Short Canadian Banks A Top Trade Idea In 2023 – BofA Securities’ Michael Hartnett

BofA Securities investment strategist Michael Hartnett released his top trade ideas for 2023, which includes shorting select banks like Canadian banks.

Hartnett placed as his tenth top idea shorting Canadian banks, as well as similar institutions in Australia, New Zealand, and Sweden. At the same time, he suggests placing long positions on European Union banks.

In qualifying this trade idea, he curtly described how the fiscal stimulus to be injected in EU would help the zone wean off its dependence on Russian energy, Chinese exports, and the US military. This would also be complemented by “real estate market busts” in Canada and the rest of countries mentioned.

In his typical bullet point style, Hartnett provided his 2023 outlook, headlined by staying “bearish risk assets” in the first half of the year then turning bullish for the rest, “as narrative shifts from the inflation and rates “shocks” of ‘22 to recession and credit “shocks” in H1′23, then bullish “peak” inflation, Fed, US$ in H2′23.”

Further on forecasts, he relayed that CPI is expected to be 8% to 4% and GDP to be 2% to a negative.

He also suggested shorting the “US dollar, barbell IG tech and Asia HY bonds,” while placing long positions on “copper, industrials, small cap stocks, EU banks.” Further, he suggested avoiding “US tech [and] private equity stocks.”

Information for this briefing was found via The Globe and Mail and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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