Market briefs

Breaking insights on the economy, market volatility, policy changes and geopolitical events.
August 14, 2024

Market Decode: What's unsettling the markets?

While August has historically been a volatile month, this year a confluence of factors is driving substantial market unrest. Markets took a dive at the start of the month, with all three major indexes plummeting briefly in response to a variety of fears before stabilizing. And it's likely the late-summer storms aren't over, says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank.
[Music in background]
[Animated glitches containing various letters flip to spell out the following financial terms]
On screen copy:
Bear Market
Business Cycle
Risks
Bull Market
Fixed Income
Inflation
Equities
Diversification
Interest Rates
Opportunities
Geopolitics
Market Catalysts
[Animated glitches end]
On-screen disclaimer:
Please read important information at the end of this program. Recorded on 8/08/2024.
[Chris Hyzy speaking throughout]
August is typically a volatile month for the markets, and this year is no different. So what's driving all of this uncertainty?
On-screen copy:
Chris Hyzy
Chief Investment Officer
Merrill and Bank of America Private Bank
Hi, I'm Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank, with a look at why we expect markets to remain choppy for the near future, and how investors can respond.
A few variables have combined to spook the markets. There's concern that the Federal Reserve might be behind the curve in cutting interest rates. In addition, U.S. and Chinese consumers are getting more selective and slowing down, which is damaging to global growth prospects.
There are other factors, too — concerns about downward pressure on the tech sector, the unwinding of the Artificial Intelligence trade, a tight U.S. election, and ongoing instability in the Middle East, just to name a few. All of this combined has led to a substantial rise in currency, interest rate and equity market volatility that has not been experienced in decades in some cases. Some have called this "the great unwind."
On-screen copy:
What's disrupting the markets?
  • Timing of interest rate cuts
  • Drop in consumer spending
  • Downward pressure on tech
  • The unwinding of the Artificial Intelligence trade
  • U.S. election uncertainty
  • Middle East instability
As a result, we see the U.S. and global markets continuing to be more volatile over the near term. But our base case has not changed. Here's what we think investors can do to help weather this near-term uncertainty and put themselves in a position for what we see as a more bullish future.
First, stay in the market—trying to time the market is a fool's errand.
Stay U.S.-centric—U.S. assets should remain core holdings of portfolios.
In fact, investors can consider buying U.S. equities on weakness, given our view on still-healthy profit growth for the balance of this year and for 2025.
Don't discount the U.S. elections, but keep in mind that growth and earnings matter more to returns.
It's important to note the potential benefits of Artificial Intelligence are still in front of us as well—with the coming boost in productivity and potentially operating leverage, the corporate earnings backdrop remains favorable over the long run.
Remember that episodes of market volatility typically have been followed by resets and an upward grind in equities.
On-screen copy:
Investing considerations:
  • Stay in the market
  • Focus on U.S. stocks
  • Keep election uncertainty in perspective
  • Think long-term on Artificial Intelligence
Finally, if you work with an advisor, now might be a good time to check in and discuss the potential risks and opportunities through the end of this year.
[Music in background]
Thanks for listening and watch for more Market Decode videos in the future.
On-screen disclaimers:
Important Disclosures
Opinions are as of the date of this webcast 8/8/2024 and are subject to change.
Investing involves risk, including the possible loss of principal.

Past performance is no guarantee of future results.
Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. Equity securities are subject to stock market fluctuations that occur in response to economic and business developments. This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate 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.
The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., ("Bank of America") and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S" or "Merrill"), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp.").
Merrill makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of BofA Corp. MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp.
Merrill Private Wealth Management is a division of MLPF&S that offers a broad array of personalized wealth management products and services. Both brokerage and investment advisory services (including financial planning) are offered by the Private Wealth Advisors through MLPF&S. The nature and degree of advice and assistance provided, the fees charged, and client rights and Merrill's obligations will differ among these services. Investments involve risk, including the possible loss of principal investment.
Investments involve risk, including the possible loss of principal investment. The banking, credit and trust services sold by the Private Wealth Advisors are offered by licensed banks and trust companies, including Bank of America, N.A., Member FDIC and other affiliated banks. Bank of America Private Bank is a division of Bank of America, N.A., Member FDIC and a wholly owned subsidiary of BofA Corp. Trust and fiduciary services are provided by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A.
Investment products:
Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value
© 2024 Bank of America Corporation. All rights reserved. 6696581 - 06/2024
[End of transcript]
[-] Close transcript
"We see the U.S. and global markets continuing to be volatile over the near term," he says, "but we still believe in a more bullish future ahead." In the video above, Hyzy outlines several factors causing current volatility and suggests some steps investors can consider taking now to help them weather the squalls through year end.
For more insights, read "The Ghosts of August Shall Fade," from the Chief Investment Office (CIO) and tune in regularly to the CIO's Market Update Audiocast series.
August 5, 2024

What's causing the volatility — and how can you respond?

