The Flow Show If Stocks were the Super Bowl

TheFlowShow IfStocksweretheSuperBowl Accessibleversion ScoresontheDoors:oil3.1%,USdollar2.7%,stocks2.6%,commodities2.2%,crypto1.1%,cash0.5%,HYbonds-0.1%,IG-1.5%,gold-1.8%,govtbonds-3.0%YTD. ThePriceisRight:priceofa30-secondadduringSuperBowlI(1967)was$37,500,priceforSuperBowlLVII$7,000,000=185xjump;nothingkeepspacewithSuperBowlinflation(93of100mostwatchedTVshowsin‘23wereNFLgames);butiftheycouldchickenwingswouldnowcost$43/lb(was23c/lbin1967),6-packofbeerwouldbe $340,gallonofgasoline$61,avgUShouseprice$4.2mn&S&P500wouldbe16374. TaleoftheTape:talkingofinflation…Nvidiamarketcapup$600bnpast2monthsor“1Tesla"(that’smarketcapnot1car);Nvidia$1.7tnmarketcapsameasChinastockmarket(H-sharesworth$1.7tn)asUShitsrecord64%ofMSCIACWI&Chinanow<3%. TheBiggestPicture:talkingofChina…ifyouinterestedindirectexposuretoworld’smostunlovedmarket,follow“Japanification”…asJapanNikkeicollapsedfrom40kto20k(onwayto10k)in1990swasbig400%bullmarketfor15stockswithinindex("Japan'sNifty15"-Chart2)sameperiod,i.e.especiallyindeflationbearssmallportfolioof"bestofbreed"stocks(strongmanagement,balancesheets,EPS)veryprofitable. Chart2:Japaninthe1990s…BestofBreedbullindeflationarybear TOPIXvsJapan“Nifty15” TOPIXJapan"Nifty15" 5.0+400% 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 08February2024 InvestmentStrategyGlobal MichaelHartnettInvestmentStrategistBofAS +16468551508 michael.hartnett@bofa.com ElyasGalou>>InvestmentStrategistBofASE(France) +33187700087 elyas.galou@bofa.com AnyaShelekhinInvestmentStrategistBofAS +16468553753 anya.shelekhin@bofa.com Myung-JeeJungInvestmentStrategistBofAS +16468550389 myung-jee.jung@bofa.com 0.5 0.0 -40% Chart1:BofABull&BearIndicator 19901991199219931994199519961997199819992000 Source:BofAGlobalInvestmentStrategy,Bloomberg.Japan“Nifty15”=Advantest,Bridgestone,Canon,Honda,Hoya,Konami,Kyocera,Matsushita,Murata,Nintendo,Orix,Ricoh,Rohm,Sony,Toyota Risesto6.8from6.1 Moreonpage2… BofAGLOBALRESEARCH 6.8 46 2 Buy 8 Sell 10 0 Tradingideasandinvestmentstrategiesdiscussedhereinmaygiverisetosignificantriskandarenotsuitableforallinvestors.Investorsshouldhaveexperienceinrelevantmarketsandthefinancial ExtremeBearish ExtremeBullish resourcestoabsorbanylossesarisingfromapplyingtheseideasorstrategies. >>Employedbyanon-USaffiliateofBofASandisnotregistered/qualifiedasaresearchanalystundertheFINRArules. Referto"OtherImportantDisclosures"forinformationoncertainBofASecuritiesentitiesthattakeresponsibilityfortheinformationhereininparticularjurisdictions. BofASecuritiesdoesandseekstodobusinesswithissuerscoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision. Source:BofAGlobalInvestmentStrategyTheindicatoridentifiedaboveastheBofABull&BearIndicatorisintendedtobeanindicativemetriconlyandmaynotbeusedforreferencepurposesorasameasureofperformanceforanyfinancialinstrumentorcontract,orotherwiserelieduponbythirdpartiesforanyotherpurpose,withoutthepriorwrittenconsentofBofAGlobalResearch.Thisindicatorwasnotcreatedtoactasabenchmark. WeeklyFlows:$40.1bntocash,$13.3bntobonds,$5.6bntostocks,$0.8bnfromgold. FlowstoKnow: MMF:ain’tnopeakincashlevelsyet….MMFnow>$6tnassets(seehereastowhy– Chart4); IGbonds:anotherweek,anotherbiginflow($12.3bn–Chart5)…onlytechmorepopularthanIGbondspast6months; USequities:largestoutflowsinceSep'23($15.6bn); EMdebt:largestinflowsinceApr’23($0.4bn)…risk-takinginfixedincome; EMequities:record$20.8bninflow(drivenbyrecord$19.8bnweeklyinflowtoChina…whichitselflikelydrivenbyChinapublicfunds–Chart6); Realestate:largestoutflowsinceMay'22($1.1bn–Chart7)…USregionalbankwoes; infrastructure:biggestoutflowsinceJun'23($0.3bn). BofAPrivateClients:$3.4tnAUM…60.6%stocks,20.9%bonds,11.8%cash;GWIMsellingT-billsbutstockallocation&stockholdingsdonotshowBofAprivateclientschasingstockindiceshigher;ETFflowspast4weeksshowbuyingJapan,EMdebt,REIT,sellingmaterials,dividendfunds&TIPS. BofABull&BearIndicator:jumpsto6.8from6.1,theweeklyjumpdrivenprimarilybystronginflowstoriskyEMassets;BofABull&BearIndicator“buysignal”of<2wastriggeredinOct,contrarian“sellsignal”requiresindicator>8. Positioning:bearpositioningin2023wasmarkets’bestfriend;in2024positioningflippingfromtailwindtoheadwind;notquitethereyet,andmustn’tforgettheoldmarketadage"topsareaprocess,lowsareamoment"(becausehumannaturemeans“fear”somuchmoreeasiertoreversethan“greed”),andmustn’tforgetthatinbubblesmarketsshowlittlerespectforpositioning(orvaluation…theysolelyrespectpolicyandrealinterestratesandgrowingcohortofinvestorssaynostoppingbubbleuntil10-yearrealratesbackabove2½%atminimum–Chart3);butstillworthnotinganumberofBofAproprietarytradingrulesare(unsurprisinglyafteraSPXmovefrom4kto5kin12orsoweeks)closinginon“sellsignals”… BofABull&BearIndicatornow6.8…contrarian"sellsignal"of>8awaitscomboofa.BofAFMScashlevels<4¼%,b.ongoinginflowstoEMdebt&stocks,c.HFfuturespositionslongS&P500,d.globalstockbreadthboostedby+10%rallyinChina/HK; BofAFMSCashRu