Bank of America strategist: “I’m so bearish I’m bullish”

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Only on Wall Street would an investment research report titled “I’m So Bearish, I’m Bullish” make intuitive sense.

That’s what Michael Hartnett, chief investment strategist at Bank of America, chose for his weekly asset flow report.

The “nihilistic” uptrend, he says, is a decadelongic backdrop of maximum liquidity, and minimal growth is always bullish. The value of US financial assets, after all, is 6.2 times gross domestic product. So, while the GDP has hemorrhaged, and with some 30 million unemployed, it is numbed by the central bank’s asset purchases amounting to $ 2 billion per hour.
The structural view leading to the fall in bond yields is now “shared by all”, the yield on 10-year Treasury bills protected against inflation being -1.08% on Thursday. While that “doesn’t mean it’s wrong,” it does prompt the bubble, says Hartnett. Finally, an S&P 500 SPX,
+ 0,64%
à 4000, or GC00,
-0,30%
at $ 3,000 per ounce and oil CL.1,
-1,28%
at $ 60 a barrel is “probably incompatible with 0% TMUBMUSD10Y,
0,534%
The Treasury reports. ” Banks, he says, cannot lend, as evidenced by 71% in the Federal Reserve’s lending officer survey, which found lending standards tightened, the highest since the fourth quarter of 2008. States and local governments can’t spend, with state tax revenues falling 37% year-over-year in New York City, 42% in California and 53% in New York City. Oregon.

Meanwhile, federal deficits are rising, with the deficit expected to reach 25% of GDP for the first time since World War II if there is a Phase IV stimulus package of at least $ 1 trillion. These deficits will be financed by the action of the Federal Reserve which will lead to a depreciation of the dollar.

Hartnett says the history of the big bear market rebounds predicts an S&P 500 peak between 3300 and 3600, between August and January, with “liquidity driving Wall Street overshoots until the weaker dollar / spreads Larger credit lines signal a credit event or fiscal stimulus / higher yields signal a recovery. “
He is bearish for 2021, however, and says the themes for next year will be buying volatility and inflation assets.
The buzzing
The market is awaiting the Ministry of Labor’s employment report, due at 8:30 a.m. Eastern time. The estimates are broad, but economists on average in a MarketWatch poll estimate 1.7 million jobs added in July. The unemployment rate is expected to decline for the third consecutive month – to 10.5% in July from 11.1% in June.
As with the unemployment claims data, economists warn that seasonal adjustment can flatter the picture of employment at a time when the economy is not performing according to its typical seasonal patterns.
Treasury Secretary Steven Mnuchin said the two sides remain “very distant” on some important issues over a deal for a stimulus package that would include the extension of federal unemployment benefits. The White House is preparing executive orders that could potentially prevent foreclosures and extend unemployment benefits.
President Donald Trump stepped up his actions against Chinese tech companies on Thursday night, signing an order barring U.S. entities from entering into transactions with WeChat owner Tencent Holdings 700,
-5,04%
as well as the TikTok social media app. It is not clear whether the order, which is due to take place in 45 days, will impact Tencent’s vast holdings in the gaming space, although only WeChat is mentioned in the order.
Trump also signed an order reimposing tariffs on aluminum in Canada.
About UBER,
+ 4,54%
reported a loss of $ 1.8 billion in the second quarter, with its food delivery business generating more revenue than first-time ridesharing.
T-Mobile US TMUS,
+ 0,18%
may increase after becoming the number two mobile operator by subscribers, overtaking Verizon Communications VZ,
+ 0,50%.

Groupon
grpn,
-0,54%
could rise after the loss-making online coupon company significantly exceeded Wall Street estimates in the second quarter.
Zilllow Z,
+ 1,16%
ZG,
+ 1,31%
was on the rise in pre-market trading, with the real estate company reporting second-quarter revenue well above Wall Street expectations and saying work-from-home trends had prompted more people to consider moving.
Intercontinental ICE exchange,
+ 1,35%,
the owner of the New York Stock Exchange said he would buy mortgage software company Ellie Mae for $ 11 billion in cash and stock from private equity firm Thoma Bravo.
The market
Le Dow DJIA,
+ 0,68%
finished higher on Thursday for its fifth consecutive win, but US stock ES00,
-0,41%
YM00,
-0,47%
NQ00,
-0,38%
were weaker amid renewed tensions between the United States and China and ahead of jobs data.
Le Hang Seng HSI,
-1,60%
fell 1.6% after Trump’s move against Tencent and TikTok.
L’euro EURUSD,
-0,51%
fell sharply against the dollar.
Table

The New York Fed’s latest report on household debt shows delinquencies are up for credit cards but down for student debt and mortgages. The Coronavirus Help, Relief and Economic Security Act has given relief to homeowners on student loans and mortgages, but not for credit card and auto credit debt.
Random readings
Facebook deleted hundreds of accounts from a foreign troll farm masquerading as African Americans on Thursday in support of Trump and QAnon conspiracy theories.
Meet the really, really, really long neck Tanystropheus.
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