IMPORTANT POINTS:
- Bank of America strategist Michael Hartnett called himself a “brainless bear.”
- Similarly, the expert is not very optimistic about the actions in the second half of 2023 either.
- “We are not convinced that we are at the beginning of a bull market,” Harnett said.
Bank of America and one of its most renowned investment strategists, Michael Hartnett, have admitted that they were wrong when they projected a decline in the stock market.
The analyst criticized himself and described himself as “a bear with very little brain.” Furthermore, he claimed that he and other bears were wrong about how the market has behaved in the first half of 2023.
Hartnett argued that there were factors that led him to make these erroneous forecasts: The muted contagion from the March collapse of Silicon Valley Bank and other institutions and the ability of major artificial intelligence companies to drive the market to powerful gains.
He was also surprised by the strength of the labor market, when one of the Fed’s objectives was to lower inflation by putting pressure on the economy.
On the other hand, he applauded how the government has managed to dodge a banking crisis after the collapse of SVB: “It was cleverly avoided by the emergency liquidity program of the Federal Reserve and the US Treasury and there was no quantitative adjustment , nor liquidity drainage, but quite the opposite”.
Bank of America is not optimistic either
While the bank and Harnett have admitted they were wrong, they still made it clear that they are not too bullish on stocks in the second half of 2023.
“We are not convinced that we are at the beginning of a bull market. It still feels more like a combination of 2000 or 2008, a big rally before a big market about to crash.Harnett.
The expert recommended investors to be aware of three conditions that could affect the market: If the Fed raises interest rates too much, an increase in Treasury yields and if the unemployment rate shoots above 4%.
