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Breaking insights on the economy, market volatility, policy changes and geopolitical events

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Feb 23, 2024

Smart strategies to consider now for next year’s tax bill

AS YOU PULL TOGETHER YOUR 2023 TAXES, take some time to consider strategies that could help boost your savings and trim next year’s tax bill. From retirement to business taxes and more, opportunities available early in the year could be diminished if you wait until December, according to the National Wealth Strategies team in the Chief Investment Office (CIO). Here are three beginning-of-year tax strategies to consider:

Front-loading your retirement plan contributions. You can make 2024 IRA contributions throughout the year — or even up to Tax Day in April 2025. But making the bulk of your contributions early in the year could give tax-deferred contributions that much more time for potential growth and compounding. The same holds if you contribute to a 401(k) plan. Just be aware that if you contribute early in the year and then stop in later months, your company’s 401(k) matching contribution, if offered, could also end or be delayed. Be sure to check your company’s matching policies.

TIP: Making the bulk of your 2024 IRA contributions early in the year could give tax-deferred contributions that much more time to potentially appreciate and compound.

March 15 deadline alert: Declare changes in your business status soon. If you’re converting your business from a C-corporation into an S-corporation this year, making the election by March 15 will enable you to be recognized under your new designation for federal tax purposes for all of 2024. If you miss that deadline, you’ll only be recognized for the portion of the year after you take the election (unless the IRS provides relief) — and that could have potentially significant tax consequences for your company.

Timing your RMDs carefully. The age at which people must begin taking required minimum distributions (RMDs) from tax-advantaged retirement accounts increased from 72 to 73 in 2023. If you turn 73 this year, you have until April 1, 2025 to take your first RMD. Granted, that move would allow you to defer taxes on any potential future growth. But waiting may not make sense for everyone. For instance, if you’re considering converting from a traditional to a Roth IRA — which doesn’t require RMDs — you’d have to take the RMD from your traditional IRA first, anyway.

In general, taking RMDs earlier rather than later can result in potential tax savings, because any future growth of the distributions, invested in a taxable account, would be taxed at the more favorable long-term capital gains rate. Your tax specialist can help you determine the best timing for your situation. Learn more about the ins and outs of RMD strategy by reading “Should you take your RMD earlier or later in the year?”

For a full rundown of year-ahead tax planning opportunities for 2024, including insights on inflation, charitable giving and stock options, read “Beginning of year tax planning” from the National Wealth Strategies team. And be sure to discuss any tax strategies with your tax professional and financial advisor.




February 21, 2024

What happened to that anticipated March rate cut?

EXPECTING THE FEDERAL RESERVE TO PIVOT from rate hikes to rate cuts, starting in March, investors rode a wave of anticipation, driving the DOW and S&P 500 indexes to new highs early in the year. Then came slightly higher than expected January Consumer Price Index (CPI) numbers (0.3 percent month over month, rather than an anticipated 0.2 percent increase.1), sending markets into a brief tizzy, with investors wondering: Should we be concerned about the economy?

Not to worry, says Matthew Diczok, Head of Fixed Income Strategy for the Chief Investment Office (CIO), Merrill and Bank of America Private Bank. Year over year, the latest CPI numbers showed a continuing downward trend — 3.1% from 3.4%.1 And though the Fed indicated that rate cuts were unlikely to happen in March, “We shouldn’t be alarmed if Fed officials appear to change their minds from month to month. What matters is the Fed’s overall  mindset, and we believe they are firmly in easing mode for this year.”

Watch the video above to find out when the CIO believes the Fed will finally pivot,  what it might mean for the markets and how you can prepare. And tune in to the CIO’s Market Update audiocast series for regular insights on the economy and the markets.




Feb 15, 2024

3 reasons to get off the sidelines and invest in equities

DESPITE PERIODIC VOLATILITY — as we saw after higher than anticipated January inflation numbers were released — the equity markets have performed exceptionally well so far this year. The S&P 5001 and the Dow Jones Industrial Average2 hit record highs, and the NASDAQ Composite Index has come close to its all-time high from 2021.3 While that’s good news for investors who already own stocks, those with significant cash on the sidelines may wonder if they’ve missed the boat. So, is getting into the market now too expensive?

