Inflation fears are pushing recession worries aside, though managers are still wary of slow economic growth.

That’s the picture from Merrill Lynch’s May global fund manager survey of 295 fund managers who handle a total of $615 billion.

The number of managers that think inflation will be slightly or a lot higher jumped to 53% from 44% in April.

Meanwhile, more think the global economy will get stronger.

Twenty-two percent see a stronger economy, up from 19% last month. That’s still a minority view, as 61% saw the economy getting a little weaker. That was down from last month’s 67%.

The chance of recession seems to weigh less on managers as well, given that the percentage thinking it is very likely dropped to 6% from 11%. Those that think it fairly likely went to 23% from 29%.

Bill Kan, emerging markets strategist at Merrill Lynch, says managers should probably be more concerned about inflation than they are. Merrill analysts, he says, see signs it will go higher than many expect.

Greater optimism doesn’t seem to have moved managers to take greater risks.

Average cash balances dropped for the third month in a row, to 4.1% from 4.2%. But the fraction that is overweight in cash hasn’t budged much, dropping to 36% from 37%.

The biggest jump was among the managers that were neutral relative to cash benchmarks. That went to 45% from 40%.

Some of those moving to neutral positions came from the group that was underweight in cash. Eight percent said they were underweight in May, down from 13% in April.

Kan says when more managers approach neutral weightings, that means risk appetite has gone up, but not much. If anything, a neutral weight is a defensive position, showing the optimism is fragile.

The movement toward benchmarks also was reflected in sector weightings. Of the 11 sectors the survey tracks, eight showed an increase in the percentage of managers who were neutral to the benchmarks.

That said, energy and technology were the most overweighted sectors. Thirty-eight percent of managers were overweight in energy, while 35% were overweight in tech stocks.

Those percentages were little changed from April, with energy at 39% and tech the same.

Banks and industrials saw some big shifts in their favor.

Banks were overweight or neutral for 35% of managers in May. That’s up from 29% in April.

Industrials went to 52%, overweight or neutral, up from 48% last month.

Managers turned away from telecom, health care and consumer staples.

Health care stocks were overweight for 24% of managers vs. 35% in April. Consumer staples dropped to 21% overweight from 33% and telecom stocks went to 21% from 35%.

Kan says it’s possible health care stocks were where many investors went when banks started to go south earlier in the year. The net percentage of managers overweight in banks bottomed out for the year in March, about the same time health care stocks peaked.

Passengers of American Airlinesare expected toface more travel troubleson Friday as the company announced it would cancel another 570 flights to continue to inspect wiring on some of its jets for a fourth straight day.

OnThursday, theairline cancelled 933 flights,on top of the almost 1,100 cancelled Wednesday, and more than 700 earlier in the week. Passengers wait in line at O’Hare International Airport in Chicago on Wednesday.
(Paul Beaty/Associated Press)

The cancellations stem from inspections of U.S. planesbeing carried out by the Federal Aviation Administration. The inspectionswere sparked bya congressional hearing last weekthat found Southwest Airlines had kept 40 planes in the air that hadn’tbeen properly inspected.

Airline industry observers said it is one of the biggest disruptions to air travel since the Sept. 11, 2001, attacks.

The airline estimated Wednesdaythat more than 100,000 travellers were affected by the cancellations with airports in Dallas and Chicago hardest hit.

Some Canadian airportswere affected as well, as Thursdayflights between Calgary and Dallas were cancelled. Six flightsfrom Toronto were alsocancelled, while Montreal had four cancellations.

The airline says it has been providing vouchers for later flights, as well as meals, hotels and ground transportation for stranded passengers, though some travellers including, Mary Rickert, complained of chaos.

“It’s an absolute disaster,” Rickert said of the lines at Chicago’s O’Hare Airport. “It’s a four-hour wait just to get to the ticket counter. Shoot me now.”

The FAA’s second round of checks are expected to continue through June.

The FAA is investigating American Airlines’ aging MD-80 jets, which make up almost half its fleet.Federal inspectors say they havefound problems with the spacing and direction of cords used to secure bundles of wires in the planes’ auxiliary hydraulic systems.

If the wiring rubs together, the fear is it could ignite fuel vapours and cause an explosion in the fuel tank, which could bring down a plane.

American Airlines CEO Gerard Arpey said Thursday that the cancellations will cost the company tens of millions of dollars, but he says American can withstand the losses. Wiring didn’t meet FAA standards

A spokesman forthe airlinesaid an FAA inspector checked several MD-80s Monday and found that some of the wiring work performed two weeks ago didn’t meet FAA standards.The next day,American begantaking planes out of service so that wiring bundles could be inspected and stowed properly in the wheel wells.

Despite the problems found by inspectors,American has said that passenger safety was never jeopardized. Arpey said he takes full responsibility for the airline’s failure to comply withthe federal safety rule.

