Fund managers globally are becoming gloomier over company growth and profits prospects, according to the latest Bank of America survey.
Positions such as junk against quality and value over growth are being unwound in favour of technology and commodities, which remain popular ‘long’[buy and hold] holdings.
The cyclical “boom” has peaked according to survey respondents, with the proportion of managers expecting growth at 47% in July down from a 91% peak in March.
Inflation expectations have also fallen along with growth with only 22% of fund managers now expecting it to rise compared to 93% in April.
Predictions of when the US will raise interest rates have been pushed out from Nov’22 to Jan’23.
Global economic and company earnings readings also show macro momentum at its weakest since the third quarter of last year.
Technology, meanwhile, has regained its crown as the biggest ‘buy’ trade and is the ‘most crowded’ according to the survey, with tech exposure rising in July.
Europe is the most favoured ’long’ region, with US exposure also higher but China fears has seen fund managers cut emerging market equity positions sharply.