FAST FIVE: Bank Of America Issues A "Code Red" For Stocks
all culminating in the quickest bear market of all-time.
and yet stocks keep rising.
Peak positioning: BofA private client equity allocation 61.1% AUM (all-time high 62.5% in Mar'15).
Peak dollar debasement: US dollar plummeting on US fiscal stimulus means that the “dollar debasement” theme is real as new administration devalues to finance deficits (US Treasury issuance $4.5tn in 2021 vs $3.4tn in 2020, $2.9tn in 2019 ) Hartnett warns that should DXY break 90, a disorderly decline in the dollar would lead to disorderly jump in US Treasury yields (and pop in speculation in Bitcoin, China EV-).
#Buy the reopening: 2021 reopening/recovery/rotation- outperformance of commodities>credit, CRE>housing, HY>IG, EM/EAFE>SPX, small>large, value>growth; BCOM has recovered to secular 1999 and 2016 levels of 75; fresh gains needed to invigorate cyclical value; gains >85 likely cause higher bond yields: That said, just like Morgan Stanley's Michael Wilson, Hartnett is confident what is coming is just a rough patch and tells clients that “if risk asset correction occurs next 3-6 weeks, investors should buy the dip in cyclical value; if correction in 3-6 months, investors should buy defensive growth.” Finally, here is Hartnett recommendation how to hedge what is not only the biggest bubble in history, but also the most goldilocks-ed market ever: a.