Is all the volatility behind us — or is more choppiness on the way? Could we still see a recession this year? Which sectors could lead the way in a recovery? Are U.S. Treasurys still attractive? "After a tumultuous first half of 2025, we know investors have plenty of questions about what's ahead," says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank.
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2025 Midyear Outlook
On the road to recovery
On-screen disclaimer:
Please read important information at the end of this program. Recorded on 6/5/2025 and 6/12/2025.
[Chris Hyzy, Marci McGregor, Savita Subramanian, Matt Diczok, Aditya Bhave speaking throughout]
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Chris Hyzy
Chief Investment Officer
Merrill and Bank of America Private Bank
Chris Hyzy
Hello and welcome. I'm Chris Hyzy and I'm glad to be hosting this 2025 Midyear Outlook event, "On the road to recovery." A year that launched on a wave of optimism over innovative technologies and strong corporate earnings took a sudden turn in early April when the United States announced sweeping tariffs on most trading partners.
We've seen a selloff in U.S. Treasurys, a decline in the U.S. dollar, friction around tariffs and fears of a recession. In recent weeks, however, most tariffs have been delayed, and/or lowered, and used more as a negotiating tactic, trade rhetoric has softened, and markets have regained ground. And through it all, the U.S. economy and consumers have proven to be remarkably resilient.
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Four phases of recovery:
- Reset
- Relief
- Reexamine
- Regrowth
At the Chief Investment Office, we've identified four phases from the initial uncertainty to recovery, starting with the reset phase, where unforeseen events quickly unfold, risk is repriced and liquidity needs to take center stage. Relief is next, characterized by policy response and significant relief rallies, followed by third, a reexamining phase, where choppy markets ultimately give way to signs of stable growth. And finally, regrowth, building back to a new normal.
But we've got some work to do, and there's still plenty of risks out there. In this Midyear program, I'll be joined first by two colleagues from BofA Global Research:
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2025 Midyear Outlook: Research Panelists
Savita Subramanian
Head of U.S. Equity and Quantitative Strategy
BofA Global Research
Aditya Bhave
Senior U.S. Economist
BofA Global Research
Savita Subramanian is a managing director and head of U.S. Equity and Quantitative Strategy and Aditya Bhave is Senior U.S. Economist. They'll shed light on where the economy and markets stand right now and what's ahead for the balance of the year.
With that, let's get started.
[Transition to Research Panel]
Chris Hyzy
Aditya, Savita, welcome. Thanks for joining me for the Midyear Outlook 2025.
Savita Subramanian
Great to be here.
Aditya Bhave
Thank you for having us.
Aditya, let's start with you. Let's talk about the broader economic environment, we've had tremendously volatile headlines almost every day since the beginning of the year. As we sit here at the halfway mark, can you project forward exactly what your current thoughts are on where we're headed in terms of the overall environment for the economy?
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Aditya Bhave
Senior U.S. Economist
BofA Global Research
Aditya Bhave
So, we think the economy is in a muddle-through phase. We think economic growth will average around 1% for the first three quarters of this year. And then as you get towards the end of the year, we think the impact of the fiscal bill that will probably get passed around July, August, that should start to kick in and tariff-related uncertainty should also fade.
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BofA Global Research expects GDP growth to reach 1.7% or 1.8% in 2026.
Aditya Bhave
So, as you get into the fourth quarter and then into next year, growth should return to a trend-ish level of high ones, call that about 1.7, 1.8%.
Chris Hyzy
When you think about the drivers of the economy, we know how the equation works, and the consumer is the engine that could most of the time. How do you see the consumer right now?
Aditya Bhave
We still think the consumer's resilient. Our mantra on the consumer has been pay them and they'll spend. Essentially, the idea is that as long as the labor market holds up, we think the consumer will as well.
Chris Hyzy
Savita, so in terms of that mix and what Aditya just described in terms of the economic environment, let's talk about the capital markets, specifically the equity markets. How do you see the second half of the year unfolding relative to what we've all experienced in the first half?
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Savita Subramanian
Head of U.S. Equity and Quantitative Strategy
BofA Global Research
Savita Subramanian
Indeed. I mean, it's been a wild ride, and we've sort of round-tripped the S&P 500. The levels, we're back at the levels where we started the year, maybe a little bit higher. I think it's going to be another tricky few months, and I think investors need to navigate the summer months with a little bit more awareness of the policy backdrop.
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Corporations have shown resilience in managing costs and navigating uncertainty.
