2023-03-21 12:24:08 ET
The wake of the banking crisis saw money managers turn more bearish, according to the latest survey by BofA Securities.
The potential for a "systemic credit event" is now the biggest tail risk for markets, with 31% of the 244 panelists with $621B in assets under management surveyed in March said. It was fifth last month.
Inflation staying high came in second, dropping from the top spot in February. That was followed by central banks staying hawkish, worsening geopolitics, a deep global recession and a stock market crash (a new risk).
"FMS investors' sentiment worsened in February, with 2 out of 3 key measures of sentiment deteriorating MoM," strategist Michael Hartnett wrote Tuesday. "The average percentile rank of next-12-month growth expectations, cash allocation, and equity allocation declined in Mar'23 to the lowest level since Dec’22."
"15 months into a stock bear market, there has not been a conclusive inflection point in economic growth expectations," Hartnett said. "Net 51% of FMS investors expect a weaker economy in 12 months, up from 35% last month and highest since Nov'22. Note that the S&P 500 index ( SP500 ) ( NYSEARCA: SPY ) ( IVV ) ( VOO ) has been flat over the same period and has not caught up with the deteriorating macro outlook."
Among the top crowded trades, long European equities ( SPEU ) ( FLEE ) was a new entry at the top. Long U.S. dollar ( DXY ) ( UUP ) was still second, as long China equities ( MCHI ) dropped to third from first.
Compare with the highlights from the February survey .
For further details see:
Systemic credit event races to the top of tail risks for fund managers - BofA survey