Michael Hartnett is the Bank of America’s Top Strategist.

From Wednesday to Thursday, there were 6 consecutive inflows into tech ($1.7 billion). Fund managers are increasing their exposure to defensive assets, with $1.7 billion inflows to healthcare. This is the biggest inflow for five months.

Hartnett notes that the inflows to bank loans have been the highest since February 17, at $22.2 billion, and to EM equities the fastest inflow in 10 weeks (at $55.3 billion).

In total, $9.2bn went to stocks over the week, while $7.5 billion and $1.4billion outflows were from bonds and cash, respectively.

Hartnett reiterated that he was bearish on the 2022 year with the possibility of three shocks.

In a note to clients, the strategist indicated that there is an inflation shock, which is getting worse, and rates shock, just beginning. There will be a recession shock, she said.

Inflation always precedes recessions; late-60s recession preceded by consumer price inflation, 1973/4 by oil/food shocks, recession of 1980 by oil, 1990/91 by CPI, 2001 by tech bubble, 2008 by housing bubble; last dominos to drop in terms of recession expectations is higher yields & weaker dollar, and steeper yield curve and banks/consumer keep falling, Hartnett wrote in a note to clients.

By Senad Karaahmetovic