Forty-six percent of hedge fund managers surveyed by TrimTabs and BarclayHedge this month were bullish about the S&P 500 index, 19% were bearish and 35% were neutral.
Last month, the TrimTabs/BarclayHedge Survey found that 30.5% of managers were bullish, 39% were bearish and 30.5% were neutral, according to a joint news release from BarclayHedge and TrimTabs Investment Research.
Also, 54% of the 92 hedge fund managers surveyed in December were bearish about the 10-year Treasury note, compared to 49% in November. Fourteen percent were bullish about the performance of T-bills, compared to 13% the prior month. Hedge fund managers who expressed neutrality accounted for 33% this month and 38% in November.
About 39% of managers were upbeat this month about the U.S. dollar index, 13% were bearish and 48% were neutral, the release said.
“These bullish and bearish readings are the highest and lowest, respectively, since the inception of our survey in May (2010),” Sol Waksman, president of BarclayHedge, said in the release. “The enthusiasm is not surprising. (The Barclays) Hedge Fund Index shows consistent gains in 13 of the past 14 years and hedge funds are firmly on track for a profitable 2010.”
About half of the hedge fund managers said higher Treasury yields are the result of “expectations of higher inflation and stronger economic growth,” according to the release. Only 4% said the negative debt implications of the federal tax-cut extension was to blame for higher T-bill yields.
“Managers are betting aggressively on the economic recovery. While markets spent most of 2010 oscillating between overblown fears of a double-dip recession and irrational exuberance about a V-shaped recovery, an inflationary growth consensus has emerged heading into 2011. Moreover, the fact that every sentiment measure under the sun shows sky-high confidence could indicate that investors are a touch too jubilant. The bandwagon might be overly packed,” said Vincent Deluard, executive vice president at TrimTabs Investment Research, in the release.