A lower-than expected July jobs report drove markets down on Friday, during a week already beset by volatility.Footnote 1 The 800-point plunge in the Dow Jones Industrial Average raised new concerns about the prospects for an economy that has remained surprisingly resilient throughout 2024. Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank, offers four reasons for the latest disruption and four reasons to keep things in perspective.
'Avoid sudden reactions to headlines and market shifts. Stay diversified across and within asset classes and rebalance as necessary.' - Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank

4 drivers of volatility

  1. Recession concerns. "As reflected in the jobs report, economic data has been consistently slowing," Hyzy notes. "Investors fear early signs of a recession."
  2. Overdue rate cuts? Observers increasingly believe the Federal Reserve (the Fed) fell behind by not cutting rates at their July meeting.
  3. Geopolitics. With November's presidential election and wars abroad, "the geopolitical environment has become more uncertain," Hyzy says.
  4. Bond-buying pullback. A rate increase by the Bank of Japan and subsequent pull-back on bond buying has upset currency, interest rates and risk assets such as technology stocks globally.

4 reasons for calm

  1. Recession unlikely. "We believe the economy is still normalizing from pandemic-era disruptions," Hyzy says. "While the road back is rocky, the BofA Global Research team does not expect a recession, all things considered."
  2. Strong earnings. "Corporate profits remain healthy. We expect low double-digit growth for the S&P 500 this year, and mid to high single digits in 2025," Hyzy believes.
  3. Rational rate decisions. While rate moves naturally draw extra attention amid volatility, the Fed is working to normalize rates based on inflation and employment trends, rather than panic over a recession, Hyzy says. And potentially significant cuts appear likely soon. "The Fed funds futures market now has a better than 80% probability of a 50-basis-point cut in September."
  4. AI-powered productivity. "The long-run benefits of generative artificial intelligence (Gen AI) across a number of sectors are just beginning," Hyzy says. "Higher productivity combined with rapid innovation allows for more substantive corporate growth than many observers are seeing."

Expect more volatility, and stay diversified

As the economy continues to work through these challenges, investors should expect above average volatility in the short term, Hyzy says. "Avoid sudden reactions to headlines and market shifts," he suggests. "Stay diversified across and within asset classes and rebalance as necessary." As you consider your long-term investment goals, he adds, "look for periods of market weakness as an opportunity to strategically add to your portfolio."
For more on current market volatility, read "Four by Four Relay (PDF)," the latest Investment Insights from the CIO, and tune in to the CIO's Market Update audiocast series.
Footnote 1 MarketWatch, "Stock market today: Dow down 800 points as recession fears bulldoze stocks," August 2, 2024.
July 26, 2024

Can markets top their strong first half of 2024?

Defying predictions of a market letdown, the S&P 500 Index of the largest U.S. stocks surged 14.5% during the first half of 2024. So, can equities maintain that momentum through the rest of the year? History says it often happens.
What history tells us: In years when the S and P 500 returned greater than 10% in the first half, the index was higher 82.6% of the time in the second half. Source: Bloomberg. Data as of June 28, 2024. Past performance is no guarantee if future results. It is not possible to invest directly in an index.
"Since 1950, in years when the S&P 500 returned greater than 10% in the first half, the index was higher 82.6% of the time in the second half,"Footnote 1 says Kirsten Cabacungan, Investment Strategist for the Chief Investment Office (CIO) at Merrill and Bank of America Private Bank. While past performance doesn't guarantee future results, a recent Chief Investment Office Capital Market Outlook report, "Can U.S. equities take the heat (PDF)?" highlights three factors supporting that hopeful outlook:
  • Economic activity, while moderating, continues to outperform expectations, thanks to cooling inflation, a still-solid labor market and consumer spending.
  • The rise of generative artificial intelligence (AI) is driving enthusiasm for U.S. companies.
  • Corporate earnings are gaining momentum. "Analysts expect S&P 500 earnings to grow by around 11.0% this year and 14.4% in 2025, a big improvement over 2023," Cabacungan says.Footnote 2

What could hold the markets back?

Uncertainties, ranging from global geopolitics to the possibility that inflation could remain above the Federal Reserve's 2% target longer than expected, remain potential roadblocks. And then there's November's contentious presidential election. "The Chicago Board Options Exchange Volatility Index (VIX) has historically risen 25% on average from July to November during election years since 1928," Cabacungan says.Footnote 3 While stocks tend to rally after an election, lingering volatility could dampen second half results, she adds.

