Brace For A Year Of “Peak Everything, Big Rotations” – Here Is BofA’s Guide How To Trade It

Over the past year, Bank of America’s chief investment strategist Michael Hartnett has often repeated that when looking at the “transforming word”, one core theme that emerges is the rotation away from monetary to fiscal policy, and from “Wall Street”-focused strategies to “Main Street.” Now, under the Trump presidency, his vision may be validated. On a report “peak returns, big rotations” he shares BofA’s asset allocation under the new regime for 2017 as follows: long stocks (except in North America where he is bearish), real
estate, commodities, and the U. S. dollar, while shorting bonds.
Among his suggested trades are long inflation, short deflation; long Main St., short Wall St.; long fiscal winners, short ‘ZIRP’ winners; long real assets, short financial assets. Hartnett also lays out the expected returns these various trades: low/negative for bonds, with single-digits for U. S. stocks, commodities, U. S. dollar, EM; sees double- digits for Japan, Europe, U. K. stocks, oil.
Hartnett says. “we believe that for first time since 2006, there will be no big easing of monetary policy in the G7, and that interest rates & inflation will surprise to the upside.”

This post was published at Zero Hedge on Nov 21, 2016.

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