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Hartnett’s comments accompany BofA’s flows in the week to Wednesday, which showed that investors pulled $6.2 billion from equities, $11.4 billion from bonds, $19.7 billion from cash, and $1.8 billion from gold.
The data also show the largest Treasuries inflow since March 2020 ($11.5 billion), the largest EM stocks outflow since June 2020 ($4.4 billion), the largest YTD outflow from tech stocks ($1.1 billion), and the 1st YTD outflow from materials ($0.9 billion).
The strategist also took note of the “crypto implosion” with Coinbase (NASDAQ:COIN) trading roughly 90% lower compared to all-time highs.
“Crash in crypto/speculative tech now rivals internet bubble crash (Nasdaq -73% peak-to-trough) & GFC (banks -78%); trading pattern of post-bubble assets always furious bear rallies amidst dead sideways trading range for couple of years,” Hartnett said in a client note.
The crypto crash “exacerbates Wall St ‘fear & loathing’, fear of VC ‘marks’, PE collapse, bank loans breakdown, dumping of Big Tech,” Hartnett added.
Hartnett also noted that the rally in bonds this week has not (yet) coincided with a rally in biotech, which is trading below 2018 and 2022 lows.
However, the strategist also has “good news” for bulls.
“Last of ‘crowded trades’ short Japan yen & long commodities starting to unwind, dollar not yet melting up into new territory,” he concluded.
By Senad Karaahmetovic
