Prices Have Discounted Much Bad News, Sentiment Rock-bottom – Bank of America

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Bank of America’s Bull & Bear Indicator remains at “0”, signaling maximum bearishness, according to the bank’s strategists.

Sentiment remains “rock-bottom,” BofA’s Chief Investment Strategist added.

“Prices have discounted much bad news,” he wrote to clients in a research note today.

“Putin/China catalysts to be less bearish H2 but bull run needs peak CPI, peak yields, Fed done by ’23… unlikely without big recession and/or big credit event (which disconnect between banks & yields has implied),” he added, before telling clients to sell S&P 500 at 4200.

The strategist also noted that “everyone is bearish but no one has sold” i.e. for every $100 of inflow since January 2021 just $2 of outflow from tech and $3 from equities.

As far as weekly flows are concerned, $3.5 billion went into cash, while outflows from gold, stocks, and bonds were $1.8 billion, $4.5 billion, and $8.2 billion, respectively.