Amid Thursday’s risk asset wobble following a weak Chinese PMI manufacturing survey, a reassuringly bullish note on the US from Michael Hartnett, Bank of America Merrill Lynch’s chief investment strategist, pinged into Trading Post’s inbox. (Granted, it was written before the China PMI was released.)

Referring to the early 2014 sell-off, Mr Hartnett says: “Despite tapering, the weather, China default risks and the famine in emerging markets, we believe January was an interruption not an inflection point.”

Why is he so confident? He gives a snappy list, of which here are a few items.

Chart: S&P 500 index, August 2013-February 2014

Lending growth to small US companies is at its strongest since June 2008, an economic gauge Mr Hartnett describes as “our key ‘escape velocity’ indicator”.

Central banks remain supportive and the financial sector is considered much healthier. “The investment-grade bonds of the global banks are at all-time highs.”

Corporate America has 91 weeks’ worth of net income sitting in cash, he notes, while “our Fund Manager Survey Cash Rule flashed ‘buy’ this week, which followed a sharp rise in cash balances up to 4.8 per cent of assets under management in February”.

“Bull markets don’t end with high cash levels and policy makers in ‘whatever it takes’ mode,” he claims.

jamie.chisholm@ft.com

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