Bank of America survey: "American exceptionalism" cools down, nearly 90% of fund managers believe U.S. stock valuations are too high
Bank of America’s global fund manager survey in February showed that 89% of respondents believe that U.S. stock market valuations are too high, the highest level since 2001. Although this percentage is high, an average of 81% of fund managers held the same view in the 2020s. The survey also revealed that 73% believe that going long on the U.S. exceptionalism trade is the most crowded trade, with cash levels dropping to the lowest in 15 years. 82% of respondents no longer expect a recession, 77% expect the Federal Reserve to cut interest rates, and 39% believe that a potential trade war is the biggest tail risk
According to the Zhitong Finance APP, Bank of America's global fund manager survey in February shows that 89% of respondents believe that U.S. stock market valuations are too high, the highest level since at least April 2001.
Bank of America strategist Michael Hartnett pointed out that although this percentage is at a 20-year high, an average of 81% of fund managers have believed that U.S. stock valuations are too high in the 2020s.
Additionally, Hartnett stated that the U.S. exceptionalism trade seems to have peaked, with a slight decrease in crowding in February.
He noted that this trade is characterized by a strong dollar and a bull market led by the seven giants.
This month, 73% of respondents believe that going long on the U.S. exceptionalism trade is the most crowded trade, down from a three-year high of 80% reached in January.
The cash level of fund managers has dropped to 3.5%, the lowest level in 15 years.
The survey shows that 82% of respondents no longer expect a recession, with concerns about a recession currently at a three-year low.
As global recession expectations fade, stock investors are turning to bond-sensitive assets and European markets.
Meanwhile, 77% of respondents expect the Federal Reserve to cut interest rates this year, with the proportion of respondents expecting a "soft landing" rising from 50% to 52%, marking the first increase in five months.
The survey indicates that concerns about a potential trade war have resurfaced, with 39% of fund managers believing it to be the biggest tail risk for the market