A “trade war” is the top tail risk for financial markets, according to fund managers, who also now overwhelmingly describe the global economy as entering the “late cycle” period. “Cracks in the bull case are starting to emerge, with fund managers citing concerns over trade, stagflation and leverage,” said Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, referring to the firm’s monthly global fund managers survey released on Tuesday. “Investors have yet to act on these fears, however, as rates and earnings are keeping the bulls bullish,” he said. A potential global trade conflict was cited as the top worry by 30% of respondents, followed by inflation at 23% and a global growth slowdown at 23% (see chart below). via