Market choppiness could create potential buying opportunities

Despite the markets' strong first-half performance, the economy is still working through extraordinary disruptions from the pandemic. "Until that's complete, investors should anticipate some market choppiness," Cabacungan notes. She suggests staying diversified both across and within asset classes and looking for opportunities to strategically add to your portfolio during times of weakness.
For more tips and insights, be sure to watch the 2024 Midyear Outlook, "Bridge to a more bullish future?".
Footnote 1 Bloomberg. Data from January 1950 to December 2023.

Footnote 2 FactSet. Data as of June 26, 2024.

Footnote 3 BofA Global Research. March 2024. Based on data for all U.S. elections since 1928.
June 27, 2024

Markets at midyear: Where do we go from here?

"The markets and U.S. economy have shown remarkable resilience so far in 2024," says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank. Despite persistent inflation, elevated interest rates and global unrest, the S&P 500 rose by more than 10% in the first 100 days of the year. And, though there's no guarantee of future performance, points out Hyzy, "historically, gains of 10% or more over the first 100 days have led to a positive year overall 76% of the time."Footnote 1
[Music in background]
[Animated glitches containing various letters flip to spell out the following financial terms]
On screen copy:
Bear Market
Business Cycle
Risks
Bull Market
Fixed Income
Inflation
Equities
Diversification
Interest Rates
Opportunities
Geopolitics
Market Catalysts
[Animated glitches end]
On screen copy:
Market Decode
On-screen disclaimer:
Please read important information at the end of this program. Recorded on 6/12/2024.
[Chris Hyzy speaking throughout]
We've made it to the halfway point, and so far in 2024 the economy and markets have defied expectations of a material slowdown. In fact, some records have even been set, with all three major stock indexes — the Dow Jones Industrial Average, the S&P 500 and Nasdaq breaking records. Yet volatility risks abound. What does this mean for investors?
On-screen copy:
Chris Hyzy
Chief Investment Officer
Merrill and Bank of America Private Bank
I'm Chris Hyzy, with midyear perspectives on what you could expect for the rest of 2024 and why we think today's somewhat choppy market environment could be a bridge to a more bullish future.
On-screen copy:
Midyear 2024: Surprising resilience
  • Rising stock performance
  • Healthy corporate earnings
  • Labor and consumer strength
First, the positives:
  • The S&P 500 index of major stocks rose by about 10.4% in the first 100 days of the year.
  • Corporate earnings remain healthy.
  • And the labor market and consumer spending, while softening somewhat, should carry positive momentum into the second half of the year.
On-screen copy:
Midyear 2024: Volatility risks
  • Election year uncertainty
  • Geopolitical tensions
  • Stubborn inflation
Risks to this momentum include a consequential presidential election, global conflicts and geopolitical tensions, and, as we continue working through the pandemic's fiscal and monetary aftershocks, there is the possibility that stubborn inflation could weaken both consumer spending and the jobs market.
On-screen copy:
Look at temporary downturns
as potential buying opportunities.
Investors can prepare for periodic volatility by staying broadly diversified and sticking to a long-term strategy based upon their personal goals. Remember that temporary downturns could provide potential buying opportunities.
Eventually, as we cross this "bridge" of uncertainty, we expect to see an economy with normalized inflation levels and interest rates, driven more by solid economic fundamentals than by fiscal or monetary policy.
This transition, likely to unfold over the next few years, coincides with rapid advances in artificial intelligence and other advanced technologies, setting the stage for an extended bull market powered by innovation and productivity.
On-screen copy:
Short-term volatility,
long-term opportunities.
If you work with an advisor, ask about ways to address short-term volatility and start preparing now for a more bullish future.
For more midyear perspectives and insights on what you can do now to prepare for the future, tune in to our upcoming 2024 Midyear Outlook webcast, "Bridge to a more bullish future."
We'll have a great panel of analysts from the Chief Investment Office and BofA Global Research on hand to take a deeper dive into where the markets and economy could be headed next and how you can prepare. Thank you.
[Music in background]
On-screen disclaimers:
Important Disclosures
Opinions are as of the date of this webcast 6/12/2024 and are subject to change.
Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.
Bank of America, Merrill, their affiliates, and advisors do not provide legal, tax, or accounting advice. Clients should consult their legal and/or tax advisors before making any financial decisions.
This material does not take into account a client's particular investment objectives, financial situations or needs and is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory (including financial planning) and other services. There are important differences between brokerage and investment advisory services, including the type of advice and assistance provided, the fees charged, and the rights and obligations of the parties. It is important to understand the differences, particularly when determining which service or services to select. For more information about these services and their differences, speak with your advisor.
All sector and asset allocation 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 in the best interest of all investors.
Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.
The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., ("Bank of America") and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S" or "Merrill"), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp.").
BofA Global Research is research produced by BofA Securities, Inc. ("BofAS") and/or one or more of its affiliates. BofAS is a registered broker-dealer, Member SIPC and wholly owned subsidiary of Bank of America Corporation ("BofA Corp.").
Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as "MLPF&S" or "Merrill") makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation ("BofA Corp."). MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp.
Merrill Private Wealth Management is a division of MLPF&S that offers a broad array of personalized wealth management products and services. Both brokerage and investment advisory services (including financial planning) are offered by the Private Wealth Advisors through MLPF&S. The nature and degree of advice and assistance provided, the fees charged, and client rights and Merrill's obligations will differ among these services. Investments involve risk, including the possible loss of principal investment.
The banking, credit and trust services sold by the Private Wealth Advisors are offered by licensed banks and trust companies, including Bank of America, N.A., Member FDIC and other affiliated banks.
Bank of America Private Bank is a division of Bank of America, N.A., Member FDIC and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp."). Trust and fiduciary services are provided by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A.
Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation.
Investment products:
Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value
© 2024 Bank of America Corporation. All rights reserved. 6696581 - 06/2024
[End of transcript]
[-] Close transcript
So, what could investors expect for the rest of 2024 and beyond? "We think today's somewhat choppy environment is a bridge to a more bullish future," says Hyzy. Watch the Market Decode video above to understand the factors supporting this view. And for a more detailed look at potential future market performance and how you can prepare, tune in to the 2024 Midyear Outlook webcast, "Bridge to a more bullish future?" on July 18.
In it, Hyzy will be joined by analysts from the Chief Investment Office and BofA Global Research to take a deeper dive into where the markets and economy are now — and where they may be headed next.

