Now: Earlier this year, duration in the survey hit an all- time low. Managers have lengthened durations recently but the level is still among the lowest since 2006. "It's kind of funny because as they did that, rates went up," says Bernstein. What does it mean? Not that much, except that it continues to be a somewhat contrary indicator, he says.
Investment Flows:
If there's a stretch of time that mutual fund flows into equities presaged a bear market, Bernstein says he hasn’t found it. What he’s found suggests that big inflows into equity mutual funds are a warning sign and that big outflows signal the opposite.
December 2012: Fund investors were selling U.S. equities as the S&P 500 returned about 15 percent. “Significant outflows suggest opportunity,” wrote Bernstein.
Now: Bernstein points to April 20 TrimTabs data showing that the trailing four-week outflow in U.S. equity exchange- traded funds stood at $27.6 billion, or 2.3 percent of all assets. That was the seventh-highest reading on record and, according to the report, an “extremely bullish short-term contrarian signal for U.S. equities.” Bernstein agrees, but he thinks it's more than a short-term signal.
Fears of Inflation:
Bernstein likes to compare actual inflation against expectations "to show how habitually afraid people are of inflation."
December 2012: The risk of meaningful inflation was “quite low,” Bernstein figured. But investors were factoring inflation of about 6 percent into stock market valuations over the next 12 months, his models showed.
Now: Inflation hasn’t been a problem since Bernstein wrote his report. His model shows investors pricing about 3 percent inflation into valuations, which he thinks is too high.
With oil plunging, then coming back to life, inflation fears may be a little more merited today, he says. If so, he says it’s based on the price of oil, not on broader inflation in the economy.