Bank of America’s monthly survey of professional fund investors – with a collective $800 BILLION under management – say the stock market conditions have reached “full capitulation” with equity allocations at their lowest levels since 2008 when Lehman Brothers collapsed.
That reading is categorized as “maximum bearish”
So that’s actually potential for some room for optimism- but it doesn’t mean the market is going to rally immediately.
It’s very unusual for big fund managers to be overweight in bonds relative to equities, and that suggests DEEP negativity about the immediate outlook for the economy. In fact, the managers in the survey said they expect slower economic growth- but they also expect inflation to ease up.
So does this level of bearishness mean stocks have finally capitulated, and the bottom is in?