The US market hit all-time highs last week and has now rallied more than 50 per cent since bottoming in March. With this happening in the middle of a global economic crash, it’s fair to ask: are investors gripped by irrational exuberance?

Not according to Bank of America’s latest monthly fund manager survey. Yes, bullishness has increased, with sentiment now at its highest level since February, prior to the coronavirus pandemic. Similarly, only 35 per cent now see this as a bear market rally, compared with 47 per cent last month.

However, cash levels of 4.6 per cent are neutral and well above levels seen in exuberant markets. Only 17 per cent expect a V-shaped economic recovery. Bank of America’s Bull and Bear Indicator is at 3.7 – well below the 8.0 level that generates a sell signal and “far from dangerously bullish”, the bank notes.

Contrarians might be concerned by managers’ US equity allocations, which are high relative to history. Overall, however, global sentiment is at neutral levels. You can argue stocks have run too far, too fast, but the data suggests accusations of irrational exuberance are wide of the mark.