Fund managers headed into last Friday's downturn at their most bullish level in eight months

By Steve Goldstein

Bank of America's monthly poll of fund managers showed an optimistic stance ahead of Friday's downturn.

Fund managers headed into Friday's sharp drawdown in their most bullish posture in eight months, according to a closely followed survey released Tuesday.

Bank of America's global fund-manager survey showed its broadest measure of sentiment - based on cash levels, allocation to stocks and global growth expectations - at its highest level since February.

Fund managers kept 3.8% of their portfolios in cash, which is just above the 3.7% "hard sell" signal, as sentiment toward the economy was its best since February.

The survey was conducted between Oct. 3 and Oct. 9, a period ending just one day before the 2.7% nosedive in the S&P 500 SPX and the slide in cryptocurrencies when President Donald Trump threatened an additional 100% tariff on China.

Investors are worried about risks from private equity and private credit.

Those managers identified risks that the music could stop - 33% said the No. 1 risk was an AI bubble, and 57% say that private equity or private credit could be the source of a systemic credit event.

Ironically, trade was the one risk that had been receding from view - only 5% said a trade war triggering a global recession was the top tail risk, a number that stood as high as 80% in April.

Another question of note - some 26% expect Christopher Waller, currently a Fed governor, to become the next Fed chair, with 16% saying Kevin Hassett and 14% saying Kevin Warsh.

The Fed: Trump's 'Apprentice'-style contest for Fed chair is down to 5 finalists. Who's most likely to get the job?

-Steve Goldstein

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10-14-25 1252ET