The year that was, in bullet points, from Michael Hartnett and team at BofAML:
1. 2015 ends with the market cap of Amazon & Google exceeding that of every single Chinese company in the MSCI China index…
2. …the US stock market a mere 107 trading days away from becoming the 2nd longest bull market of all-time, with equity leadership driven by “growth” (longest duration of outperformance ever) & “quality” (at all-time relative high)…
3. …and $6trn of negatively-yielding government bonds, $17trn of bonds yielding <1%, and the Fed expected to raise the Fed funds rates for the 1st time since 2006.
From BofAML’s Hartnett and team:
Yeah, almost, if you’re feeling contrarian, according to BofAML Hartnett et al’s rules:
These came out yesterday courtesy of BofAML’s 2015 look at looong term trends in financial markets by Harnett and Leung…
The obvious place to start:
And the obvious place to continue, asset prices: Read more
That uneasy feeling when everything is going well. Is it deserved? Can it last? Should you cash in and go paint watercolours in that studio on the Pembrokeshire coast?
Strategists are not immune, with a summer bout of the temporaries upon us. Goldman is the latest, downgrading its view of stocks over the weekend but without really committing to it:
We also downgrade equities to neutral over 3 months. We are concerned that a sell-off in government bonds will lead to a temporary sell-off in equities in line with what we saw last summer, though the magnitude is likely to be smaller as the need for bond yields to correct is lower than it was back then.
Bank of America Merrill Lynch strategist Michael Hartnett has offered a call to arms to thematic thinkers everywhere.
Invoking Dr Seuss he, well, judge for yourself:
In the next 40 years, the world will run out of oil. In the next 10 years, a laptop will communicate faster than a human brain. In the next 10 days, 112,000 people will retire in the US, Japan and Europe. Today, 56% of the world economy has zero interest rate policies. Tomorrow, there will be over 3.3 billion searches on Google. And in the next 10 seconds, the US national debt will rise by $322,000. Cyclical and secular trends are transforming at a fast and meaningful pace.
Correlation, causation, or Rorschach test we’re not sure, but the latest from BoA ML strategist Michael Harnett leads with a quite remarkable chart.
Interruption not inflection, says BoAML’s Michael Hartnett, who sees the beginning not the end of the fun.
Bank of America Merrill Lynch strategist Michael Hartnet favours themes this year.
Theme number one: it doesn’t feel pity, or remorse, or fear. And it absolutely will not stop.
Are fund managers becoming complacent? If the latest BofA Merrill Lynch survey of the profession is anything to go by there is certainly reason to think so.
According to the April report the number of investors taking “above normal risk” in their portfolios is now at its highest level since 2006, while the number of respondents predicting above trend growth and below trend inflation has reached its highest reading since February 2008. Read more
Here’s an arresting graphic from Merrill Lynch’s chief global strategist, Michael Hartnett.
It shows short term interest rates during the US depression and Japan’s lost decade: Read more