Bank of America sees bear rally fizzling out even as equity inflows surge - BNN Bloomberg

Investors flocked back into equities at the fastest pace in about eight months on signs of cooling inflation, but Bank of America Corp. strategists warn the rally will fizzle out due to earnings risks and staunchly hawkish central banks.

In the absence of an earlier change to the Fed's approach, “a fair chunk of the bear market rally is behind us,” they wrote in a Nov. 17 note. The outlook is dimmer again for next year as market strategists including Michael Wilson at Morgan Stanley warn of weaker corporate earnings fueling more stock losses before a rebound in the second half. Bank of America's team also said profits will “ironically” remain under pressure even as inflation recedes. They recommend holding bonds in the first half of 2023, with stocks becoming more attractive in the last six months of the year.

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