Chris Hyzy, Chief Investment Officer, Merrill and Bank of America Private Bank next to his quote “Consider using any near-term volatility as an opportunity to add to equities.”

That may be the wrong question to ask. “Valuation alone is not a good gauge of which way the market will trend,” says Emily Avioli, investment strategist in the Chief Investment Office (CIO) for Merrill and Bank of America Private Bank. One thing is certain: “Staying in cash because stocks seem too expensive —  or the markets too volatile — could lead to potential missed opportunities,” she adds. Here’s why.

There’s room to grow. Markets are prone to periodic volatility related to inflation news, geopolitical concerns, presidential elections and more. “Yet we have seen 11 years with new all-time highs since the current secular bull market kicked off in 2013,” Avioli says. “And, given our view that it still has room to run, we could see years of new all-time highs ahead.”4

You can still find relative bargains. While S&P 500 stocks are trading at a price-to-earnings (P/E) valuation ratio of about 20.0x — well above the historical average of about 16x — “S&P 500 stocks outside of the mega-cap ‘Magnificent Seven’ companies have a current average P/E ratio of about 18x,” Avioli says. “And beyond the S&P 500, investors may find attractively priced small-cap and value stocks.”

“Consider using any near-term volatility as an opportunity to add to equities,” suggests Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank. “Corporate earnings remain healthy, and despite January’s higher than expected Consumer Price Index numbers, the CIO maintains its view that the Federal Reserve will likely begin a measured interest-rate cutting cycle in June or July.”

Cash carries its own risks. While it’s important to maintain some cash in your portfolio, cash typically hasn’t performed as well as stocks over the long term. In any given year, cash has a 24% chance of outperforming stocks, Avioli notes. But since 1979, over stretches of 15 or 20 years, stocks have outperformed cash.5

In the end, while it’s always preferable to pay less rather than more for a stock, valuation is just one factor to consider when you’re investing, Avioli adds. Other factors, including your long-term goals, risk tolerance and time horizon, are essential. “The best approach is to invest steadily in stocks, bonds and cash according to your long-term strategy.”

Learn more about investing in a bull market by reading “Considerations for investing at all-time highs” in the recent Capital Market Outlook from the CIO. And follow up by reviewing “How much is too much cash in your portfolio?”




January 31, 2024

New goal: Limiting geopolitical risk in your portfolio

WHILE UKRAINE AND GAZA DOMINATE HEADLINES, they’re just two of more than 180 current regional conflicts, the highest number in 30 years.1 A global landscape marked by such rising tension and uncertainty could affect U.S. and global economies, markets — and investors — for years to come, notes Joe Quinlan, head of Market Strategy in the Chief Investment Office (CIO) for Merrill and Bank of America Private Bank.

“Don’t pause investing or diverge from your long-term strategy, but do consider geopolitics along with corporate earnings, valuations and other metrics when making investment decisions,” Quinlan suggests. Watch the “Market Decode” video above for tips on how to incorporate  geopolitics into your investment decisions.

For more insights, read “Are the markets really impervious to geopolitical risks?” in the January 8, 2024 Capital Market Outlook, and tune in to the CIO’s Market Update audiocast series for weekly check-ins on the markets and economy.




January 12, 2024

No one can predict the markets, but …

COMING OFF A YEAR WHEN THE S&P 500 rose by 26%,1 inching toward a new record, many investors want to know: Will the markets maintain their momentum in 2024? “Trying to predict the markets is never wise — and that’s particularly true in such an unpredictable investment landscape,” says Joe Quinlan, head of Market Strategy for the Chief Investment Office (CIO) at Merrill and Bank of America Private Bank. But some compelling clues do exist.

Lauren Sanfilippo, senior investment strategist, Chief Investment Office, Merrill and Bank of America Private Bank next to his quote “While artificial intelligence's effect on corporate earnings will vary, in 2024 we should see its applications spreading to non-tech industries.”

