The Flow Show Peaks and shovels

The Flow Show Peaks and shovels

Scores on the Doors: oil 76.1%, global stocks 13.1%, US stocks 11.6%, cash 2.6%, US$ 17 September 2026 Corrected 2.0%, HY bonds 1.6%, gold 0.2%, IG bonds -1.4%, govt bonds -2.4%, bitcoin -12.8% YTD. Investment Strategy Global The Price is Right: since June 1st Nasdaq top, Fed hike expectations deflated the AI enablers e.g. blue-collar semis (-31% - Chart 3) and independent power producers (UTES); bulls rotated to financials (Chart 4). Bad news: “GDP boom” hopes are over, good news: Fed clarity, peak in 2yr yields = MAGS flirting with record highs.

The Biggest Picture: no Fed’s been this terse since 2007 (Chart 2); return of credibility and end of “oversharing” are long-term bullish for market resilience, but require higher bond risk premiums; hawkish Fed/BoJ/ECB/BoE say the CPI decline “too slow”, FMS Investment & ETF Strategist investors say AI buildout “too fast” (record net 33% say companies overinvesting); Jared Woodard Investment & ETF Strategist solution: barring trade peace (Trump-Xi Sept 24th) or oil peace (refiners maxed out), best BofAS hope for big upside is a peak in hyperscaler capex.

Tale of the Tape: 3Ps are all peaking; positioning still too bullish per FMS, flows, Bull & Investment Strategist Michael Hartnett Bear @ 9.5; especially given profits moderating in 2027… even the 10-15% EPS Investment Strategist BofAS consensus implies ISM sustained somehow >53 (Chart 5); clearly the “run it hot” policy posture is done; not yet time for defensives but quality, value, and yield look prudent… key Q4 risks are also what’s working now: commodities, credit, China bonds (see p. 2). Anya Shelekhin Investment Strategist BofAS Chart 2: No Fed’s been this terse since 2007 FOMC statement word count since 2000 Myung-Jee Jung FOMC statement word count Investment Strategist BofAS 800 Warsh Powell Bernanke 700 Jessica Guo Investment Strategist BofAS 600 Chart 1: BofA Bull & Bear Indicator 400 Stays at 9.5

200 Yellen Sep'26 4 6 130 words Buy 2 8 Sell 100 9.5

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24 '26 0 10 Extreme Extreme Bearish Bullish Source: BofA Global Investment Strategy, Fed Board of Governors, Richmond Fed BofA GLOBAL RESEARCH Source: BofA Global Investment Strategy. The indicator identified above as the BofA Bull & Bear Indicator is More on page 2… Note: Michael Hartnett is away this week. intended to be an indicative metric only and may not be used for reference purposes or as a measure of performance for any financial instrument or contract, or otherwise relied upon by third parties for any other purpose, without the prior written consent of BofA Trading ideas and investment strategies discussed herein may give rise to significant risk and are Global Research. This indicator was not created to act as not suitable for all investors. Investors should have experience in relevant markets and the financial a benchmark. resources to absorb any losses arising from applying these ideas or strategies. BofA GLOBAL RESEARCH BofA Securities does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Refer to important disclosures on page 11 to 13.

Weekly Flows: $79.3bn to stocks, $9.8bn to bonds, $3.1bn to gold, $0.8bn from crypto, $75.9bn from cash.

• Cash: $75.9bn outflow, biggest in 9 weeks;

• Crypto: $0.8bn outflow, biggest in 11 weeks (Chart 10);

• IG bonds: $1.0bn outflow, 1st outflow since Apr’26 (Chart 11);

• HY bonds: $2.5bn outflow, biggest since Apr’26;

• US stocks: $63.8bn inflow, biggest in 3 months;

• Consumer: $1.4bn inflow, biggest since Apr’23 (Chart 12).

BofA Bull & Bear Indicator: stays at 9.5 as strong inflows to global equities are offset by HY bond outflows and wider AT1 credit spreads; “sell signal” triggered May 26th; since then, SPX +1.6%, ACWI +1.4%; “old” Bull & Bear Indicator at 7.1 (see BofA Bull & Bear Indicator report).

BofA Breadth Rule: global stock index breadth has weakened… just 2% of global equity market indices are…