BofA Strategist Warns of June Profit-Taking Amid Rising Inflation Risks
Bank of America chief investment strategist Michael Hartnett advises that the U.S. stock market is poised for profit-taking in early June due to crowded equity positions and escalating inflation risks. Despite a strong rebound in global stocks from Iran war lows, with the S&P 500 and Nasdaq 100 rallying significantly since late March, Hartnett warns that rising price pressures in energy, transportation, and rents are creating headwinds. Recent data shows U.S. wholesale inflation hitting six percent and consumer prices at 3.8 percent, with projections suggesting CPI could exceed five percent by November's midterm elections. Historical data indicates that when inflation crosses four percent, risk assets typically decline. Additionally, key upcoming events such as the OPEC gathering, G7 summit, and the first Federal Reserve meeting under Kevin Warsh are expected to spur caution. With 10-year Treasury yields surpassing 4.5 percent, Hartnett suggests that bull capitulation into tech and stocks is complete, making it an opportune time for investors to reduce exposure.
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