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In the coming months, Bank of America will remain bearish on risk assets

Risk assets are expected to remain bearish in the first half of 2023, according to Bank of America strategists.

According to the strategists, investors should wait until the second half of the year to play a rebound in beaten-down tech stocks. Former inflation and rate “shocks” have given way to recessions and credit “shocks”.

It was mentioned in a client note that long bonds were long H1… hard landing was long bonds, long stocks and bonds were long H2… peak Fed; keep SPX at 3.6k, bite at 3.3k, and gorge at 3.0k entry points; trades were long UST 30 year notes, gold, China, copper, industrials, small-caps; short US dollar, technology, PE; and barbell credit were advised.

As well as the key 4-day flows from November 22 to November 29, the report also highlighted the largest bond inflow in 15 weeks, the first gold inflow since June (ending the longest outflow episode ever on record), and the longest outflow episode on record for European stocks, extending the longest outflow episode ever.

There has been a continuation of rotation of private client funds from equity investments to bonds over the past 39 consecutive weeks, with 9 consecutive weeks of equity investments, as far as BofA’s private client portfolio is concerned.

In addition, the BofA Bull & Bear Indicator has reached 0.6, which is a 5-month high and an indication of improving risk sentiment.