Shifting concerns

What are the biggest tail risks keeping fund managers awake at night? According to the latest BofA Global Fund Manager Survey, it is not equity market valuations, nor the fear of an AI bubble. It is not even the risk of an imminent recession.

The number one concern today is a second wave of inflation hitting the US. This stands out at a moment when consensus expects the Fed to cut rates and the USD is hitting new lows. The second major concern is that the Fed could lose its independence, leading to a debasement of the US dollar.

While equity markets appear calm on the surface, these fears show that underlying risks remain elevated. At ECP, we believe this is not the time to fall asleep at the wheel.