Extreme Greed Moment! Bank of America Fund Manager Survey: "No Landing" for the global economy becomes consensus for the first time, stock hedging strategies are on the verge of collapse.
Global investors are caught in a state of “extreme greed,” with market sentiment pushed to its highest level since mid-2021. According to the latest global fund manager survey by Bank of America, as fund managers flock to risk assets, cash levels in investment portfolios have plunged to historic lows, with the market widely betting on a “no landing” scenario for the global economy.
According to Chase the Wind Trading Desk, BofA's January 20th survey showed that a decisive shift in macro expectations has occurred, with “no landing” for the first time in three years replacing “soft landing” as investors’ baseline expectation. This extremely optimistic sentiment has driven BofA's "Bull & Bear Indicator" to a “extremely bullish” reading of 9.4, which is typically regarded as a contrarian sell signal.
Driven by strong risk appetite, stock allocations have surged, while demand for downside hedging has collapsed to the lowest since January 2018. Notably, even as risk appetite runs high, “long gold” has unexpectedly surged, overtaking tech stocks as the most crowded trade, highlighting that while investors chase returns, they remain highly vigilant about geopolitical risks.
According to Bloomberg and BofA reports, this survey was conducted from January 8th to 15th, 2026, with 227 fund managers participating, managing a total of $646 billion in assets. The survey results paint a picture of a market flush with liquidity and overflowing with confidence, but also increasingly sensitive to potential shocks due to fading defensive buffers.
“No Landing” Consensus Established, Recession Worries Fade
Optimism at the macro level is the central driver of this survey. The survey shows a net 38% of investors expect the global economy to strengthen over the next 12 months, a new high since July 2021. More crucially, 49% of investors now believe “no landing” (robust growth with inflation not fully receding) is the most likely outcome, the first time this ratio has surpassed those expecting “soft landing” or “hard landing.”
At the same time, worries about recession have dropped to rock-bottom levels. Only 9% of respondents think a global recession is likely in the next 12 months, the lowest since January 2022. In contrast, the proportion expecting “boom” (above-trend growth and inflation) rose to 34%, a record high since September 2021. Investor expectations for corporate earnings have also improved, with a net 44% of respondents expecting global profits to grow.
Cash Allocations at Record Lows, Defense “Running Naked”
Driven by “Fear Of Missing Out” (FOMO), investors are deploying cash at an unprecedented pace. BofA’s survey shows fund managers’ cash levels fell further from last month’s 3.3% to 3.2%, a record low. At the same time, BofA's financial market stability risk indicator does not show excessive stress, further fueling risk-taking behavior.
This optimism has led to a wholesale retreat from defensive positions. A net 48% of investors say they currently have no hedging protection against a sharp market downturn, the highest proportion in eight years. Investors broadly believe the current liquidity environment is exceptionally favorable, with a net 66% giving a positive view of market liquidity—the best since the Federal Reserve's quantitative easing (QE) peaked in September 2021.
Stock Allocations Surge, Bank Stocks Favored
In asset allocation, net overweight to equities rose 6 percentage points to net 48%, the highest since December 2024. By contrast, bond allocations fell sharply to net 35% underweight, the lowest since September 2022.
In sector rotation, funds are moving from defensive sectors to cyclical sectors. Bank stocks have become the world’s most overweight sector, with a net overweight of 34%. In stark contrast, consumer staples have been sold off sharply, with net underweight at 30%, the lowest since February 2014. The overweight of banks versus staples has reached a record high, reflecting aggressive market bets on economic growth prospects.
Regionally, investors are not universally bullish on US stocks. The survey shows US stock allocations fell to a net 3% underweight, while Eurozone equities (net 25% overweight) and emerging market stocks (net 40% overweight) are more favored, indicating capital is globally seeking areas with more attractive valuations.
“Long Gold” is the Most Crowded Trade, Geopolitical Risk Tops
Despite the market's risk appetite, safe-haven gold is anomalously crowded. 51% of investors cite “long gold” as the most crowded trade, a sharp jump from last month, overtaking the long-dominant “long US tech stocks” (now down to 27%).
This reflects a subtle psychological contradiction: investors are extremely bullish on growth, yet uneasy about potential tail risks. The survey shows “geopolitical conflict” is now seen as the biggest tail risk (28%), surpassing the “AI bubble” (27%) and “disorderly rise in bond yields.” Notably, a net 45% of investors believe gold is now overvalued, tying the record set in May 2025.
US Midterm Elections and Fed Leadership Expectations
On politics and policy, investors’ baseline expectation for the 2026 US midterm elections is a "divided Congress." 60% of respondents expect Democrats will control the House, with Republicans holding the Senate.
Regarding future Fed leadership, the market holds clear expectations. 44% of investors expect Kevin Hassett to be nominated as the next Fed chair, though this is down from last month. Kevin Warsh and Christopher Waller follow with 19% and 6% support, respectively. Regarding the AI sector, even though it is the second biggest tail risk, still 55% of investors believe AI stocks are not currently in a bubble.
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The above content comes from Chase the Wind Trading Desk.
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