Investors are in complete panic, slashing their allocations to equities and boosting cash levels amid expectations for the lowest economic growth in history by a Bank of America survey. The survey, released on Tuesday, also pointed to pessimism about corporate earnings and the belief that although inflation is likely to ease, stagnant inflation will get nowhere and “risks biggest” is still that central banks will go too far to lower prices skyrocketing. price pressure. Amid all that bad news there’s some hope – that sentiment is so dire it could set up a relief rally in the coming days. Michael Hartnett, chief investment strategist at Bank of America, wrote: “Basic fundamentals but sentiment suggest equities/credit will recover in the coming weeks. “Contrasting Q3 trading is at risk without Lehman,” he added, while inflation eases and the Fed changes its course of policy tightening by Christmas. The September 2008 collapse of Lehman Brothers was a watershed moment, marking the worst of the Great Financial Crisis and serving as a benchmark for the depth of investor sentiment and liquidity conditions of the market. The BofA fund manager survey in July started back then. Allocations to stocks among portfolio managers have fallen to their lowest level since October 2008, a month after Lehman’s demise. 58% of managers say they are adopting a lower-than-normal level of risk, up 10 percentage points from June and actually surpassing the Lehman level, an indicator of widespread fear in the industry. context of economic slowdown, high inflation and weakening corporate income. . Cash levels rose to 6.1% in the portfolio, up half a percentage point to the highest level since October 2001. Economic expectations are also getting worse, with a net 79% of market expectations. economic weakness next year, the worst results in survey history going back to 1995. As part of that bleak economic outlook, most investors – 90% net record – think inflation will start to fall but stagnant inflation, or slower growth amid higher-than-normal inflation, will persist. In addition to large cash positions, investors are interested in long-term defensive stocks and commodities, while holding large short positions in European stocks, assets and especially discretionary stock. While Hartnett says all pessimism can be built into buying opportunities, the relief rally may be short-lived: The US central bank last week lowered its year-end outlook for only The S&P 500 fell to a Wall Street low of 3,600, down from 4,500. That means a drop of nearly 7% from Monday’s close.