Even this pessimistic Bank of America strategist says the bearish rally train has room to go

A stock market that has seen five straight advances for the Dow Jones Industrial Average DJIA,
still does not have many believers.

After meeting clients in the UK, Michael Hartnett, chief investment strategist at Bank of America, described most in a “short-term gain = long-term pain” mode. The selloff looks too orderly to believe that the lows have been reached.

According to Hartnett, a super-peak oil view is gaining traction, which could see crude oil hit $150. He also mentioned another less talked about risk: a “house of cards” in private equity.

Hartnett is certainly not a long-term believer, and he pegged 4,200 as the point at which to fade the S&P 500 SPX,
“We estimate rallies (eg SPX > 4200), but not in a rush,” he said.

For now, he writes, the bandwagon of the bearish rally is rushing ahead, given that highs have been reached in the CPI, bond yields, the US dollar and the Fed’s hawkish policy. There is an idea, he writes, of a Federal Reserve pivot during the annual Jackson Hole speech at the end of August, when the federal funds rate should be between 1.75% and 2% and a few months quantitative tightening will be on the books.

The Bank of America bullish and bearish indicator is in “extremely bearish” territory, and Hartnett says there are many assets that are oversold relative to their 200-day averages, making them vulnerable to a tradeable bounce. Among them: the 30-year Treasury, CCC high-yield bonds, Chinese and German equities, US banks and technology stocks, consumer stocks in the United States, the European Union and China, and the industrialists in Europe.

The buzz

A flurry of economic data was released at 8:30 a.m. Eastern Time.

Spending rose faster than expected in April, at 0.9%, while personal income grew slower than expected, rising 0.4%. The year-on-year growth rate of the PCE price index and the core price index moderated.

The trade deficit in goods fell nearly 16%, while retail inventories rose 0.7%, according to a separate report.

deviation gps,
fell 19% after the retailer cut its outlook on the struggles of its Old Navy division.

Costco Wholesale COST,
met earnings expectations, but also reported margin pressure. He also reiterated that he will not raise prices for hot dogs, although he has succumbed to rising prices for croissants and muffins.

Dell TechnologiesDELL,
shares jumped after its earnings beat expectations due to business demand.

Biotechnology will be on the move after the release of a flurry of data at the annual meeting of the American Society of Clinical Oncology. SpringWorks Therapeutics SWTX,
Iovance Biotherapeutics IOVA,
and Mirati Therapeutics MRTX,
– all major hedge fund holdings Perceptive Advisors, according to its latest 13-Fs – each fell, while Adicet Bio ACET,
and PMV Pharmaceuticals PMVP,

The steps

US Equity Futures ES00,

indicated a continuation of recent gains. The 10-year Treasury yield TMUBMUSD10Y,
was 2.74%.

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Random plays

The school in Uvalde, Texas, where 19 children and two teachers were shot, made extensive preparations on how to counter a gunman.

The New York Yankees and Tampa Bay Rays used their social media accounts during Thursday night’s game to tweet facts about gun violence instead of baseball.

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