Savita Subramanian
But, you know, I think where we are now, corporations have really surprised us by keeping margins relatively stable despite these inflation fears, despite sourcing issues. They're used to tariffs. They saw tariffs back in 2018. So, you know I think as long as they have the numbers and some level of certainty around tariffs, they can navigate this quite ably.
Chris Hyzy
As it relates to size, style and sectors. How, how do we see the second half unfolding? Some things have been stalled out like small caps for obvious reasons. But let's just go through those areas in terms of your latest thinking on what we can expect going forward.
Savita Subramanian
Yeah. I mean, when you look at kind of the risk-reward of small caps versus large caps, I still see better opportunities in larger companies, primarily because of balance sheet strength. So, when I think about value versus growth, growth stocks have obviously had a wonderful run for as long as we can remember. There are a lot of investors out there who've only seen a growth bull market.
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Value stocks have delivered stronger returns than growth stocks.
Source: The Wall Street Journal, "A reckoning for the magnificent seven tests the market," April 25, 2025.
Savita Subramanian
But what we've seen this year is a stealth value outperformance cycle. And I think that continues because where are we? We're in an environment where interest rates are at healthy levels. Cash is worth something. And when you look at companies that are throwing off cashflow, they're actually more valuable today than they were during that zero-interest-rate period of, you know, the 2010s.
Savita Subramanian
When you think value, financials, energy doesn't sound like these high-quality sectors. But I think what's interesting is that these are sectors that have been starved of capital for the last 10 to 15 years and have really healed themselves and are probably better adapted for a higher interest rate environment than some of the more asset light, tech and innovation-oriented companies.
Chris Hyzy
What type of drivers in the second half of the year do you foresee that could, you know, provide some tailwinds to the market that we just haven't talked about?
Savita Subramanian
Yeah, so, I think there's also this running theme of efficiency. And that's what we're really excited about for the overall market and for global markets in general, is the idea that we're going from an environment where companies weren't necessarily focused on efficiency and were really making money in lower quality ways, like global cost arbitrage, you know, levered buybacks, etc.
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Global cost (or labor) arbitrage: Companies' practice of lowering operating costs by using less expensive labor in other countries.
Savita Subramanian
And now we've got this environment where companies are laser focused on efficiency. And what we've seen in the past is that translates to a higher multiple, you know, more earnings certainty. Which we think is the next bull case for equities.
Chris Hyzy
Aditya, let's talk a little bit about the Federal Reserve. Let's talk about potential policy as well as the labor markets in general. How do you see that unfolding through the balance of '26?
Aditya Bhave
Right. So, we think the Fed is stuck in the near-term. And so, we don't expect any cuts this year.
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Federal Reserve rate cut decisions are based on inflation data and may not occur before the second half of 2026.
Aditya Bhave
When you get into the second half of next year, we see more scope for rate cuts because inflation in our view, by then, would have started to rollover, be moving closer to 2% at least potentially below two and a half, definitely below three.
Chris Hyzy
And the bill, mildly positive as it relates to overall growth?
Aditya Bhave
Yes, I think that's right. You have tax cuts that are quite frontloaded. No taxes on tips, no taxes on overtime, a larger standard deduction for seniors, and all of that or most of that is supposed to sunset around 2028, whereas your spending cuts to Medicaid and other cuts, those are much more backloaded. So at least in the near term for fiscal year '26, we think that if the final package is similar to what was passed by the House, then it should add about seven tenths of a percent of GDP.
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Tax cut bill could potentially add 0.7 percent to U.S. GDP in 2026.
Chris Hyzy
Savita, let's switch to, a little bit, this theme about valuation, valuation, valuation. We've talked about it a lot. How do you see valuations just overall relative to history, not just in the second half of '25, but for the foreseeable future?
Savita Subramanian
Yeah, I mean, it's a tough one because it feels hard to buy the S&P 500 at these multiples. I think the problem is the S&P 500 is a very different animal today than it has been over the last, you know, few decades.
Savita Subramanian
Today, 50% of the S&P 500 is innovation, tech, healthcare, asset light. And then when you look at the other sectors that are on the path to becoming less labor intensive, less asset intensive.
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S&P 500 valuations are higher today, but underlying assets are also healthier.
So, I feel like that apples to oranges comparison, while it does seem unnerving that the multiples are higher today, when you kind of boil it down to what's actually underlying the index, it's healthier. It's a different mix of business models.
Chris Hyzy
If you had to think about, what are we missing? What are you hearing from clients, from investors, that we haven't talked about that still is on your radar that you're waiting to see unfold?
