Bank of America Corp. strategists are bearish on markets next year and urged investors to focus on preserving cash as faster inflation and higher interest rates upend the trajectory of global asset prices.
In a note to clients, strategists led by Michael Hartnett listed macro trade recommendations, including long positions on volatility gauges, oil, energy, the U.S. dollar, and real assets. Investors can expect a “rates shock” in 2022, following the “inflation shock” of 2021 and “growth shock” of 2020, they wrote.
“We are therefore bearish and believe capital preservation will grow as a theme in the year ahead,” the bank strategists said.
Their forecast contrasts sharply with bullish views at other Wall Street banks, including Goldman Sachs Group Inc. and JPMorgan Chase & Co., who see stock markets climbing at a more muted pace next year.
Risk assets roared higher on Monday, sending the S&P 500 to a new all-time high, as investors cheered the nomination of Jerome Powell for a second term at the head of the Federal Reserve.