Bank of America warns that a "risk-off summer" is approaching, with market funds shifting toward cyclical stocks.

Jinse Finance reported on June 29 that Bank of America's chief equity strategist Michael Hartnett pointed out that the $8.5 billion outflow from U.S. stock funds last week almost completely offset the net inflow of up to $119 billion in the previous week, reflecting a deterioration in market sentiment, and the weakening momentum of the "Magnificent Seven" is an important signal. This may herald the arrival of a "risk-off summer," especially if the yield curve inverts again and technology stocks fall further, which could further cool market risk appetite.

Hartnett believes that market funds are shifting from large-cap AI stocks to cyclical stocks. Investors expect that if the Trump administration shifts its policy focus from foreign affairs to livelihood and cost-of-living issues that are more favorable for the November midterm elections, the related beneficiary sectors may attract more capital, with semiconductors being seen as one of the likely beneficiaries.

As for the recent synchronized weakness in safe-haven assets, the U.S. dollar, gold, silver, Bitcoin, and emerging market assets, Hartnett believes that the dollar is now an asset that "can only be rented short-term, not held long-term," meaning it is suitable for short-term trading to capture periodic rallies but not for long-term holding.