BofA Survey: 'Extreme Greed' Grips Markets as 'No Landing' Consensus Forms

Global investors have shifted into a state of “extreme greed,” pushing risk assets higher while simultaneously hedging against catastrophic tail risks. According to the latest Bank of America (BofA) Global Fund Manager Survey, expectations for a “No Landing” scenario—where growth remains robust and inflation sticky—have become the consensus view for the first time in three years, displacing “Soft Landing” hopes.

Sentiment Reaches Highs

The survey, covering heavily influential institutional managers, indicates that cash allocations have collapsed to just 3.2%, the lowest level on record. This aggressive deployment of capital has pushed BofAs “Bull & Bear Indicator” to 9.4, deep into “extreme bullish” territory—a level often interpreted by contrarians as a sell signal.

• Cash Allocations: 3.2% (Record Low)
• Bull & Bear Indicator: 9.4 (Extreme Bullish)
• Most Overweight Sector: Banking Sector
• Most Crowded Trade: Long Gold

Despite the euphoria surrounding equities, particularly in the banking sector (now the most overweight sector globally), there is a paradox in positioning. The demand for portfolio hedges against a stock market crash has crumbled to 2018 lows, yet investors are aggressively buying Gold.

The 'Crowded' Safety Trade

For the first time recently, “Long Gold” has overtaken “Long Big Tech” as the most crowded trade in the market. This divergence—buying risk assets with record low cash while simultaneously crowding into Gold—suggests investors are confident in growth but terrified of geopolitical shocks or monetary debasement.

With inflation risks lingering and the “No Landing” narrative dominant, the margin for error in asset pricing is razor-thin. A re-acceleration of CPI or a genuine geopolitical shock could force a rapid unwinding of these levered, low-cash positions.