BlockBeats News, August 15th. In a recent research report, Michael Hartnett, Chief Investment Strategist at Bank of America Securities, pointed out the optimal investment strategy in the current AI bubble environment. He suggested simultaneously long positions in leading AI technology companies and overlooked distressed assets to capture the two-way gains in the final phase of the nominal GDP bubble. He also recommended shorting AI bonds. The Bank of America Bull & Bear Indicator slightly dropped from 9.7 to 9.3, remaining in the extreme bullish territory and maintaining a "sell" signal, yet global stocks have continued to rise since the signal was issued in May. The report emphasized that funds are flowing structurally into gold and commodities, with the largest weekly outflow from tech stocks in seven weeks. Private client equity allocations have reached a historic high.

Hartnett believes that according to historical bubble patterns, on the eve of a dominant bubble peak, emerging markets or oversold cyclical assets often benefit from spillover effects. The sector most likely to replicate this path currently is the consumer sector. With over $1 trillion in AI capital spending combined with negative cash flow, there will be significant issuance pressure on related bonds. Meanwhile, Bank of America maintains a major asset framework of "avoiding bonds, avoiding the dollar, and going all-in on AI," pointing out that surging bond yields, a shift in voter sentiment towards caution, and generally overleveraged positions are three potential constraints that could suppress further upside in the bull market. Private client data shows that equity allocations have risen to a historical high of 66.4%, while cash and bond allocations have decreased to their lowest levels on record and the lowest since 2022.

Facing the pressure of the U.S. national debt approaching $40 trillion and the continuous rise in borrowing costs, Bank of America sees yield trends as the biggest variable. They indicated that U.S. Treasury yield intervention with Japan has sent a signal that they do not want the 10-year Treasury yield to exceed 5%. Under the "avoiding the dollar" theme, the report recommends a long position in gold as a hedge, while also being bullish on the Hong Kong real estate sector, which has a valuation of only about 12 times earnings, in line with levels from 30 years ago. Looking ahead, the key political variable is the November U.S. midterm elections: if the Republican party retains the Senate and the Governor of Texas is re-elected, AI risk assets are expected to accelerate their peak in 2027; otherwise, it could trigger a significant adjustment in the stock market, the dollar, and yields.