This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Market Preview: Who's Afraid of the Fiscal Cliff?

Stocks in this article: BACAAPLINTCIBMCSPY^GSPC^IXIC^DJI

NEW YORK ( TheStreet) -- Halfway through October, just two weeks away from Halloween, the evidence is in on what's spooking fund managers these days.

No, it's not earnings season (though Tuesday's late headlines on Intel (INTC) and IBM (IBM) may change that); it's the oh so scary prospect of going over the fiscal cliff!

That's the biggest takeaway from the latest Bank of America Merrill Lynch fund manager survey, which involved an overall total of 269 panelists with roughly $734 billion in assets under management queried between Oct. 5-11.

A whopping 72% of those polled said they believed the fiscal cliff, which refers to the looming expiration of Bush-era tax cuts and other stimulus programs at the start of 2013, is "not substantially priced into global equities and macroeconomic data."

Forty-two percent of respondents identified the cliff as the no. 1 tail risk for the market, up from 35% in September and 26% in August.

Fear not though, this overwhelming worry about the very same issue hasn't manifested itself in less faith in stocks. In fact, the survey found a net 24 percent of asset allocators are overweight equities, up from a net 15 percent in September.

"While the U.S. fiscal cliff is a hurdle, growing belief in the global economy could spur a more 'risk on' stance from investors," said Michael Hartnett, chief investment strategist at B of A Merrill Lynch Global Research, in a press release.

In accompanying research, B of A delved deeper into what sectors are getting the most love when it comes to equities and unearthed an interest factoid involving a status that it says U.S. banks haven't been afforded in more than six years.

"October's big OW's overweights are Tech and Pharma; the big UW's underweights are Banks and Utilities," the firm said. "Relative to the past decade, investors are very long US domestic demand plays (e.g. consumer discretionary) and very short China-plays (e.g. Energy and Materials). Global banks are out of favor, but US investors are OW US banks for first time since 8/2006."

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs