Wall Street is turning increasingly bearish on stocks, catching up with MB. BoA:
Q4 view: higher inflation, hawkish central banks, peak GDP & EPS= low/negativestock/creditreturns; sell rallies into Nov Fed taper; long H2 barbell of long inflation (e.g.commodities, energy, small cap, leisure, banks, Japan) & long quality (e.g. cash, utilities, staples, healthcare, apartments REITs); short consumer cyclicals & tech; note also Fedtaper, China contraction, FCI’stightening, US dollar surge, big inflows≠big stock pricegains, blackout for buybacks…allraises risk of Q4“event”(think 2018); ISM trendsconsistent with lower stocks/copper (Charts7&8).
On macro & Fed: yields up on weaker pandemic, reopening trend, inflation & 23 days before the Fed tapers; political pressure on Fed growing (ultimately v US$-ve) but for the moment US dollar acting as global safe haven; payroll <250k, DC fiscal meltdown, LQD>$125 probably required to stop taper.