Inflation Shock is Worsening, Rates Shock is Just Beginning and Recession Shock is Coming – BofA
2022.04.08 14:17
Inflation Shock is Worsening, Rates Shock is Just Beginning and Recession Shock is Coming – BofA
Bank of America’s top strategist Michael Hartnett has, once again, reflected on weekly flows, which saw the growth outperform value.
The week to Wednesday yielded 6th consecutive inflows to tech ($1.7 billion). On the other hand, fund managers continue to increase exposure to defensive assets with healthcare attracting $1.7 billion – the largest inflow in five months.
Elsewhere, Hartnett also notes the largest inflow to bank loans since Feb17 ($2.2 billion) and the largest inflow to EM equities in 10 weeks ($5.3 billion).
Overall, $9.2 billion went into stocks in the week to Wednesday, with $7.5 billion and $1.4 billion outflows from cash and bonds, respectively.
Hartnett reiterated his bearish view on the S&P 500 for 2022 with the risk of three shocks.
“Inflation shock” worsening, “rates shock” just beginning, “recession shock” coming, the strategist said in a client note.
Inflation always precedes recessions; late-60s recession preceded by consumer price inflation, 1973/4 by oil/food shocks, recession of 1980 by oil, 1990/91 by CPI, 2001 by tech bubble, 2008 by housing bubble; last dominos to drop in terms of recession expectations is higher yields & weaker dollar, and steeper yield curve and banks/consumer keep falling, Hartnett wrote in a note to clients.
By Senad Karaahmetovic
