Equity funds saw the biggest weekly inflow in 18 months amid growing investor confidence the US economy is headed for a soft landing, according to Bank of America Corp.

That’s in stark contrast, however, to BofA strategist Michael Hartnett’s view: “Nothing screams ‘bear market in conviction’ more than money-market funds seeing $1 trillion of inflows year-to-date,” Hartnett and his team wrote in a note on Thursday. The strategist correctly predicted the US stock slump last year, and has remained bearish in 2023 even as the S&P 500 rallied.

Global stocks attracted $25.3 billion in the week to Sept. 13, the most since March 2022, according to EPFR Global data cited by BofA. But amid the renewed optimism on the US economy, Hartnett and his team see a bearish broader picture, with cash and Treasuries having attracted the bulk of inflows and both asset classes on track for a record year.

US equities have outperformed global peers this year, with the S&P 500 Index rising 17%. The Federal Reserve’s policy-tightening has cooled inflation while managing to keep the economy growing at just over 2%, and the buzz around artificial intelligence drove tech shares to record.

For Hartnett, the opportunity to sell the market will come soon. “We believe higher means harder,” the strategists said, adding investors should respect the lag with which the tighter monetary policy will impact the economy.

“We think markets may rally into the first negative payroll print but this will likely be followed by slump on the second negative payroll print,” the strategists wrote. “Meantime, investors should be long assets that have discounted ‘hard landing,’ as they have less to lose in a recession and, if no recession, big upside, and vice versa short assets that discount no landing.”

This article was provided by Bloomberg News.