BAML: There are 2 catalysts that can make this the ‘greatest bull market of all time’

business news

  • Bank of America Merrill Lynch has identified what it views as the two catalysts that can keep the almost nine-year bull market going strong.
  • The current run is already the second-longest ever, and it needs to go roughly 1,200 more days without a 20% drop to become the king of all bull markets.

Michael Hartnett has made it no secret: He thinks the almost nine-year stock bull market is on its last legs.

For the past several months, the chief investment strategist at Bank of America Merrill Lynch warned against the so-called Icarus trade, which he defines as a reversal of the “melt up” seen in stocks since early 2016. Right before the stock market’s recent 10% correction caught many traders off-guard, he issued a strong sell signal. He’s even gone as far as to outline a four-part formula for a market meltdown.

Yet while Hartnett’s bearish side has driven much of his recent commentary, he still sees a way for the stock market’s ongoing rally to become the “greatest bull market of all time.” At more than 3,250 trading days, it’s already the second-longest on record. All it needs is roughly 1,200 more days without a 20% drop to become the king of all bull markets.

Hartnett pinpoints two specific drivers that could take the benchmark S&P 500 to the promised land:

  • “An unanticipated surge in productivity growth” — Weak productivity growth has confounded economists over the past few years, yet a recent study from the McKinsey Global Institute suggests it could see a turnaround. This is crucial to the longevity of the bull market because it helps neutralize rising inflation, which is frequently cited as a major concern for investors.
  • “A speculative bubble from a Great Rotation out of negatively yielding debt into stock markets” — BAML has frequently referred to the “Great Rotation” since coining the term in 2011, and it refers to investors pulling money out of bonds and reallocating them to stocks.

But don’t think Hartnett is going soft on his bearish market outlook. Even if a perfect combination of factors pushes stocks higher, he argues the “last great entry point” into stocks came more than two years ago, on February 11, 2016.

Overall, Hartnett’s core stance is to stay cautiously optimistic when it comes to stocks — a view matching what BAML’s global team has been saying. In late January, James Barty, the firm’s head of global cross-asset and European equity strategy, warned that markets were “starting to get a little stretched,” while urging caution.

With all of that in mind, investors would be advised to proceed warily. After all, the 10% correction that rocked US equities in early February was jarring for many traders who probably wish they’d been better hedged.

SEE ALSO: Bank of America has found the formula for a market meltdown — and we’re dangerously close

Join the conversation about this story »

NOW WATCH: The rise and fall of Hooters Air — the airline that lost the ‘breastaurant’ $40 million

Комментариев нет

Добавить комментарий

Этот сайт использует Akismet для борьбы со спамом. Узнайте как обрабатываются ваши данные комментариев.

business news
Trump’s trade fight and the unwinding of a $3 billion bet are clobbering copper

Copper prices on the London Metal Exchange slipped below $6,000 for the first time in a year Thursday. Analysts say trade escalations are weighing on a market already under pressure. An unwinding of a $3 billion long position put pressure on prices earlier this month.  Follow copper in real time …

business news
Trump threatens to slam a massive tariff on European cars, which could cause economic chaos

President Donald Trump on Friday threatened to impose a 20% tariff on imports of cars from the European Union. The move would be a huge escalation of Trump’s ongoing trade conflict with the EU. Trump already hit Europe with steel and aluminum tariffs, angering EU leaders and triggering retaliation. President …

business news
Bitcoin’s rough patch looks like the Nasdaq during the tech bubble — except it’s moving 15 times faster

Bitcoin fell as much as 70% from its mid-December high through its recent early-February low. The cryptocurrency’s price chart mirrors that of the Nasdaq Composite Index during the dotcom bubble era, but there’s a catch. Historical fluctuations in the Nasdaq should provide a template for how bitcoin will trade going …