A team of strategists at Bank of America (BofA) warned that the “extreme rally” shown by the U.S. stock market under the strong stimulus policy is creating an asset price “bubble”.
The BofA team of strategists pointed out in their report that “the policy bubble in Washington is blowing up the asset price bubble on Wall Street. When those who want to stay rich start to take the same actions as those who are bent on getting rich, it is a sign that the next stage will be a speculative burst.
The report points out that the Bank of America’s “long-short pointer” is approaching a “sell signal,” predicting that the stock market will retreat and will do a head start in the first quarter.
Experts warned that investors will do a “reflationary market”, driving stock prices soaring, will drive “general Inflation” higher, may trigger a storm of exit, financial conditions tight and market turmoil.
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