Money managers are showing an increased optimism in several important economic measures, according to Northern Trust's quarterly investment manager survey.
Ninety-one percent of respondents expect corporate earnings to increase or stay the same in the next three months, with 47% responding that earnings will increase. That compares to 32% who had a negative view on corporate earnings in the fourth quarter of 2012.
A survey record was set with 88% expecting housing prices to increase over the next six months. The survey was started in the third quarter of 2008.
Expectations that U.S. job and economic growth will improve in the next six months are rising as well — 38% expect job growth to accelerate, up from 27% in the previous quarter, and 46% said economic growth will accelerate, up from 33%. Only 11% of respondents think GDP growth will slow down over the next six months, down from 21% at the end of 2012, and 23% said job growth will decelerate but remain positive.
Despite equity markets reaching record highs in 2013, more managers still think U.S. equities are undervalued than overvalued. Thirty-seven percent said U.S. equities are undervalued compared to 28% who said they are overvalued up to 10%, a significant increase from only 11% last quarter. Also, only 11% of managers said U.S. equities are undervalued by 10% or more, the lowest percentage in the survey history.
However, 56% of managers said Japanese equities are undervalued and emerging markets, 54%. Managers were fairly split on the valuation of European equities.
About 100 money managers were surveyed in mid-March.