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 skyrocketing performance of the Magnificent Seven, the seven major technology giants in the US stock market, as well as the historical highs reached by cryptocurrencies.
During an interview with Bloomberg TV on Thursday (14th), Hartnett stated that with inflation picking up again and growth showing signs of fatigue, risk assets are unaffected, which “very much fits the characteristics of a bubble mentality.” The characteristics of a bubble can be seen in the prices and speed of change of profit assets, as well as in valuations and narrowness.
Hartnett believes that investors are “front-running” the Federal Reserve’s decision to lower interest rates, which has fueled unprecedented gains in gold and cryptocurrencies. He stated:
“While the bubble may not necessarily burst soon, there are some ominous signals in US economic data. I see evidence of cracks appearing in the labor market, and the labor market can quickly turn a soft landing into a hard landing.”
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