Bank Of America Fund Manager Survey And More Info

According to the monthly fund manager survey conducted by Bank of America Corp., investor concerns about stagflation are at their greatest level since the financial crisis of 2008, while confidence in global growth has reached a record low. The BofA strategists noted that previous troughs in profits expectations happened during past significant Wall Street crises, such as the collapse of Lehman Brothers and the fall of the dotcom boom, and that global profit expectations also fell to 2008 levels.

According to strategists led by Michael Hartnett, BofA’s survey, which included 266 participants with $747 billion under management in the week ending June 10, finished before US inflation data on Friday “shattered” optimism that the Federal Reserve would pause its rapid pace of rate hikes. Hartnett added, “Wall Street sentiment is dreadful but there won’t be a large bottom in equities before a huge high in yields and inflation, and the latter demands uber-hawkish Fed hikes in June & July.

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The results, which include the lowest percentage of respondents (73%), expecting a weaker economy over the next year since the survey’s inception in 1994, offer insight into fund managers’ sentiment and allocations just before the S&P 500 entered a bear market on Monday as fears of a more aggressive Fed response grew. Tuesday morning’s early trading has the index marginally higher.

Investors are long cash, the US dollar, commodities, healthcare, resources, high-quality, and value equities, while shorting bonds, European and emerging-market stocks, technology, and consumer shares is the most common positioning. Investors viewed hawkish central banks as the biggest market tail risk, followed by a worldwide recession. The trade with the most activity was long oil and commodities.

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