According to BlockBeats, on August 15th, Michael Hartnett, Chief Strategist at Bank of America Securities, pointed out in his latest research report that the optimal investment strategy in the current AI bubble environment is to simultaneously go long on leading AI technology companies and undervalued assets that have been neglected by the market for a long time, in order to capture the dual gains during the final peak of the nominal GDP bubble. He also suggested shorting AI bonds. The Bank of America Bull/Bear Index has slightly retreated from 9.7 to 9.3, still in the extreme bullish range and maintaining a "sell" signal, but global stock markets have still recorded gains since the signal was issued in May. The report emphasizes that funds are structurally flowing into gold and commodities, while technology stocks have seen the largest weekly outflow in seven weeks, and private client equity positions have reached a record high.
Hartnett believes that historical bubble patterns show that emerging markets or oversold cyclical assets often benefit from spillover effects before the main bubble peaks, and the consumer sector is most likely to replicate this path currently. Meanwhile, over $1 trillion in AI capital expenditure coupled with negative cash flow will put enormous pressure on the issuance of related bonds. At the same time, Bank of America maintains its asset allocation framework of "avoiding bonds, avoiding the dollar, and fully investing in AI," pointing out that soaring bond yields, a shift towards cautious voter sentiment, and generally high positions are the three potential constraints suppressing further bull market gains. Private client data shows that equity allocations have risen to a record high of 66.4%, while cash and bond ratios have fallen to their lowest levels on record and since 2022, respectively.
Facing the pressure of US national debt approaching $40 trillion and continuously rising debt servicing costs, Bank of America considers yield trends the biggest variable and points out that the intervention in the US-Japan exchange rate has signaled its unwillingness to let the 10-year US Treasury yield break through 5%. Under the theme of "avoiding the dollar," the report recommends going long on gold as a hedging tool, while also being optimistic about the Hong Kong real estate sector, whose valuation is only about 12 times earnings and whose price level is on par with 30 years ago. Looking ahead, the US midterm elections in November are listed as a key political variable: if the Republicans retain the Senate and the Texas governor is re-elected, AI risk assets are expected to accelerate their peak in 2027; otherwise, it may trigger a significant adjustment in the stock market, the dollar, and yields.