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Investors 'most bullish' since Nov 2021 - BofA survey

Published 14/05/2024, 04:58 pm
© Reuters. Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., May 8, 2024.  REUTERS/Brendan McDermid/File Photo

MILAN (Reuters) -Expectations over interest rate cuts rather than earnings optimism has made investors the "most bullish" since November 2021, Bank of America (NYSE:BAC)'s monthly fund manager survey for May showed on Tuesday.

The survey of global fund managers with $562 billion in asset under management found 82% expect the first by the rate cut by the Federal Reserve in the second half, while 78% say a recession is unlikely over the next 12 months.

The survey showed cash levels fell to a three-year low of 4% from 4.2% the previous months and stock allocation reached its highest since January 2022, a dynamic that typically reflects strong investor confidence.

However, expectations for global growth fell for the first time since November, with a net 9% expecting a weaker economy over the next 12 months, compared with 11% that expected a stronger economy in the last survey in April.

That said, most investors do not expect recession.

"On the global economy, 78% of FMS (fund manager survey) investors say a recession is 'unlikely' within the next 12 months, in line with last month’s expectations," BofA said.

"For the fourth month in a row, a greater share of

FMS investors see a global recession as 'unlikely' (78%) than 'likely' (22%)," the bank said.

© Reuters. Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., May 8, 2024.  REUTERS/Brendan McDermid/File Photo

In terms of crowded trades, the survey showed participants still believe "long Magnificent Seven" is the most crowded - referring to the seven most valuable U.S. companies, a group that includes Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN).

"Long U.S. dollar" was the second most-crowded trade, overtaking "short Chinese equities", the survey showed.

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