Bank of America: Stock market expected to experience a wave of profit-taking after Jackson Hole meeting

Bank of America strategists have pointed out that the record rally in U.S. stocks makes it an excellent time for the Federal Reserve to take profits when it sends dovish signals at the Jackson Hole meeting. Michael Hartnett's team said investors have piled into risk assets ranging from stocks to cryptocurrencies and corporate bonds on optimism that the Fed will lower interest rates to support a weak labor market and ease the U.S. debt burden. Hartnett wrote in a note that a dovish speech from Federal Reserve Chairperson Jerome Powell at the Jackson Hole meeting could lead to a slide in stocks as investors "buy rumors and sell facts." He reiterated his preference for international equities over US equities, a view that has proved true this year. Hartnett recently warned of a potential bubble in equities, arguing that gold, commodities, cryptocurrencies and emerging market assets would be the biggest winners as investors seek to fight inflation and hedge against a weaker dollar.