Hartnett: Quantitative Tightening Turning Into Quantitative Tinkering As Central Banks Panic
With that in mind, and going back to Hartnett's latest title, "Main Trade, Pain Trade, Vain Trade", he explains:
main trade = long T-bills & short-dated Treasuries on big yield, hedge for recession & credit event;
pain trade = new highs spreads, flush in SPX to 3333 (pre-COVID high) as bear rally in risk too consensus, flows show no capitulation, recession/credit shock coming;
vain trade = US dollar & big tech in US (big luxury in EU)…to Hartnett, shorting the US dollar is the short of ‘23, the BofA strategist is confident that the "final capitulation" will be led by unwind of hubristic longs in large cap growth stocks.
Meanwhile, as markets debate the timing of the Fed pivot (if only on hikes, now that the fate of QT's reversal is all but sealed), Hartnett warns that the inflation shock continues: latest YoY food price inflation in US 11%, in Germany 19%, in UK 15%
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