Bank of America's Michael Hartnett is back with another controversial note overnight, reminding readers that "it ain't a normal cycle" for one overarching reason: central banks.

As Hartnett explains, the catalyst for bull in equity and credit markets since 2009 was the "revolutionary monetary policy of central banks" who, since Lehman, "have cut rates 679 times and bought $14.2tn of financial assets." And, once again, he warns that this central bank “liquidity supernova” is coming to an end, as is "the period of excess returns in equities and corporate bonds, as is the period of suppressed volatility."

With an entire generation of traders having grown up "trading" in centrally-planned markets, few can make sense of the fundamentals that accompany the market. As a result, Harnett writes that "risk markets continue to climb a wall of worry, defying bearish structural trends in the financial industry, taunting skittish skeptics by paraphrasing Margaret Thatcher…”You turn if you want to. The market’s not for turning.”

Demonstrating how insane just the past year has been in markets, Hartnett reminds us that just eight months ago belief in debt deflation & secular stagnation induced lowest interest rates in 5000 years.

• On July 11th 2016 Swiss government could have issued 50- year debt out to 2076 at a negative yield (of -0.035%)…
• …and in 1989 the Imperial Palace in Tokyo worth more than all real estate in California…
• …and in March’2000 the market cap of Yahoo was 25X greater than market cap of Chinese equity market (MSCI)…
• …and in 2008 the combined assets of Iceland’s three biggest banks were 14 times the size of the nation’s GDP…
• …all manias, all over now.

While the current mania almost ended in early 2016, it was once again China that was responsible for the latest leg higher:

• The current rally was kick-started by China, commodities and credit (the “3C’s”) in February 2016: since then stocks are up 31%, commodities 27% and HY bonds 23%.
• Watch the 3C’s…China, commodities, credit.
• We believe commodity prices must rise to maintain equity outperformance versus bonds; BofAML forecast oil at $57/b in Q2. Note commodity/claims driver hooked lower last month or two.

And yet, this period of great confusion is slowly coming to an end: what happens next is split into two phases - the famous "Icarus Trade" popularized by Hartnett several months ago, which the BOFA strategist believes will send the S&P above 2,500 and the yield on the 30Y to 3.5%, before the next "Great Fall" trade emerges.

First, a look at the near-term forecast:

We believe we are closer to the highs than lows in risk markets. But

http://www.zerohedge.com/news/2017-03-31/bank-america-unexpectedly-warns-coming-manias-panics-and-crashes