Overview
- Bank of America strategist Michael Hartnett is keeping a tactical risk-off stance through mid-November and says investors should expect lower yields, weaker stocks and a softer U.S. dollar.
- The call reflects heavy recent flows into technology and AI-related assets, with EPFR data cited by the bank showing one of the biggest weekly tech inflows since July and BofA survey exposure at multi-year highs.
- Despite big tech allocations, many investors have shifted to defensive positions because of higher oil prices, rising financing costs and growing warnings that AI trades may be showing bubble-like features.
- Hartnett says risk appetite could return if the European Central Bank or the French government stabilizes French sovereign bonds or if large AI 'hyperscaler' firms take material capital-action steps such as cutting capex or issuing equity.
- The combination of concentrated tech bets and political uncertainty is pushing money into safer assets and defensive stocks, a move that could tighten credit spreads and weigh on corporate profit growth if the market prices in policy or tax changes.