'Nobody is Short the Equity Market': Over $30 Billion Went Into Stocks Last Week - BofA

January 14, 2022 1:29 PM EST
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BofA Chief Investment Strategist Michael Hartnett has reflected on the last week’s flows to note another strong inflow in US stocks by the firm’s clients.

Hartnett urges investors to short “the winners of Fed’s liquidity supernova...tech, IG, private equity” as the Fed will be “very hawkish next 9 months.”

The strategist sees similarities where yields will go up while the US dollar will suffer. Overall, the analyst sees cash/commodities outperforming stocks/bonds this year.

“Inflation off-the-charts, oil prices strong, supply bottlenecks remain (China freight prices @ all-time highs, and less-acknowledged G7 unemployment rate (@ 4.5%) close to 40-year lows = wage growth; "rates shock" will be global in ’22; deflation of long duration bonds (Austrian 100-year bond -34% in price terms) leading deflation of long duration equities (biotech, software, solar, ARKK...),” Hartnett said in a client note.

“Nobody is short the equity market” added Hartnett as $30.5 billion went to stocks while $43.5 billion went from cash (the largest outflow since September last year) and $2.9 billion from bonds.

“Largest inflow to bank loans since Feb’17 ($1.9bn), flows to IG bonds faltering ($3.1bn outflow); largest inflow to Europe stocks since Jun’21 ($1.9bn), largest inflow to EM stocks since Mar’21 ($6.7bn); largest inflow to financials since Nov’16 ($3.6bn), largest inflow to utilities since Feb’16 ($1.1bn),” Hartnett added.

The S&P 500 is down 1.3% on the week.

By Senad Karaahmetovic | senad@streetinsider.com

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