Bank of America Merrill Lynch 2020 Market Outlook: Profits Rise, Economy Slows, Globalization Peaks, and Business-as-Usual Investing Comes to an End
Key drivers of this year's late-cycle bull market gains are expected to shift as the global markets enter the new year, according to BofA Merrill Lynch Global Research, which was recently named Institutional Investor's top research firm in the world. In its year-ahead outlook, the research team forecasts a bottoming of economic growth in the spring as trade war tensions ease, and relatively low recession risk.
Key highlights include:
"The new year and decade begin near the tail end of the longest bull market on record, and despite recent strong gains, investor anxiety remains at a high level," said Candace Browning, head of BofA Merrill Lynch Global Research. "Many of the driving factors - central bank policy, globalization, oil - have peaked, and new economic paradigms are emerging in response to a different set of challenges facing the world's social, environment, political and economic systems. Rather than focusing on the downside, we think the opportunity for investors will be found in what happens next."
At the annual Bank of America Merrill Lynch Year Ahead Outlook presentation today in New York City, the firm's top strategists and economists discussed the overarching themes that are transforming economies and investing paradigms in the year ahead and throughout the 2020s. Notable among these is the transition to stronger local and regional economic ties, following three decades of economic growth fueled by the benefits of globalization - an unchecked, cross-border free flow of goods, people and capital that rewarded cheap labor and low consumer prices. The shift from globalization to localization and other global macro trends underpins much of Bank of America Merrill Lynch's outlook on the markets and economy next year.
Key macro calls made for the markets and economy in the year ahead are:
Given macro trends impacting the markets, business-as-usual investing is likely to come to an end. Localization, rather than globalization, has major implications for global growth, and a rise in moral capitalism is changing corporate behavior, shifting the focus from shareholders to stakeholders. Investors should consider several longer-term trends for 2020 and beyond: (1) from global to local, (2) from trade war to tech war, (3) from bonds to stocks, and (4) from short-term gains to long-term growth, where environmental, social and governance (ESG) considerations can help isolate the long-term growth stories.
To learn more about these major themes, please listen to a podcast hosted by Candace Browning, "What the 2020s could bring for the markets - and our financial lives."
BofA Merrill Lynch Global Research
Bank of America
"Bank of America Merrill Lynch", "Bank of America" and "BofA Securities" are the marketing names used by the Global Banking and Global Markets divisions of Bank of America Corporation. Lending, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Trading in securities and financial instruments, and strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation ("Investment Banking Affiliates"), including, in the United States, BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp., both of which are registered broker-dealers and Members of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA.
Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured * May Lose Value * Are Not Bank Guaranteed. ©2019 Bank of America Corporation.
Keynote Roundtable Discussion
The Why and How of Edge Intelligence Tools