Bank of America had carried out this survey between August 7 and 13, among 200-plus fund managers, who manage a combine wealth of $581 billion.
Equity allocation is on the rise among fund managers as cash levels have now dipped to 3.5% from 3.6% last month and the global equity allocation has now surged to the highest since 2021. Fund Managers are now “overweight” on equities for 14 straight months.
What is the consensus that has come in among these participants who were surveyed for this?
The fact that there will be no macro landing, no hard nor soft, there will be no Fed rate hikes, there will be no AI capex cut, and the Democrats will not sweep the midterm elections.
Where is the global economy headed in the next 12 months?
50% say no landing, 34% say soft landing, and are expecting a hard landing for the global economy.
Will the US Federal Reserve hike interest rates or not?
22% say yes, 72% of them say no. The probability of the central bank hiking interest rates in September have already dwindled down to 32% from well over 70% at the start of the month.
Where are the oil prices going to be at the end of the year?
The average price consensus that has come out is that by the end of the year, prices will be at $76 a barrel.
A majority 42% believe that it will be between $70 to $80, a third believe that it will be $80 to $90, 13% of them see it down to $70, but there are a few who are hawkish as well. 6% believe that they’ll remain in this $90 to $100 range that they currently are in.
There is also a small fraction that expect it to either go as far below as $50 or well over $100 as well.
What is right now the most crowded trade in the global markets?
Unsurprisingly so, it is long global semiconductors, that is still the most crowded trade, more than 53%. Short the yen, long the Magnificent Seven, long global treasuries, long EM equities are some of the other crowded trades here as well.
What Is The Biggest Risk That Comes For The Global Markets?
Again, unsurprisingly so – the AI bubble. A disorderly rise in bond yields is a new entrant, and 27% of the Fund Managers surveyed believe that to be the biggest risk.
A second wave of inflation, geopolitics, a sweep of the Democrats in the midterm elections are of course some of the other tail risks that the fund managers are seeing.