While other airlines have also had to ground planes, the cancellations at American Airlines are by far the most severe. Midwest Airlines said Thursday personnel were reinspecting wiring harnesses on 13 planes.

The cancellations and resulting loss of revenue come as American faces high fuel prices and a weakening economy.

The airline’s parent company, AMR, is scheduled to report first-quarter earnings in two weeks, and analysts are forecasting a loss of more than $300 million, according to a survey by Thomson Financial. With files from the Associated Press Post a commentPeople have commented on this story Recommend this story People have recommended this story Story Tools: | | Text Size: | | Story comments (0) Sort: Most recent | First to last | Most recommended

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Note: The CBC does not necessarily endorse any of the views posted. By submitting your comments, you acknowledge that CBC has the right to reproduce, broadcast and publicize those comments or any part thereof in any manner whatsoever. Please note that comments are pre-moderated/reviewed and published according to our . Comment:Characters allowed: 2500 Post Related Internal Links «www.cbc.ca» «www.cbc.ca» Video Alison Smith reports for CBC-TV (Runs: 3:24) People who read this also read … Money Headlines 00 General Electric Co. reported a smaller-than-expected first-quarter profit on Friday and lowered its outlook for the full year, as a slowing U.S. economy sapped its financial services business. 00 The total number of flights cancelled by American Airlines reached more than 3,000 this week, after another 595 flights were scrapped on Friday. 00 In an unprecedented move, the federal government has blocked the sale of the space technology division of Vancouver-based MacDonald, Dettwiler and Associates to a U.S. firm. 00 Stronger exports in February helped push Canada’s trade surplus up by more than $2 billion to $4.9 billion, Statistics Canada said Thursday. 00 Canadian banks have begun to lower fixed mortgage rates to their lowest levels since last spring. Money Features «www.cbc.ca» «www.cbc.ca» «www.cbc.ca» «www.cbc.ca» BIZ HITVideo Update Hourly market wrap from CBC Newsworld

Most people probably think of a white talking duck when they hear the name Aflac. ()

But investors who’ve been tracking the insurance provider also may think of a track record of steady profit growth.

The Columbus, Ga.-based company has increased its annual earnings for at least the past eight years. It has a five-year earnings per share growth rate of 14% and the kind of low EPS Stability Rating that long-term investors covet: 2.

Last week Aflac reported Q1 profit of 98 cents a share, up 20% from the same year-ago period and 2 cents above expectations. That was its best growth in 11 quarters.

Sales grew 14% for the biggest increase in 13 quarters. Sales in Japan rose 5%; U.S. sales climbed 0.4%.

The firm’s 11.1% after-tax profit margin was the highest level in more than four years.

Aflac expects to earn roughly $3.95 to $4.09 a share this year. Analysts are looking for an upwardly revised $4 a share in ‘08.

More fund managers have been buying the insurer’s shares. At the end of Q1, 407 funds held a position, up from 356 in Q1 ‘07.

An up/down volume ratio of 1.1 also suggests increased demand for shares.

The stock marked a record high on Jan. 10 before giving in to market pressure. It fell 15% from its high to the bottom of the base, where it found support at its 40-week moving average.

The mild pullback, compared to the S&P 500’s 20% decline, underscores Aflac’s strength. The stock cleared the 65.10 buy point of a cup with handle March 31.

It’s near the 68.91 buy point from a pullback to the 10-week average.

to view an Excel spreadsheet of the screen below with expanded data.

Long-Term Investor Screen

Symbol Company Name EPS
Stability
Rating EPS
Rating Additional
Research
Ansys Inc 2 97
Covance Inc 2 89
Becton Dickinson & Co 2 79
Ametek Inc 3 92
Idexx Laboratories Inc 3 87
Northern Trust Corp 3 86
Amphenol Corp Cl A 4 94
Emerson Electric Co 4 88
Danaher Corp 4 86
Bard C R Inc 4 80
Harsco Corp 5 92
Varian Medical Systems 5 82
Hewlett-Packard Co 6 93
Questar Corp 6 90
C H Robinson Worldwide 6 90
Fastenal Co 7 92
Smith International 7 91
Blackrock Inc 8 94
Schlumberger Ltd 8 91
Google Inc 11 98
C S X Corp 11 96
Halliburton Company 11 89
General Cable Corp 12 99
Parker-Hannifin Corp 12 92
Gamestop Corp Cl A 13 95
Monsanto Co 14 97
Atwood Oceanics Inc 19 99
National Oilwell Varco 20 98

This screen excludes stocks under $25 and average daily volume less than 350,000 shares. Sorted by EPS Stability Rating and then EPS Rating. to view an Excel spreadsheet of this screen with expanded data. Your computer should have Excel 5.0 or a later version to view the spreadsheet. Data as of Monday, April 28, 2008 1:50 p.m. Pacific time.

