The April Global Fund Manager Survey Paints a Dismal View of the Global Economy. I Don’t Entirely Agree

The Bank of America has just issued its April 2025 Global Fund Manager report. On most levels, it gives a pessimistic view of the current and immediate future. Granted, the name of my podcast, Bullish with Bridger Pennington, does suggest I tend to take a positive view. But in this case, a particular element in the April report caught my notice. According to the report, fund managers are currently cutting cash holdings to 3.5%.

What This Means

In my opinion, reducing cash holdings signifies fund managers are starting to deploy cash into new investments and signals at least to a degree a return to bullish sentiment. So, why are institutional investors slashing cash holdings? For starters, there has been considerable confidence in the Trump administration, particularly in January and February, as investors sought to unlock U.S. markets. And there’s still $5 trillion of foreign investment already coined in Trump’s first 100 days.

We also have Goldman Sachs putting out a published statement saying they believe IPO activity is going to return. So, from my vantage point, there’s a lot of confidence within the markets.

Then, the Tariffs

But we’ve also gotten hit with the “Liberation Day” tariffs. This has put cold water on what’s happening for the short term.

Trump is pushing rates, trying to get interest rates down, but Jerome Powell’s policy seems to be to hold steady. And the 10-year and 30-year treasuries are currently not looking so sharp. With tariffs, many financial advisors are saying we could currently be in a recession. Right now, we’re experiencing two consecutive quarters of negative growth. Typically, we don’t necessarily know we’re in a recession until it’s over. Some believe we’re in a recession.

So, this has put cold water on a lot of fund managers and has admittedly slowed IPOs. However, most portfolio fund managers are investing in a three-to-seven-year time frame for private investment funds. If you look at a three-to-seven-year time frame, right now, you’re resetting global trades with the tariffs considered. You’re also anticipating interest rates will be cut, whether it’s within the current meeting, the next meeting, or within the coming six months. But rates do seem to be coming down, which will bring more bullish activity to the market.

Furthermore, we have an administration that is very much pro-business, that wants IPO activity, and wants foreign investment, at once.

What About the FTC?

As we know, the FTC has changed investor sentiment now that Lina Khan has been removed. We have Paul Atkins as the new FTC chair, who is much more pro-crypto and pro-business and is now creating a friendly environment to invest in the United States (in contrast to the last four years, when it’s been kind of horrendous to be an investor in the U.S.). For all these reasons, we can see why there’s been an attitude of risk toward IPOs and toward the markets.

In the short term, many equity markets have sold off. There’s been a lot of movement, movement to sell or to hold still and simply weather the storm. Right now, we have roughly 80 countries negotiating with the White House on trade deals. It is looking like we’ll have a de-escalation of the China/US trade war, but with the overall reorganizing of global trade we’ll see in the next 60 to 90 days, what will come of all these negotiations? I’m hopeful the United States is back in a good spot. In essence, any news on trade deals right now is good news.

The market is swinging back and forth drastically, based on any ounce of news about tariffs. Roughly $12 trillion has entered the gold markets in the last 18 months as a flight to safety. I could see a world where a lot of that money flows out of gold back into risk, on assets like equity markets and crypto. This, coupled with lowering rates, could mean that we will potentially see much more IPO and M&A activity this year.

M&A Is Poised to Resume

With Lina Khan no longer in the FTC chair, we’ll see much more M&A activity and companies able to do mergers. We’ve had a near halt on M&A activity over the “Wrath of Khan” during the Lina Khan era of the last several years.

So, I see many fund managers continuing to be very optimistic about the balance of 2025. The ones I’m talking to are saying, “We believe the tariff situation will be somewhat short-term. The medium to long term is a very bullish outlook for North America and the United States if the tariff negotiations go well.”

The bear case would be if tariff negotiations go badly, and countries remove themselves altogether from North American trade. But most perspectives from the investors I’m talking to believe this is a low possibility based on the data we have right now.

So, what should retail investors take from the current data? I would say to remember the old Charlie Munger quote: “Be an investor, not a trader.” Invest for the long term and for value. If you’re going to sell a stock just because it went down, you probably shouldn’t be investing in the first place.