Bank of America Strategist Flags 60% Oil Surge, Private Credit Strains
Michael Hartnett of Bank of America warns markets mirror mid-2007 to mid-2008 as oil surged over 60% this year after Iran conflict. He highlights private credit fund redemptions and underwriting strains that threaten bank earnings and urges selling oil above $100, 30-year Treasuries above 5%, and S&P 500 under 6,600.
1. 2008 Analogy and Oil Surge
Michael Hartnett warns that asset performance in 2026 is eerily similar to mid-2007 through mid-2008, noting oil prices more than doubled to $140 a barrel in August 2008 and have climbed over 60% this year following the Iran conflict. He points to this parallel as a warning sign for market stability.
2. Private Credit Risks
Hartnett flags growing concerns around banks’ exposure to private credit, citing fund redemptions, tightening underwriting standards and potential AI impacts on borrowers. He warns these factors could strain bank balance sheets and weigh on earnings if redemption pressures intensify.
3. Stagflation Fears and Rate Policy
Soaring energy costs have stoked stagflation fears, threatening to force central banks into premature rate hikes. Hartnett references the ECB’s July 2008 rate increase—one of the greatest policy mistakes—as a cautionary tale for today’s policymakers.
4. Trading Recommendations
To hedge against rising risks, Hartnett recommends selling oil futures above $100 per barrel, 30-year Treasuries if yields exceed 5%, the dollar when its index rises above 100 and the S&P 500 below 6,600 to limit downside exposure.