Fundies see a ‘bear market rally’: BofA survey

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Global fund managers are still hesitating to call the S&P 500’s more than 8 per cent gain this year the start of a new bull market.

P 500’s fast start to 2023 is a “bear market rally” according to two-thirds of global fund managers responding to the Bank of America’s monthly survey of these sophisticated investors.As for the S&P 500’s rally, 66 per cent of the managers view the easier financial conditions as a bear market rally rather than a new bull market, at 23 per cent.

Cash levels continue to suggest a wariness to invest at 5.2 per cent this month from 5.3 per cent in January. “Cash allocation is now at the level it stood at just before the start of the Russia/Ukraine war a year ago.” Survey respondents still see stagflation as the most likely macro backdrop in next 12 months with 83 per cent expecting below-trend growth above-trend inflation through January 2024, unchanged from a month ago.“Note that the probability of ‘stagflation’ scenario in next 12 months has hovered above 75 per cent since May 2022,” the survey found. As for the probability of secular stagnation, it has drifted back to 8 per cent from 11 per cent in January.

 

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