A recent Capital Market Outlook report, “10 macro questions for 2024,” written by Quinlan and Lauren Sanfilippo, senior investment strategist for the CIO, features informed insights (and a few qualified predictions) as they answer 10 questions that may be top of mind for you. Here’s a sampling — read the full report for their thoughts on whether all the good news is already priced into the stock market, how close the Fed is to beating inflation, and more.  

Will the 2024 U.S. election create volatility — or opportunity?

“Asset prices are determined more by economic fundamentals than by politics,” notes Sanfilippo. “Presidential elections do create market uncertainty, but disruptions are usually temporary.” Volatility will likely depend on what stances the parties take on taxes, immigration, healthcare and other issues, she adds. It’s worth noting, too, that the U.S. isn’t the only country holding a major, potentially consequentical election this year.

What it could mean for investors: “Temporary election volatility may allow long-term investors to strategically add to portfolios at attractive prices,” Sanfilippo says.

What’s the likely impact of geopolitical unrest?

“Amid wars in Europe and the Middle East, shipping lane disruptions, U.S.-China tensions and cybersecurity threats, geopolitical unrest has become a significant variable for investors,” says Quinlan. While these tensions represent one of this year’s major market risks, “quicker-than-expected resolutions to the major global conflicts could be among several potential surprises contributing to market growth this year,” he adds.

What it could mean for investors: The fluid global landscape favors high-quality diversified assets with an emphasis on energy and copper, large defense companies and cyber leaders.

How could artificial intelligence (AI) move markets in 2024?

AI innovations have been building since late 2022, and companies across industries and sectors have ratcheted up their capital spending,” Sanfilippo says. “While the magnitude and timing of AI’s effect on corporate earnings will vary, in 2024 we should see AI applications spreading to non-tech industries.”

What it could mean for investors: Sectors such as education, healthcare and manufacturing should benefit. But the growing push for regulation of AI could affect its impact on earnings and productivity. 

While there’s plenty of room for positivity about the markets and economy, “we remain optimistic — but realistic — about where asset price returns can be in 2024,” concludes Quinlan. For more on the year ahead, watch “Looking toward a new era of growth.”




Tap to select correct answer and learn more

Q: How much is currently sitting on the sidelines in money market funds, ready for investors to deploy?

$156 billion

$6 trillion




December 14, 2023

Outlook 2024: Insights on the year ahead

INVESTORS HOPING FOR STEADIER MARKETS in 2024 may get their New Year’s wish. While there will undoubtedly be some volatility along the way, the coming year should be “a time for investors to consider new assets and diversify their portfolios further for what we believe will ultimately be the transition to a new era of growth later in 2024,” says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank.

In the Outlook 2024 webcast above, “Looking toward a new era of growth,” Hyzy and analysts from the Chief Investment Office and BofA Global Research provide insights on the markets and economy in 2024 and share ideas for how investors can prepare for the potential opportunities and risks ahead. 

For more on what could drive the markets in the coming year, watch “Global elections and the markets: What to expect in 2024” and “How much is too much global debt?” And be sure to read “Outlook 2024: Positioning yourself for future growth.”




November 1, 2023

Getting comfortable with “higher for longer”

HFL STANDS FOR “HIGHER FOR LONGER,” and it doesn’t just apply to interest rates anymore, says Joe Quinlan, head of CIO Market Strategy. Given the tight labor market, strong wages and elevated energy prices, it’s unlikely rate cuts will come any time soon, Quinlan explains. Markets and investors have pretty much accepted that fact. But the HFL trend also applies to a number of other areas that could affect the markets and your investing decisions. Among them: global energy prices, defense spending and the U.S. deficit.

Watch the video above for what these higher-for-longer trends could mean for your portfolio. For more insights, read “Higher-for-Longer Goes Beyond Interest Rates: What Investors Need to Know” in the October 10, 2023 Capital Market Outlook and tune in to the CIO’s Market Update audiocast series for weekly insights on the markets and economy.




October 27, 2023

What rising geopolitical risks could mean for your investments

THE CONFLICT IN THE MIDDLE EAST has pushed already-simmering global tensions to their highest level in recent memory. “Geopolitics used to be considered a lower-level financial risk. Now, it may be the top risk,” says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank. “In addition to the overriding humanitarian concerns, the terror attack in Israel, the continuing conflict in Ukraine and tension in the Indo-Pacific create a new level of uncertainty and raise urgent questions about the potential impact on the economy and financial markets,” he adds.

