BofA Analysts Sound Alarm: Trump Tax Cuts Spark Market Frenzy
Wall Street’s hype machine kicks into overdrive as fiscal policy whiplash hits.
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Bank of America strategists warn of irrational exuberance—because nothing says ’stable markets’ like political uncertainty turbocharged with corporate handouts.
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Bonus jab: Another day, another excuse for hedge funds to justify their fees while retail traders hold the bag.
Magnificent Seven stocks often rise 30% from a bubble’s start: BofA analysts
Looking back at previous bubbles, the team estimates that the so-called Magnificent Seven tech stocks typically rally about 30% from the start of a bubble to its peak. To guard against a sudden downturn, they recommend a “barbell” approach that holds those seven names alongside global value stocks as a hedge.
Earlier this month, the 30-year U.S. Treasury yield ROSE above 5% after Moody’s Ratings downgraded the U.S., and investors grew concerned that larger government debt could undermine the country’s safe-haven status. Meanwhile, the Nasdaq 100 has jumped nearly 10% in May, on pace for its strongest monthly gain since 2023.
Other highlights from the BofA report include the fact that investors withdrew $9.5 billion from global equity funds last week, marking the largest weekly outflow of 2025, according to EPFR data. At the same time, assets seen as “weak dollar plays,” such as gold, cryptocurrencies, and emerging-market debt and stocks, attracted substantial inflows.
The strategists argue that 30-year Treasuries yielding 5% now look more appealing than the S&P 500.
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