Fund managers are unusually bearish on U.S. equities, with their positioning ranking among the bottom five readings of the past 25 years. Net U.S. equity underweights hit 36% in April.
Tariff worries have dragged down global growth forecasts, leading the IMF to cut its 2025 global GDP outlook to 2.8%, down from 3.3% in January, amid century‑high U.S. duties.
That downgrade places growth projections near multi‑decade lows, reflecting the uncertainty stemming from trade policy.
This combination of slowing growth and rising prices is fueling stagflation concerns, as 82% of surveyed fund managers now see a weakening economy while inflation expectations spike.
Flip the script: When pros are this one‑sided, the smart money often goes the other way. Staying long in U.S. markets—especially tech names—offers a classic contrarian edge.
Analysts like Oppenheimer’s John Stoltzfus argue that markets have overreacted to tariff risks and that high‑quality growth stocks are poised for a rebound.
Commodities have held up well, with the Bloomberg Commodities Index rebounding after the tariff pause and oil staging a short‑cover rally.
Gold has surged to record highs as investors hedge against inflation and policy uncertainty.
The real wildcard is the Fed: if growth keeps weakening while inflation expectations climb, Powell could be caught between cutting rates to support a faltering economy and keeping them high to tame prices—a toxic mix that markets fear.
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