Bank of America issues warning again: Global central banks "flooding" + regulatory easing increase stock market bubble risk.

The Bank of America strategist said that with the relaxation of monetary policy and financial regulation, the risk of a stock market bubble is rising. The team of strategists led by Michael Hartnett of the Bank of America stated that due to central banks in the United States, the United Kingdom, and Europe lowering borrowing costs, global policy rates have decreased from 4.8% to 4.4% over the past year. He expects this rate to further decrease to 3.9% in the next 12 months. Meanwhile, policymakers are considering regulatory reforms to increase the proportion of individual investors in the United States. Hartnett said, "The larger the scale of individual investors, the greater the liquidity, the greater the volatility, and the greater the bubble." Thanks to optimism about economic growth and corporate profits, the U.S. stock market has reached historic highs despite tariff increases. Market forecasters like Michael Wilson from Morgan Stanley believe that positive earnings momentum, strong operating leverage, and tax savings from cash still provide reasons to be bullish. However, strategists from J.P. Morgan and UBS Group warn that the market may be underestimating trade risks. S&P 500 index futures were mostly flat on Friday as investors hesitated to make big bets ahead of next week's Federal Reserve policy meeting. Hartnett accurately predicted that international stock markets would outperform the U.S. market this year. He warned in December last year that after a strong rebound in 2024, the stock market started to show signs of a bubble. Following his prediction, the S&P 500 index fell by 18% at one point before rebounding in early April. The U.S. stock market has underperformed international markets this year. The strategist reiterated in June that due to expected interest rate cuts, the stock market could enter a bubble state.