Fundies worry about stagflation

China is taking care of global inflation as we speak but that hasn’t entered the minds of fundies yet. Via ZH comes the monthly BofA fundie report:

Over the past few years, one of our recurring laments about the Bank of America Fund Manager Survey was the at times irreconcilable intellectual inconsistency of the survey respondents, who on one hand have panned the state of the economy even as the piled into risk assets (or so they said, one wouldn’t know it by looking at the chronic underperformance of the active manager cohort), although in retrospect that has served them well in a world where “bad news has consistently been good news for stocks.”

Well, in the latest, September, edition of the BofA FMS which polled 258 panelists managing $839 billion in AUM, and which was titled “Fiscal Frenzy Flips to Fiscal Flop”, this apparent inconsistency has finally caught up to poll organizer, Chief Investment Strategist Michael Hartnett who notes that a “rare FMS disconnect between asset prices & fundamentals growing” whereby a net 50% long stocks vs 20-year average of 29%; while net 69% short bonds (vs 43% avg) even as global growth expectations have continued to plunge, and in September, economic growth expectations are now just net 13%, the lowest since April 20 and down from the 91% peak in March 21. This is notable because as Hartnett points out, “global growth expectations have historically led FMS investor equity allocation but equity allocation has lagged this cycle.” In other words, any last connection between stocks and the underlying economy has now been irrevocably torn.

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