Bank of America says massive stimulus from central banks in the United States, China and elsewhere is driving bubbly returns for stocks and could head off a global recession. “This is a bubble dream,” Bank of America chief investment strategist Michael Hartnett wrote in his weekly “Flow Show” analysis of where investors are headed. “The Fed is cutting interest rates sharply, oil prices are plunging, inflation in China… If China's stimulus measures don't work, geopolitical risks will soar.” The observation comes a week after the Fed cut its benchmark interest rate by 50 basis points. This happened the same week that China launched a series of stimulus measures that Hartnett estimated could be equivalent to $560 billion. As concerns about a sluggish housing market and falling consumer confidence grew, the People's Bank of China followed the Federal Reserve's lead and cut bank reserve requirements by 50 basis points and injected cash into the financial system through the sale of sovereign bonds. The central bank will also take steps to support the stock market. These measures come as other central banks are also implementing easing policies, helping to push the value of global stocks to $123 trillion, the highest level since October 2021, Hartnett said. Investors in turn put money into the stock market, which absorbed an additional $10.9 billion, for an annualized return of $363 billion, the second-highest ever. In other circumstances, such radical measures might be seen as a desperate stimulus to fend off a recession. But while some indicators do point to a slowdown in global economic growth, the flood of forecasts for a recession have eased. Hartnett wrote: “The Fed's reduction in recession is negative for risk assets, but the Fed's reduction in the absence of recession is positive, and investors firmly believe that the Fed + China's Loose policies are enough to avoid the risk of economic recession.