Source: Golden Ten Data
Bank of America strategists known as “Wall Street's most accurate analysts” said that a weak employment report would reinforce concerns about stagflation and trigger a wave of stock market sell-offs.
Bank of America strategist Michael Hartnett (Michael Hartnett) said that a weak employment report would indicate stagflation, thereby increasing the possibility that US stocks will be sold off.
Hartnett said that recent US economic data have shown a stagnant trend, indicating that economic growth has slowed while inflation and labor costs remain high. If the report released by the US Department of Labor on Friday shows that fewer than 125,000 new jobs were added in April, and the average hourly wage growth rate was more than 0.4% month-on-month, then this heightens concerns about stagflation and triggers risk aversion in the market.
On the other hand, if the number of jobs increases by more than 225,000 and the average hourly wage growth rate is less than 0.2% month-on-month, then this will be interpreted as “Goldilocks returning, risk sentiment returning,” Hartnett added.
The report will be released at 8:30 p.m. Beijing time. Economists expect the report will show that employers added 240,000 jobs in April, and the average hourly wage may rise 0.3% from the previous month.
The rise in US stocks was hampered last month because the Federal Reserve indicated that it would keep interest rates unchanged in the face of high inflation. The sharp slowdown in economic growth in the first quarter also raised concerns that the US economy is moving towards stagnation.
Other market strategists, including Bank of America, have downplayed these concerns. Savita Subramanian (Savita Subramanian), the bank's head of US stocks and quantitative strategy, said on Thursday that a strong economy will support the bull market.
However, Hartnett believes that US stocks are in the “late phase of a long-term bull market,” which will eventually either end with a burst bubble or an economic recession.
Sabramania and Hartnett often have opposing views on the stock market outlook. In March of this year, the two disagreed on whether artificial intelligence was triggering a bubble in US tech stocks.
As the chief investment strategist at Bank of America, Hartnett is known for his deep insight into the market and accurate predictions, and is known as “Wall Street's most accurate analyst”. He has accurately predicted several market fluctuations, including the global recession in 2019, the sharp decline in US stocks in the first half of 2022, and a strong rebound in US stocks in the second half of 2022.
edit/lambor