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Capital Market Outlook

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July 24, 2023

IN THIS ISSUE

  • Macro Strategy — Small-caps Showing Relative Strength Versus Large-caps. Time To Upgrade?: The technical backdrop for index-level investing in Small-cap stocks has improved but we still remain neutral for now and are closely watching the profits cycle.

  • Market View — The Market Risks Of China Being the Refinery To The World: Although China's recently announced export restrictions on gallium and germanium could spark a global mad scramble for critical metals and minerals, we continue to remain constructive on hard assets.

  • Thought of the Week — Liquidity Sufficient To Handle Sizable Treasury Bill Issuance: The level of bank reserves, which will be driven by flows from the Federal Reserve's reverse repurchase program, the Treasury General Account and Quantitative Tightening, can affect risk market sentiment.

Important Disclosures

 

Opinions and data are as of the date of this report and are subject to change.

 

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

 

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.

 

Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.

 

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.

 

A Merrill Contribution
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