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What we're watching: Next three or four jobs reports, indicating the health of the labor market.
Aditya Bhave
So, if something's going to break, it's probably going to happen by September, which is why we're in this very bimodal kind of outlook right now where if we muddle through, there is potential for re-acceleration and for the narrative to really change as we get into the fourth quarter. But if something's going to break, it's probably going to be the next, call it three, four jobs report. That's when you're going to see it.
Chris Hyzy
And the bond market will probably tell us what potentially is coming.
Aditya Bhave
Right. So, markets have called probably nine of the last three recession, right? [Laughter.] So, you get you some false positives there. I think there was a lot of concern in early April that this was going to be a lot worse than, than it turned out to be.
Chris Hyzy
So, this is the Midyear Outlook for 2025. But let's talk and end on longer-term thinking. Can you describe what your belief is on where the economy is headed? What potentially we should be thinking about.
Aditya Bhave
Right. So, the simplest way to think about GDP growth is that GDP growth is growth in hours worked, or basically the labor force, plus growth in productivity. Growth in hours worked is slowing fast. It could go down to zero soon.
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Growth in productivity will be an important factor in increasing GDP.
Aditya Bhave
Right. So, we're going to be all about productivity. And we've seen some signs of stronger productivity starting a couple of years ago. Right? So, if that continues, then we could maintain about 1.8% ish productivity growth, which would mean 1.8% GDP growth, which is actually pretty good. Right? But if productivity slows down then you're in trouble because you're not getting bailed out by hours. And I think that's going to be one of the key questions in the long run.
Savita Subramanian
From here, you know, I think there's a sort of balancing act between, you know, how many jobs can we replace without the consumer slumping? And that's the that's the tricky part. But when you look at prior productivity cycles, there's this fear that, you know, computers are going to put everybody out of business. Obviously, that hasn't happened. We just do a lot more and we do it faster. And I think that's where we're headed.
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A silver lining: Artificial Intelligence and other innovations could drive demand for leisure and other services.
Savita Subramanian
Which actually frees up time and could actually drive more demand for services, leisure, etc. So, you know, in all of these kind of bear scenarios, there's a there's a silver lining or a bull case that doesn't get as much airtime.
Chris Hyzy
Time in the market still really important overall?
Savita Subramanian
Our mantra for equities is it's not about market timing. It's about time spent in equities. And equities are remarkable where the longer you've held the S&P 500 the less loss risk you've had. So, I think the idea of emotional selling amidst, you know, dramatic news flow, headlines, policy risk, just doesn't make sense as a long-term strategy.
Chris Hyzy
That's a great place to end. Savita, Aditya, thanks for joining me for the Midyear Outlook 2025.
Aditya Bhave
Thank you.
Savita Subramanian
Thank you.
[Transition to Chris Hyzy straight-to-camera]
Chris Hyzy
Next, I'll be joined by Marcy McGregor and Matt Diczok, two of our top strategists with the Chief Investment Office, to share their perspectives and help you prepare your portfolio for what's ahead.
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2025 Midyear Outlook: CIO Panelists
Marci McGregor
Head of Portfolio Strategy, Chief Investment Office
Merrill and Bank of America Private Bank
Matthew Diczok
Head of Fixed Income Strategy, Chief Investment Office
Merrill and Bank of America Private Bank
Chris Hyzy
We'll look at some sectors that hold potential opportunity for stock investors and we'll consider what a balanced portfolio looks like today.
[Transition to CIO Panel]
Chris Hyzy
Matt, Marci, thanks for joining our Midyear Outlook today.
Marci McGregor
Thanks, Chris.
Chris Hyzy
So, Marci, we talked about four different phases in this market workout cycle as it relates to where we were and then "On the road to recovery," which is the title of our Midyear Outlook. Talk to us about where we are right now and what the potential is to move on to the next phase.
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Marci McGregor
Head of Portfolio Strategy
Chief Investment Office
Merrill and Bank of America Private Bank
Marci McGregor
Well, I think markets have experienced a huge relief as we outlined as phase two, the relief phase for markets, the recovery from the tariff announcement and the choppiness we felt in from February to the end of April. But, now I think it's going to be all about fundamentals.
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Expect choppy markets in the reexamine phase on the road to recovery.
Marci McGregor
Now, markets may feel choppy in the reexamine phase because data may appear choppy, corporate profits, especially in the second quarter, may appear choppy, and the big question is; Can markets look through that to the second half of the year and stay on a positive track?
