Eli Salzmann, manager of the Neuberger Berman Large Cap Value Fund, predicts that a recession is on the way and advises investors to adopt a defensive position in their portfolios, with holdings in consumer staples and utilities, due to the impact of monetary policy, the inverted yield curve, and higher inflation.
The stock market's recovery in 2023, driven by technology stocks and the growing interest in artificial intelligence (AI), suggests that a new bull market may be underway, making it a good time to consider buying AI stocks like Advanced Micro Devices and Palo Alto Networks.
This article does not mention any specific stocks. The author's advice is to rotate out of historically overvalued financial assets and into historically undervalued critical resources. The author's core argument is that there is a high probability of a recession in the next twelve months, and they believe that the Fed's policies will contribute to this recession. The author also highlights potential risks in the junk bond market, the private equity industry, and the banking sector.
Bank of America believes that the stock market will continue to rise as investors' bullish sentiment contradicts their conservative portfolio positioning, suggesting there is still upside potential until hedge funds increase their exposure to cyclical and high-beta stocks and economic conditions deteriorate considerably.
Investors expecting a continued surge in technology stocks due to enthusiasm over artificial intelligence may face trouble as central banks tighten monetary policy, according to Bank of America strategists. The correlation between central bank liquidity and tech stocks is a cause for concern, as central bank balance sheets have shrunk while the Nasdaq continues to climb, indicating potential risks ahead.
Tech-heavy Nasdaq Composite and S&P 500 close higher on Monday, while Dow Jones Industrial Average falls slightly; Bank of America analyst predicts insurers will increase customer prices due to increased climate change risk; Allianz economist believes Federal Reserve Chair Powell will focus on short-term monetary policy at Jackson Hole; Loop Capital warns of weak smartphone sales ahead of iPhone 15 launch; CFRA Research chief investment strategist expects year-end rally for stocks despite recession concerns; Homebuilding stocks begin to decline; AMC Entertainment falls ahead of stock conversion; Cybersecurity company SentinelOne explores potential sale; LPL Financial chief technical strategist says recent stock pullback is temporary and predicts end-of-year rally; Jefferies upgrades gold product manufacturer Acushnet Holdings; Nvidia's quarterly earnings report could be critical for the market, says Wolfe Research; Stocks making big moves midday, including XPeng, Eli Lilly, and Marriott Vacations Worldwide.
The fundamentals and technicals support a demographically driven bull market in stocks until 2034, but potential risks include inflation, interest rate-induced debt crisis, and refinancing problems, which could lead to a drop in the stock market. Comparing the S&P 500's score in August 2023 to historical patterns, the market seems confident and not indicating an imminent debt crisis or severe recession. Credit spreads also appear tame compared to previous crisis periods. However, the article notes the possibility of abrupt changes in the market and encourages openness to a wide range of outcomes.
Investors are bullish on the market in 2023, with the Nasdaq Composite up 30% and two leading ultra-growth stocks, Amazon and Apple, poised to benefit from improving market conditions and their strong positions in multiple industries.
Bank of America Securities' Savita Subramanian sees the recent jump in Treasury yields as a positive signal for the economy, with companies focusing on efficiency and productivity rather than leveraging buybacks and cheap financing costs, driving the next leg of the bull market.
Summary: Many investors are predicting a new bull market for the S&P 500, and while it has yet to reach a new high, it is only 7% away; three stocks to consider buying are Amazon, which has a strong presence in the logistics market and opportunities in AI, Mastercard, which benefits from its business moat and growth in emerging markets, and Vertex Pharmaceuticals, which has potential catalysts in its pipeline and an attractive valuation.
Bank of America predicts that the S&P 500 could surge over 25% within the next year based on a bullish indicator, with low long-term profit growth expectations among analysts signaling potential gains.
Bank of America's head of US equity and quantitative strategy, Savita Subramanian, has raised the year-end target for the S&P 500 to 4,600, citing a bullish outlook and dismissing concerns of a consumer slowdown and Fed rate hikes.
