The chief investment strategist at Bank of America Merrill Lynch Global Research warns that today’s market conditions are reviving ghosts of the pre-2008 Global Financial Crisis.
In a new investment note, BofA’s Michael Hartnett warns that oil rallied to as high as $140 per barrel in August 2008 from just $70 in July 2007, reports Bloomberg.
According to Hartnett, Wall Street is “ominously trading ‘07-’08 analog.”
“Asset performance in 2026 is more ominously close to price action seen from mid’07 to mid’08.”
At time of publishing, oil is trading at $98.83 a barrel, up over 71% from its 2026 opening price of $57.62.
Other banking giants are also sounding the alarm about soaring oil prices. JPMorgan’s Priya Misra said that it could trigger stagflationary shocks, while Goldman Sachs chief economist Jan Hatzius raised the risk of a US recession amid tensions in the Middle East.
Hartnett also points to growing concerns in the private credit market as investors scrutinize banks’ exposure to private credit lenders. Data from the Federal Reserve and Moody’s Ratings show that US banks have nearly $300 billion in exposure to the private credit market.
Last month, Big Short investor Steve Eisman warned that the private credit market is a ticking time bomb as more funds halt or limit investor redemptions.
While Hartnett notes that private credit is not a systemic risk, he says the biggest risk to equities is earnings. The BofA strategist recommends unloading oil above $100 a barrel and the US dollar once the DXY soars above 100. He also tells investors to buy US Treasuries above 5% and the S&P 500 below 6,600.
At time of publishing, the US dollar index (DXY) is valued at $100.49, and the S&P 500 is trading at 6,632.
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