The Flow Show :Bull Traps & Bear Slaps

TheFlowShow BullTraps&BearSlaps Accessibleversion ScoresontheDoors:crypto22.0%,gold11.5%,oil9.8%,commods7.9%,stocks4.5%, USdollar4.2%,cash1.8%,HYbonds0.5%,IGbonds-2.7%,govtbonds-5.9%YTD. ThePriceisRight:sinceMarch13th(Bitcoinpeak)whenmarketflippedfrompricinginmorecutstolesscutsthanFed“dotplot”(Charts3&4),MOVEback>100,“flashcrash”inMXN,JPY,cocoa,27“plungingcorporatebonds”(pricedown>5centsinday)inApril(Chart5)…higher-for-longer”stuffhappening”;goodnews…“tailrisks”ofFedhike&JPYcollapsenowlowerafterFed“eased”(lessQT)&Japanspent$55bntosupportFX. TaleoftheTape:“ABC”AnythingButChinatradereversedbigpast3months(ChinaH-sharesbestperformingglobalstockmarket&Chinabondyieldsnolongerfalling);“ABB”AnythingButBondstradehasnotreversed(perpetuating“longmonopolies,shortleverage”incredit&stocks);bondsinsecularbearbuthardlandingriskspricedsolowthatcomingbearmarketrallyinbondsonweakerdatalikelyvicious. TheBiggestPicture:bestcoincidentindicatorofprofits=ISM…ISMcontractingagaininApril–Chart7);bestleadingindicatorofISM&profits=neworders/inventoryratio…down3consecutivemonths(Chart2). Chart2:LeadingindicatorofISMhasrolledover ISMManufacturingPMIvsISMneworders/inventories(pushedforward3months) 02May2024 InvestmentStrategyGlobal MichaelHartnettInvestmentStrategistBofAS +16468551508 michael.hartnett@bofa.com 65 1.6 60 1.4 55 1.2 50 1 45 0.8 40 0.6 35 '90'92'94'96'98'00 '02'04'06'08'10'12'14'16'18'20'22'24 0.4 70ISMMfgPMIISMneworders/inventories(pushedforward3m,RHS) Source:BofAGlobalInvestmentStrategy,Bloomberg. 1.8 ElyasGalou>>InvestmentStrategistBofASE(France) +33187700087 elyas.galou@bofa.com AnyaShelekhinInvestmentStrategistBofAS +16468553753 anya.shelekhin@bofa.com Myung-JeeJungInvestmentStrategistBofAS +16468550389 myung-jee.jung@bofa.com Chart1:BofABull&BearIndicator 5.2 46 2 Buy 8 Sell 10 0 Risesto5.2from5.1 Moreonpage2… BofAGLOBALRESEARCH Tradingideasandinvestmentstrategiesdiscussedhereinmaygiverisetosignificantriskandarenotsuitableforallinvestors.Investorsshouldhaveexperienceinrelevantmarketsandthefinancialresourcestoabsorbanylossesarisingfromapplyingtheseideasorstrategies. >>Employedbyanon-USaffiliateofBofASandisnotregistered/qualifiedasaresearchanalyst ExtremeBearish ExtremeBullish undertheFINRArules. Referto"OtherImportantDisclosures"forinformationoncertainBofASecuritiesentitiesthattakeresponsibilityfortheinformationhereininparticularjurisdictions. BofASecuritiesdoesandseekstodobusinesswithissuerscoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision. Refertoimportantdisclosuresonpage11to13.12690615 Timestamp:02May202410:37PMEDT Source:BofAGlobalInvestmentStrategyTheindicatoridentifiedaboveastheBofABull&BearIndicatorisintendedtobeanindicativemetriconlyandmaynotbeusedforreferencepurposesorasameasureofperformanceforanyfinancialinstrumentorcontract,orotherwiserelieduponbythirdpartiesforanyotherpurpose,withoutthepriorwrittenconsentofBofAGlobalResearch.Thisindicatorwasnotcreatedtoactasabenchmark. BofAGLOBALRESEARCH WeeklyFlows:$9.8bntoequities,$4.6bntobonds,$0.6bnfromcrypto,$1.1bnfromgold,$1.6bnfromcash. FlowstoKnow: Gold:biggestoutflowsinceJan’24($1.1bn), Crypto:biggestoutflowsinceJun’22($0.6bn–Chart12), IGbonds:27thstraightofinflows($3.9bn–Chart10), HYbonds:smallweeklyoutflow($85mn), China:biggestinflowin8weeks($2.7bn–Chart11), Europe:1stinflowsinceDec’23($0.3bn), Financials:biggestoutflowin8weeks($0.7bn), Utilities:1stinflowsinceJan’24($0.3bn). BofAPrivateClients:$3.5tnAUM…61.3%stocks,20.4%bonds,11.5%cash;biggestweeklyinflow(>$6bn)tostocksin2024,2ndlargestinflowsinceSep’22;privateclientsbuyingMLP,financials,JapanETFspast4weeks,sellinghealthcare,utilities&TIPS. BofABull&BearIndicator:upto5.2from5.1onreductioninSPX&2-yearUSThedges,risingglobalequityindexbreadth,inflowstoEMstocks. BigPicture: bondsin"earlysecularbearmarket"drivenbyinflation(fiscalexcess,debt,war,deglobalization);30-yearUSTreasurydown40%past4years,secularbearonlyoveronceelectoratesonMainSt(viaelections)&WallSt(viadebtratings,failedauctions)voteforlessfiscalexcess, commoditiesin"earlysecularbullmarket"forsamereasons+newdemandtopowerAI…notegoldhasoutperformedstockssinceUS-Chinatradewarbeganin2018, stocksin“latesecularbullmarket"(nochangeinUSleadershipsince2009,norecessiontochangeleadershipplusvaluation)endswithbubbleand/orrecession(globalstocksespEMmuch,muchless"late-cycle"), USdollarin“secularbearmarket”espvs.crypto&gold…USdebt/deficitsrequireweakerFXtoattractforeigncapitaland/orFedsupportforTreasuryviaratecuts("ICC"InterestCostControlpolicy/QE/YCC);note'24US$cyclicalbullon'USexceptionalism'drivenby'exceptionally'easyfiscalpolicy. SmallPicture: StagflationvsGoldilocksin’24…springdata“stagflationary”…ISMnewordersbelow50vsISMpricespaidabove60,USjobopeningstounemployedlowestsinceAug'21(Chart6)vsrisinglaborcosts(ECI&unitlaborcosts), AprilUSpayrolls…goldilocksback-on&riskbac