Looking for a contrarian bearish indicator?

Stocks would probably work. US equities are up 20% in 2023 solely on multiple expansion. In the middle of an earnings recession. On the eve of an economic recession. And with the Fed still hiking rates and core inflation still double target.

But that’s too easy, and it’s anyway been a disastrous line of reasoning. Instead, you might look to record bill selling by one bank’s private clients.

As the figure shows, BofA’s Global Wealth and Investment Management clients sold riskless US paper at a record pace last week.

“Compare [that] with the record weekly inflow following SVB,” the bank’s Michael Hartnett exhorted, calling it “contrarian bearish,” and the “mirror image” of the risk-off inflows in early March that presaged stocks’ bull run.

Not coincidentally, clients bought the most stocks since SVB. Their allocation to equities sits at nearly 61%, five percentage points above the two-decade average.

Do note, though, that the 20-year mean is difficult to interpret. It includes the plunge to 39% during the financial crisis.

Over the last decade, equity allocations have only fallen below 55% once — during the initial COVID selloff.