Global Fund Manager Survey-Bull Crash
Trading ideas and investment strategies discussed herein may give rise to significant risk and are not suitable for all investors. Investors should have experience in relevant markets and the financial resources to absorb any losses arising from applying these ideas or strategies. >> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst under the FINRA rules. Refer to "Other Important Disclosures" for information on certain BofA Securities entities that take responsibility for the information herein in particular jurisdictions. BofA Securities does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Refer to important disclosures on page 25 to 27. 12807148 Global Fund Manager Survey Bull Crash BofA March Global Fund Manager Survey Bottom Line: 2nd biggest drop in global growth expectations ever, biggest drop in US equity allocation ever, biggest jump in cash allocation since Mar'20; stagflation, trade war, end of US exceptionalism drive “bull crash” in FMS sentiment, speed of which consistent with “end of equity correction”; that said, no one is long recession/bonds, FMS positioning nowhere near extreme bear/close-your-eyes-and-buy levels. Q2 SPX >6k requires reversal in inflation/trade war concerns, while recession would drive SPX <5k. Macro, Risks, Crowds: expectations for higher global growth drop from -2% to -44%, driven by US, not China or EU; trade war = #1 tail risk say 55% but soft landing (64%) & Fed rate cuts (2-3 cuts say 68%) still consensus (just 11% expect hard landing); 40% say long Magnificent 7 = #1 crowded trade, but this down from 71% peak in Jul’24 and 69% of investors now say “US exceptionalism” has peaked. Asset Allocation: cash jumps from 3.5% to 4.1% ending FMS “sell signal” triggered on Dec 17th; March FMS allocation to global equities slumps from +35% to -6% driven by US & tech (lowest exposure in 2 years – Chart 1); allocation to Eurozone stocks highest since Jul'21, to staples highest in 18 months, and banks now world's favorite sector; note March FMS shows biggest rotation to high vs low dividend stocks on record. Contrarian Trades: for bulls expecting trade war & stagflation concerns to unwind – long stocks-short cash, long tech-short staples; for bears expecting US recession risk to increase – long bonds-short banks & Europe. Chart 1: March FMS shows biggest drop in US equity allocation on record Monthly change in FMS investor positioning Source: BofA Global Fund Manager Survey BofA GLOBAL RESEARCH -50ppt-40ppt-30ppt-20ppt-10ppt+0ppt+10ppt+20ppt+30pptUSEquitiesTechEnergyDiscretionaryHealthcareIndustrialsBondsREITsJapanCommodUtilitiesBanksMaterialsStaplesCashEMUKEurozoneMar'25 Global F
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