Bank of America (NYSE:BAC) strategist Michael Hartnett has reflected on last weeks flows amid a strong rebound in the US equities despite rising rates.
In a week to Wednesday, equities attracted $18.9 billion with $12.2 billion going to cash. Moreover, $6.3 billion went into bonds while $400 million were inflows to gold.
Hartnett also noted the largest inflow to EM stocks and tech in 2 months - $5.1 billion and $3.1 billion, respectively.
Outflows from Japan and Europe were $1.5 billion and $4 billion, respectively.
In coming months recession risks will jump, Treasury yields & the US dollar will peak, junk bonds, EM, long-duration tech will rally at expense of banks, Hartnett said in a client note.
The BofA Bull & Bear Indicator is now at 2.1, up from 2.0, therefore ending 1-week contrarian "buy signal".
Crypto were 1st signals in Q1'21 that inflation & rates shock coming, will be 1st signals in Q2'22 that recession & peak in yields imminent. Energy is a long-term buy, tech is a long-term sell and likely is worst performing sector in 2020s, Hartnett added.
By Senad Karaahmetovic