Chris Hyzy
So Matt, Marci talked about data, right? It is all about data. We sometimes discount whether or not the soft data, sentiment, is going to shift into hard data, the real factual thing. What's going on in the bond market right now? We've seen yields come back to life, but yet we still have a very attractive real yield. You want to talk about a little bit of that?
Matt Diczok
Sure. It's been a volatile time in fixed income.
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Matthew Diczok
Head of Fixed Income Strategy
Chief Investment Office
Merrill and Bank of America Private Bank
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Real yields — what an investment earns above inflation — are very attractive right now in fixed income.
Matt Diczok
As you pointed out, real yields, meaning the yield above inflation are higher right now. It's more attractive for our investors, more attractive for our clients, both relative to its own history, and also relative to real rates across the globe. Whether it's Germany or Japan, U.S. fixed income at these new higher levels are actually attractive in our opinion.
Chris Hyzy
Describe how we're positioned today in fixed income.
Matt Diczok
Earlier this year we moved to a position we were neutral, meaning neutral across sectors, weren't overweight in corporates, weren't overweight in Treasurys. We also moved to a neutral duration, meaning we weren't either long or short relative to an average maturity of a bond portfolio.
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Maintaining a neutral position in a fixed-income portfolio offers flexibility to maneuver as opportunities arise.
Matt Diczok
So being neutral has been good position for our clients, but it also gives us the ability if we see good opportunities later in this year, next year, we have some dry powder we can reinvest into other asset classes.
Chris Hyzy
Right now, let's hold that thought for a second. Let's shift back again to the economy. What has surprised both of you as it relates to the economy in general?
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Consumer spending accounted for 68.4% of U.S. GDP in the first quarter of 2025.
Source: U.S. Bureau of Economic Analysis, April 30, 2025.
Marci McGregor
For me it's all about the consumer. So, we have a consumer, if you think about from Covid till the supply chain crisis, to inflation to now tariff noise, the consumer stayed resilient. And while consumer sentiment hasn't been great, the real data shows that the consumer is still out there spending and growing their spending.
Chris Hyzy
It's great. Matt, anything to add?
Matt Diczok
One of the surprises was how nervous people got when the bond market moved higher. Those higher yields kind of really spooked people. And we took a step back, and again we looked at them. They look attractive to us relative to other opportunities across the globe, relative to other asset classes. So, the lack of buying when yields move higher surprised us a little bit, but creates a longer-term opportunity for our clients.
Chris Hyzy
Let's stick on growth for a second and shift a little bit to the medium term and, and longer term. Does it feel like some of the data is now shifting overseas, and is that changing portfolio positioning from a global allocation perspective?
Marci McGregor
China is a great example where they're trying to position in this world of trade uncertainty by stimulating their own domestic economies, and that can also lead to opportunity. Now, when I think about investing outside of the U.S. now, we have long advocated for a strategic allocation to non-U.S. equities because especially in emerging markets, a growing consumer base that we feel is really important for our clients to have exposure to.
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Look for opportunities in emerging markets.
Chris Hyzy
With the potential that their own money comes back to their markets on the margins a little bit as well. Let's talk a little bit about what's going on in yields around the world. Is it any different?
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Higher long-term yields are currently a global phenomenon.
Matt Diczok
It's not actually different. You're seeing a very similar theme across global markets, a steepening of yield curves, meaning the long end is moving up higher than the short end in Japan and Germany and other places, more attractive yields. So, we do see favorable global growth, favorable domestic growth that is pushing yields up somewhat higher, that's making the curve a little bit steeper. And, again, that's an opportunity for our clients.
Chris Hyzy
But let's talk about sectors in general. What are we most enthusiastic about?
Marci McGregor
Yeah. When I think about what's next for U.S. equity markets, and we are constructive on U.S. equities broadly, the sectors that we see leading the way are financials, again, avoiding a recession and a strong consumer base. Financials can really benefit from their consumer discretionary. Also, in that non-recessionary scenario can really benefit consumer discretionary, spending has held up, especially among the highest income households in our data.
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Sectors that may lead the way:
Financials, Consumer Discretionary, Utilities and Technology.
Marci McGregor
And then utilities, that next evolution of generative AI. The demand needs for energy to fuel the growth in innovation that's happening. Technology: The Magnificent Seven had been the leadership for markets for so long, and then they became the Lag Seven for a couple of months this year. But, innovation is so important to U.S. equity markets. I would maintain a market weight to the technology sectors because the toothpaste is out of the tube. I think the innovation is going to continue from here for many years to come.
Chris Hyzy
And this is coming at a time where the engine of growth is most notably now becoming the private sector again. Can you talk a little bit about what are large theme is that is just now beginning.
Marci McGregor
Infrastructure, I think, is such a great example of what you've outlined here. So, we all know about old infrastructure, right, that needs a modernization. Everybody is familiar with that theme, but I like the theme of innovative infrastructure.
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Artificial Intelligence could account for 18% of U.S. electricity consumption by 2030.
Source: International Monetary Fund. May, 2025
Marci McGregor
So, if we think about the trend of generative AI and the power and energy demand that that is causing, that is new demand for energy that we haven't seen in decades. Demand for data centers, the trend of digitization of our economy. And, what's interesting about that theme, to your point, is it's going to be fueled by investment from the private sector versus government funding, which, as we work through governments spending, the potential for spending cuts and policy shifts, private sector spending, maybe a little bit more insulated and, in turn, can be a real boost to corporate profits in the future.
Chris Hyzy
Now Matt, let's talk about what's been very delayed because of the tariff fog and other things, is capital expenditures, CapEx.
How does that delay turn into now we're going to spend, and what does that do from the standpoint of corporate bonds?
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Economic growth factors:
- Capital investment
- Technology
- Worker productivity
Matt Diczok
We think that's going to be an important factor. If you think about it from a larger term perspective. If you want to get more real economic growth, not economic growth, higher prices, nominal GDP, but actual real GDP, you need either more people working more hours, or you need to be productive, more productive with every hour you work.
Corporate health is strong right now, as you've said several times, the public sector really has re-leveraged the last 10 to 15 years. Corporate health actually looks good if they do get corporate and capital expenditures, which are productive and good for earnings, that'll be favorable for spreads. So, we still feel that, generally speaking, we like investor-grade corporates right now.
Chris Hyzy
So, we talked about leverage in the public sector and the private sector being the engine, more so on a go forward basis. I have to ask the question, what's going on? How do we fix the deficit? How do we ultimately start to contain the debt?
Matt Diczok
So yes, it certainly is an issue. The vast majority of it is mandatory spending on entitlement programs and most of the discretionary spending, at least half, is actually defense, which is not really discretionary. So, the real way to address the problem is not so much to reduce debt deficits, it's to increase the denominator, debt to GDP.
Chris Hyzy
So, what you're suggesting is is that denominator, being our economy and our economic growth…
Matt Diczok
Correct, correct.
Chris Hyzy
…if that rises faster than future spending clips, that will chip into it. Marci, you have any thoughts on that?
Marci McGregor
Absolutely. Growing our way out of the debt, since to Matt's points, spending cuts are so challenging. Growing our way out of the debt, increasing productivity around American workers, and increasing real GDP, I think is going to be the key here to that challenge.
Chris Hyzy
Okay, let's end on portfolio positioning. Everything that we've discussed from tariffs to the debt deficit, the weaker dollar, potentially global allocation changes to non-U.S. investments, overall, what are the top two or three portfolio positioning considerations you would foresee as we go into 2026?
Marci McGregor
When I think about allocations, we have that preference for equities over fixed income and we do think equities can move through this reexamine phase in a positive manner. The areas where I see opportunity, on the other side of this choppiness, if I think about outside of the U.S., often our clients are under allocated to non-U.S. equities.
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Potential equity opportunities:
- Non-U.S. equities
- Alternative investments (for qualified investors)
- Innovative infrastructure
Marci McGregor
The other part of a portfolio, we always talk about diversification across and within asset classes, would be alternative investments. So, considering private markets for qualified investors, we talked about infrastructure today. That's another way you could approach such an overarching theme that covers so many different asset classes.
Chris Hyzy
And you were touching before on innovative infrastructure, the modern way of thinking about what that new infrastructure is.
Marci McGregor
Exactly.
Chris Hyzy
Matt, let's talk from your portfolio positioning perspective. We say this a lot, fixed income should be boring. We don't want to see massive risks across the fixed income spectrum but it doesn't mean there's not opportunities. Want to talk about two or three portfolio positioning considerations?
Matt Diczok
Absolutely. First thing we'd say is, we know cash feels comfortable for folks, but as part of diversified portfolio, we don't want people in cash or very short-term bonds in their fixed income portfolios. Another point we'd make, especially for clients in a high tax bracket, is one of the most appealing opportunities in fixed income markets right now is the municipal market. Supply has not grown there like it has in Treasurys and corporates. Valuations look better.
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Potential fixed-income opportunities:
- Long-term bonds
- Municipal markets
- Corporate bonds
Matt Diczok
Separately, we would also say, finally, that while spreads on high-yield or corporate bonds might look tight relative to history, you can't just look at history. We're in an environment now where the Fed takes a much more active role in reducing liquidity risks in market. If the Fed is a liquidity provider in times of market stress, maybe higher equity valuations and tighter corporate high-yield spreads actually might make sense.
Chris Hyzy
Speaking of toothpaste out of the tube, since 2019, arguably speaking, the S&P at current levels have basically doubled or a little bit better than that since those levels in 2019. Is it outlandish to suggest that over the next business cycle, 6, 7 years or so, we could see that again?
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Secular bull market: a long-running period of overall stock market growth driven by sustained positive economic fundamentals rather than transitory or cyclical trends.
Marci McGregor
We're believers that we are still in a secular bull market for equities and that's just a fancy way of saying a multi-year up cycle that can have bull and bear markets and even recessions and economic expansions. But, we believe that secular bull market remains intact. This is why it's so important for our clients to remain invested, even when markets pull back or feel choppy. Staying invested for the growth of the equity market is absolutely critical for the lifetime of your portfolios.
Chris Hyzy
That's great. Matt, Marci, thanks for joining me in this Midyear Outlook.
Marci McGregor
Thanks, Chris.
Matt Diczok
Thanks, Chris.
[Transition to Chris Hyzy straight-to-camera]
Chris Hyzy
We hope you found this helpful as you think of next steps for 2025. With that in mind, a few closing thoughts. First, in a year of constant change, keep in mind why you invest. Even as you consider adjustments for current conditions, the most important thing is creating and sticking to a long-term strategy based on your goals.
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Closing thoughts:
- Remain focused on your goals.
- Volatility can bring potential opportunity.
- Stay diversified.
Second, volatility is a natural part of investing and not a reason to abandon markets. In fact, periodic downturns may offer strategic opportunities for investors to add to their portfolios. Finally, diversify across and within asset classes. That's always a good idea, especially as we work through these uncertain times. An advisor can help you keep these principles top of mind.
Thanks again for watching and we'll see you again soon.
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[On-screen disclaimers]
Important Disclosures:
Opinions are as of the date of this webcast 6/23/2025 and are subject to change.
Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.
Bank of America, Merrill, their affiliates, and advisors do not provide legal, tax, or accounting advice. Clients should consult their legal and/or tax advisors before making any financial decisions.
This material does not take into account a client's particular investment objectives, financial situations or needs and is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. All sector and asset allocation recommendations must be considered in the context of an individual investor's goals, time horizon, liquidity needs and risk tolerance. Not all recommendations will be in the best interest of all investors.
Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.
Investments have varying degrees of risk. Some of the risks involved with equity securities include the possibility that the value of the stocks may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the U.S. or abroad. Investments in a certain industry or sector may pose additional risk due to lack of diversification and sector concentration. Investing in fixed-income securities may involve certain risks, including the credit quality of individual issuers, possible prepayments, market or economic developments and yields and share price fluctuations due to changes in interest rates. When interest rates go up, bond prices typically drop, and vice versa. Income from investing in municipal bonds is generally exempt from Federal and state taxes for residents of the issuing state. While the interest income is tax-exempt, any capital gains distributed are taxable to the investor. Income for some investors may be subject to the Federal Alternative Minimum Tax (AMT). Treasury bills are less volatile than longer-term fixed income securities and are guaranteed as to timely payment of principal and interest by the U.S. government. Investments in foreign securities (including ADRs) involve special risks, including foreign currency risk and the possibility of substantial volatility due to adverse political, economic or other developments. These risks are magnified for investments made in emerging markets. Investments in certain industry or sector may pose additional risk due to lack of diversification and sector concentration.
Alternative investments are intended for qualified investors only.
Alternative Investments such as derivatives, hedge funds, private equity funds, and funds of funds can result in higher return potential but also higher loss potential.
Investments in Infrastructure Assets will be subject to risks incidental to owning and operating infrastructure projects, including risks associated with the general economic climate, geographic or market concentration, government regulations and fluctuations in interest rates. The industries targeted for investment may be highly regulated by governmental agencies. Such regulations may impact an investor's ability to acquire, dispose of and/or manage investments.
The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., ("Bank of America") and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S" or "Merrill"), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp.").
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