Pros These Days Are More Bear, Less Goldilocks

Pros These Days Are More Bear, Less Goldilocks
Carl Hazeley

about 1 month ago1 min

Fund managers are a bearish bunch these days, socking away more cold hard cash as their hopes for a recession-averting, Goldilocks-style “soft landing” dwindle. They’ve upped their cash levels to 5.3% this month, from 4.9% in September, according to Bank of America’s (BoA’s) latest survey of professional investors.

And while a rising prepper mentality among fund managers might seem like a warning signal, BoA’s analysts say that in the past, it’s often been the opposite. Since 2011, cash levels rising above 5% have been a contrarian signal, with the S&P 500 rising 7% in the next six months.

That said, it’s worth treading cautiously. About half of fund managers surveyed said they expect a weaker global economy over the next year. And nearly a third (31%) said they anticipate that central bank efforts to bring down inflation will result in a recession, or “hard landing”, and that’s up from about 20% last month. That said, most, or 59%, of the fund managers said they still expect a soft landing.

They see buys of Big Tech, Japanese stocks, and long-dated US government bonds as the most popular trades now, along with short positions on Chinese stocks and the US dollar.

Their contrarian trades, meanwhile, include betting against commodities, US tech, and Japanese shares, while buying emerging market stocks, real estate investment trusts, and consumer staples shares.



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