Investor confidence rises ahead of US earnings season

Jan 21, 2020
Survey finds big drop in number of investors fearing recession

Investors are feeling a renewed sense of bullishness as we head into US earnings season, according to new research.

The proportion of investors who call themselves ‘bullish’ or ‘neutral to bullish’ has risen to 52 percent this quarter, up from 37 percent three months ago, reports Inside The Buy-side, a quarterly study conducted by Corbin Advisors. 

Expectations for US GDP figures have also improved: 60 percent say they expect growth of 2.5 percent for 2019, compared with 54 percent last quarter.

The research polled the views of 82 individuals, with 71 percent hailing from the buy side and 29 percent from the sell side. In total, respondents hold around $1.2 tn in assets under management. 

The findings suggest that fears of a recession, which many market commentators have predicted in 2020, are easing off. Just 15 percent say they expect a recession in the next 12 months, a significant change from 40 percent three months ago.

Sentiment about the US-China trade war has also moved in a positive direction, although significant fears remain, according to the survey. 

This quarter, 44 percent name ‘trade wars’ as the top global concern for investors, a fall from 55 percent in the last survey. That still leaves ‘trade wars’ as the top global concern, a position it has held for the last four quarters. ‘Geopolitics’ is the second-biggest concern, selected by 35 percent of respondents, followed by ‘US elections’ at 27 percent.

‘We saw a significant shift in optimism across all channel checks this survey, buoyed by a strong consumer, low-interest-rate environment and strong corporate balance sheets, further supported by actual progress on the US-China trade deal,’ comments Rebecca Corbin, founder and CEO of Corbin Advisors, in a statement. 

‘Expectations are that management will play a critical role this earnings season as corporates set the stage for 2020. The markets will benefit this year from companies remaining conservative in their annual outlooks, as uncertainty and challenges persist, including tepid economic growth, anemic industrial production, the impact of wide-sweeping corporate cost reductions and the US political elections.’

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