Source: Golden Ten Data
Bank of America strategists warn that there is a risk of a “hard landing” in the US, which means that interest rate hikes may start again...
Bank of America strategists said that the rare simultaneous rise in technology stocks and commodities, combined with soaring US bond yields, is reminiscent of a period when a bubble was forming.
This unusual asset price fluctuation is consistent with people betting on the so-called “no landing” scenario. The so-called “no landing” scenario means that interest rates will remain high for a longer period of time while economic growth remains strong. However, strategists led by Michael Hartnett (Michael Hartnett) wrote that although this argument is “very popular,” there is also a risk that inflation will rise and the cost of capital will rise.
Hartnett believes that the current asset price trend “has the typical characteristics of a bubble market,” and compared it to the period before the 1999 tech bubble. According to the strategists' suggestions, in the current environment, investors should sell US bonds and US dollars, and buy NASDAQ stocks and inflation-safe haven assets such as gold, commodities, and cryptocurrencies.
Famous analyst Jesse Felder (Jesse Felder) said that Nvidia's hype is a bubble that is about to burst. US stocks will disappoint for the next ten years or more, and the US will experience a recession this year.
He warned that the microchip buying frenzy will not continue, the market's huge returns will dry up, and the economy may fall into stagflation. “The price performance of financial assets in the future will be much worse than in the past 10 or 15 years.” He pointed out that the expectation that financial asset prices will continue to maintain extraordinary performance is a “linear extrapolation of unsustainable trends,” which is a sign of the bubble.
Despite the recent hawkish shift from Federal Reserve officials, US stocks have shown resilience over the past few weeks. Currently, the bond market expects the Federal Reserve to cut interest rates once or twice by the end of this year; just three months ago, this figure was six times. Despite this, the S&P 500 and Nasdaq 100 indices are still hovering near historic highs.
Bank of America strategists warned that there is a risk that the US soft landing scenario will turn into a hard landing scenario, which means that interest rate hikes may start again, and financial difficulties in regional banking and real estate industries may have contagious effects.
Editor/jayden