Bank of America warns that signs of caution have emerged for S&P 500

<p>Bank of America’s chief strategist, Michael Hartnett, has been busy since Friday, when he wrote in a note to clients that investors piled US$40 billion into equities over the past two weeks, which has helped the S&amp;P500 to its best monthly performance, so far, since July 2022.&nbsp;</p><p>He noted, though that&nbsp;signs of caution have emerged and that&nbsp;Bank of America’s proprietary “Bull &amp; Bear Indicator”&nbsp;has now exited its “Buy” zone, back to "Neutral:</p><ul><li>this suggests&nbsp;a potential shift in investor sentiment and is a sign that prudence is best for now.&nbsp;</li></ul><p>And, he now thinks that&nbsp;the "3C"s of Credit, Crude, Consumer are signalling slower growth: </p><ul><li>Credit is tightening, spreads rising, defaults rising, delinquencies rising; </li><li>oil has entered an unexpected bear market; </li><li>while the US Consumer has been so far bulletproof (job security&amp; wealth security) unemployment is now rising; </li></ul><p>Hartnett sees no 2023 recession but 2024 will be more challenging:</p><ul><li>we await the classic combo of bearish Positioning, recessionary Profits &amp; Policy easing ("3P"s)</li><li>believe the risk of a "hard landing" for the economy is higher-than-expected</li><li>a soft landing which takes bond yields from 5% to 4% is bullish risk, but a deeper recessionary decline in yields from 4% to 3% is bearish risk; driven by weak growth &amp; EPS we expect risk asset downside in early-24, lower yields-lower stocks correlation </li></ul><p>And then gets more bullish for the back half of next year.</p><p><br></p><figure data-media-><img src="https://images.forexlive.com/images/s%26p500%202024%20forecast%2027%20November%202023_id_bbd8a08f-3b41-491b-88cb-68342a9bd2ce_size900.jpg" alt="s&amp;p500 2024 forecast Monday, 27 November 2023" width="1068" height="741" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/s%26p500%202024%20forecast%2027%20November%202023_id_bbd8a08f-3b41-491b-88cb-68342a9bd2ce_size900.jpg" /></figure><p><br></p><p><br></p><p><br></p><p><br></p><p><br></p><p><br></p><p><br></p>

This article was written by Eamonn Sheridan at www.forexlive.com.