BofA: “QE vs Unemployment” Means Soaring Inflation Will Crush The Dollar
by Tyler Durden
ZeroHedge.com
Fri, 04/03/2020
Here are the key takeaways from Michael Hartnett’s latest Flow Show:
Lows on corporate bonds & stocks to hold on extreme bearishness & policy stimulus.
Policy ended credit crunch but not yet recession…US dollar, oil, HY bonds will signals worst of recession priced-in.
Big EPS headwinds: bias asset allocation toward growth, yield, quality alongside stagflation hedges (gold & small cap).
And before we get into the meat of Hartnett’s latest weekly must read, a quick reminder that it’s one of those years where gold is the top performing assets: gold 3.6%, US dollar 3.4%, government bonds 3.0%, cash 0.5%, IG bonds -5.7%, HY bonds -14.9%, global equities -24.2%, commodities -41.6% YTD.
With that in mind, here are the key themes of the current week:
March capitulation: historic $284bn out of bonds and $658bn into cash in past 4 weeks ($64bn out of equities = sideshow).
Bond capitulation: record month of redemptions from IG bonds ($156bn), EM debt ($47bn), Municipal bonds ($24bn), HY bonds ($23bn).
Tech indestructible: $4bn inflows to technology funds in March & inflows throughout 2020 (Chart 3); IG bonds = “glue” holding Wall St together, but tech “glue” for stocks (Nasdaq currently defending v imp asset allocation resistance level vs. T-bills – Chart 2).
The Rest…HERE
