According to ME News, on August 7 (UTC+8), analysts at Bank of America stated that investor bullish sentiment has reached extreme levels, and it is time to begin reducing exposure to risk assets. Led by Michael Hartnett, the team wrote in a report that the bank’s Bull-Bear Index rose from 9.4 to 9.7, reaching its highest level since 2021. They noted that the broadening rally in equities, significant inflows into high-yield bonds, and narrowing credit spreads underpin this investor optimism. The team favors defensive assets, which they believe can help portfolios withstand potential negative shocks from economic conditions, monetary policy, and developments in artificial intelligence. Hartnett stated, “We are still in the summer phase of ‘retreat/rotation,’ not ‘re-risking.’” He advised investors to reduce allocations to risk assets or shift toward defensive assets, duration assets, and the U.S. dollar. (Source: BlockBeats)
Morgan Stanley: Market Sentiment Reaches Most Extreme Bullish Level Since 2021
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Summary
Market sentiment reached its most extreme bullish level since 2021, according to Morgan Stanley. On August 7, the bank’s Bull-Bear Index rose to 9.7 from 9.4, fueled by rising equities, strong inflows into high-yield bonds, and narrowing credit spreads. Investor sentiment is at a peak, prompting strategists to recommend reducing exposure to risky assets. Michael Hartnett noted that the market remains in a “retreat/rotation” phase, favoring defensive assets, duration, and the dollar to hedge against shocks in AI, the economy, and monetary policy.
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