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2025-12-16 19:26:06
[Extreme Sentiment: When "Cash Depletion" and "Crowded Trading" Simultaneously Flash Red Lights] ⑴ Bank of America's December Global Fund Manager Survey shows that global investor bullish sentiment has reached its highest point in the past three and a half years, driven by "hot" macroeconomic and policy expectations. ⑵ Market positioning has adjusted accordingly, with cash holdings falling to a record low of 3.3%, while the allocation to stocks and commodities has risen to its highest level since February 2022. ⑶ The bull-bear index used in the survey has risen to 7.9, approaching the threshold for issuing a "sell signal," and the report states that current positioning has become a "significant headwind" for risk assets. ⑷ Investors believe the biggest tail risk is a potential bubble in the artificial intelligence sector, followed by disorderly rising bond yields. ⑸ As many as 54% of respondents believe that "going long on the seven major tech giants" is currently the most crowded trade in the market, while "going long on gold" ranks second with 29% of the vote. (6) The coexistence of extremely optimistic sentiment, extremely low cash levels, and highly concentrated trading positions indicates that market fragility is rising.
