BofAML: The Idea That Stocks Will Continue To Rise Is “Wishful Thinking”

BofAML is out on Thursday calling the euphoria in the US equity market what it is: “wishful thinking.”

Besides the rather obvious fact that…

valuations are stretched to the proverbial breaking point,

and besides the fact that…

if we can indeed begin to take central banks seriously when it comes to their intentions to normalize policy (as evidenced in the ECB’s removal of the reference to further rate cuts and reports that even the BoJ is contemplating an exit strategy), then it’s reasonable to suggest that the artificial vol suppression behind the dynamics driving risk assets to nosebleed levels is about to fade,

….the myriad geopolitical land mines littering the investment landscape should themselves be enough to warrant more caution than prices seem to reflect.

And while BofAML touches on those points as well as the possible impact of China’s ongoing efforts to tighten policy, the bank also notes that measures of business and consumer confidence are at odds with what they’re hearing from CFOs.

Read more below on why you should probably curb your enthusiasm…

Via BofAML