BofA: “Massive Market Inflection Point Coming This Summer: Will Lead To Fall Crash”
by Tyler Durden
ZeroHedge.com
Jul 7, 2017
One week after BofA’s Michael Hartnett became the latest strategist to admit the truth, when in his latest Flow Show report he said that “central banks have exacerbated inequality via Wall St inflation & Main St deflation” and now that they are hoping to quickly and painlessly undo their error, there are “two ways to cure inequality…you can make the poor richer…or you can make the rich poorer…” concluding that the “Fed/ECB are now tightening to make Wall St poorer” because it is “no longer politically acceptable to stoke Wall St bubble”, he has followed up with a note in which he looks at the vast change in the market landscape over the past year.
As he says, one year ago, July 11th, 2016, 30-year Treasury yield hit all-time low (2.14%), and Swiss government could have issued a 50-year bond at a negative yield (Chart 2 shows 10- year Swiss yield back to 1900).
One year later, 10-year bond yields up from 1.43% to 2.37% in the US, from -0.27% to 0.10% in Japan, and from -0.17% to 0.56% in Germany. Over same period, global equity full float market cap rose $10.0tn to $76.3tn.
Then in a follow up from his recent report predicting when the Fed may be preparing to finally open the trapdoor beneath the market, the BofA analyst writes that over the next 6 months, higher interest rates likely be “much more negative for stocks & credit given new central bank policies”; tightening by the Fed, rhetorical tightening by ECB has already succeeded in raising bond yields, volatility, reducing tech stocks.
Specifically, he view the summer of 2017 as a “massive inflection point in central bank liquidity trade…will likely lead to “Humpty-Dumpty” big fall in market in autumn, in our view.” The outcome of this global coordinated tightening, as he has shown below, will be a “financial event”.
The Rest…HERE
