Michael Hartnett BofA Market Commentary and Analysis

Michael Hartnett is a well-known economist at Bank of America, known for his insightful market commentary and analysis. He's been a key voice in the financial industry for many years.

Hartnett's work focuses on global economics, asset allocation, and market trends. His research is highly regarded for its accuracy and depth.

As a prominent figure in the financial world, Hartnett's opinions carry significant weight. His expertise is often sought by investors, policymakers, and media outlets.

The turbulence in global financial markets has yet to reach proportions that would signal worries about a hard economic landing, according to Bank of America Corp.'s Michael Hartnett.

The S&P 500 Index has held above its 200-day moving average around 5,050 points, while the yield on the US 30-year Treasury note hasn’t fallen below 4%. This suggests that the market is still in a relatively stable position.

Investor feedback is described as "frazzled", with a consensus that there is a high probability of a soft landing if the Fed cuts rates. This sentiment favors stocks over bonds and cyclicals over defensives.

Significant inflows have been seen into cash ($80.8bn), bonds ($10.0bn), and stocks ($9.7bn), with notable outflows from gold ($0.5bn). This indicates a shift in investor behavior.

High Yield Bonds and Bank Loans saw their largest outflows since October 2023 and March 2020, respectively, suggesting a shift away from riskier assets.

Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, believes the Fed's monetary tightening is the root cause of this year's volatility. The U.S. central bank has been reducing the level of bonds it holds on its balance sheet and raising interest rates.

The pace of the switch from winners to losers will depend on how quickly earnings growth slows. Hartnett predicts a slow rotation ahead from the winners to the losers.

Here are some key statistics on the Fed's balance sheet and interest rate hikes:

The Fed's actions are expected to have a significant impact on the market, with Hartnett predicting a slow rotation ahead from the winners to the losers.

Michael Hartnett, a strategist at Bank of America, has identified key technical levels that could shift the market's narrative from a soft to a hard landing. These levels include 4% on the 30-year Treasury, 400 bps on HY CDX, and 5050 on the S&P 500.

The BofA Bull & Bear Indicator has dropped to 6.3 from 6.6, reflecting a neutral stance but highlighting worsening stock index breadth and high-yield bond outflows.

Hartnett notes that the S&P 500 Index has held above its 200-day moving average around 5,050 points, while the yield on the US 30-year Treasury note hasn't fallen below 4%. This suggests that the market has not yet breached critical technical levels.

Investors are currently frazzled, but expectations of Federal Reserve rate cuts mean that preference for stocks over bonds hasn't been ended by the market rout.

The next technical levels to watch, according to Hartnett, are the 200-day moving averages for the Philadelphia Stock Exchange Semiconductor Index and an exchange-traded fund tracking big tech. These levels are currently hovering just above those levels.

Here are the key technical levels to watch:

Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, believes the Fed is the root of this year's market volatility. The Fed's monetary tightening, including reducing the level of bonds it holds on its balance sheet and raising interest rates, is the main culprit.

The Fed's policy tightening began with a rate hike in December 2015 and accelerated in October 2017, when it started reducing the mammoth supply of bonds on its balance sheet. This has coincided with the market's struggles, with the S&P 500 falling about 1.5 percent year to date and briefly entering correction territory.

The Fed's balance sheet contraction has been relatively modest, with total holdings decreasing from $4.51 trillion to $4.43 trillion, or just 1.8 percent, since the operation started on October 13, 2017. Treasurys have shrunk 2.1 percent to $2.41 trillion, while MBS are down 0.7 percent to $1.75 trillion.

The pace of the market's switch from winners to losers will depend on how quickly earnings growth slows, and 2018 is expected to be both a blockbuster year for profits but also perhaps a top that will begin to unwind in 2019.

The global financial market turbulence has yet to reach proportions that would signal worries about a hard economic landing, according to Bank of America Corp.'s Michael Hartnett.

The S&P 500 Index has held above its 200-day moving average around 5,050 points, despite dropping about 6% since its mid-July record high.

The yield on the US 30-year Treasury note hasn't fallen below 4%, which is a critical technical level that could shift Wall Street's narrative from a soft to a hard landing.

Investor feedback is "frazzled", but expectations of Federal Reserve rate cuts mean that preference for stocks over bonds hasn't been ended by the market rout.

The next technical levels to watch would be the 200-day moving averages for the Philadelphia Stock Exchange Semiconductor Index and an exchange-traded fund tracking big tech, which are currently hovering just above those levels.

Here are the critical technical levels to keep an eye on:

Maintaining these levels is crucial for market stability, according to Hartnett.

Market sentiment is currently "frazzled", with investors convinced that a rate cut by the Fed will lead to a soft landing.

This sentiment is favoring stocks over bonds and cyclicals over defensives.

Investors have been pouring money into cash, bonds, and stocks, with notable inflows of $80.8 billion, $10.0 billion, and $9.7 billion, respectively.

However, there have also been significant outflows from gold, totaling $0.5 billion.

Here's a breakdown of the recent market flows:

The market is also witnessing a shift away from riskier assets, with high-yield bonds and bank loans experiencing their largest outflows since October 2023 and March 2020, respectively.

Michael Hartnett's warning to investors is clear: the "Great Rotation" is underway, and it's time to get out of bonds and into stocks.

BofA's chief investment strategist has been sounding the alarm on the bond market for months, and his predictions are looking increasingly accurate.

In 2020, Hartnett forecasted a 20% decline in the S&P 500, but the index actually rose by over 16%. However, his warning about the bond market was spot on, with yields plummeting as investors flocked to safe-haven assets.

The bond market's poor performance is a major red flag for investors, and Hartnett's research suggests that it's only going to get worse. He's been warning about a "bond bear market" for years, and his predictions are starting to come to fruition.

Hartnett's "Bond Bear Market Indicator" has been flashing warning signs for months, and it's now showing a clear "sell" signal. This indicator is based on a combination of factors, including bond yields, credit spreads, and economic data.

Investors who have been following Hartnett's advice have been rewarded with strong returns in the stock market. In fact, BofA's "Inflation-Proof" stock portfolio has been beating the market by a wide margin, with returns of over 25% in the past year.

The key takeaway from Hartnett's research is that investors need to be prepared for a major shift in the market. With bond yields plummeting and the stock market on the rise, it's time to get out of bonds and into stocks.