Expectations for global growth are once again at a high, highest since July 2011 according to a survey of fund managers. About 11% of investors in the Bank of America Merrill Lynch survey see a stronger world economy in 2012 compared to a 27% of investors who saw a weakening economy back in December.

This came from a very bullish January that saw great numbers come out of the United States and now Europe is finally showing investors signs of life. The report showed us that managers are now heavy in equities with 26% saying they were overweight on equities, comparable to just 12% in the last month.

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Managers claim that European bank stocks are a great place to be right now as central banks pump money into ailing banks. The report showed renewed signs that Europe will improve greatly this year and will avoid a double dip recession. However, investors are still weary in the short term as 55% said they were going to step away from Europe until signs improve.

What’s bad for European sentiment is great for emerging markets however. Emerging markets equity allocation jumped to its second highest point in 12 years. The survey shows that 44% of managers are now in emerging markets compared to just 20% last month.

Moving to China, 86% of managers see a “soft landing” on China’s economy rather than a crash and burn, recessionary environment. China also is seeing its highest growth estimates since November 2010.

Investors are starting to come out of hiding and realizing that it is not as bad as everyone thought it would be. The US is improving greatly, Europe is starting to show signs that they are getting their debt under more controllable conditions, China will boost up world economy with a “soft landing” combined with high growth and emerging markets are gaining ground at the second largest rate in 12 years. There is a lot of good happening in the market place and world economy. However, it is in a very fragile state right now. If anything deters off it could have a butterfly effect and ravage other country’s recovery plans. Hopefully this is not the case but it is important to not be naïve and believe that everything is rosy sugarplums. Stay sharp but it might be time to follow smart money into emerging markets and if you enjoy risk, European bank stocks.