Financial Insights That Matter
Relentless rallies in multiple risk assets into the year-end have caused widely followed strategist Michael Hartnett to sound the alarm on a bubble forming. The price of bitcoin soared past the long-awaited $100,000 benchmark for the first time ever late Wednesday evening. Meanwhile, the S & P 500 and the blue-chip Dow notched more record highs this week, powered by continuous strength from technology shares. Hartnett, a Bank of America investment strategist, said “froth” is gathering in crypto as bitcoin now exceeds a $2 trillion market value. He also raised a red flag on the S & P 500’s valuation, where its price to book ratio has topped its previous high from March 2000 during the dot-com bubble. The strategist said the risk of an “overshoot” is now “high” as the S & P 500 “melts” toward 6,666, around 10% from current levels. The equity benchmark closed Thursday at 6,075.11. The Wall Street firm’s Savita Subramanian had set her 2025 S & P 500 target at 6,666. While Subramanian expects the broad benchmark to continue to climb, she said buying opportunities lie in individual companies that have the potential to return cash to shareholders and are beneficiaries from the new administration. The S & P 500 hit a new record again on Friday even as a better-than-expected jobs report could call into question whether the Federal Reserve should continue lowering rates in 2025.
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