“风险并没有好到哪里去，Hotung inv's Hartnett, who accurately predicted the surge in US bonds, pointed out that bonds and gold are powerful hedging tools against economic recession and inflation resurgence, while in aBut after the bursting of the internet bubble and the Fed's rate cut in 2001, the ROI dropped by more than 10%.context, stocks and csi commodity equity index outside the US are better investment symbols.
Michael Hartnett, Chief Strategist at Bank of America, stated that the excitement triggered by the first round of rate cuts by the Fed is exacerbating the bubble risk in the US stock market. Considering the risks of economic recession and inflation resurgence, bonds and gold are once again attractive hedging tools.
In a recent report, Hartnett stated that US stocks are currently digesting the Fed's further rate cuts and the expectation of 18% earnings growth in S&P 500 index constituents by the end of 2025.
"The risks are not getting any better, so investors are forced to chase the uptrend," Hartnett wrote. "Bubble risk" is reemerging, and now is the time to buy bonds and gold on dips.
It's not just Bank of America singing the bearish tune on US stocks. The Chief Investment Officer of Singapore's sovereign wealth fund GIC, Jeffrey Jaensubhakij, warned that in an environment of rising inflation risks, the market prosperity following the Fed's sharp rate cuts may be short-lived. Additionally, US stocks and bonds are diverging, with the bond market signaling "economic recession" while the stock market conveys "economic acceleration" expectations, only one of these narratives is correct.
Hartnett also mentioned that in a scenario of an economic soft landing, stocks and csi commodity equity index outside the USA are better investment symbols, with the latter being one of the common means to hedge against inflation. Hartnett pointed out that stock prices in other countries are cheaper and beginning to outperform US stocks.
After a collective surge in the European and American stock markets on Thursday, there was a noticeable retreat on Friday. Nasdaq futures and S&P 500 index futures fell slightly, and the decline in the STOXX Europe 600 index widened to 1%, making investors more cautious.
Due to the continued risk of economic recession, Hartnett has maintained a bullish stance on US Treasury bonds since the beginning of this year, believing that monetary policy will become more accommodative in the next 12 months. It has proven to be accurate, as the yield on 10-year US Treasury bonds has fallen by a cumulative 100 basis points since Hartnett's bullish call, hitting a new low for the year.
In a previous report, Hartnett also stated that gold is the best hedge against accelerated inflation in 2025, just like in 2021 and 2022. Gold has provided a warning signal for the explosive inflation during these two years by becoming the best-performing asset, and it is expected that the price of gold will rise to $3000 per ounce.
Editor/Lambor