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: Fund managers ‘scream capitulation’ as cash levels rise to highest in 21 years, Bank of America says


Fund managers have taken their cash positions to the highest level in 21 years, according to the long-running monthly survey of portfolio managers.

The survey found the average cash level was 6.3% in October, up from 6.1% in September and well above the long-term average of 4.8%.

Relative to the history of the survey, investors are 2.6 standard deviations overweight cash and 3 standard deviations underweight equities.

A net 72% expect a weaker economy in the next 12 months, and 91% say earnings are unlikely to rise 10% of more in the next year.

A growing percentage are expecting a policy pivot: 28% expect lower short-term rates in the next 12 months, up from 14% in September.

The survey “screams macro capitulation, investor capitulation, and crucially start of policy capitulation,” said Bank of America strategists led by Michael Hartnett.

The S&P 500

has dropped 23% this year, and S&P’s U.S. government bond index has declined by 12%.

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