In a weekly financial note to clients on Friday, Bank of America’s (BOFA) chief investment strategist Michael Hartnett warned that the US economy might enter a recession. According to the BOFA strategist’s report, cryptocurrencies might beat bonds and equities.
The top investment strategist at Bank of America has cautioned that the US economy may face some economic shocks. Inflation in the United States has recently exploded, prompting the Federal Reserve to intervene and handle the situation. The Federal Reserve of the United States hiked the benchmark bank rate for the first time in 2018 on March 16, and the central bank forecasts six more rises this year. Meanwhile, according to Reuters, BOFA’s Michael Hartnett thinks the macroeconomic situation is deteriorating.
With the macroeconomic climate in chaos, the Fed raising rates, and the central bank halting large-asset purchases, the BOFA strategist believes the United States is on the verge of a recession. “‘Inflation shock’ is getting worse, ‘rates shock’ is just getting started, and recession shock’ is on the way,” Hartnett claims. The BOFA analyst’s comments come after bond markets in the United States signalled an expected economic slowdown. The margin between 2-year and 10-year Treasury rates flipped last week, warning that the US economy may be headed for a recession.
According to Reuters columnist Julien Ponthus, Hartnett’s memo to clients on Friday also stated that commodities, cash, and cryptocurrencies “may beat bonds and equities.” Emerging market equities funds and debt vehicles performed better in the recent ten weeks, according to the BOFA statement. Bank of America has spoken a lot about cryptocurrencies in the previous six months. For example, a BOFA analyst predicted in January that the market cap of the smart contract platform token Solana might overtake Ethereum as the industry leader.
Mortgage rates are rising, the BOFA Institute has downgraded nine transportation stocks, and the BOFA Institute claims that households have more cash on hand:
BOFA stated in December that it sees huge opportunities in the metaverse, while the financial institution’s chief operating officer stated the month before that he does not view crypto as a competitor. The Federal Reserve is expected to hike the benchmark rate by 50 basis points at its next meeting, according to BOFA’s current estimate. Furthermore, in April, mortgage rates rose to 5%, making owning a little more expensive. BOFA downgraded nine transportation equities this week, citing “deteriorating demand.”
While BOFA’s senior investment strategist stated on Friday that cash, commodities, and cryptocurrencies might do well, Bank of America Institute’s chief economist David Tinsley said on Thursday that consumers have been stockpiling cash to prepare for inflation. During a Yahoo Finance Live interview, Tinsley said, “On average, the lower-income household has around $1,500 more in the savings and checking account than before the epidemic.”
