Hartnett: Bonds not stocks

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The latest from BofA’s excellent Michael Hartnett.


Year Ahead 2023: we stay bearish risk assets in H1, set to turn bullish H2 as narrative shifts from inflation and rate ‘shocks’ of ’22 to recession and credit ‘shocks’ in H1’23; long bonds H1…hard landing, long stocks and bonds H2…peak Fed; maintain SPX nibble at 3.6k, bite at 3.3k, gorge at 3.0k entry points; trades: long UST 30-yr, gold, China,copper, industrials, small cap; short US$, tech, PE; barbell credit.

The Biggest Picture: flows in the 2020s…equities ($1.3tn) and cash ($1.3tn) the big winners…equities have seen big inflows relative to bonds ($0.6tn)and credit ($0.4tn)…trend continuedin‘22(Chart 2).

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.