Mike Hansen
Bullish sentiment continues to increase, with few now expecting a hard landing for the U.S. economy, according to the latest BofA survey.
The June Fund Manager Survey of 238 panelists with $721B in assets under management shows its sentiment measure (based on cash levels, equity allocation and economic growth expectations) rising to the highest level since November 2021.
Money managers expecting a hard landing dropped to 5% in June from 11% in May. Those expecting a soft landing rose to 64%, while expectations for no landing fell to 26%.
More than 50% of panelists still expect no recession in the next 18 months, but that’s down from May to 53%, with expectations for a recession in H2 2025 rising. On the Fed, 78% expect two, three or more rate cuts over the next year.
“‘Long Magnificent 7’ (AAPL) (AMZN) (GOOG) (GOOGL) (META) (MSFT) (NVDA) (TSLA) remains the most crowded trade for the 15th consecutive month and is now the most crowded trade at 69%,” strategist Michael Hartnett wrote.
“There have only been a handful of times when a single trade was more crowded in FMS history … 71% for ‘Long US Tech’ in Oct’20, 80% for ‘Long US Tech’ in Sep’20, 74% for ‘Long US Tech’ in Jul’20, 72% for ‘Long US Growth Stocks’ in Jun’20 and 72% for ‘Long US$’ in Feb’15.”
The other crowded trades were short China equities (MCHI) (FXI) (CQQQ), followed by long gold (GLD), long U.S. dollar (DXY) and long bitcoin (BTC-USD) (IBIT) (GBTC).
“‘Higher inflation’ remains the #1 tail risk according to 32% of FMS investors, but down sharply from 41% in May,” Hartnett said. “‘Concerns over geopolitics’ rise to 22% (from 18% in May) but still #2 spot. Risks associated with ‘US election’ jump to #3 per 16% of investors (from 9%).”
