Bank of America strategists led by Michael Hartnett say investor bullishness has reached its most extreme level since 2021, with the firm's bull-and-bear indicator climbing to 9.7 from 9.4, and they recommend reducing exposure to risky assets. The team points to broadening equity markets, strong inflows into high-yield debt, and tighter credit spreads as drivers of the optimism, and they favor defensive assets to protect against negative surprises in the economy, monetary policy, and artificial intelligence. Hartnett advises retreating from risk assets or rotating into defensives, duration, and the US dollar. The warning comes as equities hit record highs on both sides of the Atlantic and US equities attracted a net $9.6 billion in the week through August 5, putting the region on track for a record year of inflows, according to EPFR Global data cited by BofA.
Bank of America CorpBofA's own strategists recommend reducing risk exposure, which could dampen investor sentiment toward the bank's stock.
