Bank of America’s $2.8 trillion wealth management chief breaks down how the 9-year bull market will end — and how you can see it coming

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chris hyzy

Chris Hyzy, the chief investment officer for Bank of America’s Global Wealth and Investment Management division, outlines what would have to happen for the 9-year bull market to end.
He also highlights three potential signals that could tip off investors to the types of deteriorating conditions that could lead to such a collapse.

The stock market’s Red October may have felt like a major gut punch for investors, but it was actually pretty tame compared to the type of meltdown that will one day end the bull market.

So says Chris Hyzy, the chief investment officer for Bank of America’s Global Wealth and Investment Management division.

Hyzy notes that while corrections of 10% definitely hurt, they’re usually short-lived and relatively harmless in the grand scheme of things. But he views bear markets — defined as declines exceeding 20% — as a totally different animal. There’s something more sinister and deep-rooted about the conditions surrounding them.

As such, when Hyzy is assessing what could derail the ongoing bull market, he’s looking far beyond the fleeting headwinds that briefly crippled stocks in October. He’s instead focused on the type of jarring economic slowdown that can quickly turn the entire market on its head.

“From my perspective, in order for us to have a bear market that sticks, there has to be something other than a regime shift where you re-price things,” Hyzy told Business Insider by phone. “That’s what a correction is — a repricing. There would need to be an economic hard landing.”

While that may seem like a daunting prospect, Hyzy says there are ways to read the tea leaves and recognize a looming hard landing as it approaches. The key is the yield curve, which looks at Treasury bonds of different maturities in relation to one another.

According to Hyzy, the dreaded hard landing would correspond with an inversion of the yield curve comparing 10- and 30-year Treasurys — a situation where the nearer-term bonds would be yielding more than their longer-maturity counterparts.

Considering that most hard landings (and recessions) throughout history have been coupled with deep stock losses, a bear market might not be much further behind.

Going beyond a sudden economic collapse, Hyzy is also closely watching oil prices. He says that if the price of WTI crude climbs above $100, and brent crude rises above $125, that could …read more

Source:: Business Insider

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