Most people probably think of a white talking duck when they hear the name Aflac. ()

But investors who’ve been tracking the insurance provider also may think of a track record of steady profit growth.

The Columbus, Ga.-based company has increased its annual earnings for at least the past eight years. It has a five-year earnings per share growth rate of 14% and the kind of low EPS Stability Rating that long-term investors covet: 2.

Last week Aflac reported Q1 profit of 98 cents a share, up 20% from the same year-ago period and 2 cents above expectations. That was its best growth in 11 quarters.

Sales grew 14% for the biggest increase in 13 quarters. Sales in Japan rose 5%; U.S. sales climbed 0.4%.

The firm’s 11.1% after-tax profit margin was the highest level in more than four years.

Aflac expects to earn roughly $3.95 to $4.09 a share this year. Analysts are looking for an upwardly revised $4 a share in ‘08.

More fund managers have been buying the insurer’s shares. At the end of Q1, 407 funds held a position, up from 356 in Q1 ‘07.

An up/down volume ratio of 1.1 also suggests increased demand for shares.

The stock marked a record high on Jan. 10 before giving in to market pressure. It fell 15% from its high to the bottom of the base, where it found support at its 40-week moving average.

The mild pullback, compared to the S&P 500’s 20% decline, underscores Aflac’s strength. The stock cleared the 65.10 buy point of a cup with handle March 31.

It’s near the 68.91 buy point from a pullback to the 10-week average.

to view an Excel spreadsheet of the screen below with expanded data.

Long-Term Investor Screen

Symbol Company Name EPS
Stability
Rating EPS
Rating Additional
Research
Ansys Inc 2 97
Covance Inc 2 89
Becton Dickinson & Co 2 79
Ametek Inc 3 92
Idexx Laboratories Inc 3 87
Northern Trust Corp 3 86
Amphenol Corp Cl A 4 94
Emerson Electric Co 4 88
Danaher Corp 4 86
Bard C R Inc 4 80
Harsco Corp 5 92
Varian Medical Systems 5 82
Hewlett-Packard Co 6 93
Questar Corp 6 90
C H Robinson Worldwide 6 90
Fastenal Co 7 92
Smith International 7 91
Blackrock Inc 8 94
Schlumberger Ltd 8 91
Google Inc 11 98
C S X Corp 11 96
Halliburton Company 11 89
General Cable Corp 12 99
Parker-Hannifin Corp 12 92
Gamestop Corp Cl A 13 95
Monsanto Co 14 97
Atwood Oceanics Inc 19 99
National Oilwell Varco 20 98

This screen excludes stocks under $25 and average daily volume less than 350,000 shares. Sorted by EPS Stability Rating and then EPS Rating. to view an Excel spreadsheet of this screen with expanded data. Your computer should have Excel 5.0 or a later version to view the spreadsheet. Data as of Monday, April 28, 2008 1:50 p.m. Pacific time.

Finance Minister Jim Flaherty said the scheduled New Year’s Day GST cut is being jeopardized because the NDP is holding up passage of the implementation bill.

The GST tax cut from six per cent to five per cent was part ofFlaherty’s Oct. 30 economic statement. The Harper government wantsthe consumption tax cut to go into effect on Jan. 1, 2008.

But the bill that would implementthat GST cut and other tax changes Bill C-28 is still in the committee stage. Flaherty said Tuesday he has heard fromretailers worried that the bill won’t pass in time for the cut to be in effect on New Year’s Day.

“I said yesterday the bill was moving ahead and was likely to get through the House and Senate before Christmas, now we have the NDP blocking progress of the bill right in the House of Commons,” Flaherty said after Question Period.

“That does put into jeopardy the GST cut.”

Tax changes are regularly implemented before legislationis given Royal Assent. But Flaherty says the Canada Revenue Agency (CRA) has advised him that the GST cutcould be difficult to implementonJan. 1, if the bill hasn’t been passed into law by then.

“The CRA has said it’s challenging because it is a deduction at the cash register,”Flaherty told reporters. “It’s not as simple as a future tax change.”

Flaherty said hehopes to get the bill through Parliament bythe time the House of Commons adjourns for the holidays later this week.

TheNDP said the GST cut can still go into effect even if the bill isn’t law because a ways and means motion has been adopted.

“Our objection is less with the one per cent GST cut than the across-the-board tax cut for corporations, which we think is going to be more destabilizing for our economy,” said NDP finance critic Thomas Mulcair.

A spokesman for the Retail Council of Canada told CBCNews.ca thatits members were proceeding on the assumption that the GST will be five per cent as of Jan. 1 and are ready to implement the change.

“We’ve been through one iteration of this before,” said council vice-president Derek Nighbor, referring to the 2006 tax cut that lowered the GST from seven per cent to six per cent. With files from the Canadian Press