TEST YOUR MIDYEAR MARKET KNOWLEDGE

Tap  the following items to select the correct answer and learn more
True or false: All three major stock indexes — the Dow, the S&P 500 and the Nasdaq — have broken records so far in 2024.
Footnote 1 Investing.com, "A strong first 100 days suggests a strong rest of the year for the S&P 500," May 25, 2024.

Footnote 2 Reuters, "S&P 500, Nasdaq close at record highs as data supports Fed easing," June 5, 2024.

Footnote 3 CNN, "Dow closes above 40,000 for first time ever," May 17, 2024.
May 23, 2024

Reasons to join the 'Stay Invested' party this election year

Markets are essentially apolitical. "That's the main thing investors should keep in mind during election years," says Joe Quinlan, head of Market Strategy for the Chief Investment Office (CIO), Merrill and Bank of America Private Bank. Long-term market returns are driven more by market fundamentals, like the strength of the economy and corporate earnings, than they are by assumptions about a political candidate's possible future policies.
Making investment decisions along political party lines is a great way to underperform the broader market. Joe Quinlan, head of Market Strategy, Chief Investment Office, Merrill and Bank of America Private Bank.
So, while it's true that uncertainty about the outcome of elections can cause heightened volatility,Footnote 1 investors shouldn't "vote" with their assets by trying to reconfigure their portfolios to align with what may lie ahead. "Making investment decisions along political party lines is a great way to underperform the broader market," says Quinlan.
"Instead, join the 'Stay Invested' Party," he suggests. History tells us that U.S. equity returns during election years and non-election years are not dramatically different.
U.S. equity returns during election years vs. non-election years. 7.5% Average S and P 500 returns during election years, since 1928. 8% Average S and P 500 returns during non-election years, since 1928. Source: Value calculated using S and P 500 daily total returns gross dividends. Sources: Bloomberg: Bespoke Investment Group. Data as of April 23, 2024. Past performance is no guarantee of future results. It is not possible to invest directly in an index.
What's more: From 1953 to the present, $1,000 fully invested in the S&P 500, regardless of party in power, would be worth $1.7 million today versus only $56,000 if you kept the same amount invested only during Democrat-led administrations, and $30,000 if you kept it invested only during Republican-led administrations.Footnote 2
"All the more reason not to try to time the markets or make major moves before Election Day," says Quinlan, who offers these three useful reminders for investors during election years:
  • Stay focused on your long-term goals.
  • Stay diversified across all asset classes, with an emphasis on quality.
  • Above all, stay invested.
"In fact," he says, "you could consider using periodic volatility leading up to the election as an opportunity to add to your portfolio."
For more timely insights, watch "Investing in a year of election uncertainty." And be sure to read Capital Market Outlook (PDF) and tune in to the CIO's Market Update audiocast series regularly.
Footnote 1 Source: Average Chicago Board Options Exchange Volatility Index (VIX) Performance in Election Years since 1990. Bloomberg. Data as of 2020 Election.

