The global growth outlook “tanked” and cash allocations “surged” among professional money managers this month as the war in Iran shattered what was a bullish consensus.
That was the overarching takeaway from the March edition of BofA’s closely-watched monthly fund manager poll, released on Tuesday.
A net 7% expect a stronger global economy over the next 12 months, the results showed, down a remarkable 32ppt from February’s poll.
At the same time, a net 45% now say headline inflation will be higher, up from 9% prior to the war.
The worsening inflation outlook drove a sharp rebound in the share who said short-end rates will be higher (from a net negative 46% in February to a net negative 17% in March, as shown above).
That’s the poisonous juxtaposition I wrote about here: Lower growth expectations, higher inflation and higher short rates is a recipe for stagflationary recession.
And yet, even as rate-cut hopes evaporated, subjective recession odds remained subdued. “Hard landing” managed to garner just 5% of the survey vote when respondents were asked about the most likely outcome for the global economy.
Meanwhile, capital allocators are raising cash. Self-reported cash levels, which hit a series of record lows in recent months, bounced to 4.3% in March.
As the figure on the left, below, reminds you, 4.3%’s still very low (4% is the contrarian sell signal threshold). But the month-to-month increase was the biggest since the original COVID panic.
The figure on the right won’t come as a surprise: Geopolitical conflict grabbed the top spot on the tail risk list for the second time in 2026, a year so far defined on the US foreign policy front by not one, but two regime change operations.
That, from a president who said, on the campaign trail, “We believe that the job of the United States military is not to wage endless regime change wars around the globe.”
I’ll leave you with a short excerpt from Ezra Klein’s recent interview with Donald Trump’s first-term deputy national security adviser Nadia Schadlow. Enjoy:
Klein: The question I’m asking you is: Regime change poses dangers —
Schadlow: But we’re not talking about regime change.
Klein: They just killed the leader of that country.
Schadlow: Yes. OK.
Maybe three regime change operations soon with Cuba in the crosshairs?
Sadly, the rule of threes applies to both bad news and good jokes, and no one seems to be laughing except Howard Lutnick at all the wrong times.
A humerous note. I tend to skim read. I read the headline as: ‘Iran War Shatters Bullish** Wall Street Consensus’. Not sure my reading was entirely inaccurate. However I did re-read and got the headline correct after it created some cognative dissonance.
To use the parlance of the day ..Its not “regime Change’ its an ‘involuntary preemptive national leadership transition’ , or perhaps ‘a Unscheduled kinetic authority reallocation’