Bank of America: There are three thresholds for US stocks to trigger a "full risk-off" this summer; none of the conditions have been triggered yet, but signals are accumulating.

Mars Finance news: On June 28, Bank of America Securities Chief Strategist Hartnett, in his latest “Funds Flow Report,” laid out three thresholds that could trigger a “full risk-off” this summer: Mag7 ETF falls below $60, the US dollar to Japanese yen drops to below 110, and the yield curve once again inverts. None of the three conditions has been triggered yet, but signals are building. US stock funds are currently recording net outflows of $8.5 billion, the first time since March; they had previously just posted a historic net inflow of $119.2 billion. The divergence in which mega-scale cloud providers continue to underperform chip stocks is pushing the sustainability of AI capital expenditure to the core of market debate: Apple has raised MacBook prices, and Microsoft has raised Xbox prices, both directly tied to rising memory costs. The cumulative increase in Vera Rubin rack memory prices is 435%, and Goldman Sachs has forecast that AI capital expenditures in 2027 could be as high as $1.4 trillion. The central proposition Hartnett keeps pressing is—how much further does the cloud-services sector need to fall before the market starts pricing in cuts to capital expenditures?

US equity capital has already shifted ahead of time. Liquidity flowing out of tech giants is moving into cyclical assets such as semiconductors, small- and mid-cap stocks, housing, and REITs, which the market reads as a head start on expectations that the policy focus will shift toward “affordability.” At the level of major asset classes, Hartnett believes that gold below $4,000 still has strong allocation value, and that going long on long-end US Treasuries is the most contrarian long-term trade right now. The US dollar is for short-term holding rather than long-term allocation, and his strategic position is to go long emerging markets over the long term. Since Fed Chair Warsh took office on May 22, US Treasuries have gained 3.2% cumulatively, while stocks have fallen 1.6%, with bonds clearly outperforming.