‘Dire levels of pessimism’: BofA Bull & Bear Indicator remains at ‘max bear’

Half of investors want corporates to shore up balance sheets amid what Bank of America (BofA) describes as ‘dire levels of investor pessimism’.

This is now the most popular choice among investors responding to the monthly BofA Fund Manager Survey (FMS) – far more so than looking for companies to increase capex (29 percent) or buybacks (15 percent).

The July survey shows global growth expectations to be at an all-time low at net -79 percent.

The firm says recession anticipation is at its highest since May 2020, though it adds that even as the mood remains ‘stagflationary’ – where rising prices are coupled with higher unemployment and weak growth – ‘everyone’ (a net 76 percent) expects inflation to fall.

The ‘July BofA FMS shows [a] dire level of investor pessimism… Expectations for global growth and profits [are at] all-time lows, [while] cash levels [are at their] highest since 9/11,’ writes the bank, announcing the results of its most recent monthly survey. ‘Equity allocation [is at its] lowest since Lehman [and the] BofA Bull & Bear Indicator remains [at a] ‘max bearish’ [score of] zero.’

Despite all that, BofA sentiment still points to a stocks/credit rally in the coming weeks.

The bank surveyed 293 members of the investment community with $800 bn in assets under management between July 8 and July 15.

The results of another buy-side survey released this week showed that more than half (55 percent) of investors and analysts were taking either a ‘neutral to bearish’ or ‘bearish’ view of the market, up from 43 percent last quarter.

The Corbin Advisors research, which polled 80 institutional investors and sell-side analysts globally between June 2 and July 8, finds negativity has intensified amid persistent inflation, rising interest rates and slowing economic growth.