Bank Of America Strategist Warns That March's 'Crashy Vibes' May Be A Precursor To A Hard Landing

March's "crashy vibes" are calling to us, and they're going to get worse and worse.

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Bank of America strategists headed by Michael Hartnett have issued a warning to investors, saying this year's rate hikes in the global economy haven't put investors in a Goldlicks situation - where the economy is neither too hot nor too cold. As the team explained in a note to clients on Friday, it's not just the prelude to a hard landing, but it's more like the precursor to a credit crisis.

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In their chart, Hartnett reiterated his assessment that tightening Fed policy is always going to lead to something breaking.

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As the stock market also deals with fresh stress across the banking sector on Friday amid fears of a run on Silicon Valley Bank, shares of SVB Financial Group SIVB, -60.41% parent company of the bank continued to slump Friday amid concerns that it is in danger of a run on the bank.

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The Bank of America warned that there is plenty more trouble brewing on Wall Street than meets the eye. A credit event could occur in "tech & healthcare, [private equity/venture capital] lending, government debt, shadow banking/private equity, crypto, speculative technology, collateralized loan obligations, and mortgage-backed securities, as well as real estate, according to the report. CMBS, an exchange-traded fund that deals with commercial mortgage-backed securities, has dropped by 0.84% in the past month.

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“There are so many potential catalysts for [a] systemic deleveraging event that sparks policy panic/ends Fed tightening; however, the source of the event is irrelevant....all that is important is that it happens and it causes policy makers panic (the BoE restarted QE last October) and investors should be prepared to deploy their money in new leadership assets that are expected to outperform in an era of higher inflation, according to Hartnett and his team,” they added.

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The S&P 500 SPX, -0.68% is up 2% so far this year in spite of the panicky vibes surrounding the market.

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