Big investors are now starting to worry about numerous key fundamentals that are the foundation of America’s stock market.

Global growth expectations have “fallen markedly” in Sept., according to the new survey of fund managers from Bank of America. The survey revealed that positive economic expectations are now at their lowest number since April 2020.

Expectations for economic growth went down 14 points from BofA’s Aug. survey. Bank of America said in his report that macroeconomic optimism is “going down.”

The large month-to-month lowering comes after a lackluster Aug. jobs report and an uptick in earnings warnings from American companies such as the 3M Company and others deal with the affects of the Delta variant on demand and prices.

The dimming growth outlook has caused concerns among managers of funds about corporate bottom lines.

Bank of America stresses that global profit expectations also fell “markedly” this month. And profit expectations were at their lowest number since May 2020. The Sept. survey marked a 29 percentage point lowering in profit when compared to Aug.

Further, a net 22% of those questioned by Bank of America expect that profit margins will continue to get worse in the next months. That is higher from 15% in Aug.

During the gloomier outlook for profits and economic growth, Wall Street handicappers are starting to push new worries about stocks in the short-term.

“The bottom line is the risk and reward is not especially great at the index level from this time going forward, no matter the outcome. That is why we do not have any upside to the S&P for the rest of 2021,” said Mike Wilson, who is the Morgan Stanley chief investment officer.

This comes at a time when more Americans are seeing higher prices in a range of products and services like gas and groceries and even rent. With Biden’s new large trillion dollar relief bill targeting liberal policies and agendas, there is no word on any new relief check being planned for the general population. 

Meanwhile Democrats have managed to protect their hedge fund donors from a carried interest tax increase by keeping the measure out of their economic bill.

Author: Blake Ambrose

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