The October survey covered 371 managers with $1.1 Trillion in assets under management.
OUTLOOK:
-38% (majority) of FMS investors expect the Fed tightening cycle to end in Q1 2023 – one quarter faster than a month ago:
-Fed funds rate is now seen peaking around 4.5% – 5.0%, up 50bps in the past month:
-Most investors since Nov’08 expect lower bond yields next 12 months:
-BofA’s FMS financial market stability risk metrics are at all-time high.
-FMS inflation expectations are finally tumbling.
-Global growth expectations net -72%, near all-time low:
SENTIMENT:
– 91% of FMS investors (net) say that global corporate earnings are unlikely to rise 10% or more in the next year, the most since the GFC
POSITIONING:
-Investors are now 3-sigma Underweight equities, surpassing even the panic during the peak of the 2008-2009 GFC:
-Relative to FMS +20-year history investors are 2.6-sigma OW cash:
MOST CROWDED TRADES:
-Long USD:
BIGGEST TAIL RISKS:
BANK OF AMERICA COMMENTARY:
Contrarian trades: long sterling vs USD, long stocks vs cash, long EU stocks vs US, long consumer discretionary vs healthcare.
