The U.S. is back, and fund managers around the world say it's time to buy America.

Today, Merrill Lynch's monthly global fund manager survey confirms this market idea we've been hearing about as the dollar has been moving higher. This "group think" on American assets, as one trader put it to me last week, is driving buyers into the dollar and stocks. (this is in general, certainly not today)

Of 117 participating fund managers, Merrill says 63 percent expect the U.S. dollar to appreciate the most on a trade weighted basis in the next 12 months, and 48 percent say the U.S. is the region they most want to overweight in that period. Those numbers were 54 percent and 45 percent, respectively in July.

On the other hand, 68 percent expect the euro to depreciate more than the dollar or yen, and 33 percent would underweight the Eurozone and 24 percent would underweight global emerging markets.

Merrill strategists say on a net basis more managers want to overweight the U.S. than at any time in the last six years. A net 58 percent thought the dollar was undervalued while 71 percent believe the euro is overvalued. They also see the U.S. as having a more favorable corporate profit outlook than Europe, and the quality of earnings is seen to be improving while Europe deteriorates.

We've been seeing, hearing and watching signs of this for days now. Perhaps the most pronounced showing was the big jump last Friday in the dollar, its biggest one day move in six years, and a parallel triple digit gain in the Dow.

But beware. Traders keep reminding us though that this move of capital is not an endorsement of the U.S., but an acknowledgement instead that the rest of the world is now joining the U.S. in a slowdown and the U.S. has the chance to emerge earlier.

Along with this move in the dollar has been a major meltdown in commodities of all types - particularly oil. The managers also changed their views on inflation and interest rates, and the survey shows the weakest inflation expectations reading in more than six years.

Surprisingly, despite the big drop in oil prices, the fund managers mostly stick to a trade that prefers energy shares over banks. The survey shows that they had been favoring the long energy and underweight financials for months now.

But in August, they reduced their overweight in energy and were more overweight pharmaceuticals, though emphasis on that group was reduced as well. They also say the financials are the most undervalued, but they view materials, utilities, staples and discretionary stocks as more overvalued than energy.

The dynamics of the credit crunch may also be starting to change, Merrill says. They say the changes in investment preference in sector rotation and the currency markets is a sign of this and suggests the credit crunch is morphing from a financial crises into an economic event as fear grows about the global economy. One in four of the managers now believe the global economy is in recession and half the respondents expect the world to be in recession in the coming 12 months.

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