Hartnett: Buy bonds and the world

BofA’s excellent Michael Hartnett returns for 2023. Lots of good ideas here.

The Price is Right: end of era…monetary tightening caused collapse in value of negative yielding debt from $18tn in Nov’21 to zero today (Chart 3); same period NYFANG (Big Tech) market cap sank $5tn in value; US/Japan/EU/UK governments to issue $6tn bonds in‘23 (US national debt to rise $2bn today, another $15bn this week…)

Tale of the Tape: start of era…past 2 months Europe stocks outperformed US by 1500bps (Chart 4) driven by lower price of oil ($100/bl to $80/bl), natural gas (-50%), China reopening, peak CPI/PPI (Chart 5), big credit rally (€IG spreads 60bp tighter).

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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.