Investors are "feasting on trade wars ending, rate cuts starting," survey says
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Bank of America's monthly survey of global fund managers is the most bullish since February, showing the biggest jump in growth expectations among investors since October 2024.
Why it matters: The bulls see a reaccelerating economy as a reason to charge ahead.
What they're saying: The bulls are "feasting on trade wars ending, rate cuts starting," according to the survey.
- The optimism is rooted in what Axios Markets has previously noted: Investors believe the economy is set for a soft landing.
- That view on the economy is driving investment decisions more than concerns about stock valuations.
By the numbers: Of the 196 fund managers surveyed, 67% see the Federal Reserve engineering a soft landing.
- 77% of fund managers, however, expect to see stagflation.
- 48% think AI stocks are not in a bubble.
- 35% said companies should increase their capital expenditure, which is striking given that the Magnificent 7 companies alone are set to spend over $350 billion on AI.
Yes, but: A record 58% of those surveyed say that stocks are overvalued.
- The Magnificent 7 was called out as the No. 1 most crowded trade by investors surveyed.
- Still, investors added to their long positions in tech at the highest levels since July 2024.
Between the lines: This suggests that investors are finding ways to play the AI rally outside of the largest Big Tech stocks.
- Allocation to U.K. and EU stocks was trimmed, which could indicate the trade outside the U.S. is losing steam in favor of the AI trade.
Zoom in: 84% of fund managers said they have not started structurally allocating to crypto.
- 67% of respondents currently have 0% of their portfolios committed to crypto.
What we're watching: The Reddit crowd of retail investors is starting to question stocks at record highs while the market is so concentrated.
- Yet institutional investors are charging ahead.
- This fund manager survey indicates that Wall Street isn't ready for this bull market's consistent record highs to wrap up any time soon.
