Bank of America’s April survey of fund managers painted a bleak picture for the US and world markets, with a record high of 82 percent of respondents expecting the global economy to weaken.
The bank surveyed 164 people with $386 bn in managed assets the week of April 4, just after Trump announced his so-called ‘Liberation Day’ tariffs on April 2.
Those surveyed were a net 17 percent overweight on US stocks in February, but fast forward two months to April and they are 36 percent underweight – the biggest drop ever recorded over a two-month period.
US President Donald Trump’s tariffs were largely to blame amongst respondents. Bank of America strategists wrote that ‘big upside needs big tariff easing, big Fed rate cuts, and/or economic data resilience.’
Eighty percent of those surveyed considered a trade war triggering a global recession to be the biggest tail risk. Bank of America said it was the ‘largest concentration for a tail risk’ in the 15 years it has been measured.
Other answers for tail risk trailed far behind and included inflation causing the Fed to hike at 10 percent and a US dollar crash on international buyers’ strike.
The latter is a new tail risk, with a net 61 percent expecting the US dollar to depreciate further this year, the largest response since 2006.
Forty-two percent of respondents said that they believed a recession is likely in the US. That is the most since June of 2023 and the fourth highest percentage in the past two decades.
Forty-two percent also said that they expected gold to be the best performing asset of the year, which is up from 23 percent in March and reflects the weakening dollar and overall misgivings about the predictability of the Trump administration.
Since Trump's tariff announcement, the dollar has tumbled, hitting its lowest value in three years on Monday after Trump insulted Federal Reserve chairman Jerome Powell.
It has since made slight gains as Trump backtracked on his comments threatening to fire Powell.
Talia Samuelson
Talia Samuelson is a reporter for Governance Intelligence. She previously worked as a journalist in Buenos Aires and has covered compliance in Latin America.
