Bank of America analysts have sifted through their latest survey of money manager funds to find 12 things institutional investors are NOT preparing for in 2024, and the contrarian trade for it for some:
-
Improving geopolitics, with 89% of respondents saying risk is above
normal
- if geopol does improve the bet should be on lower oil prices
- A hard landing (21% expect)
- look for wider credit spreads, forced selling of tech names
- No landing (7% expect)
- should see cyclicals outperform
- Higher inflation (6% forecasting a higher CPI)
- Higher rates (only 6% are projecting higher short rates)
- sell leverage
- Higher bond yields (18% expect higher long rates)
- Restrictive fiscal
policy (9% say policy too restrictive)
- should lead to bond yields falling under 3%
- Yield curve flattens (16% expect)
- Stronger U.S. dollar
(12% expect)
- sell emerging markets
- China or the UK outperforms, with 'short China' considered the second-most crowded trade and just 14% overweight UK stocks
- Leverage outperforms (6% expect low quality to outperform high quality)
- Magnificent 7 underperforms, with large-cap tech the most crowded trade
