BofA - The Flow Show Goldishocks-240315

AccessibleversionTheFlowShowGoldishocksScoresontheDoors:crypto57.2%,oil13.0%,commodities6.8%,stocks6.7%,gold14March20244.5%,US$2.1%,HYbonds1.2%,cash1.1%,IGbonds-1.2%,govtbonds-3.0%YTD.InvestmentStrategyZeitgeist:“Theoldworldisdying,andthenewworldstrugglestobeborn;nowistheGlobaltimeofmonsters”…headofcentralbankonUSdollarhegemonyatBofAconference(channelingGramsci).TheBiggestPicture:USheadline/coreCPItrendingto3.6-4.0%byJunewhenFedexpectedtocutrates(Chart2);implicitlyFedtoleratinghigherinflation(easesUSdebtburden);weakerpolicycredibility=weakercurrency…whycrypto&goldatall-timehighs.ThePriceisRight:first5monthsofFY24USgovtspendup9%YoYonmilitaryspend&interestpayments,budgetdeficitup15%(annualizing$2.0tn);USgovtdebtnowrising$1tnevery100days…whyUSTbondyieldsthreateningbreakoutuptoward4½%.TaleoftheTape:macroshiftingfromQ4/Q1“Goldilocks”toQ1/Q2“Stagflation”;MichaelHartnettinflationupinDM&EM(EMcentralbanksnow“pausing”cuts–Chart4)whileUSlaborInvestmentStrategistmarketfinallycracking(full-timepayrollsdown~3mnjobsin3months,quitsratioandBofASsmallbusinesslabordemanddowntolowestsinceQ2'20lockdown–Chart5);USinQ4+16468551508=3%growth,2%inflation=Goldilocks,butUSinQ1=<2%growth&3-4%inflation=michael.hartnett@bofa.comStagflation…whyoilnowhandilyoutperformingNasdaqYTD.ElyasGalou>>Chart2:USCPIsetfor3.6%YoYwhenFedwid...