In Bank of America's latest monthly survey of Fund Managers which polls 183 participants with $526bn in AUM, BofA Chief Investment Strategist Michael Hartnett found what many had expected: euphoria is officially the only sentiment that matters in the market, to wit: "Investors are long, unprotected, & say equity bull market continues to 2019."
As part of this "Party like it's 2019" mentality, Hartnett believes that the bull capitulation means "a vol spike is imminent but requires surge in inflation & yields to satisfy bond paranoia." Meanwhile, fund managers are rotating into pro-cyclical sectors like tech, industrials, EMs, equities, and out of telecom, bonds, utilities, UK.
Below we lay out the main findings from the January poll:
Average cash balance falls from 4.7% in December to 4.4% this month, a five-year low: