Wednesday, September 16, 2020
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Investors have never loved anything more than they love tech stocks.
Back in July, The Morning Brief noted that investors were afraid of the trade they loved most.
And that trade was betting on U.S. tech stocks.
Fast forward two months and Bank of America’s latest global fund manager survey reveals that investors think this trade has gotten even more crowded.
Some 80% of respondents to the firm’s survey said that being long U.S. tech stocks is the most crowded trade in the market right now, a record for any asset that has served as the firm’s “most crowded” trade.
In July, 74% of respondents flagged tech stocks as the world’s most crowded trade.
As Yahoo Finance’s Brian Sozzi noted Tuesday, investors are “paranoid” about the sector, with a “tech bubble” now seen as the second-biggest risk to this market behind only a second wave of COVID.
But as was the case back in July, investors are still overweight technology in portfolios, though these positions have moderated somewhat.
Indeed it seems investors still love the trade they fear most.
Bank of America notes that both technology and pharmaceuticals — the two most overweighted sectors among portfolio managers — saw 10% reductions in how many investors said they are overweight these sectors relative to their benchmark versus how many are underweight relative to a benchmark.
And so as was the case in July, investors still do love this trade. And why not? The Nasdaq is up 42% over the last six months against a 24% advance for the S&P 500.
Elsewhere in BofA’s survey, the firm found a notable shift in how investors are thinking about the environment more broadly.
A shift that is moving away from a crisis perspective and towards the dawn of a new growth cycle and bull market for equities.
Some 58% of respondents to BofA’s survey think we’re in a new bull market while 49% of respondents say we’re in the early phases of a new economic growth cycle; 37% of survey respondents, in contrast, think we’re in recession.
In other words, more investors think the recession is over than think the recession is still on.
Leaving us with another curious set of investor views that may or may not help us make sense of this crisis, the market’s response, and the aftermath.
What to watch today
7:00 a.m. ET: MBA Mortgage applications, week ended September 11 (2.9% prior week)
8:30 a.m. ET: Retail sales, August advance month-on-month (1.0% expected, 1.2% in July)
8:30 a.m. ET: Retail sales excluding autos and gas, August advance month on month (0.9% expected, 1.5% in July)
10:00 a.m. ET: Business inventories, July (0.1% expected, -1.1% in July)
10:00 a.m. ET: NAHB Housing Market Index, September (78 expected, 78 in August)
2:00 p.m. ET: FOMC rate decision
4:00 p.m. ET: Net long-term TIC flows, July ($113.0 billion in June)
4:00 p.m. ET: Total net TIC flows, July (-$67.9 billion in June)
[Yahoo Finance UK]
YAHOO FINANCE HIGHLIGHTS