BofA says fund manager positioning 'manna from heaven' for Q4 trading bulls

Global fund managers continued to be "uber-bearish" in November with a hefty majority anticipating a global recession, the results of Bank of America's fund manager survey revealed.

A net 77% of managers anticipating an economic downturn with their cash levels at 6.2% was "manna from heaven" for trading bulls in the fourth quarter, the strategy team led by Michael Hartnett believed, prompting them to tell clients to "rent the pivot".

They also recommended 'fading' the S&P 500 around 4,100 points.

On the flip side, BofA also believed that the probability of debt deflation, either as the result of a credit event or unemployment, was "high", as opposed to the just 1% of managers anticipating so-called debt deflation.

Nonetheless, in a research note sent to clients, Hartnett and his team said that "if inflation rates tumble lower in coming months, bulls can wrestle back some control from the bears."

They also noted how asset allocation remained very defensive, with their underweight in stocks more than two standard deviations from the mean, while the same was true of their cash holdings.

The US dollar however was still the most crowded trade, for a fifth month running, with the Greenback's overvaluation at a record high, they judged.