BAML survey shows sharp shift

Bank of America Merrill Lynch surveyed 230 fund managers responsible for $645 billion in funds in the second week of June and they found a sharp increase in risk aversion.

The survey is the "most bearish survey of investor confidence since the Global Financial Crisis," they write. "Pessimism driven by concerns over trade war/recession, monetary policy impotence and low strike prices for policy puts."

The survey showed the second largest drop in equity allocation ever and global growth expectations fell by the most in a single survey since 1994.

On policy, they don't see a Fed put until the S&P 500 hits 2430 with Trump cutting a deal with China at 2350.

The survey shows a "huge June rotation to bonds, cash, staples, utilities, and huge rotation away from equities, banks, Eurozone, tech" and that long US Treasuries is the most-crowded trade.

The contrarian responses to the survey would be:

  1. "long gold, short US$",
  2. "long stocks, short Treasuries",
  3. "long Eurozone, short EM"
  4. "long banks, short utils"
  5. "long energy, short discretionary"