The bears have officially gone into hibernation.
According to Bank of America’s January Fund Manager Survey, global investor sentiment has hit its most bullish level since July 2021. The “Wall of Worry” has been dismantled, replaced by a consensus bet on an economic “No Landing” scenario.
🔥 THE NUMBERS (Hyper-Bull Mode):
- Bull & Bear Indicator: Surged to 9.4 (Hyper-Bull territory).
- Cash Levels: Sunk to a record low of 3.2%.
- Hedging: Investors hold the least protection against an equity correction since January 2018. Nearly half of all respondents reported having zero hedges.
🌍 THE CONSENSUS:
- Economy: Net 38% expect a stronger economy; recession fears are at a two-year low.
- Top Trade: Long Gold (interestingly, a defensive asset despite the risk-on mood).
- Top Risk: Geopolitics has officially overtaken the “AI Bubble” as the #1 tail risk.
⚠️ THE “TIMING” TRAP: Crucially, this survey (96 participants, $575B AUM) was conducted between Jan 8 – Jan 15.
- The Catch: This data was collected before President Trump’s recent threat to impose escalating tariffs on European allies over the Greenland dispute.
- The Implication: The “Hyper-Bull” positioning—with virtually no hedging—is vulnerable to the exact geopolitical shock that just hit the wires this week.
💡 ANALYST TAKEAWAY: When cash hits 3.2% and hedging collapses to 2018 lows, the market is priced for perfection. BofA’s indicator at 9.4 is historically a contrarian “Sell” signal. The fact that the #1 risk (Geopolitics) flared up immediately after investors dropped their shields suggests the market is currently mispricing volatility. The “Long Gold” crowding suggests that while managers are buying stocks, they are quietly keeping one hand on the parachute.
👇 Risk Managers: With almost 50% of funds unhedged, is the market dangerously exposed to a Q1 geopolitical correction?