Bank of America Warns of AI Frenzy and Inflation Heating Up Market Risk, Suggests Deleveraging to Lock in Gains by Early June

BlockBeats News, May 15th, Bank of America's Chief Investment Strategist Michael Hartnett warned in the latest "Flow Show" report that with funds continuing to pour into the stock and tech markets, early June may become a window for investors to take profits. Hartnett stated that the current AI craze, rising inflation, and FOMO fund inflows are pushing the market into a dangerous territory. He pointed out that the US April PPI rose to 6% year-on-year, and CPI rose to 3.8% year-on-year, both higher than expected. If inflation maintains its current pace in the coming months, the US CPI may break 5% before the mid-term elections in November.

He sees CPI breaking 4% as a key threshold where risk assets start to come under pressure, and mentioned that historical data shows that when inflation exceeds 4%, the S&P 500 index averages a 4% decline over the next 3 months and a 7% decline over the next 6 months. In addition, Bank of America's Bull & Bear Indicator has risen to 7.6, approaching the "sell signal" range of 8.0. Hartnett also pointed out that the current Semiconductor Index (SOX) is 62% above its 200-day moving average, surpassing the level during the Internet bubble.

In terms of fund flows, in the latest week, global stock funds saw inflows of $20.5 billion, tech stocks saw inflows of $5.4 billion, while cryptocurrency funds saw outflows of $1.3 billion, the largest weekly outflow since February 2026.