Massive stimulus from central banks in the U.S., China and elsewhere is driving bubble-like stock returns and could head off a global recession, according to Bank of America.
"It's the bubble dream," BofA chief investment strategist Michael Hartnett wrote in his weekly "Flow Show" breakdown of where investors are putting their money.
"Fed slashing, oil crashing, China inflating ... and if this China stimulus don't work then geopolitical risks [are] going to soar."
But while some indicators do point to a slowing in global growth, the abundant forecasts for recession have eased.
"Fed cutting into recession is negative for risk assets, but Fed cutting with no recession is positive and investors firmly of view Fed + China is sufficient policy easing to short-circuit recession risk," Hartnett wrote.
Persons:
Michael Hartnett, Hartnett
Organizations:
Bank of America, Federal Reserve, People's Bank of China, Investors
Locations:
U.S, China