Fund Managers Worry Stagflation, Boost Defensives

0:00Stocks roared back this week on hopes that tensions in the Middle East might ease up, especially with President Donald Trump set to speak on Iran at 9 p.m., Eastern daylight time, Wednesday night. The S&P 500 posted its biggest one-day gain in nearly 10 months on Tuesday, and the rally kept rolling into Wednesday. Bank of America's latest Global Fund Manager survey paints a different picture, though. Polled from March 6 through 12, 181 managers handling $509 billion in assets, bumped cash, holdings to 4.3 percent, from 3.4 percent, the sharpest jump since March 2020. Sentiment took a hit too, dropping to a 6 month low of 5.6 from 8.2, with growth outlook souring fast, a net 7 percent now. Expect stronger global growth over the next year, down from 39 percent last month, while 45 percent brace for higher inflation, up from 9 percent. Fund managers are dialing up stack-flation worries, with 51 percent seeing that scenario

1:03ahead, up from 42 percent, but recession fears. Stay low 46 percent bet on no landing, 44 percent on a soft one. Geopolitical clashes jumped to the top-tail risk at 37 percent from 14 percent, edging out the AI bubble. They're rotating into defenses like emerging market stocks, health care, gold, and semiconductors, while staying overweight equities at 37 percent in commodities at 34 percent, their highest since April 2022. This shift signals caution without a full retreat from risk assets. That's your Durham News today update, AI powered and always on.