In just three months, the outlook on the global economy has gone from 5% of fund managers being pessimistic about the next 12 months to 60% having a dim view of the coming year, according to MerrillLynch’s Survey of Fund Managers for July. “This survey is so grim it could constitute a contrarian signal,” says Dave Bowers, a Merrill spokesman. “High cash levels, high risk aversion and extreme pessimism about growth are the raw ingredients for a stock market rally if we get the merest pinch of good news to add to the mix.” As dire as the survey sounds – Merrill says it is its most negative in its history – few believe there will be a “full-blown recession” within the next 12 months. About one in three institutional investors are overweight in cash, a level exceeded only after Sept. 11. The one almost positive glimmer, according to the survey, is that investment time horizons are about where they were in May. Incidentally, dire predictions notwithstanding, Merrill’s profits soared 42% in the second quarter.