About 91% of participants indicated that American stocks are overvalued, the highest ever proportion in data going back to 2001. While investor allocation to global equities climbed to the highest since February, a net 16% were still underweight the US, the poll showed.

Overall sentiment improved to the most bullish in six months, since before President Donald Trump’s sweeping tariffs roiled financial markets and stoked worries about a recession. BofA strategist Michael Hartnett said investors now see the lowest probability of a hard landing since January.

US stocks have scaled record highs on signs of a better-than-expected corporate earnings season and optimism that the Federal Reserve will lower interest rates as economic growth slows. That’s prompted market forecasters including at Citigroup Inc. to turn more optimistic about the S&P 500’s trajectory in the second half.

Still, some strategists such as BofA’s Hartnett have warned the rally risks overheating into a bubble given a potential easing in both monetary policy and financial regulation. The bank’s August survey showed cash levels as a percentage of total assets remained at 3.9%, a level that is consistent with a so-called sell signal for stocks.

Hedge funds sold a net $1 billion in US stocks last week, while long-only investors bought $4 billion, according to data from Goldman Sachs Group Inc.

Meanwhile, focus remains on the Fed as Trump exerts pressure on the central bank in his demand for lower rates. About 54% of participants said they expect the next chair to resort to quantitative easing or yield curve control to ease the US debt burden. Jerome Powell is scheduled to step down as chair in May.

Other highlights from the poll, which was conducted from July 31 to Aug. 7 and canvassed 169 participants with $413 billion in assets:

• About 68% said a soft landing is the most likely outcome for the global economy in the next 12 months; 22% say no landing, and just 5% predict a hard landing

• A net 49% say EM stocks are undervalued, most since February 2024

• Inflation expectations rose to a three-month high, with a net 18% expecting a higher reading of the global consumer price index

• Biggest tail risks: trade war triggers global recession (29%), inflation prevents Fed rate cuts (27%), disorderly rise in bond yields (20%), AI equity bubble (14%), dollar debasement (6%)

• Most crowded trades: long Magnificent Seven (45%), short dollar (23%), long gold (12%)