The next crypto bull run will be different from the last one, as corporate interest in blockchain technology will drive gradual growth rather than a sudden surge in prices, according to Lars Seier Christensen, founder of Concordium. However, there are differing opinions, with some experts believing that we are already in the initial stages of a bull market.
The Federal Reserve's updated projections suggest a potential shift in focus towards increased vigilance on unemployment and GDP growth, which may impact inflation; the US economy is expected to face significant constraints in 2024; active stock picking is recommended over passive index investing as valuations for the S&P 500 remain fair but not necessarily cheap; investment opportunities lie in tech product category expansion, penetration rate, and customer growth for struggling small and mid-cap companies, as well as in e-commerce; overall, investors should research alpha opportunities and be selective in their portfolio positioning for 2024.
The author discusses the 2024 stock market outlook, including the bull vs. bear debate, the S&P 500's potential performance, and top stock picks for the year.
This article discusses M&T Bank (NYSE: MTB) and provides a nuanced hold recommendation for the stock. The author suggests that existing MTB investors could maintain their positions but also highlights potential challenges such as elevated nonperforming loans, negative revenue growth expectations, and potential economic headwinds.
The key information and data mentioned in the article include:
- M&T Bank is one of the larger U.S. regional banks with consolidated total assets exceeding $200 billion.
- The bank operates primarily in the Northeast and Mid-Atlantic regions.
- M&T Bank is commended for its conservative lending practices and robust risk management.
- The bank's community-focused approach offers a range of services, including retail and business banking, wealth management, and customer and business segments.
- The bank's interest income has shown a sharp upward trend since 2021, and it has a stable deposit base and liquidity profile.
- M&T Bank's loan and lease portfolio faces challenges, with a high rate of nonperforming loans and a low allowance for credit losses, indicating potential credit risk.
- The bank's regulatory capital ratio and leverage ratio are higher than most of its larger peers.
- The bank has consistent growth and a solid dividend history but faces challenges in its revenue trajectory and potential impacts from economic downturns.
- Valuation metrics present a mixed picture, but the author sets a recommended price target of $155 for M&T Bank, suggesting potential upside from its current market position.
- The author also outlines potential downside scenarios, including inflation rebound, recession, and fintech disruption.
Overall, the author's core thesis is that while holding MTB as part of a diversified portfolio remains a cautiously optimistic strategy, there is limited upside potential based on the current valuation.
Investors should remain bullish on US large cap stocks due to several factors, including the S&P 500's strength, high cash yields driving consumer spending, a strong economy, favorable stock valuations despite high interest rates, and relatively cheap equal-weighted stocks.
US bank stocks are currently the market's Achilles' heel, as they need to participate in any recovery rally in order to validate the notion that higher interest rates won't lead to a recession next year.
A bullish formula for the stock market is emerging as the economy grows, with positive GDP growth, improving earnings, and a paused Federal Reserve leading to a bullish outlook for stocks, according to JPMorgan. The Nasdaq 100 Index is also following a similar playbook from 1999, although JPMorgan is not predicting a repeat of the mind-boggling year-end rally seen in 1999.
Analysts are optimistic that the stock market will reach new all-time highs in 2024, despite concerns over inflation and rising interest rates, and there are opportunities for investors, although bloated Big Tech valuations may limit further upside for the Nasdaq.
U.S. Bancorp's stock surges as it is released from meeting requirements for larger banks by the end of next year.
Bank of America's Bull & Bear Indicator is now in "extreme bearish" territory, signaling a contrarian buy signal for stocks and riskier assets, despite outflows from emerging markets and high-yield bonds.
BMO Capital Markets believes that the US bull market will continue in 2024, despite expected volatility, and shares a list of 22 stocks that are poised to outperform.
Billionaire investor Bill Gross predicts that the US will enter a recession this quarter due to challenges faced by regional banks and a surge in auto loan delinquencies, causing him to recommend investing in the yield curve, SOFR futures, and equity arbitrage; fellow billionaire investor Bill Ackman has closed his bets against Treasurys due to growing economic risks.
