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

Michael Hartnett on buying the global equity dip

We've had a 10% correction now in global equity markets. I think we'd like to see the policy actions that give us the buy-signal that say "It's safe to go back in now" and we haven't seen that yet. We're not willing to say right here and now, move back into equities. I do think, however, if you have a list of best-of-breed, or the large-cap multinationals [that David's been talking about] that you like and that you trust those companies, now is a very good opportunity to start purchasing those again.

~Michael Hartnett, Chief Global Equity Strategist, BofA Merrill Lynch Global Research, "Market Update: Is Volatility Back?", May 7, 2010

Michael Hartnett on the need for quantitative easing in response to the PIIGS crisis

The market really started off when [European Central Bank chief] Trichet had that look of "We're not worried about what's going on in the markets" and the markets basically said, "Well, we will make you worried, because we think it is worrying what's happening with Greece and Spain and Portugal." So, asset prices fell very quickly and they'll continue to fall until the European authorities do something. And what we think they should do is launch what is known as a 'quantitative easing' program, whereby the central bank uses its balance sheet to buy assets and in so doing it will stem the contagion out of these countries into the banking system and thereafter into the real economy.

So, damage has been done, without a doubt and you are likely to see GDP estimates in Europe fall, but they won't fall too far so long as the ECB steps in.

There's an old adage, "Markets stop panicking when policymakers start panicking." That's what you should keep in the back of your mind the next couple of weeks. Once you see the panic, it'll be over.


~Michael Hartnett, Chief Global Equity Strategist, BofA Merrill Lynch Global Research, "Market Update: Is Volatility Back?", May 7, 2010

Michael Hartnett on the outlook for the global economy after the panic

I still think the global markets have upside. We have a 350 target for the MSCI-ACWI which is the global benchmark and that's probably 10 or 15% higher from where we are today. I think that's really driven by the earnings story globally, and as long as we don't see a double-dip globally in the economy, and obviously there are bigger fears of that now because of what's happening in China and also in Europe, but as long as we don't see that, and that's the forecast we have from Ethan Harris who is our global economist, earnings will be fine. I think earnings going up is going to take the market higher but I would certainly caution right now about jumping into the market. I think over the next couple of weeks you've really got to see the Europeans, the Chinese, step up. Until you do, we won't be issuing a buy signal.

~Michael Hartnett, Chief Global Equity Strategist, BofA Merrill Lynch Global Research, "Market Update: Is Volatility Back?", May 7, 2010

Michael Hartnett on living in a stock-picker's paradise

One of the messages today that we'd certainly like to relay to the financial advisors and their clients is that there's the beginning of a stock-picker's paradise out there. There are a tremendous amount of macro concerns, and we share them as well, but when you see this dislocation it does often throw up a lot of opportunities to buy very, very good companies at much cheaper prices.

~Michael Hartnett, Chief Global Equity Strategist, BofA Merrill Lynch Global Research, "Market Update: Is Volatility Back?", May 7, 2010