Stock Market Faces Sell Signal as Cash Balances Decline, Bank of America Warns
Bank of America's latest global fund manager survey reveals dwindling cash allocations among investors, dropping to 3.7% in November—a level that has historically triggered stock market declines. Strategist Michael Hartnett notes this sell signal has only occurred 20 times since 2022, typically preceding underperformance against Treasuries over the following quarter.
Equity exposure now sits at its highest since February, creating headwinds rather than tailwinds for risk assets. Nearly half of surveyed investors identify AI as the market's greatest tail risk, with 53% believing AI stocks have already entered bubble territory. The poll captured sentiment from 172 managers overseeing $475 billion in assets.