In the video above, Hyzy discusses potential impacts on the global oil supply, individual industries and corporate earnings, and suggests steps you might consider now to help maintain progress toward your goals. In the midst of rising geopolitical tension, “stay balanced, think long term, and keep a high level of diversification across and within asset classes,” he says. If you work with an advisor, now might be a good time to reach out for a talk.

For a deeper look at the impact of heightened global risks, read “What rising geopolitical tensions could mean for the markets and economy,” a Q&A with leading analysts across the Chief Investment Office and BofA Global Research. And keep up with our latest insights by tuning in regularly to the CIO Market Update audiocast series.




October 20, 2023

Welcome tax relief for retirement savers of all ages

IF YOU’RE SAVING FOR RETIREMENT or have an inherited retirement account, the IRS recently announced a few changes that could affect your finances — in a good way. Among them, a SECURE Act 2.0 provision putting an end to pre-tax catch-up contributions for high earners, scheduled to kick in next year, has been postponed, reports the National Wealth Strategies team in the Chief Investment Office (CIO). Other provisions slated for 2024 create new opportunities to save more. And, in 2023, there’s a reprieve on penalties for heirs who neglected to take required minimum distributions (RMDs) from inherited retirement accounts. Below are the highlights.

Contribution rule changes for 2024

For younger savers. The resumption of student loan payments this month could crimp younger investors’ ability to save for retirement.  As one possible remedy, starting in 2024, employers will have the option to “match” employee student loan payments with contributions to a retirement account, thanks to SECURE Act 2.0. Also kicking in in 2024, certain unused funds in a 529 education savings plan could be rolled over into a Roth IRA in the beneficiary’s name without Federal income tax or the usual 10% penalty for non-education withdrawals.

For older savers. High-earning savers 50 and over have gotten a two-year reprieve from the SECURE Act 2.0 rule limiting their ability to make catch-up contributions using pre-tax income.

As background, SECURE Act 2.0 had mandated that, starting in 2024, workers earning more than $145,000 in the prior year would have to make their catch-up contributions to a Roth plan, using post-tax rather than pre-tax dollars. Yet due to the complexities of implementing the new rule, the IRS has determined those high earners can continue to make their contributions to traditional retirement plans using pre-tax dollars through 2025.

Penalty relief on RMDs for inherited plans

The IRS’s “10-year rule” for inherited IRAs enables many beneficiaries to take full distribution of an inherited retirement account within a decade, with no required minimum distributions needed in any specific year. However, if the person you inherited a retirement plan from died on or after their “required beginning date” for taking RMDs, you may have to take annual RMDs during that 10-year period. Amid some confusion on the part of beneficiaries, the IRS has determined that those who have overlooked this annual distribution requirement won’t be subject to penalties for 2023. (A previous IRS notice provided relief for 2021 and 2022).

You can learn more about this and other recent RMD changes by reading the recent CIO report, “Tax Alert 2023-04: IRS again provides relief for required minimum distributions for certain beneficiaries.”  But keep in mind that these provisions are highly complex, with many variables, so be sure to speak with your tax professional before making decisions.




September 26, 2023

What could a government shutdown mean for investors?

RIGHT NOW ALL EYES ARE ON WASHINGTON and whether the necessary discretionary-spending appropriation bills or a stop-gap bill can be signed before midnight on September 30 to avoid a government shutdown. Investors, of course, are wondering what the impact might be on the markets and economy.

Though serious events, shutdowns have historically been less concerning from an economic and market perspective than you may imagine, says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank. It’s also important to remember that mandatory spending, such as Social Security and Medicare payments, would continue in the event of a shutdown. Watch the video above for more insights and be sure to check back for updates.

You’ll find an interesting chart highlighting the market effect of the last 20 government shutdowns in the September 18, 2023 Capital Market Outlook from the CIO. For more timely market commentary, tune in to the CIO Market Update audiocast series.



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