Footnote 2 Value calculated using S&P 500 daily total returns gross dividends. Sources: Bloomberg; Bespoke Investment Group. Data as of April 23, 2024.
May 3, 2024

A brighter future for renewable energy stocks?

With renewable energy equities tumbling by more than half since their highs in early 2021Footnote 1, investors may wonder if the sun has set on solar and wind. It isn't even high noon — the underlying drivers are as strong as ever, says Joe Quinlan, head of Market Strategy in the Chief Investment Office (CIO) for Merrill and Bank of America Private Bank. "We believe the global transition toward a clean energy future is still very much in progress."
[Music in background]
[Animated glitches containing various letters flip to spell out the following financial terms.]
On screen copy:
Bear Market
Business Cycle
Risks
Bull Market
Fixed Income
Inflation
Equities
Diversification
Interest Rates
Opportunities
Geopolitics
Market Catalysts
[Animated glitches end.]
On screen copy:
Market Decode
On screen disclosure:
Please read important information at the end of this program. Recorded on 03/26/2024.
[Joe Quinlan speaking throughout]
After a post-pandemic boom, renewable energy stocks went bust. So, where is the sector headed now?
On screen copy:
Joe Quinlan
Head of CIO Market Strategy, Chief Investment Office
Merrill and Bank of America Private Bank
Hi, I'm Joe Quinlan, with a closer look at why we believe renewable or clean energy, despite recent headwinds, holds long-term potential for investors.
First, some background:
On screen copy:
MSCI Global Alternative Energy Index more than tripled from March 2020 to Jan. 2021.
Source: MCSI. Past performance is no guarantee of future results. It is not possible to invest directly in an index.
From March 2020 to January 2021, the MSCI Global Alternative Energy Index more than tripled — amid global commitments to clean energy and growing concerns over the climate and the availability of fossil fuels. Since then, solar, wind and other renewables have given up virtually all those gains. Why? We see four key factors at play.
On screen copy:
Challenges for renewable energy
  • Sector has become overvalued
  • Rising rates made financing more expensive
  • Competition from natural gas
  • Drop in demand from China
First, the wave of excitement left the sector overvalued. Second, rising interest rates made financing of projects and equipment more expensive. Third, declining natural gas prices made renewables less competitive. And finally, the economic slowdown in China helped spur a drop in demand.
The good news is, we believe these challenges, while real, are temporary and unlikely to stem the transition to a clean energy economy.
On screen copy:
Good news for renewable energy
  • Emissions reduction policies remain priorities
  • Energy security favors alternative fuels
  • Technology improvements
  • Falling costs and rising efficiency
Emissions reduction policies at the local, national and international levels remain priorities. Energy security, a growing concern in Europe and globally, argues in favor of alternative fuels. And as the technology continues to improve, costs should fall as efficiency rises.
In addition, a decline in inflation, along with a shift towards lower interest rates could contribute to a resurgence for the sector.
On screen copy:
Potential opportunities include solar and wind,
manufacturers of related components, and commodities.
That could create investment opportunities in solar and wind projects, as well as manufacturers of batteries, inverters and other components, and commodities such as copper, nickel, lithium, graphite and cobalt.
For more timely insights on the economy and the markets, be sure to read our weekly Capital Market Outlook. Thanks for watching.
On screen disclosure:
Important Disclosures
The opinions expressed are as of 03/26/2024 and are subject to change.
Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.
Equity securities are subject to stock market fluctuations that occur in response to economic and business developments. All sector and asset allocation 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 in the best interest of all investors. Investments in a certain industry or sector may pose additional risk due to lack of diversification and sector concentration. Investing in commodities or the securities of companies operating in the commodities market involves a high degree of risk, including strategies and investment practices that may increase the risk of investment loss, including the principal value invested.
Bank of America, Merrill, their affiliates, and advisors do not provide legal, tax, or accounting advice. Clients should consult their legal and/or tax advisors before making any financial decisions.
MSCI Global Alternative Energy Index includes developed and emerging market large, mid and small cap companies that derive 50% or more of their revenues from products and services in Alternative energy.
This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate 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.
The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., ("Bank of America") and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S" or "Merrill"), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp.").
Merrill makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of BofA Corp. MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp.
Merrill Private Wealth Management is a division of MLPF&S that offers a broad array of personalized wealth management products and services. Both brokerage and investment advisory services (including financial planning) are offered by the Private Wealth Advisors through MLPF&S. The nature and degree of advice and assistance provided, the fees charged, and client rights and Merrill's obligations will differ among these services. Investments involve risk, including the possible lo ss of principal investment.
The banking, credit and trust services sold by the Private Wealth Advisors are offered by licensed banks and trust companies, including Bank of America, N.A., Member FDIC and other affiliated banks.
Bank of America Private Bank is a division of Bank of America, N.A., Member FDIC and a wholly owned subsidiary of BofA Corp. Trust and fiduciary services are provided by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A.
Investment products:
Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value
© 2024 Bank of America Corporation. All rights reserved. 651813 — 03/2024
[End of transcript]
[-] Close transcript
In the "Market Decode" video above, Quinlan looks at the myriad factors that drove clean energy stocks to new heights and more recently spurred their decline. He also highlights the forces shaping a potential comeback for the sector, as well as the market segments that could benefit from this ongoing shift in the global energy mix.
For a deeper dive, read "Renewable energy equities: What next after the boom and bust?" in this edition of the CIO's Capital Market Outlook. You can find more on investing and the environment in "Climate risk and the markets: 5 key questions answered." And be sure to check out our most recent Capital Market Outlook for the latest market news and insights.

