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HomeLife InsuranceBofA Survey Reveals Full Investor Capitulation Amid Pessimism

BofA Survey Reveals Full Investor Capitulation Amid Pessimism


What You Have to Know

  • Investor allocation to shares plunged to ranges final seen in October 2008 whereas publicity to money surged to the best since 2001.

Traders slashed their publicity to danger property to ranges not seen even through the world monetary disaster in an indication of full capitulation amid a “dire” financial outlook, in response to Financial institution of America Corp.’s month-to-month fund supervisor survey.

International progress and revenue expectations sank to an all-time low, whereas recession expectations had been at their highest because the pandemic-fueled slowdown in Could 2020, strategists led by Michael Hartnett wrote within the be aware.

Investor allocation to shares plunged to ranges final seen in October 2008 whereas publicity to money surged to the best since 2001, in response to the survey. A internet 58% of fund managers mentioned they’re taking decrease than regular dangers, a document that surpassed the survey’s world monetary disaster ranges.

Bloomberg chart from July 2022 showing investor risk levels

Financial institution of America’s survey, which included 259 individuals with $722 billion beneath administration within the week by means of July 15, mentioned excessive inflation is now seen as the most important tail danger, adopted by a worldwide recession, hawkish central banks and systemic credit score occasions.

On the similar time, probably the most traders because the world monetary disaster are betting that inflation shall be decrease within the subsequent 12 months, which implies decrease rates of interest, in response to the ballot.

The survey’s findings spotlight this 12 months’s flight from danger property, which has despatched the S&P 500 Index right into a bear market and led European shares to their worst six-month drop since 2008.

Though optimism is brewing once more that US inflation may very well be nearing a peak, sentiment stays subdued with dangers round a possible financial contraction remaining excessive. A looming power disaster in Europe has additionally added to the uncertainty.

Bank of America Fund Manager survey from July 2022

Financial institution of America strategists mentioned their customized bull & bear indicator stays “max bearish,” which may very well be a contrarian sign for a short-term rally.

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