Investor fears of stagflation are at the most noteworthy since the 2008 financial emergency, while worldwide development optimism has sunk to a record low, as per Bank of America Corp’s. month to month fund manager overview. Worldwide profit expectations likewise dropped to 2008 levels, with BofA tacticians noticing that earlier box in profit assumptions happened during other significant Wall Street crises, such as the Lehman Brothers bankruptcy and the bursting of the dotcom bubble.
“Wall Street sentiment is dire but no big low in stocks before big high in yields and inflation, and the latter requires uber-hawkish Fed hikes in June & July,” Hartnett wrote.
BofA’s survey, which included 266 participants with $747 billion under management in the week through June 10, ended before the US inflation data on Friday “shattered” hopes of the Federal Reserve pausing its aggressive cycle of rate hikes, according to strategists led by Michael Hartnett.
The results — including 73% of respondents expecting a weaker economy in the next 12 months, the lowest since the survey started in 1994 — provide insight into fund manager allocations and sentiment right before the S&P 500 collapsed into a bear market on Monday as surging US inflation fueled fears of sharper Fed action. The index is up slightly in early trading on Tuesday morning.
Hawkish central banks was seen as the biggest tail risk to markets among investors, followed by global recession. Long oil and commodities was the most crowded trade.
In terms of positioning, investors are long cash, US dollar, commodities, healthcare, resources, high quality and value stocks, while short positioning dominates bonds, European and emerging-market stocks, tech and consumer shares.
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