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BofA's July Global Fund Manager Survey says sentiment has turned bullish

Newsquawk Staff ·

  • NOTE: The July release does not specify the date range when the survey was conducted, and accordingly, it is unlikely to factor in the most recent geopolitical escalations.
  • BofA says that investor sentiment has turned markedly bullish, driven by optimism around a macro "boom", AI capex, and expectations of a dovish Fed.
  • Cash allocations have fallen from 4.1% to what the bank describes as an 'exceptionally low' 3.6%. Its Bull & Bear Indicator has reached an extreme bull reading of 9.4, suggesting investors should reduce equity and high-beta exposure.
  • The survey finds that a record 54% of respondents anticipate a "no landing" scenario; inflation expectations are at their lowest since January 2025, partly reflecting a sharp fall in oil price forecasts from USD 86/bbl to USD 71/bbl during the survey period.
  • 83% believe the Fed will not hike before the US midterms; 44% expect a Democrat House/Republican Senate outcome, with 27% forecasting a Democrat sweep.
  • Long global semiconductors is considered the most crowded trade (82%); 48% view AI hyperscaler capex as the most likely source of a credit event, though 48% do not believe AI stocks are in a bubble, and 61% do not expect a hyperscaler to announce a capex cut.
  • Investors are increasing exposure to US equities, the Eurozone, healthcare, and industrials, while cutting UK, emerging markets, commodities, energy, and staples.
  • Contrarian plays for a hawkish Fed surprise: long staples and gold, short semiconductors and healthcare. For "peak boom": long bonds, UK equities, and high-dividend yielders, short industrials and banks.

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