Bank of America: U.S. Stocks to Trigger "Full Hedge" This Summer, Three Major Thresholds to Watch, Trigger Conditions Already Accumulating

BlockBeats News, June 28th. Bank of America Securities Chief Strategist Hartnett listed three key thresholds that would trigger a "summer of full risk-off" in his latest "Flow Show" report: Mag7 ETF dropping below $60, USD/JPY falling below 110, and a renewed yield curve inversion. While none of these conditions have been met yet, the signals are accumulating. Currently, U.S. stock funds have seen $8.5 billion in net outflows, marking the first outflow since March after experiencing a historic $119.2 billion inflow. The ongoing underperformance of mega-cap cloud stocks compared to chip stocks is driving the core of the market debate on the sustainability of AI capital expenditure: Apple has raised MacBook prices, Microsoft has increased Xbox prices, both directly related to rising memory costs; Vera Rubin rack memory prices have cumulatively risen by 435%, and Goldman Sachs predicts that AI capital spending could reach as high as $14 trillion by 2027. Hartnett's persistent core question is—how much further do cloud stocks need to fall for the market to begin pricing in a cut in capital expenditure?

Funds in U.S. equities have shifted early, with liquidity flowing out of tech giants and into cyclical assets such as semiconductors, mid-caps, housing, and REITs, interpreted by the market as an anticipatory race towards the expectation of a policy shift towards "affordability." At the asset class level, Hartnett believes that gold below $4000 still holds strong allocation value, longing the long end of U.S. Treasuries is the most contrarian long-term trade at present; the U.S. dollar is only for short-term holding, not long-term allocation, with long-term bullishness on emerging markets being his strategic stance. Since Fed Chair Powell took office on May 22nd, U.S. bonds have risen by 3.2%, outperforming stocks' 1.6% decline, showing a significant leadership in bond performance.