Price action is helluva drug. That’s a big takeaway from Bank of America’s latest global fund manager survey, which reveals the increasingly ebullient mood among investors.
To be sure, the optimism isn’t so strong that it’s alarming (yet). But the combination of surprisingly strong economic growth, the prospect of central bank rate cuts, and a broadening stock market rally higher keeps improving the mood music.
Over two-thirds of the almost 200 fund managers polled by BofA’s analysts now don’t expect a recession over the next year. Less than half a year ago the vast majority thought a downturn was in the mail.
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Almost two-thirds of those polled now expect any landing to be “soft”, and nearly a quarter see no landing whatsoever. Hardcore “hard landing” truthers are becoming endangered.
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Fund managers have also turned net positive on corporate profit growth for the first time in over a year.
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As a result, more fund managers say that they are taking on extra risks.
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On the flip side, most fund managers still expect the economy to be weaker in the next 12 months, even if a recession is less likely. They are holding a bit more cash than before and are increasingly worried about inflation picking up again.
The Mag7 are still considered a massively crowded trade, and 40 per cent of fund managers polled reckon that AI-related stocks are a bubble. That’s less than the 45 per cent that think they aren’t, but shows a higher degree of cynicism than Alphaville would have guessed.
However, the overall findings push BofA’s blender measure of optimism further upwards.
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