Bulls running wild — so when’s the correction?

Global growth expectations and risk appetite among global fund managers are at the highest level they’ve been in almost two years, making a market correction this quarter likely.

Global fund managers expect the global economy to grow at around 2% over the next 12 months, the highest growth projections in almost two years, according to the latest Bank of America Merrill Lynch Global Fund Manager Survey. The 254 managers surveyed, who manage approximately $754 billion combined, are also taking on the most risk since 2004. Almost 80% said they’re taking on more risk than normal.

The most telling sign of bullishness can be seen in how the global managers view bank stocks. For the first time since 2007, the survey found that managers are overweight global banks.

The global fund managers aren’t the only ones feeling bullish this month. Investors poured $18 billion into stock mutual funds and exchange-traded funds in the second week of January, according to Lipper Inc. It was the most net new cash deposited into stock funds since mid-2008, and the $7.5 billion that went into stock mutual funds was the most since 2001.

The numbers actually are probably much higher, since stock fund bigwigs such as The Vanguard Group Inc., Fidelity Investments and American Funds don’t report weekly flows to Lipper.

Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research, isn’t ready to join in on the fanfare surrounding stocks. “Bullish sentiment doesn’t guarantee a correction, but market vulnerability has certainly risen,” he said in a statement. “In our view, a dip in equities in January would be healthy. Without one, a larger correction in the first quarter becomes more likely.”

The global fund managers are still wary of the fiscal situation in the U.S. More than 40% ranked it as the biggest tail risk the markets face today, ahead of the problems in the European Union and China’s growth.