Bank of America delivers blunt stock market warning investors can’t ignore

Bank of America (BAC) conscionable waved a not-so-subtle reddish emblem for enslaved marketplace investors and anyone positioned successful the banal market.

In a caller Flow Show note, main equity strategist Michael Hartnett argued that the epoch “anything but bonds” is here, and that the accepted information commercialized has failed.

In laying retired his curt rationale, helium said the archetypal fractional of the 2020s delivered what helium presumption “bond-market humiliation,” with long-duration authorities indebtedness suffering unprecedented damage.

For perspective, the information enactment Hartnett’s constituent that long-duration authorities bonds person so incurred large, antithetic losses.

The iShares 20+ Year Treasury Bond ETF (a proxy for “long bonds”) shed a monolithic 31% successful 2022 (one of its worst years), with the maximum drawdown astatine astir -47.8% from its 2020 highest done precocious 2025.

So wherever does the wealth spell erstwhile bonds tin nary longer support your portfolio?

Well, BofA’s reply is wide and, successful galore ways, among the much contrarian takes.

Hartnett expects the backmost fractional of the decennary to favour international stocks, emerging markets, commodities, and gold, with a weaker dollar fueling overseas reflation.

So the AI stocks that person hogged each the spotlight implicit the past 3 years could instrumentality a backmost spot to small- and mid-cap players connected the backmost of almighty reshoring trends and concern rebuilding.

BofA’s informing is little astir the adjacent large commercialized and much astir the instauration beneath investing portfolios, which has seemingly shifted.

Hartnett believes that bonds (the daze absorbers) efficaciously failed astatine their superior job, compelling investors to rethink hazard crossed the full banal market.

That rethink, Hartnett believes, is underway already.

A weaker dollar, stronger commodity prices, and reflation extracurricular the U.S. volition favour international and emerging-market stocks, which person different lagged.

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For perspective, the U.S. Dollar Index has shed 9% of its worth successful the past 12 months and dropped nearly 2% successful the past 5 days alone, MarketWatch noted.

To look astatine the numbers for emerging stocks, let's instrumentality a cleanable gauge successful the iShares MSCI Emerging Markets ETF to spot however they’ve fared against the tech-heavy S&P 500.

For the afloat twelvemonth 2025, here’s however the portion fared.