BofA - The Flow Show A Short History of Bubble-240216

AccessibleversionTheFlowShowAShortHistoryofBubblesScoresontheDoors:crypto16.3%,oil7.0%,USdollar3.3%,commod2.8%,stocks15February20242.6%,cash0.6%,HYbonds-0.3%,IGbonds-2.3%,gold-3.9%,govbonds-4.0%YTD.InvestmentStrategyThePriceisRight:creditthe“glue”ofanybullmarket…IGbondspreadstight-as-a-Globaldrum,closetopost-Covidlowsof86bps(despiterecord$310bnissuance);butequitybullsonarrow…top5stocks=75%ofS&P500YTDgain,top3techstocks=90%oftechsectorYTDgain,USequity“breadth”currentlyworstsinceMar’09(Chart2).TaleoftheTape:newconsensus"all-weather"assetclassesarecorporatebonds&techstocks…inflowstobothoncourseforblowoutyears…YTDannualized$0.5tntoIGbonds,$85bntotechsectorfunds–Charts4&5).TheBiggestPicture:long,illustriousbubblehistory…SouthSea,Mississippimonopoliesof1710s,DowinRoaring1920s,goldininflationary‘70s,Japanin‘80s,internetin‘90s,China2000s,GreatBondBubble2014-20,crypto,FAANG,techdisruptorderivatives;notwobubblesalike(tryblowingacoupleyourself)butsimilaritiestogaugeMagnificent7todayarecatalyst,price,valuation&"priceofmoney"(seeTable1,page2formore).Table1:AShortHistoryofBubblesMichaelHartnettBubblesinPrice,Velocity,Valuation,YieldInvestmentStrategistBofASBubblePeakRiseDeclineVelocityValuationYield+16468551508MississippiCo.17202955%-95%73%n/amichael.hartnett@bofa.comSouthSeaCo.1720707%-89%188%n/aRoaring20s19...