Market Updates
December 21, 2020
We examine why traditional equity valuation metrics have trended higher in recent decades, indicate why we believe portfolios should maintain long-term exposure to key industries in wealthy consumer markets, and consider the risk of negative corporate bond returns.
January 13, 2020
Catalysts in Focus for 2020
The powerful rally in equities to close out 2019 was a mirror
image to the precipitous selloff to end 2018. Headwinds ranging from
tight monetary policy, to fears of an earnings recession, to trade
uncertainty and slower global growth all began to fade as U.S.
equities rallied to new all-time highs in what was the strongest year
for the S&P 500 since 2013. While we remain bullish, there are
plenty of catalysts this year that could create risk to the upside or
downside. Here we outline some of the major catalysts for investors to watch.
January 6, 2020
The Path of Least Resistance
Although a wall of worry continues to cast shadows over the
global economic outlook into the new year, we believe that, with
inflation contained and the Federal Reserve (Fed) out of the way, the
economy is likely to slowly accelerate from here. Basically, if past
experience is any indication, more accommodative central-bank policy
around the world and a steady-to-lower dollar, courtesy of increased
Fed liquidity, should help global manufacturing and trade growth turn
positive in 2020. The improvement appears slow, however, as
diminishing drags from the German and Chinese motor-vehicle sectors,
seriously damaged by the introduction of tight emissions standards in
2019, will in part be offset by ongoing difficulties related to the
Boeing 737 Max production disruptions and high news-based uncertainty levels.
December 16, 2019
UK Election: What the Result Means for Markets
Last week’s general election in the United Kingdom produced a
big victory for the ruling Conservatives. The party won a total of 365
parliamentary seats, well in excess of the 326 needed for a majority,
and will now form the government for a new term of up to five years.
The response from investors was positive, with the local UK equity
market rising on the result and the pound building on its gains of the
past two months. UK markets had been buoyed by the rising odds of a
Conservative majority in the lead up to the vote, given the party’s
pro-market policy agenda and the narrowing of the range of possible
outcomes around Brexit. And the unexpected size of the Conservative
victory gives the party a strong mandate to pursue both.
All data, projections and opinions are as of the date of this report and subject to change.
This material was prepared by the Chief Investment Office (CIO) and is not a publication of BofA Global Research. The views expressed are those of the CIO only and are subject to change. This information should not be construed as investment advice. It is presented for information purposes only and is not intended to be either a specific offer by any Merrill or Bank of America entity to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.
Global Wealth & Investment Management (GWIM) is a division of Bank of America Corporation. The CIO, which provides investment strategies, due diligence, portfolio construction guidance and wealth management solutions for GWIM clients, is part of the Investment Solutions Group (ISG) of GWIM.
Investing involves risk, including the possible loss of principal.
All recommendations must be considered in the context of an individual investor’s goals, time horizon, liquidity needs and risk tolerance. Not all recommendations will be suitable for all investors.
Investments have varying degrees of risk. Some of the risks involved with equity securities include the possibility that the value of the stocks may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the U.S. or abroad. Bonds are subject to interest rate, inflation and credit risks. Treasury bills are less volatile than longer-term fixed income securities and are guaranteed as to timely payment of principal and interest by the U.S. government. Investments in foreign securities (including ADRs) involve special risks, including foreign currency risk and the possibility of substantial volatility due to adverse political, economic or other developments. These risks are magnified for investments made in emerging markets. Investments in a certain industry or sector may pose additional risk due to lack of diversification and sector concentration.
