Investing

BofA Merrill Lynch Lightens Up On Equities (SPY)

In the latest RIC Report, Bank of America Merrill Lynch has come out with a new report titled “Time to Reduce Equities.” There is no hidden message in the report and it is pretty much what it sounds like.  The equity allocation is being reduced to 60% from 65% and the wonderful returns of fixed income has been raised to 35% from 30% for U.S. corporate bonds and emerging market bonds.

The bank noted that liquidity and profits which have been powering the markets since March 2009 look less potent in the coming quarters. 

The quote sums up the obvious: “we believe this is an appropriate time to make this change given the ongoing deleveraging constraints on global activity, slower earnings growth in 2012 and our more conservative US equity outlook.”

The good news is that BofA noted that while equity upside is constrained, there is still opportunity in assets that provide yield, growth and quality.

As far as the technicals, it is a break above 1,350 on the S&P that would require leadership from the banking sector; while the break below 1,100 on the S&P would signal a new global recession driven by a hard landing in China. We track the S&P via the SPDR S&P 500 (NYSE: SPY).

BofA is issuing from the U.S. Equity and Quantitative Strategist a 2012 year-end target of 1,350 for the S&P 500 with the best sectors being staples and technology.  So, with a 1,241 close on Monday’s S&P, BofA’s upside target for 2012 only about 8.8%.

JON C. OGG

Take Charge of Your Retirement: Find the Right Financial Advisor For You in Minutes (Sponsor)

Retirement planning doesn’t have to feel overwhelming. The key is finding professional guidance—and we’ve made it easier than ever for you to connect with the right financial advisor for your unique needs.

Here’s how it works: 

1️ Answer a Few Simple Questions

Tell us a bit about your goals and preferences—it only takes a few minutes!

2️ Get Your Top Advisor Matches

This tool matches you with qualified advisors who specialize in helping people like you achieve financial success.

3️ Choose Your Best Fit

Review their profiles, schedule an introductory meeting, and select the advisor who feels right for you.

Why wait? Start building the retirement you’ve always dreamed of. Click here to get started today!

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.

AI Portfolio

Discover Our Top AI Stocks

Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.

You can follow him investing $500,000 of his own money on our top AI stocks for free.