RJ and Makay

In the past two months, investors’ confidence in their outlook for global growth and corporate profits substantially slipped, according to a May Bank of America Merrill Lynch survey of global fund managers.

The proportion of respondents who believe the world economy would be strengthening in the next 12 months fell to a net 10%, down from 27% in April and 58% as recently as February. Only 9% of respondents are expecting corporate profits to improve in the coming year.

It may not be necessary to complete the second round of quantitative easing (QE2), the Federal Reserve's $600 billion bond-buying program aimed at stimulating the U.S. economy, suggests St. Louis Federal Reserve Bank President James Bullard. “The economy is looking pretty good,” he explains. "It's still reasonable to review QE2 at coming meetings, especially this April, and see if we want to finish the program or stop a little bit short."

However, Fed Chairman Ben Bernanke has given no indication the central bank will deviate from its plan to buy bonds through June to spur economic growth and reduce unemployment. In two days of congressional testimony earlier this month, Bernanke said that while growth will accelerate in 2011, he still wants to see a sustained period of stronger job creation before curtailing economic stimulus.

With the recession and bear market still fresh in their minds, Americans are increasingly opting for savings vehicles with safety features such as a guaranteed income stream in retirement. Their need for more security has pushed demand for annuity products, especially variable annuities, to record highs.

For example, fourth-quarter variable annuity sales totaled $37.6 billion, a 10% increase from the previous quarter and an 18% gain from the fourth quarter of 2009, reports the Insured Retirement Institute (IRI). Variable annuity assets reached an all-time high of $1.5 trillion last year, the IRI adds.