Global Research Unlocked
Listen and subscribe to Global Research Unlocked. A podcast from BofA Global Research. Nuanced insights that can help you chart the right path. Our industry-leading analysts discuss what’s emerging – from risks and opportunities to growth themes like AI and energy transition.
Episodes
Tuesday Apr 23, 2024
Software’s AI Opportunity Is Still Ahead
Tuesday Apr 23, 2024
Tuesday Apr 23, 2024
AI: Hardware Today, Software Tomorrow
Corporate investments in AI have had significant impact on the financials of certain semiconductor and server companies, but while software providers stand to benefit from AI investments too, the technology hasn't yet shown up in the profits of these companies in a meaningful way. Alkesh Shah draws parallels between AI today and the Internet in 1995. Back then, investments were mainly in equipment and chips and the successful Internet companies that we know today hadn't even emerged yet. Internet applications that exist today hadn't even been imagined in many cases, suggesting that for software, much of this opportunity is still ahead. For the market as a whole, the cost savings and revenue opportunities that may come from AI are also still very much in the future, and our survey of BofA analysts suggests corporate AI implementation could boost S&P operating margins by 250bps, equivalent to ~$65bn in cost savings, over the next 5 years.
You may also enjoy listening to the Merrill Perspectives podcast, featuring conversations on the big stories, news and trends affecting your everyday financial life.
"Bank of America" and “BofA Securities” are the marketing names for the global banking businesses and global markets businesses (which includes BofA Global Research) of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, trading, research, strategic advisory, and other investment banking and markets activities are performed globally by affiliates of Bank of America Corporation, including, in the United States, BofA Securities, Inc. a registered broker-dealer and Member of FINRA and SIPC, and, in other jurisdictions, by locally registered entities.
©2024 Bank of America Corporation. All rights reserved.
Tuesday Apr 23, 2024
Pandemic debt maturities, higher rates make for busy convertible bond issuance
Tuesday Apr 23, 2024
Tuesday Apr 23, 2024
Higher rates broadening the converts issuance market
Convertible bonds (CBs) can offer equity-like returns with downside protection thanks to the coupon and the ability to redeem most CBs at par. Thus far in 2024, CB issuance has been active, well ahead of levels seen the last few years. Michael discusses the reasons for such an active issuance year, including that Pandemic debt issuance, which was at record levels in the convert space, is starting to come due and converts offer issuers the ability to lower their coupons at a time of relatively high rates. We do have a constructive view on converts for 2024 but we're not overly bullish. That's because converts tend to be issued by smaller companies, and delayed rate cuts present a risk to those stocks. Also, continued appetite for mega cap tech could be a challenge for small caps. On an absolute basis, converts perform best when equities and GDP growth are strong, and relative to equities, they act best later in cycles. Institutional investors can purchase CBs outright but retail investors can gain exposure through mutual funds and exchange traded funds.
You may also enjoy listening to the Merrill Perspectives podcast, featuring conversations on the big stories, news and trends affecting your everyday financial life.
"Bank of America" and “BofA Securities” are the marketing names for the global banking businesses and global markets businesses (which includes BofA Global Research) of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, trading, research, strategic advisory, and other investment banking and markets activities are performed globally by affiliates of Bank of America Corporation, including, in the United States, BofA Securities, Inc. a registered broker-dealer and Member of FINRA and SIPC, and, in other jurisdictions, by locally registered entities.
©2024 Bank of America Corporation. All rights reserved.
