The rally in American shares has pushed it far, and if economic growth fades in the second half of the year, elite investors will suffer a brutal fall, warn Bank of America strategists.
The most painful thing is always the postponed apocalypse, he wrote in the comments of the team led by Michael Hartnett. According to him, there is a threat that inflation will rise again in a few months and the American economy will enter a deep recession in the second half of 2023, after remaining resilient in the first six months of the year, he added.
Global equity funds, according to data from EPFR Global, recorded a loss of 44.7 billion dollars in the last three weeks. Stocks have been strengthening since the beginning of 2023 thanks to the first signs of cooling inflation, optimism about the reopening of the economy and hopes that a slow economy will force global central banks to suspend rate hikes. However, Hartnett advises investors to start selling when the S&P 500 stock index crosses 4,200 points. What a bummer that this benchmark will reach its maximum in the first quarter by November 14.
Hartnett’s vision included several strategies. Morgan Stanley’s Michael Wilson said investors flocking to the stock rally will be disappointed because they are going against the Fed. JPMorgan Chase’s Marko Kolanovic believes the economy will stop declining at a time when stocks are rising and about to crash.
As for financial flows, European shares recorded a weekly inflow of more than USD 21 million until November 1, while emerging market investors poured USD 7.7 billion into shares. American stocks had positive flows of around 6.7 billion dollars, and the leading sectors here were finance and energy, in contrast to healthcare and real estate, from which investors, on the contrary, left. Bonds saw a spit of $7.8 billion.
