Latest news with #Michael Hartnett
Yahoo
3 days ago
- Business
- Yahoo
BofA Says 'It Better Be Different This Time,' as Stock Valuations Give Dotcom Bubble Vibes
With U.S. stocks sitting near record highs, Wall Street analysts say one key metric is starting to draw dotcom bubble comparisons. The S&P 500's price-to-book value ratio has climbed to 5.3, a touch above extreme valuations seen in March 2000, right before the dotcom bubble burst, according to Bank of America market strategist Michael Hartnett. Except, "it better be different this time," Hartnett said in a note to clients Thursday. Factors that would suggest the current market cycle is unlike the one in the 1990s—when tech stock valuations ballooned, and subsequently burst in the early 2000s—include bond allocations, the boom in artificial intelligence, currency debasement as well as global rebalancing away from the U.S. to the rest of the world, he said. However, investors partying on hopes the Federal Reserve cuts rates sooner rather than later could drag on the U.S. dollar, as rate cuts would lower the returns and attractiveness of investments in the currency. The firm's Bull & Bear Indicator sits in neutral territory, at a 6.1 on a scale of zero to 10 that measures extreme bearishness to extreme bullishness. "If not different this time, bonds get some love," Hartnett wrote; international stocks would be favored over the S&P 500 too. Investors appear "pumped" with expectations the Fed could soon join the "central bank rate cut party," with valuations being the only hurdle to pushing corporate bonds and stocks higher, he said. Traders are currently pricing in a roughly 87% chance the Fed will cut rates at its next meeting in September, according to the CME Group's FedWatch tool. However, a sharp pivot from Fed's recent policy stance could also give rise to fresh debates on the central bank's independence, and "disruption [equals] debasement," Hartnett said, suggesting a policy disruption could drive the U.S. dollar index below 90 and push investors to seek inflation and currency devaluation hedges in gold, crypto, and emerging markets in the second half of the 2020s. The U.S. dollar index, which measures the relative strength of the dollar compared to other currencies, has declined more than 9% this year, at around 98 as of Friday afternoon. A weaker dollar might prove useful for the Trump administration to see a "'25/'26 boom & bubble," Hartnett said, which he added could be an easy way "to reverse path of US debt & deficit trends." Read the original article on Investopedia Sign in to access your portfolio
Yahoo
4 days ago
- Business
- Yahoo
BofA's Hartnett Sees Profit-Taking in Stocks After Jackson Hole
(Bloomberg) -- The record-breaking rally in US stocks has left them prime for profit taking in the event of dovish signals from the Federal Reserve at the Jackson Hole economic symposium, according to Bank of America Corp. strategists. The US-Canadian Road Safety Gap Is Getting Wider Festivals and Parades Are Canceled Amid US Immigration Anxiety To Head Off Severe Storm Surges, Nova Scotia Invests in 'Living Shorelines' Five Years After Black Lives Matter, Brussels' Colonial Statues Remain For Homeless Cyclists, Bikes Bring an Escape From the Streets The team led by Michael Hartnett said investors have flocked into risky assets from equities to cryptocurrencies and corporate bonds on optimism that the central bank will reduce interest rates to shore up a weakening labor market and ease the US debt burden. A dovish tone from Fed Chair Jerome Powell at the conference in Wyoming on Aug. 21-23 could see stocks sliding as investors 'buy rumor, sell fact,' Hartnett wrote in a note. He reiterated a preference for international equities over US peers, a call that has proved correct this year. The S&P 500 Index has rallied to an all-time peak, powered by technology heavyweights, as benign US consumer price inflation data earlier this week raised wagers of a Fed rate cut in September. Those bets were pared on Thursday as figures showed producer prices remain hot, but swaps traders still see a 92% chance of a reduction. Investors poured about $21 billion into US equity funds in the week through Aug. 13, after redeeming nearly $28 billion in the week prior, according to the note citing EPFR Global data. Global stock funds attracted over $26 billion and are on track for the third-biggest year of inflows. Hartnett has recently warned of a potential bubble forming in the equity market. He sees gold, commodities, cryptocurrencies and emerging-market assets as the biggest winners as investors seek protection against inflation and hedge against a weaker dollar. Americans Are Getting Priced Out of Homeownership at Record Rates What Declining Cardboard Box Sales Tell Us About the US Economy Dubai's Housing Boom Is Stoking Fears of Another Crash Bessent on Tariffs, Deficits and Embracing Trump's Economic Plan Twitter's Ex-CEO Is Moving Past His Elon Musk Drama and Starting an AI Company ©2025 Bloomberg L.P.
Yahoo
4 days ago
- Business
- Yahoo
BofA's Hartnett Sees Profit-Taking in Stocks After Jackson Hole
(Bloomberg) -- The record-breaking rally in US stocks has left them prime for profit taking in the event of dovish signals from the Federal Reserve at the Jackson Hole economic symposium, according to Bank of America Corp. strategists. The US-Canadian Road Safety Gap Is Getting Wider Festivals and Parades Are Canceled Amid US Immigration Anxiety To Head Off Severe Storm Surges, Nova Scotia Invests in 'Living Shorelines' Five Years After Black Lives Matter, Brussels' Colonial Statues Remain For Homeless Cyclists, Bikes Bring an Escape From the Streets The team led by Michael Hartnett said investors have flocked into risky assets from equities to cryptocurrencies and corporate bonds on optimism that the central bank will reduce interest rates to shore up a weakening labor market and ease the US debt burden. A dovish tone from Fed Chair Jerome Powell at the conference in Wyoming on Aug. 21-23 could see stocks sliding as investors 'buy rumor, sell fact,' Hartnett wrote in a note. He reiterated a preference for international equities over US peers, a call that has proved correct this year. The S&P 500 Index has rallied to an all-time peak, powered by technology heavyweights, as benign US consumer price inflation data earlier this week raised wagers of a Fed rate cut in September. Those bets were pared on Thursday as figures showed producer prices remain hot, but swaps traders still see a 92% chance of a reduction. Investors poured about $21 billion into US equity funds in the week through Aug. 13, after redeeming nearly $28 billion in the week prior, according to the note citing EPFR Global data. Global stock funds attracted over $26 billion and are on track for the third-biggest year of inflows. Hartnett has recently warned of a potential bubble forming in the equity market. He sees gold, commodities, cryptocurrencies and emerging-market assets as the biggest winners as investors seek protection against inflation and hedge against a weaker dollar. Americans Are Getting Priced Out of Homeownership at Record Rates What Declining Cardboard Box Sales Tell Us About the US Economy Dubai's Housing Boom Is Stoking Fears of Another Crash Bessent on Tariffs, Deficits and Embracing Trump's Economic Plan Twitter's Ex-CEO Is Moving Past His Elon Musk Drama and Starting an AI Company ©2025 Bloomberg L.P. Sign in to access your portfolio
Bloomberg
4 days ago
- Business
- Bloomberg
BofA's Hartnett Sees Profit-Taking in Stocks After Jackson Hole
The record-breaking rally in US stocks has left them prime for profit taking in the event of dovish signals from the Federal Reserve at the Jackson Hole economic symposium, according to Bank of America Corp. strategists. The team led by Michael Hartnett said investors have flocked into risky assets from equities to cryptocurrencies and corporate bonds on optimism that the central bank will reduce interest rates to shore up a weakening labor market and ease the US debt burden.