TEST YOUR MARKET KNOWLEDGE

Tap  the following items to select the correct answer and learn more
Q: True or false: The world's biggest carbon dioxide emitter is also the world's biggest renewable energy consumer?
Footnote 1 MSCI; Bloomberg; Chief Investment Office. Data as of January 2024.

Footnote 2 The New York Times, "U.S. and China on Climate: How the World's Two Largest Polluters Stack Up," July 19, 2023.
April 10, 2024

How troubling are the interest costs on U.S. debt?

With Federal interest payments reaching $659 billion in 2023, some investors fear the government's spiraling costs to service rising debts could disrupt the broader economy. "That's a big, concerning number — nearly twice the level from 2020," notes Joe Quinlan, head of Market Strategy for the Chief Investment Office (CIO) at Merrill and Bank of America Private Bank. "Fortunately, we believe the U.S. economy is large enough to limit any market impact."
Quote: Follow the news but avoid precipitous reactions and instead stay well-diversified and focused on long-term investment goals.
The situation. The spike reflects two dynamics, Quinlan notes in the latest CIO Capital Market Outlook report: A $9.5 trillion surge in U.S. debt from 2020 to 2023 and higher U.S. Treasury rates.
The concern: Higher government borrowing costs could push borrowing costs for businesses and individuals higher for longer, dragging the economy down in the short term.
Keeping perspective. Even at elevated rates, government interest payments represent about 2.4% of U.S. GDP.Footnote 1 "That's higher than over the past decade, but we see this as manageable for a $28 trillion economy that remains the most dynamic and innovative in the world," says Quinlan.
Investment considerations. "Investors should follow the news but avoid precipitous reactions and instead stay well-diversified and focused on long-term investment goals," Quinlan advises.
Tune in to the CIO's Market Update audiocast series weekly to stay up to date on financial news that could affect your investments.

TEST YOUR MARKET KNOWLEDGE

Tap  the following items to select the correct answer and learn more
Q: What percentage of U.S. government spending goes to paying debt interest?
Footnote 1 Sources: U.S. Office of Management and Budget; Federal Reserve Bank of St. Louis. Data as of April 5, 2024.

Footnote 2 Congressional Budget Office. February 2024.
February 6, 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.Footnote 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.

