... at least according to BofA's latest, just released monthly Fund Managers Survey, in which 181 participants with $549bn in AUM responded to dozens of questions, among which "what do you think is the most crowded trade." In September, for the first time ever, the top answer, per 26% of respondents, was Bitcoin, (which as BofA handily reminds us was up as much as 344% YTD), #2 was "long Nasdaq" (up 20% YTD) according to 22% of fund managers, while the "Short US Dollars" (-11% YTD) was third at 21%. Note: long US$ was most crowded trade as recently as Mar'17.

Of course, this does not mean that everyone is long bitcoin; it just means that everyone thinks everyone else is long bitcoin...

Another notable change in September: "central bank policy mistake" is no longer the biggest tail risk - that honor now belongs to North Korea by some margin (34% of respondents) , followed by Fed/ECB policy mistake (21%) and Chinese Credit Tightening (15%).

Looking ahead, the smartest people on Wall Street said that over the next 6 months, a recession would be the most surprising event (54% of respondents), while an equity bubble least surprising (net -30%).

Finally, in terms of most over and undervalued assets, volatility was declared by far the most overvalued (54%), with sterling, oil, Italian equities and Chinese banks in distant 2nd through 5th slots.

Meanwhile, on macro, FMS growth optimism continues to sag (+62% in Jan to +25% today) but profit hopes rose a tad this month (+34%)…greater conviction in EPS than GDP; notable divergence in FMS perceptions of fiscal policy ("easy") vs. flatter yield curve shows US tax reform most obvious catalyst for steeper US curve.

What is also interesting is that "Mean reversion" has become a contrarian theme as investors cut expectation of higher bond yields: rotation back to QE themes of scarce "growth" & "yield" (e.g. EM), away from "value" (Japan, banks) as investors shun mean reversion, slash expectations for "much higher" bond yields (+26% last Nov to 5%); energy ("value") UW largest since Mar'16, utilities ("yield") UW smallest since Aug'16.

To summarize: most on Wall Street are short volatility even as they suspect everyone else of being long bitcoin (explaining the tepid performance by the hedge and mutual fund community), nobody expects a recession although most admit the equity market is a bubble, and most are hopeful that the economy will surprise to the upside even as earnings outperformance is taken for granted.

Good luck trading that.