Listen and subscribe to Global Research Unlocked. A podcast from BofA Global Research. Nuanced insights that can help you chart the right path. Our industry-leading analysts discuss what’s emerging – from risks and opportunities to growth themes like AI and energy transition.
Corporate investments in AI have had significant impact on the financials of certain semiconductor and server companies, but while software providers stand to benefit from AI investments too, the technology hasn't yet shown up in the profits of these companies in a meaningful way. Alkesh Shah draws parallels between AI today and the Internet in 1995. Back then, investments were mainly in equipm...
Convertible bonds (CBs) can offer equity-like returns with downside protection thanks to the coupon and the ability to redeem most CBs at par. Thus far in 2024, CB issuance has been active, well ahead of levels seen the last few years. Michael discusses the reasons for such an active issuance year, including that Pandemic debt issuance, which was at record levels in the convert s...
In 2023, we saw an earnings recession, at least in the first half of the year, despite GDP growth that was ahead of trend. Back then, companies were adapting to higher rates, weaker demand and climbing costs, which weighed on earnings. Ohsung Kwon expects earnings growth to look much better in 2024. This year benefits from a lower 2023 earnings base on which to build as well as a number ...
The latest economic data releases this year suggest the labor market remains strong but is cooling and the consumer is resilient in the face of sticky inflation, especially on the services side of the economy. Michael Gapen says the rebound in the labor force, labor participation and net migration played a crucial role in his revised US GDP (gross domestic product) estimates w...
Transport metrics had been in an extended downturn for around 18 months. Demand was depressed, inventory levels were high and end demand for goods had faded from COVID highs. But more recently there are signs of stabilization in some of the data tracked by BofA Global Research, partly because trucking supply has been removed. And some purchasing managers indices, or PMIs, have shown ...
Earlier this month, BofA Securities hosted a Global Investor Summit in Rome, Italy. In attendance were corporate executives, prominent investors, policy experts, members of BofA management and several BofA Global Research strategists. Topics ranged from private capital to understanding central banks to the future of Europe. Michael Hartnett suggests that while European markets have been d...
At the start of the year, markets were pricing in three rate cuts by June and now, the likelihood of one cut by June is close to 50/50 based on market implied probabilities. But while delayed rate cuts complicate the bull case for Emerging Markets (EM), David Hauner does point out that expectations for cuts have slid partly because of stronger economies, a positive for EM. Still, further ...
US ESG funds faced a challenging 2023, seeing net outflows of around $7.1 billion, but strong markets meant that assets under management grew strongly. In the US, ESG regulations have historically been market driven, unlike the specific directives in the EU, but more recently the regulatory landscape in the US has seen a flurry of initiatives. For investors, there is state ...
Since emerging from the COVID pandemic, the Fed has contracted the size of its balance sheet, also known as Quantitative Tightening (QT). They've done this by allowing their Treasury holdings to mature without reinvesting the proceeds. This has placed upward pressure on yields, all else equal. But the Fed is expected to slow this process later this year. Mark Cabana says this...
M&A (Mergers & Acquisition) activity had fallen to well-below the 10Y average over the last 2 years. There are various reasons for this slowdown, including higher rates and negative corporate sentiment. But between equity markets faring well over the last year and interest rates off highs, there are some reasons to expect a recovery. Indeed, we've seen a bit of an uptick. ...
US oil production grew roughly 1mm barrels per day in 2023 and while US production growth may be slowing, it's growing elsewhere including in Guyana and Brazil. Such growth outside of Saudi threatens their market share, and that could mean even more supply as Saudi looks to take that share back. That all makes for a tough backdrop for the oil price and oil-levered equities, but the ...
Streaming video choices have ballooned over the last decade and leading streamers are already reaching well over half of US households. But there are still a number of compelling growth drivers. The crackdown on password sharing is underway and can boost subscribers, so can bunding deals, such as those with wireless companies and there's still room for much better ad targeting....
Our Economics and Strategy teams expect central banks in developed economies to start cutting rates in '24, inflation to slow further and the dollar to weaken. But questions persist, ranging from which emerging economies may perform best amidst the weakening dollar backdrop, whether 10Y Treasury rates will follow Fed Funds rates lower, and if the markets might be too complacent about...
Almost 40% of US adults are obese and the US healthcare system spends nearly $173 billion a year on obesity-related medical costs. In the past, exercise and diet regiments were the best solutions for combating obesity but now there's an injectable called a GLP-1. These drugs trigger receptors in the brain to suppress appetites, cravings and addictive behaviors. Pete Galbo explai...
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