It’s that time of the month again – time for the latest edition of BofAML’s Global Fund Manager survey.
The January edition of Michael Hartnett’s popular poll showed that nearly 2/3 of respondents saw global growth decelerating over the next year. That, Hartnett wrote, was “the worst outlook on the global economy since Jul’08, and below the trough in Jan’01.”
Needless to say, the outlook for global growth has deteriorated in the four weeks since the January survey was published, and central banks have responded accordingly with what looks to be the beginning of a coordinated dovish pivot.
Read more from the January survey
The title of the February survey is “Big fat buyers’ strike” and it finds Hartnett kicking things off by noting that despite the YTD rally in risk assets (and indeed, the best start to a year for stocks since 1987), “global equity allocations in February fell to lowest levels since Sept’16 [and] commodity allocations [are] down too.”
Specifically, equity allocations dropped 12ppt to just a 6% overweight.
Meanwhile, the number of respondents who were “overweight cash” in the February poll hit the highest level since Jan’09, as the net cash allocation jumped to 44%.
Amusingly (or disconcertingly, considering the survey represents more than $625 billion in AUM), fully 1/3 of respondents to the survey think the S&P has already peaked. As Hartnett writes, that’s “up from just 11% in Sept’18, when the market actually peaked.”
The “good” news is also the “bad” news. Here’s Hartnett one more time:
55% of FMS investors are now bearish on both the growth & inflation outlook for the global economy over the next 12 months, up 13ppt MoM, cementing the return to the post-GFC theme of secular stagnation.
Below-trend growth and below-trend inflation argues for more accommodation, and if you believe in the idea that central banks are running an addiction liability so severe that markets cannot be weaned off without the “patient” dying, well then that chart is good news to the extent the macro backdrop opens the door to more “heroin.”