But that Friday-Monday route has generated a healthy debate about whether these names—and some semiconductors–are in a bubble, or not.
Some light on how Wall Street views this came today from Bank of America, which published its Global Fund Manager Survey this morning. The 210 fund managers weighed in on the key question–are internet stocks in a bubble? The conclusion: the majority believe they are expensive, but not in a bubble, a subtle but important distinction:
Fund managers on internet stocks
In a bubble: 18%
Fairly priced: 25%
One the broader question–are equities overvalued?–44% said yes, which is the highest ever, a jump from 37% in May:
Fund managers: are equities overvalued?
Equities overvalued (June): 44% (highest ever)
Equities overvalued (May): 37%
However, roughly 50% believe that global profits will continue to improve. This suggests that the markets are vulnerable to profit weakness down the road.
Speaking of risks, you might think that the risk of a big selloff in Technology–the biggest mover of the year–would be foremost on a fund manager’s mind. Not even close. China is the biggest risk.
Fund managers: biggest risk to markets
China credit tightening: 31%
Crash in global bond market: 18%
Delay in US tax reform: 14%
Those who think that the Trump Agenda is the primary phenomenon underpinning the rally might be surprised fund managers assign “Delay in US tax reform” such a low risk.
What do fund managers see as the most crowded trades?
Fund managers: most crowded trades
1. Long NASDAQ
2. Long EU equities
3. Long US/EU corporate bonds
Finally, a lot of equity traders are still worried about a sudden rise in bond yields–what would it take to kill the equity rally? Fund managers have an opinion: 64% say it would take 10-year Treasury yields of 3.5%-4.0% for an equity bear market to start.