©Health & Fitness Journal. Hot November NFP report will end ‘chasing rally’ – BofA’s Hartnett
By Senad Karaahmetovic
It seems that more and more investors are willing to bet that the recovery rally in US stocks will not end near current levels. Bank of America data shows US stocks attracted $22.9 billion in inflows in the week ended Wednesday.
“The hunt is on,” said the bank’s chief investment officer, Michael Hartnett, after the BofA Bull & Bear Indicator rose to 0.4 from 0.0, marking its first rise in 9 weeks and signaling improved risk sentiment.
“Bull & Bear indicator at highest level since September 22; tells you, without the crucial stipulation of political panic, that a good chunk of the bear market rally is behind us,” Hartnett said in a note to clients.
Fed pivot talk is accelerating, fueling the year-end rally chase.
“We’re saying a fading SPX >41,000 + hot salaries in November will end it,” Hartnett said, before adding that the first half of 2023 could be marked by a rally in bonds followed by a rise in stocks in the second half of the year.
BofA’s CIO also discussed signals the bond market is sending.
“US 2s10s yield curve inverted the most since February 1982; Inversion Best leading indicator of recession for the last 50 years, but steepening Best indicator Recession has started & pivot imminent; Neither will happen until historically low unemployment rates rise (recently US 3.7%, UK 3.6%, Canada 5.2%, Australia all-time low 3.4%…),” Hartnett added.
Other economic indicators (eg, declining home sales, declining lumber, declining global freight rates, negative PPI, etc.) are also signaling that the recession is coming, Hartnett said.