BofA Global Research-The Flow Show Won’t save, won’t short

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Trading ideas and investment strategies discussed herein may give rise

to significant risk and are

not suitable for all investors. Investors should have experience in relevant markets and the financial

resources to absorb any losses arising from applying these ideas or strategies.

>> Employed by a non

-US affiliate of BofAS and is not registered/qualified as a research analyst

under the FINRA rules.

Refer to "Other Important Disclosures" for information on certain BofA Securities entities that take

responsibility for the information herein in particular jurisdictions.

BofA Sec

urities does and seeks to do business with issuers covered in its research

reports. As a result, investors should be aware that the firm may have a conflict of

interest that could affect the objectivity of this report. Investors should consider this

report

as only a single factor in making their investment decision.

Refer to important disclosures on page

12 to 14. 12686798

The Flow Show

Won’t save, won’t short

Scores on the Doors

: crypto 34.5%, oil 17.1%, gold 12.5%, commodities 11.4

%, stocks

4.6

%, US dollar 4.2%, cash 1.7%, HY bonds 0.2%, IG -3.0%, govt bonds -5.9% YTD.

Tale of the Tape

: if you spent $100 every second of every day it would take you 1966

years to

equal the $6.2 trillion the US government has spent the past 12 months; fiscal

excess =

no landing =

inflation = secular bear in bonds = ABB “Anything But Bonds” bull…

stocks & crypto ripped Q4, commodities & crypto ripped Q1,

in Q2 turn of US$ to rip as

investors hedge

Fed hike risk & US govt needs US$ strength to counter inflation.

The Price is Right

: not something you normally see when Fed starts cutting rates…

global house prices jumping (Chart

3), US metro house prices all rising YoY (Table 1), all-

cash deals = re

cord 47% of all US luxury home sales in Q1; short bonds until yields hit

2sd

“oversold” levels… 5.2% on 2-year, 5.1% on 10-year & 5.2% on 30-year Treasury

(Chart 4)

The Biggest Picture

: ABB bull = "long monopolies, short leverage" in stocks; top 10 US

ocks = record 34% of S&P 500 market cap (Chart 2 – “Magnificent 7” = 30%), top 10

global

stocks = record 23% of MSCI ACWI (2841 constituents); narrow mega-cap

“

growth” leadership intact until real 10-year yields of 2½-3% and/or higher yields

combine with h

igher credit spreads to threaten recession.

Chart 2: “Anything But Bonds” bull = “long monopolies, short leverage”

Top 10 companies % of S&P 500 market cap

Source:

BofA Global Investment Strategy, Bloomberg.

BofA GLOBAL RESEARCH

More on page 2…

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24

Top 10 companies % of S&P 500 market cap

2000: Microsoft, Cisco, GE, Intel, Exxon Mobil, Walmart,

Oracle, IBM, Citigroup, Nokia

2024: Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta,

Berkshire Hathaway, Eli Lilly, JPMorgan, Broadcom

2020: Microsoft, Apple, Amazon, Alphabet, Meta, Berkshire

Hathaway, Johnson & Johnson, Visa, P&G, Nvidia

25 April 2024

Investment Strategy

Global

Michael Hartnett

Investment Strategist

BofAS

+1 646 855 1508

michael.hartnett@bofa.com

Elyas Galou

Investment Strategist

BofASE (France)

+33 1 8770 0087

elyas.galou@bofa.com

Anya Shelekhin

Investment Strategist

BofA

+1 646 855 3753

anya.shelekhin@bofa.com

Myung

-Jee Jung

Investment Strategist

BofAS

+1 646 855 0389

myung

-jee.jung@bofa.com

Chart 1: BofA Bull & Bear Indicator

Rises to 5.1 from 5.0

Source:

BofA Global Investment Strategy The indicator

identified above as the BofA Bull & Bear Indicator is

intended to be an indicative metric only and may not be

used for reference purposes or as a measure of

performance for any financial instrument or contract

, or

otherwise relied upon by third parties for any other

purpose, without the prior written consent of BofA

Global Research. This indicator was not created to act as

a benchmark.

BofA GLOBAL RESEARCH

Extreme

Bullish

Extreme

Bearish

Sell

Buy

5.1

Accessible version

Timestamp: 25 April 2024 10:34PM EDT

The Flow Show

| 25 April 2024

Weekly Flows: $4.4bn to bonds, $3.6bn to stocks, $11mn from crypto, $0.6bn from

gold, $5.8bn from cash.

Flows to Know:

• Treasuries: 1st outflow in three months ($1.6bn),

• IG bonds: smallest inflow YTD ($3.9bn – Chart 12),

• MBS: record weekly inflow ($2.2bn – Chart 13),

• Japan: biggest inflow ($5.9bn – Chart 14) since May’13 (BoJ QQE announcement),

• Tech: small $0.7bn inflow (like IG, inflows have slowed – Chart 15),

• Consumer: largest outflow since Feb'22 ($1.1bn).

BofA Private Clients: $3.4tn AUM… 60.6% stocks, 20.7% bonds, 11.8% cash; flows

show private clients chased stocks in Q4, but have not in '24; past four weeks GWIM

buying MLP, Japan, bank loan ETFs & selling healthcare, utilities, TIPS ETFs.

