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To: Rarebird who wrote (42734)	10/12/1999 8:28:00 AM
From: Rarebird	Read Replies (1) \| Respond to of 116766

POLL-More US funds turn bearish on dollar-Merrill Reuters Story - October 12, 1999 07:32 LONDON, Oct 12 (Reuters) - The percentage of U.S. fund managers expecting the dollar to be the world's strongest currency in a year's time has fallen to a record low, according to the October Merrill Lynch Gallup Survey released on Tuesday. Only 24 percent of respondents favoured the dollar, down from 26 percent in September, while a record 57 percent of fund managers expected U.S. inflation to rise over the coming year. They cited a combination of a weakening dollar and rising commodity prices as factors behind their inflation outlook. "U.S. inflation is likely to persist until the global manufacturing cycle turns down," said Merrill Lynch Global Strategist Trevor Greetham. The survey was conducted October 1-6 and involved 76 institutions responsible for funds totalling $2.158 trillion. The currency of choice for a record 64 percent of U.S. fund managers was the euro while buyers of European equities outnumber sellers by 32 percent, the highest balance of euro-zone bulls since May 1995. Since the last survey, the U.S. National Association of Purchasing Management survey of business confidence has come out much higher than expected and central banks in the United States, Britain and Europe all decided to leave interest rates unchanged. Even so, 68 percent of fund managers expected Fed Fund rates to be higher in a year's time but the forecast rate was a moderate 5.40 percent versus the current 5.25 percent. U.S. fund managers were modest sellers of domestic equities, with sellers outweighing buyers by five percent. The survey found 57 percent of respondents considered U.S. stocks to be overvalued compared with 54 percent the previous month while 60 percent preferred small caps to large caps, up from 45 percent in September. There was also some rotation back into financial and cyclical sectors compared with September. Growth stocks remained the favourite sector but for only 46 percent of the survey compared with 63 percent in September. TREASURIES GAIN FAVOUR U.S. investors also switched some assets into U.S. Treasuries, with buyers outweighing sellers by eight percent after sellers dominated for the past three months, and there were signs they were less underweight overseas bonds. As well as the record European preference, a net 24 percent more managers said they were buyers of Japanese equities than sellers and a net eight percent favoured British equities. But although there were net buyers of Latin American and of Pacific Basin equities, interest in these areas appeared to be tailing off, according to the survey. In their view of global markets, U.S. fund managers were less bearish on the U.S. economy than last month, with net bears at only 11 percent versus 14 percent. Net bulls of commodity prices increased to 35 percent from 23 percent. Among emerging markets, Asia and South Africa both gained favour, with net bulls of the former increasing to 52 percent from 45 percent in September and for South Africa to 14 percent from seven percent