FAST FIVE: In Stunning Reversal, Investors Are Now "Most Bearish Since The Financial Crisis"
At the same time, Average cash balance soars to 5.6% from 4.6% for each of the last three months, marking the biggest jump in cash since the debt ceiling crisis in 2011; allocation to cash jumps 10ppt from last month to net 43% overweight As investors dumped stocks, bond allocation soared 12% to net 22% underweight, the highest level since September 2011, as dovish central banks, falling inflation expectations, and a risk-off sentiment drive interest rates lower.
2nd biggest ever drop in EPS expectations, as a record number of investors say economy “late-cycle”: Not just equity allocations have plunged: interest rate expectations have also collapsed; in just 8 months, the percentage of investors expecting higher shorter rates has flipped from net 89% to -10%, the lowest level since 2008.
As rates plunge, so do inflation expectations: just 9% of fund managers now expect higher global CPI in the next year, down 30ppt from last month and the most bearish inflation outlook since August 2012.
Adding to the depressionary mood, global profit expectations plummeted 40% to net 41% of investors surveyed saying they expect EPS to deteriorate in the next year, the second biggest one-month collapse in the 23-year history of the Fund Manager Survey.
Yet what we find most bizarre of all, is that investors have never been more bearish.