According to Bloomberg, Michael Hartnett, Chief Investment Strategist at Bank of America (BofA), has warned that the market is showing signs of a bubble in the record surge of the Magnificent Seven tech giants in the US stock market and the historic highs reached by cryptocurrencies.
During an interview with Bloomberg TV on Thursday (14th), Hartnett stated that with inflation picking up again and growth showing some weakness, risk assets remain unscathed, which “fits the characteristics of a bubble mentality.” The bubble characteristics can be seen in the prices of profitable assets, the speed of change, valuations, and narrowness.
Hartnett believes that investors are “front-running” the Federal Reserve’s decision to cut interest rates, which has fueled unprecedented surges in gold and cryptocurrencies. He stated, “The labor market can quickly turn a soft landing into a hard landing.”
While Hartnett acknowledges that the bubble may not necessarily burst soon, he points out some ominous signals in US economic data, seeing evidence of cracks in the labor market. He further stated, “The labor market can quickly turn a soft landing into a hard landing.”
