Bank of America renowned strategist Hartnett: If Jackson Hole is dovish, US stocks may see a "buy the expectation, sell the fact" market
Bank of America strategist Hartnett stated that if the Federal Reserve releases dovish signals at the Jackson Hole Economic Symposium, U.S. stocks may face a risk of correction. Investors are flocking to high-risk assets, betting on interest rate cuts by the Federal Reserve to support the job market. Hartnett warned that if Powell leans dovish, it could trigger a "buy the expectation, sell the fact" market. He is more optimistic about international stocks, believing that the risk of a stock market bubble is increasing, and that gold, commodities, and cryptocurrencies will benefit
According to the Zhitong Finance APP, after the U.S. stock market reached a historic high this week, the strategy team at Bank of America pointed out that if the Federal Reserve releases dovish signals at the Jackson Hole Economic Symposium, U.S. stocks may face a risk of correction.
The strategy team led by Michael Hartnett stated that investors are pouring into high-risk assets such as stocks, cryptocurrencies, and corporate bonds, betting that the Federal Reserve will support the weak job market and alleviate U.S. debt pressure through interest rate cuts.
Hartnett specifically warned in his research report that if Federal Reserve Chairman Jerome Powell expresses a dovish stance at the Wyoming meeting from August 21-23, it could trigger a "buy the expectation, sell the fact" profit-taking trend. He reiterated his view that he is more optimistic about international stocks compared to U.S. stocks—this strategy has been validated by the market this year.
Driven by tech giants and buoyed by moderate CPI data this week, the S&P 500 index recently hit a historic high, and market bets on a rate cut in September briefly intensified. Although the PPI data released on Thursday exceeded expectations, slightly cooling rate cut expectations, interest rate swap contracts still indicate a 92% probability of a rate cut in September.
On Friday, S&P 500 futures rose slightly as investors awaited key retail sales data and the results of the U.S.-Russia summit. The index has accumulated nearly a 30% increase since its low in April.
According to EPFR Global data, in the week ending August 13, U.S. stock funds recorded a net inflow of $21 billion, reversing the previous week's net outflow of $28 billion. Global stock funds attracted over $26 billion during the same period, likely setting a record for the third-highest annual inflow.
Hartnett has repeatedly warned of the risk of a stock market bubble. He believes that as investors seek inflation-hedged assets and hedge against the risk of a weakening dollar, gold, commodities, cryptocurrencies, and emerging market assets will become the biggest winners
