Global investors just aren’t that worried about Trump’s trade war anymore.
Fund managers were the most bullish in July since Trump first went into office, according to a BofA survey.
That’s due to factors like falling expectations for a recession and optimism for AI.
President Donald Trump’s trade war is starting to feel like old news for markets.
Bank of America’s monthly global fund manager survey, published on Tuesday, showed that investors have largely moved past the fear of tariffs and are feeling good about the stock market again.
A sentiment reading of fund managers surveyed from July 3 to July 10 rose to 4.3 from 3.3 in the last month, the most positive investors have felt about the market since February, early in Trump’s new term and months before the worst of the tariff volatility rocked markets.
That boost in sentiment comes even as Trump’s latest volley of tariff threats reignites uncertainty around the trade war.
More than half—53%—of fund managers said they believed the final tariff rate the US would impose on the rest of the world would hover around 15%, up from the 10% rate investors expected in June.
And yet, most investors aren’t too worried about the prospect of higher tariff rates. Here’s what they’re thinking about instead.
1. Recession expectations are falling
Investors aren’t worried about a global recession.
The percentage of investors who believed a global recession is likely in the next year dropped to its lowest level in five months, according to BofA’s survey. The percentage of investors who believed a global recession was unlikely also grew to 59%.
Meanwhile, 65% of fund managers said they believed the most likely outcome for the world economy was a soft landing, a slight economic slowdown that avoids an outright recession. Twenty-one percent of investors said they believed the most likely outcome was a “no-landing,” a situation in which inflation comes down and the economy continues on a path of uninterrupted growth.
2. Corporate earnings optimism
Investors are also feeling pretty good about the picture for corporate earnings growth.
Forty-two percent of fund managers in the BofA survey said they believe earnings-per-share would surprise to the upside for the second quarter, compared to 19% of investors who said they believed earnings would likely surprise to the downside.
The outlook for earnings has brightened in recent weeks. Morgan Stanley’s gauge for earnings revisions breadth has climbed from -25% in mid-April to 3%, analysts at the bank wrote in a note on Monday.
“The vibe right now is: underpromise and overdeliver,” Hardika Singh, an economist strategist at FundStrat, wrote in a note on Tuesday. “And given that there is now more clarity on what’s happening with tariffs, it’s not an unrealistic scenario,” she said of earnings beats.
3. AI bullishness
The hype for artificial intelligence is still strong — and some investors think the economy is already starting to reap the benefits.
Forty-two percent of fund managers said they believed productivity was already rising from AI use, while 21% said they believed productivity would rise as soon as next year.
Meanwhile, the Roundhill Magnificent Seven ETF, which tracks the seven mega-cap tech firms, has rallied nearly 40% from its low on April 8.
“The market has become numb to the administration’s moves and is instead focusing on AI, tech and corporate America’s ability to adapt and be nimble,” Skyler Weinand, the chief investment officer at Regan Capital, wrote in a note on Tuesday.
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