Bank of America survey: Fund managers are the most pessimistic about the economic outlook in 30 years, and US stocks may face more sell-offs
A survey by Bank of America shows that fund managers' outlook on the economic prospects is the most pessimistic in 30 years, with 82% of respondents expecting a slowdown in the global economy. Nevertheless, the asset allocation of fund managers does not fully reflect this pessimism, which may lead to more sell-offs in the U.S. stock market. The survey indicates that the number of fund managers planning to reduce their exposure to U.S. stocks has reached a record high, with net positions shifting from a 17% increase to a 36% decrease. Strategists warn that without significant policy easing, the U.S. stock market will struggle to rebound
According to the Zhitong Finance APP, a survey by Bank of America shows that fund managers' outlook on the economic prospects is the most pessimistic in 30 years, but this pessimism is not fully reflected in their asset allocation, which may indicate that U.S. stocks will face more sell-offs. In Bank of America's monthly survey, 82% of the fund managers surveyed expect a weakening global economy. Meanwhile, the survey indicates that the number of fund managers planning to reduce their exposure to U.S. stocks has reached a record level.
Michael Hartnett, leading the Bank of America strategists, stated in a report: "Fund managers are extremely pessimistic on a macro level, but have not yet reached the most pessimistic point regarding the market itself." They added that the current cash allocation ratio is 4.8% of total assets, while the "panic peak" typically requires this ratio to rise to 6%.
The high uncertainty of U.S. trade policies and the surge in financial market volatility have left stock investors feeling uneasy. In the April survey, fund managers' net position in U.S. stocks was a reduction of 36%, compared to an increase of 17% in February, marking the largest shift in history within two months.
Concerns that the trade war initiated by President Trump will harm economic growth have led to underperformance of U.S. stocks this year. 42% of the fund managers surveyed indicated that the U.S., the world's largest economy, may fall into recession.
Although the S&P 500 index has rebounded from its low this month, it is still down 8.1% year-to-date, lagging behind European and Chinese stock market benchmark indices. Bank of America's strategists expect the S&P 500 index to hold its low in April in the short term, but they warn that "without significant tariff relief, substantial interest rate cuts by the Federal Reserve, and/or strong support from economic data, it will be difficult for U.S. stocks to see a significant rebound."