• Net 36% of investors expect weaker global economy, shifting from net 7% expecting growth
• Global equity allocation drops to net 13% overweight from 37% in February
• 58% of investors expect Fed to cut rates and 46% see ECB hiking over next 12 months
• 34% of investors expect oil at $80-90 per barrel by end of 2026

The Bank of America Global Fund Manager Survey (FMS) is one of the most influential monthly reports in the financial world. It polls roughly 200 to 400 institutional fund managers (people managing hundreds of billions of dollars in hedge funds, pension funds, and mutual funds) to see how they are positioned in the markets.

It’s useful as a contrarian indicator. In fact, when positioning gets overstretched on one side or the other, the risk of aggressive unwinding increases. Recent examples include the precious metals crash in late January or the US dollar surge in March. Complacency is punished in the markets. There’s generally a catalyst triggering the reversals or just multiple factors signalling an inflection point.

The US-Iran war led to a repricing in growth and inflation expectations and we’ve seen that reflected in market prices. This is now priced in and the markets are looking forward to the end of the conflict and eventually better growth and lower inflation as oil prices ease. In fact, the contrarian calls here are short oil as the US-Iran war ends and the Strait of Hormuz is reopened, and long stocks as growth expectations get revised higher.

This is of course conditional to the end of the war and the reopening of the Strait, but for now the markets are already positioning into that outcome.