BoA Bearish on US Equities Despite AI-Powered Tech Rally

Bank of America analysts restate their bearish view of US equities again. Say that bears like them had been wrong in H1 due to the US economy avoiding a recession and a credit crunch, and an “unanticipated event” - the the AI-powered tech rally.

In a note laced with metaphorical language now say that

• individual investor sentiment had risen "with frothy stocks as investors chase the bull".
• "we are not convinced we at start of brand, new shiny bull market"

Say the current market looks more like 2000 or 2008, with a “big rally before big collapse”. Then see a confluence of factors in late July as topping out the S&P500 benchmark index:

• central bank meetings of:
  • FOMC (25 and 26 of July meeting)
  • BOJ BOJ The Bank of Japan (BOJ) is the central bank of Japan. It was established in 1882 and is headquartered in Tokyo.The BOJ's main responsibilities include issuing and managing the country's currency, implementing monetary policy, and ensuring the stability of the financial system. It also acts as a lender of last resort to banks during times of financial crisis. The BOJ sets the interest rate of the country and sets an inflation target, aiming to achieve 2% inflation.The BoO has a long history, with The Bank of Japan (BOJ) is the central bank of Japan. It was established in 1882 and is headquartered in Tokyo.The BOJ's main responsibilities include issuing and managing the country's currency, implementing monetary policy, and ensuring the stability of the financial system. It also acts as a lender of last resort to banks during times of financial crisis. The BOJ sets the interest rate of the country and sets an inflation target, aiming to achieve 2% inflation.The BoO has a long history, with Read this Term (27 and 28 July)
  • ECB (27 July)
• along with Q2 EPS data

The analysts are looking for upside of as much as 150 points versus 300 points of downside between now and US Labor Day (September 4).

Weekly candles

2023 so far has been harsh on bears. While the arguments for a recession and credit squeeze/collapse have been well made, they've been more than countered by the bull argument, which was basically just counting the money they made.