Global investor sentiment hits highest since February on optimism on macro ‘boom’, AI capex and dovish FedRecord 54% of fund managers expect ‘no landing’ for global economy; only 2% see ‘hard landing’Cash levels fall to ‘uber low’ level of 3.6% from 4.1%, triggering sell signal on BofA cash rule82% of investors say long global semiconductors is world’s most crowded trade, trimmed July tech longs, but ‘no one is short’Fund managers raise US equity allocation to highest overweight since December 202461% of investors do not expect AI hyperscalers to cut capex this year versus 28% expecting cut83% of investors do not expect the Fed to hike rates before November US midtermsFund managers cut end-2026 oil forecast to 71$ from 86$ in June
The Bank of America Global Fund Manager Survey (FMS) is one of the most influential monthly reports in the financial world. It polls roughly 200 to 400 institutional fund managers (people managing hundreds of billions of dollars in hedge funds, pension funds, and mutual funds) to see how they are positioned in the markets.
It’s useful as a contrarian indicator. In fact, when positioning gets overstretched on one side or the other, the risk of aggressive unwinding increases. Complacency is punished in the markets. There’s generally a catalyst triggering the reversals or just multiple factors signalling an inflection point.
The latest survey is ominous as the sentiment looks very lopsided. We have record 54% expecting ‘no landing’ and just 2% seeing a ‘hard landing’. We have record 82% of investors being long global semiconductors and ‘no one’ being short. We have 83% of investors not expecting a Fed rate hike before November midterms. These are all very one-sided views.
The contrarian trades here would be short the Nasdaq on crowded semiconductors and tech positioning, long US 10y Treasuries on record ‘no landing’ view, long US dollar on low odds of Fed rate hikes before November and long oil on lower year-end price forecast.
This article was written by flfeaa2662d774455a8d50fa77b791ed5f at investinglive.com.