BofA Bull & Bear Indicator: up to 5.1 from 5.0 driven by reduction in HF SPX short

positions, resilient credit technicals & lower FMS cash levels (4.2% in April) offsetting

EM debt & global equity outflows.

“Why save?” 2020s era of big government intervention (pandemic = "stimulus checks",

war = "energy rebates", bank run = "deposits insured", unaffordable housing = "student

debt forgiveness"… largest deficits ever outside recession – Charts 5-6); fiscal excess…

Main Street says "why save?"… US personal savings rate low 3.6% (Chart 7), consumer

continues to spend, nominal GDP growth up stunning 42% since COVID… government

bonds just four years into secular bear market (after 40-year secular bull – Chart 8).

“Why short?” past 20 years of big Fed intervention & monetary excess (QE, ZIRP,

NIRP…)… Wall Street says “why short?”… “Fed put” has delivered secular credit & equity

bull markets (both now late cycle); Fed Q4 “pivot” incited big asset price inflation,

ironically making “pivot” in ’24 harder to deliver… bull market in US dollar and

gold/crypto reflect bear market in institutional trust.

“Why save?” + “Why short?”… inflation on Wall Street & Main Street in 2024… no

landing much more probable than soft landing; a "good” no landing driven by

acceleration of growth (e.g. global PMIs) positive risk, especially cyclicals (this is how

market positioned); but "bad” no landing driven by acceleration of inflation more

negative risk, positive volatility & real assets (e.g. cash, gold & commodities – see

“Stagflation Quilt” Chart 16); note ‘70s inflation ended by electorates voting for

candidates promising to reverse inflation (note today inflation clearly macro reason why

Biden approval ratings <40% at time of <4% unemployment rate – Chart 9).

ABC: “Anywhere But China” trade reversing… China stocks breakout on valuation,

positioning (world “long EM ex-China, short China”), China HY bond spreads signal no

real estate crisis (Chart 10); also… higher UST yields + higher US$ = EM trouble… pace

of rate cuts by EM central banks slower (Chart 11 – some reverting to hikes due to

inflation & FX weakness e.g. Indonesia); China one of world’s best performing bond

markets YTD… China less vulnerable to EM crisis assuming no Japanese yen collapse.

The Flow Show |

25 April 2024

Chart 3: Global house prices rising… not typical of Fed easing cycles

Global house prices YoY %

Source:

BofA Global Investment Strategy, Bloomberg

BofA GLOBAL RESEARCH

Table 1: US home prices rising in all major cities

US home prices by city (YoY change %)

Home price YoY change as of Jan'24 (%)

San Diego

11.2%

Los Angeles

8.6%

Detroit

8.3%

Charlotte

8.1%

Chicago

8.0%

New York City

7.6%

Miami

7.5%

Boston

7.0%

Cleveland

6.9%

Atlanta

6.5%

Washington DC

6.4%

Las Vegas

5.7%

Tampa

4.7%

Phoenix

4.6%

San Francisco

4.6%

Seattle

4.4%

Minneapolis

3.2%

Dallas

3.0%

Denver

2.7%

Portland

0.9%

Source:

BofA Global Investment Strategy, Bloomberg

BofA GLOBAL RESEARCH

Chart 4: Treasuries “oversold” level when US bond yields >5%

US Treasuries price vs 200-day moving average

Source:

BofA Global Investment Strategy, Bloomberg, ICE Data Indices, LLC

BofA GLOBAL RESEARCH

Chart 5: US fiscal deficit past four years averaging 9% of GDP

US government budget balance % of GDP and US recessions

Source:

BofA Global Investment Strategy, Bloomberg

BofA GLOBAL RESEARCH

US 6.6%

UK 1.6%

Sweden 1.1%

Australia 9.9%

Canada -0.4%

NZ 2.7%

-20

-10

'04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24 '26 '28

US UK

Canada Sweden

Australia New Zealand

-12%

-10%

-8%

-6%

-4%

-2%

10%

'87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21 '23 '25

US Treasuries price vs 200d-MA

+2 st. dev

-2 st. dev

Jun-Oct'22

May'94

Oct'87

Jun'99 Mar'21 Oct'23

Treasuries 'oversold'

Treasuries

'overbought'

Oct'90 Jun'09 Dec'16

Apr'24

Mar'20

Sep'11

Dec'08

Jun'95 Oct'98 Sep'02 Mar'08

-20%

-15%

-10%

-5%

'59 '64 '69 '74 '79 '84 '89 '94 '99 '04 '09 '14 '19 '24

1959-2019

avg = 2.6%

2020-2024

avg = 9.4%

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Tradingideasandinvestmentstrategiesdiscussedhereinmaygiverisetosignificantriskandarenotsuitableforallinvestors.Investorsshouldhaveexperienceinrelevantmarketsandthefinancialresourcestoabsorbanylossesarisingfromapplyingtheseideasorstrategies.>>Employedbyanon-USaffiliateofBofASandisnotregistered/qualif...

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