The long-awaited BofA fund manager survey (FMS) shows, as happened last year and at this point, a caution on the part of managers in the macroeconomy. However, it shows less bearish sentiment, although caution still prevails:
Among the highlights are:
- a soft landing
- low interest rates, with more than 75% considering that the Fed is ending tight monetary policy
- even if they consider that fiscal policy continues to stimulate the economy (compared to a tight monetary policy)
- weak dollar
- large-cap tech and pharma bulls
- Avoid China and leveraged companies
- Reduced the currency level slightly (from 5.3% to 4.7%)
- overweight equities bull
Regarding the macroeconomy, investors expect weaker global growth (-57% net), but 74% see a soft or no landing (21% say it will be a hard landing) and a strong conviction of lower rates over time.
The strong change in this survey of global managers in the past months is that the largest overweighting of bonds has been observed since 2009, and an increase in the allocation to equities has begun to be seen, coming from an underweight of 4% in October.
With profit expectations remaining bearish but once again approaching August 2023 levels (the most bearish since February 2022), based on the fact that the main ISM manufacturing indicator points to PMIs more than 50 However, more than half of the managers prioritize the financial health of the balance sheets, while the fifth only favors investment in capex or paying dividends.
The FMS shows high positions in/rotation towards bonuses, technology (maximum 2 years), REITs, US stocks, and Japan (maximum 5 and a half years) and rotation from/short positions on money, materials (minimum 3 and a half years), industry, banks, and UK/eurozone stocks; busiest trades: long Big Tech (38%), short China stocks (22%), and high T-bills (11%).
