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You know when you’re in that mood where you roundhouse kick everyone who tells you to “calm down”? This is where investors have arrived.
A closely watched Bank of America survey revealed a “dismal level of investor pessimism” among 259 fund managers. A few data points:
- Investors’ equity allocation has reached its lowest level since the 2008 financial crisis, showing that they have little appetite for risky assets.
- Expectations for global economic growth have hit an all-time low.
- And the proportion of investors who thought a recession was “likely” hit the highest level since the Covid outbreak in April 2020.
What Makes Investors Blow Up Simple Plan? Their biggest concern is that inflation will remain high, which has really weighed on the economy.
To weather the storm, investors are moving into defensive sectors such as utilities and consumer staples, hoarding cash at levels not seen in 21 years.
Zoom out: BofA chief investment strategist Michael Hartnett said while a stock market rally like yesterday’s is possible, expect it to be as fleeting as a summer camp romance. He doesn’t expect the market to bottom until the Fed starts scaling back its rate hikes, which — as inflation is only going to continue to soar — may not happen any time soon. – NF
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