Bank of America: “Tick Tock”

Friday, July 28, 2017
By Paul Martin

by Tyler Durden
ZeroHedge.com
Jul 28, 2017

The drums of doom from BofA’s Michael Hartnett (most notorious for his recent prediction of when “the Fed will crash the market”, and warning that “The Most Dangerous Moment For Markets Will Come In 3 Or 4 Months”) are beating louder, and in his latest Flow Show report titled “Tick Tock”, he doubles down on his recent forecast that “positioning is becoming more consistent with autumn top in risk assets”, but more importantly than just making a forecast, Hartnett lays out the key catalysts that would confirm an imminent market “crack”: a dollar swoon (DXY < 90), unambiguous US labor/consumer weakness (payroll <100K) and flatter yield curve.

In terms of recent market moves, Hartnett points out the euphoria still is prevalent, with BofA’s proprietary Bull & Bear indicator now 7.6, edging up toward “sell” level of 8…

So why “tick tock”? Below, Hartnett lays out his negative views, familiar to those who have been following his “Icarus” thesis which expects stocks to surge in the summer, rising as high as 2,600 before tumbling:

Positioning becoming more consistent with autumn top: Bull & Bear indicator now 7.6, edging up toward “sell” signal of 8 (trigger = further strong inflows to HY, EM debt, active equity plus drop in FMS institutional cash); private client cash levels at record lows.

Disobedience of central banks: stocks rally in defiance of Fed’s promise to reduce balance sheet (Chart 2); central bank disobedience classic euphoria signal.

The Rest…HERE

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