Investors view persistently high inflation as the biggest tail risk, followed by a global recession, hawkish central banks and systemic credit events. In relative terms, investors are once again net overweight equities versus bonds, according to the survey.
The bank’s custom bull & bear indicator remains “max bearish,” which is seen as a contrarian signal for a short-term rally.
Other survey highlights include:
• Investors are long stagflation plays including commodities, cash and defensives, while being short European and emerging market stocks and the consumer sector.
• Big August rotation to US stocks, technology and consumer, and out of staples, utilities and the UK.
• Investors see the G7 announcing an energy price cap as the most likely outcome of the energy crisis in Europe.
• Most crowded trades are long US dollar, long oil and commodities, long cash, long FAANG stocks, short US Treasuries and short EM debt.