BANK OF AMERICA
BofA Merrill Lynch Global Research released its outlook for the markets in 2014, calling for strong U.S.-led economic growth, higher yields and solid U.S. stock gains that are lower than in 2013 but higher than consensus. Meanwhile, a rising U.S. dollar and rising rates, as well as rising rate volatility, will have consequences for markets around the world as credit cycles diverge.
“In 2013, we saw the 30-year bull market in bonds wind down and stocks soar, with a stronger recovery since 2009 than in the last five market cycles,” said Candace Browning, head of BofA Merrill Lynch Global Research. “As we move into 2014, we expect this trend to moderate but continue forward even with Federal Reserve tapering mid-year.”
Bearish on rates and commodities, long on volatility and bullish on real estate and equities, the BofA Merrill Lynch team expects a shift to lower liquidity/higher growth in 2014 and overall positive asset returns. Rejecting the outright bear market case for equities, analysts remain optimistic about stock market gains in the near term as high-quality, U.S.-based companies with global exposure unleash value. However, they advise to move to middle ground, shedding the extremes of high-yield or high-growth stocks as long-term trends in the great global rotation continue to play out.
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For more information regarding the BofA Merrill Lynch Global Research 2014 Year Ahead outlook, please contact Selena Morris, Bank of America, 646.855.3186 or Rinat Rond, Bank of America, 646.855.3152.