„Which brings us back full circle back to Hartnett key 2018 BofAML themes:

  • big long = Volatility
  • big short = Credit
  • big top = Equities
  • big rotation = Deflation to Inflation
  • big risk = Equity Bubble

And with Hartnett’s original correction warning is now in the history books, having been confirmed just days later, the BofA CIO warns that more of is coming, with „correction vulnerability“ in 2018’Q1 high due to:

  • „Amazonification“ of Main St (low inflation)
  • „Japanification“ of Wall St (low rates)
  • „Icarus trade“ (melt-up in risk assets)

These three have all became euphorically priced, e.g. China tech sector on 9x book (vs China financials on 9x earnings), European HY bond yields < US Treasury yields; VIX & MOVE at 50-year lows; global equity market cap +$30 trillion since Feb 11th 2016 lows.

The result is unfolding before our eyes, with daily 3-4% moves in the market, and nobody having any clue when the selling will stop.

Hartnett, however, has a clue what may be coming next: the reflationary year 1966, when rising rates caused a 16% drop in the S&P“

Read More

Schreibe einen Kommentar