Bank of America strategist Michael Hartnett states a major equity market peak is not yet in sight. This is because the typical condition of policy tightening is absent.
Investor positioning is bullish, and profit expectations are high. However, the policy backdrop remains supportive. This includes potential Federal Reserve rate cuts and other fiscal measures, contrasting with market peaks seen in 2018 or 2022.
Hartnett believes investors are unlikely to retreat until financial conditions tighten materially. He suggests a 30-year U.S. Treasury yield above 5.1% could be a panic threshold.
The strategist reiterated a bullish long-term view on gold as a hedge. He also sees a new secular bull market developing for Emerging Market stocks. This EM growth is driven by strong commodities and strengthening currencies.