Merrill Lynch Bank of America Recession Warning from the Head of US equity and quantitative strategy, Savita Subramanian, as she talked about the US economy. Will the global markets fall into recession?
Bank of America Recession Warning
As for her outlook on the markets’ future, Ms. Subramanian stated the following:
“We are seven years into a full-fledged, all-out, central bankers doing everything they can to stimulate demand. We looked at all of these indicators that have been pretty good at forecasting recessions and we extrapolated that if they follow the current trends they’re on, we’re going to hit a recession sometime in the second half of next year.”
She also noted that the most disturbing thing currently is that the crisis risk is not discounted into the market at these levels.
The S&P’s indexes show 1.8 percent gap from its intraday all-time high of 2.193.81, which was reached in August last year. Ms. Subramanian believes that the S&P target by the end of this year is 2000, which is nearly 7 percent lower than its today’s figures. She
Health care and technology sectors are at their best
Moreover, Savita Subramanian has highlighted that her expectations regarding the S&P are signaling the reaction function of the market. She stated:
“There’s a lot of violent trades that can really roil a fairly complacent environment.”
Although Ms. Subramanian admitted that there is a lot more risk than reward currently, she still believes that the technology and health care sectors show their best performance right now. She commented:
“Health care has taken it on the chin because of Hillary risk and fears that the M&A cycle is over.”
She added that some of the sector experts perceive Hillary Clinton as a risk to the sector, mostly due to her position regarding the drug firms and health care. Nevertheless, Ms. Subramanian stated that the good growth is present in the market, even though the trading is at its almost lowest multiples.
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