Description

Title
[Music in background]
[Animated glitches containing various letters flip to spell out the following financial terms.]
[On-screen text]
Bear Market
Business Cycle
Risks
Bull Market
Fixed Income
Inflation
Equities
Diversification
Interest Rates
Opportunities
Geopolitics
Market Catalysts
[On-screen text]
Market Decode
[On-screen text]
Please read important information at the end of this program. Recorded on 01/22/2024.
[Joe Quinlan speaking throughout]
Despite rising geopolitical tensions, U.S. and global markets posted record or near-record gains in 2023. Does this mean investors can disregard the potential impact of geopolitics in the future? In our view, far from it.
[On-screen text]
Joe Quinlan
Head of Market Strategy, Chief Investment Office
Merrill and Bank of America Private Bank
Hi, I'm Joe Quinlan, with a look at why global events could matter for the markets and your portfolio in the coming year.
It's true that many global markets have performed well, despite wars in Europe and the Middle East, elevated U.S.-China tensions and disruptions to international trade.
But these and other events could present longer-term risks that no investor should ignore, such as:
GRAPHIC CARD
[On-screen text]
Geopolitical risks to watch:
  • Supply chain disruptions
  • Higher shipping costs
  • Rising defense spending
  • Greater dislocations of people
  • Higher government deficits
Supply chain disruptions, higher shipping costs, rising defense spending, greater dislocations of people, and higher government deficits.
This is not a case for putting a pause on investing or making any major changes to your long-term strategy.
LOWER 3RD
[On-screen text]
Geopolitics should play a role in investment decisions,along with traditional metrics.
It simply means that geopolitics should also play an important role in your investment decisions, along with traditional metrics such as earnings growth, interest rates and valuations.
So, what's most important to consider from here?
LOWER 3RD
[On-screen text]
A high-quality, diversified portfolio could offer a good defense against geopolitical tensions
We believe a high-quality, broadly diversified portfolio can offer investors a good defense during times of heightened geopolitical tensions. In addition, the U.S. economy remains the most dynamic, diversified and resilient on earth.
As such,
GRAPHIC CARD
[On-screen text]
  • We maintain a preference for U.S. assets over the rest of the world.
  • Within the U.S., we are constructive on:
    • Large-cap defense companies
    • Cybersecurity companies
    • High-quality dividend-paying stocks
we maintain a preference for U.S. assets over the rest of the world, including Europe, Asia and emerging markets, which could be most vulnerable to geopolitical shocks. Within the U.S., we are constructive on large-cap defense and cybersecurity companies, as well as high-quality dividend-paying stocks.
LOWER 3RD
[On-screen text]
For more insights, read our weekly Capital Market Outlook.
For more timely insights from the CIO, be sure to read our weekly Capital Market Outlook, and we'll continue to keep you up-to-date on these and other changes in the markets.
[On-screen disclaimers]
Important Disclosures
The opinions expressed are as of 1/22/2024 and are subject to change.
Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.
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. All sector and asset allocation 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 in the best interest of all investors. 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.
Bank of America, Merrill, their affiliates, and advisors do not provide legal, tax, or accounting advice. Clients should consult their legal and/or tax advisors before making any financial decisions.
This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate 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.
The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., ("Bank of America") and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S" or "Merrill"), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp.").
Merrill makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of BofA Corp. MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp.
Merrill Private Wealth Management is a division of MLPF&S that offers a broad array of personalized wealth management products and services. Both brokerage and investment advisory services (including financial planning) are offered by the Private Wealth Advisors through MLPF&S. The nature and degree of advice and assistance provided, the fees charged, and client rights and Merrill's obligations will differ among these services. Investments involve risk, including the possible lo ss of principal investment.
The banking, credit and trust services sold by the Private Wealth Advisors are offered by licensed banks and trust companies, including Bank of America, N.A., Member FDIC and other affiliated banks.
Bank of America Private Bank is a division of Bank of America, N.A., Member FDIC and a wholly owned subsidiary of BofA Corp. Trust and fiduciary services are provided by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A.
Investment products:
Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value
© 2024 Bank of America Corporation. All rights reserved. 6269335 - 01/2024
[-] Close transcript
"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 Market Update audiocast series for weekly check-ins on the markets and economy.
Footnote 1 International Institute for Strategic Studies, 2023. Bloomberg, "It's Not Just Ukraine and Gaza: War is on the Rise Everywhere," Dec. 10, 2023.
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.

