BofA clients exit stocks fearing recession

BofA clients exit stocks fearing recession
The bank's private clients have favored bonds in the past week.
AUG 04, 2023
By  Bloomberg

Bank of America Corp.’s clients are fleeing equities as the risk of an economic contraction remains high, strategist Michael Hartnett said.

Private clients were net sellers of stocks for a second straight week in the five days through Aug. 2, while bond purchases were the strongest since October in the past two weeks, according to a note from the bank.

“Private clients are shifting back to ‘risk-off’ mode,” Hartnett wrote, adding that a hard landing was still a risk for the second half of 2023 amid higher bond yields and tighter financial conditions. 

The strategist was correct with his bearish prediction in 2022, but his pessimistic view this year hasn’t played out as US equities rallied for five straight months until the end of July. That was driven by optimism that the US economy could avoid a recession on the back of cooling inflation and resilient economic data. 

The early days of August have been tumultuous, however, as a downgrade of US government debt by Fitch Ratings lifted yields and prompted some profit-taking in stocks. The focus later on Friday will be on the monthly jobs report for July for clues on the strength of the labor market.

Inflows into technology funds remained strong despite the recent pullback, with the sector attracting almost $6 billion in the past four weeks, according to the note from Bank of America, citing EPFR Global data.

Other highlights from the note:

  • Global equity funds had inflows of $4.8 billion in the week through Wednesday, while $7.2 billion entered bond funds and $20.4 billion went into cash
  • European stock outflows extended to 21 weeks at $3.3 billion
  • Financials and consumer had the biggest outflows among sectors

Latest News

Judge OKs more than $90 million in settlement money for GWG investors
Judge OKs more than $90 million in settlement money for GWG investors

Mayer Brown, GWG's law firm, agreed to pay $30 million to resolve conflict of interest claims.

Fintech bytes: Orion and eMoney add new planning, investment tools for RIAs
Fintech bytes: Orion and eMoney add new planning, investment tools for RIAs

Orion adds new model portfolios and SMAs under expanded JPMorgan tie-up, while eMoney boosts its planning software capabilities.

Retirement uncertainty cuts across generations: Transamerica
Retirement uncertainty cuts across generations: Transamerica

National survey of workers exposes widespread retirement planning challenges for Gen Z, Millennials, Gen X, and Boomers.

Does a merger or acquisition make sense for your firm? Why now is the perfect time to secure your firm’s future
Does a merger or acquisition make sense for your firm? Why now is the perfect time to secure your firm’s future

While the choice for advisors to "die at their desks" might been wise once upon a time, higher acquisition multiples and innovations in deal structures have created more immediate M&A opportunities.

Raymond James continues recruitment run with UBS, Morgan Stanley teams
Raymond James continues recruitment run with UBS, Morgan Stanley teams

A father-son pair has joined the firm's independent arm in Utah, while a quartet of planning advisors strengthen its employee channel in Louisiana.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave