Bullish Investors Pin Hopes on Warsh's Jackson Hole Speech

Bank of America's latest survey reveals that investor sentiment has reached its third most bullish level since 2022, with a record consensus conviction around a 'no landing' economic scenario. This means investors expect the economy to continue growing despite elevated interest rates.

Cash levels have dropped to an extremely low 3.5%, while global equity allocations have surged to a net 56% overweight, the highest since November 2021, signaling extraordinary risk appetite among institutional investors.

Fed Chair Kevin Warsh prepares for his debut speech at the Jackson Hole Economic Policy Symposium, scheduled for August 27-29. He has deliberately reduced forward guidance compared to his predecessor Jerome Powell, telling markets to interpret macroeconomic data for themselves rather than relying on Fed signaling.

The survey also shows that 72% of fund managers believe no Fed rate hike will occur before the November midterm elections, while only 22% expect one. Money markets currently price in a rate hike by December, though the probability of a September increase has fallen sharply to roughly 34% following weaker-than-expected July employment data.