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BofA: Stocks Will Continue to Plunge as Scared Investors Sell

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Tuesday, 13 November 2018 09:31 AM

A Bank of America strategist reportedly is predicting more bloodshed for investors because stocks will continue to fall before hitting their “big low.”

"We remain bearish, as investor positioning does not yet signal 'The Big Low' in asset markets," Michael Hartnett, BofAML's chief investment strategist, told CNBC in a statement.

The November BofAML fund manager survey, its latest pulse of professional investors, indicates both an increased allocation to U.S. stocks and a belief that domestic large caps will be among the worst performers in 2019.

A decline that began in mid-October continues to chip away at the market and rattle some nerves, CNBC explained. Wall Street strategists look for signs that sellers are exhausted and the market has reached sufficiently low levels as to indicate a bottom.

However, 44 percent of respondents see global growth slowing over the next year, the worst outlook since November 2008, CNBC reported.

Investors continue to cite the trade tariff war as the biggest risk, though they also are concerned about interest rate hikes from the Fed and rising levels of corporate debt.

However, other experts are much more optimistic about the market's future despite six weeks of unusual U.S. stock market volatility.

Veteran market strategist Richard Bernstein continues to believe share prices will keep rising, even though the nine-year U.S. economic expansion has reached its late stages.

“I really don’t think there is a bear market on the horizon,” Bernstein, the chief executive of Richard Bernstein Advisors LLC and former Merrill Lynch & Co chief investment strategist, said at the Reuters Global Investment 2019 Outlook Summit in New York.

Bernstein said there is now an absence of typical catalysts for a “multi-quarter, curl-your-toes” bear market including falling corporate profits, an inverted U.S. Treasury yield curve, and overly bullish investors.

“People are so focused on downside and downside protection,” said Bernstein, whose firm oversees $9.5 billion of assets as of Sept. 30. “That’s not what a recession feels like.”

Bernstein said he is “very cyclically positioned,” favoring industrials, commodities, gold and other investments that can thrive in a rising “pro-inflation” environment, while keeping a “very, very short duration” in fixed-income investments.

“Fundamentals have been deteriorating in the fixed-income market for two years. Nobody cares. It’s an amazing thing to see,” he said. “If you think about what’s the kryptonite of fixed income, it’s inflation. (It) has been creeping up at a snail’s pace, but it’s creeping up.”

A key cause of uncertainty about growth prospects comes from Washington, Bernstein said, as lawmakers eyeing the two-year election cycle enact voter-friendly stimulus but resist the hard choices to address a longer-term need, infrastructure spending.

He said that shortcoming is already impeding productivity, pointing to the daily slog that he and thousands more commuters experience on a much-maligned suburban railroad to New York from New Jersey.

“I have the pleasure of riding New Jersey Transit every day,” he said. “I only go through a 108-year-old tunnel. I don’t get to go over the 110-year-old bridge.”

Bernstein sees no “day of reckoning” for the economy, but said a “slow

Stock markets stabilized Tuesday after a sell-off led by technology shares dragged Wall Street sharply lower the day before, the Associated Press reported.

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A Bank of America strategist reportedly is predicting more bloodshed for investors because stocks will continue to fall before hitting their “big low.”
bank, america, stocks, plunge, big, low
Tuesday, 13 November 2018 09:31 AM
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