Bank of America Corp. strategists are bearish on the outlook for the markets for next year, urging investors to focus on holding cash as faster inflation and higher interest rates alter the trajectory of loans. global asset prices.
On a note to clients, strategists led by Michael Hartnett they provided macro trading recommendations, including long positions in volatility indicators, oil, energy, US dollar and real assets.
Investors can expect a “impact on rates“In 2022, after”impact on inflation“Of 2021 and”impact on growth”From 2020, they wrote.
“Therefore, we are bearish and believe that capital maintenance will grow as a theme next year.”Said the banking strategists.
His forecast stands in stark contrast to bullish views from other Wall Street banks, such as Goldman Sachs Group Inc. and JPMorgan Chase & Co., which estimate that equity markets will advance at a more moderate pace next year.
Risk assets rose Monday, sending the S&P 500 to a new all-time high, after investors applauded the nomination of Jerome Powell for a second term at the head of the Federal Reserve.
The strategists of Bank of America they warned that this is “a very unconventional cycle“And that it is highly unlikely that its term”follow a conventional path”. They draw parallels between the current investment context and the “early stagflation”From the late 1960s and early 1970s.
As for the bullish argument for stocks, asset prices could continue to rise if the Fed is determined to keep real rates deeply negative, they wrote.
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