Investors are maintaining their bullish stance on the US sharemarket, even with a weakening economy that is expected to lead to multiple interest rate cuts by the Federal Reserve this year. A recent Bank of America global fund manager survey revealed that over 25 per cent of investors are overweight equities, the highest in seven months, despite a record 58 per cent considering equities overvalued. Wall Street continues to reach all-time highs, despite growing indications of a slowing US economy, particularly in the labour market.
Fund managers at a GSFM investor forum in Sydney explained that the sharemarket’s positive performance, despite slowing economic growth, isn’t a contradiction. Marc-André Lewis, chief investment officer at CI Global Asset Management, which manages $US140 billion in assets, stated that the market is more focused on the Fed’s anticipated interest rate cuts than the fallout from the slowing economy. CI Global Asset Management is a Toronto-based company that provides a range of investment management services to individuals, institutions, and advisors. The central bank is widely expected to cut interest rates for the first time, with bond traders anticipating significant cuts by next year.
Lewis noted that it makes sense for central bankers to lower rates, but cautioned that this macro environment won’t last indefinitely. He predicted that in approximately 18 to 24 months, economic data may begin to conflict with the ongoing push for lower rates. In the meantime, Lewis believes the sharemarket’s path of least resistance is still upward. CI Global has recently increased its allocation to US stocks after reducing exposure last year due to valuation concerns.
Qiao Ma, a portfolio manager at Munro Partners, is also optimistic about the US sharemarket, highlighting the strong balance sheets of American companies as separate from the broader economy. Munro Partners is an Australian asset manager focused on global growth equities. Ma noted that innovation, global reach, and shareholder-aligned leadership distinguish the “global champions.” She added that 70 per cent of her portfolio is invested in the United States.
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