Description

Title
[On-screen text]
Higher for longer isn't just for interest rates anymore
Please read important information at the end of this program. Recorded on 10/19/2023
[Joe Quinlan speaking throughout]
HFL... It may sound like a new sports league. But it's actually a trend we believe will shape the investment landscape for the next several years.
[On-screen text]
Joe Quinlan, Head of CIO Market Strategy, Chief Investment Office, Merrill and Bank of America Private Bank
Hi, I'm Joe Quinlan, with a look at what HFL -- which stands for "higher for longer" -- could mean for the markets and for your portfolio.
[On-screen text]
A "Higher-for-Longer (HFL) world"
  • Interest rates
    First up, interest rates. A tight labor market, strong wages and elevated energy prices are help keeping inflation higher than the Federal Reserve's target range, likely dashing hopes of any rate cuts any time soon.
[On-screen text]
A "Higher-for-Longer (HFL) world"
  • Global energy prices
    Next, global energy prices are being fueled by rising geopolitical tensions, along with oil production cuts and tighter supplies heading into the colder months.
[On-screen text]
A "Higher-for-Longer (HFL) world"
  • Global defense spending
  • U.S. budget deficit
  • Political discourse in DC
Also on the HFL list: global defense spending, the U.S. budget deficit and the pitch of political discourse in Washington
So, what does this mean for investors?
[On-screen text]
Higher rates should be favorable for cash and fixed income
On the positive side, higher rates should be favorable for cash and fixed income.
[On-screen text]
Elevated oil prices could boost energy stocks and commodities
Elevated oil prices could boost energy stocks and commodities, such as metals and minerals.
[On-screen text]
Strong defense spending could help equities in defense and cybersecurity
And strong defense spending may help equities in defense and cybersecurity.
On the other hand, the growing deficit could weaken the U.S Dollar and Washington politics could weigh on consumer and business confidence.
For more, read our Capital Market Outlook for October 10th. And if you're working with an advisor, check with them about what these insights could mean for you.
[On-screen disclaimers]
Important Disclosures
The opinions expressed are as of 10/19/2023 and are subject to change.
Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.
Equity securities are subject to stock market fluctuations that occur in response to economic and business developments. Investing in fixed-income securities may involve certain risks, including the credit quality of individual issuers, possible prepayments, market or economic developments and yields and share price fluctuations due to changes in interest rates. When interest rates go up, bond prices typically drop, and vice versa. Investing in commodities or the securities of companies operating in the commodities market involves a high degree of risk, including strategies and investment practices that may increase the risk of investment loss, including the principal value invested.
Bank of America, Merrill, their affiliates, and advisors do not provide legal, tax, or accounting advice. Clients should consult their legal and/or tax advisors before making any financial decisions.
This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate 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.
The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., ("Bank of America") and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S" or "Merrill"), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp.").
Merrill makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of BofA Corp. MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp.
Merrill Private Wealth Management is a division of MLPF&S that offers a broad array of personalized wealth management products and services. Both brokerage and investment advisory services (including financial planning) are offered by the Private Wealth Advisors through MLPF&S. The nature and degree of advice and assistance provided, the fees charged, and client rights and Merrill's obligations will differ among these services. Investments involve risk, including the possible lo ss of principal investment.
The banking, credit and trust services sold by the Private Wealth Advisors are offered by licensed banks and trust companies, including Bank of America, N.A., Member FDIC and other affiliated banks.
Bank of America Private Bank is a division of Bank of America, N.A., Member FDIC and a wholly owned subsidiary of BofA Corp. Trust and fiduciary services are provided by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A.
Investment products:
Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value
© 2024 Bank of America Corporation. All rights reserved. 6028857 - 10/2023
[-] Close transcript
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.

Next steps

Important Disclosures

Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.

Opinions are as of the date of these articles and are subject to change.

Bank of America, Merrill, their affiliates, and advisors do not provide legal, tax, or accounting advice. Clients should consult their legal and/or tax advisors before making any financial decisions.

This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate 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.

The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., ("Bank of America") and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S" or "Merrill"), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp.").
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 in the best interest of 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 a certain industry or sector may pose additional risk due to lack of diversification and sector concentration.

These risks are magnified for investments made in emerging markets. There are special risks associated with an investment in commodities, including market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors.

Income from investing in municipal bonds is generally exempt from Federal and state taxes for residents of the issuing state. While the interest income is tax-exempt, any capital gains distributed are taxable to the investor. Income for some investors may be subject to the Federal Alternative Minimum Tax (AMT).

Retirement and Personal Wealth Solutions is the institutional retirement business of Bank of America Corporation ("BofA Corp.") operating under the name "Bank of America." Investment advisory and brokerage services are provided by wholly owned non-bank affiliates of BofA Corp., including Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as "MLPF&S" or "Merrill"), a dually registered broker-dealer and investment adviser and Member SIPC. Banking activities may be performed by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A., Member FDIC.

You have choices about what to do with your employer-sponsored retirement plan accounts. Depending on your financial circumstances, needs and goals, you may choose to roll over to an IRA or convert to a Roth IRA, roll over an employer-sponsored plan from your old job to your new employer, take a distribution, or leave the account where it is. Each choice may offer different investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment (particularly with reference to employer stock), and different types of protection from creditors and legal judgments. These are complex choices and should be considered with care. For more information visit our rollover page or call Merrill at 888.637.3343.
Diversification does not ensure a profit or protect against loss in declining markets.

Sustainable and Impact Investing and/or Environmental, Social and Governance (ESG) managers may take into consideration factors beyond traditional financial information to select securities, which could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favor in the market. Further, ESG strategies may rely on certain values based criteria to eliminate exposures found in similar strategies or broad market benchmarks, which could also result in relative investment performance deviating.
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