BofA Securities urged caution on U.S. equities, saying about 70% of its
bear‑market signals have been triggered—on par with historical levels seen near
market tops—in a June 5 report from a strategy team led by Savita Subramanian.
Seventeen of 20 S&P 500 valuation metrics show statistically significant
overvaluation; eight exceed tech‑bubble levels. High‑P/E names have strongly
outperformed low‑valuation stocks, which the strategists flag as a sign of
excessive speculation. Within tech, the spread between best and worst quintiles
is the widest since February 2000, and the three‑month return gap between the
top 10% and bottom 10% of S&P constituents is at its highest post‑pandemic
level. Subramanian added that cash‑conversion has stalled, supply of
investment‑grade bonds and equity issuance is rising, buybacks as a share of
market cap have fallen, and hyperscale cloud firms’ capex is forecast to
approach 100% of operating cash flow by year‑end (vs. 40% in 2023).
