What’s next? A U.S. downgrade or Spanish bailout?

January 16, 2013

What will happen first? A U.S. credit rating downgrade or the country’s unemployment falling below 7 percent?

Or Spain having no other option but to ask for a bailout?

Bank of America Merrill Lynch asked investors in its monthly fund manager survey what “surprises”  they saw coming up first this year.

And the result is: bad news will come first.

A U.S. debt downgrade got the top spot, with more than 35 percent of investors seeing that happen first, with crisis-hit Spain having to ask for more help a close second, at just over 30 percent.

The United States will have to wait a bit longer to cut its unemployment below 7 percent, with only about 12 percent seeing that happening first. Only 10 percent bet on Japan weakening its currency to 100 yen to the dollar and very few chose gold hitting $2,000 an ounce.

For the bank, it shows pessimism is still alive and kicking despite investors’ more positive view on the global economic outlook. It said in the report:

Despite the most bullish fund manager survey since February 2011, investors still think downside surprises (US debt downgrade & Spanish bailout) are more likely than upside surprises (US unemployment below 7% & 100JPY=1USD).

No comments so far

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/