Bear market to extend into second half of 2023: BofA

The mid-June to mid-August rally in US stocks prompted some investors to say that a new bull market had begun. Not so fast, write Bank of America’s equity quant strategist Savita Subramanian and colleagues.

Subramanian and her colleagues said seven of the last seven bear markets ended after a Federal Reserve rate cut. Moreover, 2-yr yields fell by at least 50 basis points before the majority of market troughs. “BofA forecasts the first rate cut in the September quarter of 2023, and 2-yr yields are still rising to cycle highs.”P 500 are “rich on almost every measure we track”, the strategists said, and one signpost with a perfect track record says it’s too early to buy: the Rule of 20.

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