Wind Direction Shift! Wall Street's Smartest Minds Are Collectively Selling "Boom" and Hoarding "Stagflation" — Does the Safe-Haven Logic for $BTC Still Hold?

The March fund manager sentiment survey is like a bucket of ice water poured over a boiling market. The overall sentiment indicator plummeted from 8.2 to 5.6, hitting a six-month low. Cash allocation rose from 3.4% to 4.3%, the largest single-month increase since the March 2020 pandemic panic. Market analysis indicates that the cash rule previously triggering a contrarian buy signal has now returned to neutral.

Strategist Michael Hartnett’s views are worth noting. He believes current sentiment is sufficiently pessimistic to support some contrarian moves: shorting oil when prices break above $100 per barrel, shorting the dollar index when it surpasses 100, buying when the 30-year U.S. Treasury yield hits 5%, and building positions when the S&P 500 drops to 6,600 points.

The collapse of macro expectations is at the core of the sentiment shift. The proportion of respondents optimistic about global economic growth sharply fell from a net 39% last month to a net 7%. Meanwhile, inflation expectations surged, with 45% expecting global consumer prices to rise over the next year, up from just 9% last month.

These expectations directly limit room for rate cuts. The proportion expecting short-term rates to decline shrank from a net 46% to a net 17%, the lowest since February 2023. Expectations for continued steepening of the yield curve also cooled significantly.

Qualitative judgments on the economic outlook have undergone a structural change. 51% of respondents now expect “stagflation” in the next year—growth below trend combined with above-trend inflation—up noticeably from last month. The proportion expecting a “boom” fell from 36% to 29%. However, the pricing of a hard landing remains very low, with only 5% holding this view.

The market’s most feared “black swan” has changed. Among the biggest tail risks, 37% of respondents now cite geopolitical conflicts as the top concern, a sharp increase from 14% last month. The “AI bubble,” which topped the list last month, now has only 10% support. Tensions related to Iran are seen as a key catalyst driving this sentiment shift.

Even more concerning is credit risk. 63% of respondents see private credit as the area most likely to trigger a systemic credit event, the highest in the survey’s history. The credit default risk indicator has surged to its highest since April 2025, with 46% perceiving default risk as above normal levels.

AI asset enthusiasm has cooled significantly. Regarding whether AI stocks are in a bubble, 51% believe they are not, while 38% see a bubble. Concerns over excessive AI capital expenditure have also eased.

In terms of trading crowdedness, the “long AI/Big Tech” trade has lost its shine, with only 9% of respondents viewing it as the most crowded trade—far below the 54% peak in December last year. Currently, the most crowded trades are “long gold” and “long global semiconductors,” sharing the top spot.

On asset allocation, fund managers are shifting their portfolios from a “boom” theme to a “stagflation” theme. This month, they increased holdings in Japanese stocks, healthcare, and cash, while reducing positions in discretionary consumer, European stocks, and banks.

Commodity overweights rose to a net 34%, the highest since April 2022, indicating strong inflation hedging demand. Emerging market stocks’ overweight position increased to a net 53%, a new high since February 2021. In contrast, U.S. stocks remain underweighted at a net -17%.

Political variables are also subtly changing. The expectation that Democrats will fully control Congress in the midterm elections has risen from 11% two months ago to 28%.

Regarding oil prices, fund managers’ forecasts differ significantly from market prices. During the survey, Brent crude was about $102 per barrel, but the weighted average expected year-end price is only $76, implying about 26% downside, reflecting a market view that geopolitical premiums are unlikely to persist.

Finally, a contrarian trading logic is proposed: if tensions with Iran ease, the currently lightly positioned Big Tech, consumer stocks, and Chinese stocks may outperform the more heavily weighted emerging markets, Japan, semiconductors, banks, and industrials.