Stock Groups

Energy is a Long-term Buy, Tech is a Long-term Sell

by Mike Robinson

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© Reuters. The Long-term investment in Energy and the long-term sale of Tech are both valid – BofA

Michael Hartnett, strategist at Bank of America (NYSE) has taken a look back on the flows over the last week amid strong recovery in US Equities, despite higher rates.

Equities attracted $18.9 Billion over the past week, with $12.2 Billion going to cash. Inflows of $400 million to gold were also in the $6.3 billion range.

Hartnett reported that $5.1 billion was the highest inflow into EM stocks, and $3.1 trillion in tech over 2 months – respectively.

Inflows from Japan were $4 billion and $1.5 billion respectively.

In coming months recession risks will jump, Treasury yields & the US dollar will peak, junk bonds, EM, long-duration tech will rally at expense of banks, Hartnett said in a client note.

The BofA Bull & Bear Indicator is now at 2.1, up from 2.0, therefore ending 1-week contrarian “buy signal”.

Crypto were 1st signals in Q1’21 that inflation & rates shock coming, will be 1st signals in Q2’22 that recession & peak in yields imminent. Hartnett said that while energy is long-term, tech is not.

By Senad Karaahmetovic

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