S&P 500 and Chicago Fed National Financial Conditions Index Should investors stay optimistic? The rise in the Chicago Fed Financial Conditions Index is seen as a bullish signal for the S&P 500, suggesting potential for further upside. Image: BofA Global Research
GS U.S. Financial Conditions Index While the Fed is navigating a complex economic landscape, current U.S. financial conditions suggest a supportive environment for growth, allowing for potential policy adjustments in the future. Image: Goldman Sachs Global Investment Research
S&P 500 Quarterly Net Margins Ex-Financials Forecasts suggest that S&P 500’s net margins are poised to rise over the next few quarters, potentially reaching new highs in 2025, indicating a favorable outlook for profitability. Image: BofA US Equity & Quant Strategy
Returns for Major Global Financial Assets Over the past 50 years, the annualized equity returns in the U.S., adjusted for inflation, have been around 7.5%. This solid long-term performance has allowed investors to achieve significant growth, outpacing the rate of inflation. Image: Deutsche Bank
Financial Conditions Financial conditions in G3 economies have been experiencing a trend of loosening, posing challenges for central banks in their efforts to manage inflation and making it more difficult to keep it under control. Image: BofA Global Research
U.S. Private Sector Financial Assets % of GDP The disconnect between the value of U.S. financial assets and GDP raises concerns about the widening wealth gap, potential systemic risks, and economic stability, while also posing policy challenges. Image: BofA Global Investment Strategy
Equity – Aggregate Financial Asset Allocation Among Households, Mutual Funds, Pension Funds, and Foreign Investors Compared to historical standards, a 52% allocation to equities among investors is considered high, which increases the potential for volatility and losses, particularly during a market downturn. Image: Goldman Sachs Global Investment Research
Valuation – Real Assets vs. Financial Assets The price of real assets relative to financial assets being very low suggests that investors should consider owning more real assets, such as real estate and precious metals. Image: BofA Global Research
Weekly Financials Flows Given the current market dynamics, potential regulatory changes, and ongoing economic trends, will flows into financials continue in 2024? Image: BofA Global Investment Strategy
Equity – U.S. Households Aggregate Financial Asset Allocation Currently, U.S. households allocate 48% of their total financial assets to equities. This allocation reflects a high level of risk exposure, as equities are known for their volatility and potential for capital loss. Image: Goldman Sachs Global Investment Research