BofA Predicted The Market Plunge: Here’s What It Thinks Happens Next
by Tyler Durden
ZeroHedge.com
Fri, 02/09/2018
Last Friday, just before the market imploded on the higher than expected hourly earnings print, we published a Bank of America note titled “Our Sell Signal Was Triggered On Jan 30, S&P 2686 Is Next” in which chief investment strategist Michael Hartnett explained he was certain that a drop as much as 12% was imminent in the coming 3 moths. Specifically, he pointed to a proprietary indicator that – when triggered – had correctly predicted a drop that averaged 12% over the coming weeks. As a result, he said that his immediate target for the S&P was 2686.
With the S&P trading 100 points below his target just one week later, and 300 points below where it was just last Friday, we can now say that this indicator has been accurate on 12 out of 12 occasions.
However, if that was troubling, what Hartnett said today was even more concerning:
In his latest Flow Show released on the same day as the greatest ever outflow from equity funds…
… Hartnett writes that after 706 rate cuts, $12.1tn asset purchases by central banks, global interest rates @ lowest levels in 5000 years, “2018 marks end of era of maximum liquidity, maximum asset returns, minimal rates, minimal volatility, minimal spreads…end of era of Wall St inflation thanks to Main St deflation.”
He also reiterates what we – and Moody’s – said earlier, namely that 2018 is the year when the US deficit exceeds $1 trillion, something which is clearly not lost on the 10Y yield, and in turn is prompting selloffs across equities every time the 10Y yield approaches 3%.
The Rest…HERE
