Hartnett: Did You Sell The Last Hike?

After appropriately calling the final route of the market in 2022 in addition to all main inflection factors, BofA CIO Michael Hartnett has seen some occasional mockery this 12 months, particularly after he mentioned that the post-March financial institution disaster soften up within the S&P wouldn’t rise above 4,300, and but rise it did after the S&P rose above the important thing resistance stage in June, after which stored rising… and rising, till it hit a 2023 excessive of 4600 a number of weeks in the past, but none of this might have been attainable with out the sudden emergence within the tech bubble consisting of only a handful of shares often known as the “Magnificent 7″ AI-linked tech giants, which have seen the majority of capital inflows this 12 months, whilst the remainder of the market has been bought off (as mentioned right here).

And but, two weeks in the past a prime JPM TMT dealer unexpectedly rang the demise knell of the AI bubble when he admitted that “AI hype continues to wane. Companies spent much time on AI during earnings calls/analyst days, and now it’s time to start putting up results. Anecdotally, the experience of these products has underwhelmed users, and the novelty could wear off quickly.” Incidentally, the frontrunning of the AI-bubble full-blown collapse was the explanation why firstly of the month, Goldman’s Prime Brokerage famous that the cumulative web shorting by hedge funds in 2023 simply hit a YTD excessive as we get an enormous pile up of bears hoping to frontrun the following market crash. Incidentally, this burst in shorting can also be why GS Prime turned tactically bullish late final week as we mentioned in “Surge In Short Selling Has Goldman Prime Predicting Imminent Painful Squeeze.”