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Bank of America: Investor pessimism at dire levels: BofA Securities

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Bank of America: Investor pessimism at dire levels: BofA Securities

Investor pessimism has reached ‘dire levels’ with expectations for global growth and profits at all time lows, according to Bank of America Securities’ latest survey of fund managers.

Conducted between July 8 and 15 among nearly 300 investors overseeing $800 billion in assets under management, the survey showed cash levels are highest since 9/11 and equity allocation is at the lowest since the Lehman crisis.

Meanwhile, recession risks are at the highest level since the pandemic-triggered slowdown in May 2020, the report added.

Global growth expectations have slumped to -79% which is an all time low and everyone expects inflation to fall but the mood is still ‘stagflationary’, the report showed.

Investors want corporates to shore up balance sheets and not increase capital expenditure or buybacks, according to the report.

Investor sentiment globally has been hit this year due to inflation, fears of aggressive rate hikes by the US Fed and other central banks and resultant inflation.

Meanwhile, about 58% of fund managers said they are taking lower than normal risks, as per the survey.

The survey recorded inflation as the biggest tail risk, followed by global recession, hawkish central banks and systemic credit events.

‘Long US dollar’ is the most crowded trade followed by long oil/commodities trade, the survey showed.

However, most investors since the global financial crisis of 2008 think that inflation will be lower next year and lower inflation expectations means lower interest rates.

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