BofA warns of ‘postponed apocalypse’ in US stock market

Global equity funds had $44.7 billion in net inflows over the last four weeks, according to the BofA report (Image: REUTERS/Stephanie Keith)

The stock rally Americans (AMER3) has already gone too far, and investors could face brutal falls if economic growth collapses in the second half, according to strategists at the Bank of America.

“Postponed Apocalypse”. This is how the team led by Michael Hartnett referred to the strong upward trend at the start of the year and the positive flows to variable income funds.

The risk is that the inflation rise again in the coming months and that the economy From USA face a deeper recession in the second half of 2023, they said.

Global equity funds had $44.7 billion in net inflows over the past four weeks, according to the BofA report, based on EPFR data.

Stocks have been rising since the beginning of the year with signs of cooling inflationoptimism about China’s reopening and hopes that the economic slowdown will force major banks central banks to break the monetary tightening.

Hartnett recommends that investors start taking profits when the S&P 500 breaks above 4,200 points — just 0.5% above the most recent close. He expects the US benchmark to hit its Q1 peak before Feb 14th.

Several strategists share Hartnett’s view.

Morgan Stanley’s Michael Wilson said investors excited by the rally in US stocks will be disappointed because they are directly challenging the Federal Reserve.

JPMorgan’s Marko Kolanovic said the economy is headed for a slowdown just as stocks rise, setting the stage for a “crash”.

Source: Moneytimes

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