Michael Hartnett: "Everyone’s fully invested in U.S. exceptionalism"

Everyone’s fully invested in U.S. exceptionalism.  A bond investor is overweight U.S. Treasurys.  An equity investor is massively long U.S. stocks and massively long U.S. tech stocks, and everyone’s now overweight the dollar.  And I just wonder if this is the thing that we’re going to get wrong…  You can only sell what you own.  And everyone owns America.  And I just worry – whether it’s starting today or whether it’s done in three months’ time – that the dollar’s going to get spanked.  It’s partly because the market ultimately knows that we need to delever, it knows that there’s too much debt and knows that the deficit is so big.  But it also knows that society and the politicians would rather address that through debasement, a weaker currency, than by attacking the root of the problem, which is reducing spending and reducing expectations of spending.

~ Michael Hartnett, chief investment strategist, BofA Merrill Lynch, speaking at Grant’s Conference, October 2023