Hartnett’s 2008 Warning: BofA Strategist Breaks Wall Street’s Crisis Silence

Bank of America’s Michael Hartnett issued the first explicit comparison to the 2008 financial crisis from a major Wall Street strategist in 2025, warning that markets are ‘ominously trading ’07-’08 analog’ as converging pressures threaten to unwind years of bullish positioning.

The warning, delivered today in Hartnett’s closely-watched Flow Show note, marks a significant departure from the measured language that has dominated sell-side research through the recent market turbulence. While other strategists have acknowledged rising risks, none have drawn such a direct line to the crisis that brought the global financial system to its knees. The comparison centers on three converging factors: sharply decelerating economic growth, volatile credit conditions, and an oil price shock driven by geopolitical escalation—a combination Hartnett says mirrors the mid-2007 to mid-2008 period.

The GDP Shock That Changed the Narrative

The catalyst for Hartnett’s stark assessment arrived this morning when CNBC reported that the U.S. Bureau of Economic Analysis revised Q4 2024 GDP growth down to just 0.7%, a sharp step down from the previous estimate of 1.4% and well below the Dow Jones consensus forecast for 1.5%. The revision marked a considerable slowdown from the 4.4% gain in the prior period, with adjustments driven by downward revisions to consumer and government spending and exports.

The economic deceleration compounds pressure from inflation that refuses to cooperate with Federal Reserve targets. Core PCE inflation rose 0.4% in January, putting the annual rate at 3.1%—well above the Fed’s 2% target and 0.1 percentage point higher than December, according to CNBC. Markets are now assigning near 100% probability that the rate-setting Federal Open Market Committee will remain on hold at next week’s meeting.

Oil’s Double From 2007 Echoes in Iran Crisis

Hartnett’s 2008 comparison hinges heavily on the oil price trajectory. He flagged how oil doubled to $140 per barrel by August 2008 from $70 in July 2007, accompanied by the start of subprime tremors that engulfed Northern Rock and Bear Stearns, according to Yahoo Finance. The Iran war that erupted February 28 has pushed oil prices more than 60% higher this year, creating a parallel that Hartnett finds difficult to ignore.

The conflict has evolved far beyond the 12-day June 2025 engagement. According to Wikipedia, the U.S. and Israel began a series of strikes against Iran on February 28, 2026, with stated aims to induce regime change and target nuclear and ballistic missile programs. The strikes killed Supreme Leader Ayatollah Ali Khamenei and multiple senior IRGC officials. Iran has responded by targeting U.S. military bases in the region and launching counter-strikes against Arab states housing U.S. forces.

Energy disruption has been severe. Allianz Research notes that crossings through the Strait of Hormuz—a critical chokepoint through which roughly 20 million barrels per day of crude and 30% of global seaborne hydrocarbons transit—have dropped by more than 70% following the attacks. Major shipping lines including Maersk have temporarily avoided the strait, reassessing routing decisions on a 24-hour basis.

Credit Rumblings and Private Market Exposure

Beyond oil and GDP, Hartnett’s team is monitoring troubling signals in credit markets. BofA’s Sebastian Raedler told Bloomberg Television that he sees “a lot of rumblings in the credit sector, which I would say, there are some parallels to 2007.” Worries are increasing around banks’ exposure to private credit, an asset class grappling with fund redemptions, scrutiny of underwriting standards, and the impact of artificial intelligence on some borrowers.

While comprehensive 2008-level credit spread data remains elusive in real-time, recent indicators show widening. According to Breckinridge Capital Advisors, the U.S. Corporate Index option-adjusted spread widening trend continued in March 2025, adding 7 basis points month-over-month. Widening credit spreads may reflect increasing caution among corporate bond buyers as they assess market volatility, changes in economic data, and the potential for slowing growth.

Treasury market volatility has also spiked. A New York Fed analysis from May 2025 showed that Treasury market liquidity deteriorated significantly in early April, with illiquidity measures nearing or exceeding levels seen in March 2023 during the banking sector stress episode. Interest rate volatility rose significantly, prompting a notable deterioration in Treasury cash market liquidity. Throughout January and February 2026, the 10-year Treasury yield fluctuated wildly as market participants reacted to shifting geopolitical tensions in the Middle East.

Positioning Signals: Not Yet Capitulation

Despite the mounting pressures, Hartnett’s team notes that positioning still does not show the type of capitulation that typically marks a market bottom. According to Investing.com, the BofA Bull & Bear Indicator has slipped to 8.7 from 9.2, remaining in sell territory and far from the sub-2 levels that historically coincided with major market lows. Other sentiment signals—such as heavy equity and high-yield fund outflows or a sharp rise in fund-manager cash levels—have not yet reached the extremes typically seen at durable turning points.

The positioning paradox suggests investors still expect policymakers to “ride to Wall Street rescue,” as Hartnett puts it. This complacency is particularly evident in institutional versus retail sentiment divergence. JPMorgan data shows that March was the strongest month on record for retail buying, with retail investors aggressively buying the dip during and after April’s market lows while institutional investor flows remained cautious.

Counter-Narratives From the Street

Not all strategists share Hartnett’s dire assessment. Within BofA itself, Savita Subramanian, the bank’s head of U.S. equity and quantitative strategy, has pushed back against crisis comparisons. According to Advisor Perspectives, Subramanian argues there is “no broad spread euphoria” and points to strong earnings and a resilient U.S. economy, seeing further room for gains. “The risks are sitting outside of the public market,” she said, adding that private credit and private equity, along with regional banks, are where credit risks are bubbling up.

Other Wall Street voices remain constructive. Deutsche Bank recently projected that a notable reduction in tariffs could push the S&P 500 to 6,150 by year-end, while Morgan Stanley has pointed to the prospect of a U.S.-China agreement as a key catalyst that could fuel another leg higher for the equity market, according to The WealthAdvisor.

Hartnett’s Credibility and Track Record

Hartnett’s warning carries particular weight given his track record and willingness to stake out contrarian positions. As chief investment strategist at Bank of America since 2011, he has built a reputation for prescient Macro calls, including his early warnings about the risks of extreme positioning in technology stocks. His Flow Show notes are widely circulated among institutional investors and frequently move markets.

The timing of his 2008 comparison—amid a Treasury selloff and the highest Iran signal density—makes this a significant market psychology moment. Hartnett has recommended selling oil above $100 per barrel, 30-year Treasuries above 5%, the dollar when the DXY index is above 100, and the S&P 500 under 6,600. As of Friday, the 30-year yield stood at 4.89%, the dollar gauge at 100.18 (the highest since November), and the S&P 500 at 6,673—all approaching or at his trigger levels.