After the last two eventful weeks, professional investors are positioning their portfolios for what they think is a regime change. As you can see in the chart below, which shows BoA Fund managers survey, they now expect 4 cuts over the next 12 months, with the first one starting on Sept 18th. Interestingly, they do not expect a recession. They still believe the Fed can handle the situation smoothly and transition from growth to soft landing, unwinding 550 bps of rate hikes and QT without a meaningful downturn. Part of the reason for that is that corporate earnings are showing great resilience, with a 12.5% growth. Next stop, the second estimate for the 2Q24 GDP will be released on August 29th.
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