Thursday Apr 11, 2024
S&P earnings growth to bloom and broaden in 2024
Thursday Apr 11, 2024
Thursday Apr 11, 2024
Earnings improvement is still fairly nascent
In 2023, we saw an earnings recession, at least in the first half of the year, despite GDP growth that was ahead of trend. Back then, companies were adapting to higher rates, weaker demand and climbing costs, which weighed on earnings. Ohsung Kwon expects earnings growth to look much better in 2024. This year benefits from a lower 2023 earnings base on which to build as well as a number of positives, including rising margins through more rational costs and improved demand in certain sectors. US Equity Strategy believes that capex growth from large cap tech will be virtuous, boosting other groups from semis to hardware to power grid equipment. The end of destocking indicates the end of the manufacturing recession and could be meaningful for the earnings recovery as consumers shift from services back to the goods side of the economy. And while estimating 2025 earnings is difficult as much can happen between now and then, we see compelling growth next year too, partly on better demand, helped to some degree by Fed cuts.
You may also enjoy listening to the Merrill Perspectives podcast, featuring conversations on the big stories, news and trends affecting your everyday financial life.
"Bank of America" and “BofA Securities” are the marketing names for the global banking businesses and global markets businesses (which includes BofA Global Research) of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, trading, research, strategic advisory, and other investment banking and markets activities are performed globally by affiliates of Bank of America Corporation, including, in the United States, BofA Securities, Inc. a registered broker-dealer and Member of FINRA and SIPC, and, in other jurisdictions, by locally registered entities.
©2024 Bank of America Corporation. All rights reserved.
Wednesday Apr 03, 2024
Sticky inflation and strong labor market don’t imply acceleration of US economy
Wednesday Apr 03, 2024
Wednesday Apr 03, 2024
Data trends are approaching Fed threshold for rate cuts
The latest economic data releases this year suggest the labor market remains strong but is cooling and the consumer is resilient in the face of sticky inflation, especially on the services side of the economy. Michael Gapen says the rebound in the labor force, labor participation and net migration played a crucial role in his revised US GDP (gross domestic product) estimates where he forecasts higher economic growth in 2024 and lower growth in 2025. Much of this positive data has led the Fed to delay their first rate cut from March to June according to our US Economics team's forecast. However, equity market strengths should help keep inflation sticky, but shouldn't reverse the downward trend. Productivity enhancements from AI still aren't reflecting in the economic data and we're still a few years off until we see AI's impact.
You may also enjoy listening to the Merrill Perspectives podcast, featuring conversations on the big stories, news and trends affecting your everyday financial life.
"Bank of America" and “BofA Securities” are the marketing names for the global banking businesses and global markets businesses (which includes BofA Global Research) of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, trading, research, strategic advisory, and other investment banking and markets activities are performed globally by affiliates of Bank of America Corporation, including, in the United States, BofA Securities, Inc. a registered broker-dealer and Member of FINRA and SIPC, and, in other jurisdictions, by locally registered entities.
©2024 Bank of America Corporation. All rights reserved
Wednesday Apr 03, 2024
Wheels make the economy go ‘round; transports and the case for rails
Wednesday Apr 03, 2024
Wednesday Apr 03, 2024
Transports would ride the cycle but modes matter
Transport metrics had been in an extended downturn for around 18 months. Demand was depressed, inventory levels were high and end demand for goods had faded from COVID highs. But more recently there are signs of stabilization in some of the data tracked by BofA Global Research, partly because trucking supply has been removed. And some purchasing managers indices, or PMIs, have shown modest improvement. Ken Hoexter discusses what this improvement means for different modes of transportation and when those modes would stand to benefit. And within transports, rails have a long track record of outperforming the S&P, but since the start of 2023, the group has underperformed. Ken discusses why performance had weakened, what's changed for the better more recently and the structural changes that could benefit the rail group.
You may also enjoy listening to the Merrill Perspectives podcast, featuring conversations on the big stories, news and trends affecting your everyday financial life.
"Bank of America" and “BofA Securities” are the marketing names for the global banking businesses and global markets businesses (which includes BofA Global Research) of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, trading, research, strategic advisory, and other investment banking and markets activities are performed globally by affiliates of Bank of America Corporation, including, in the United States, BofA Securities, Inc. a registered broker-dealer and Member of FINRA and SIPC, and, in other jurisdictions, by locally registered entities.
©2024 Bank of America Corporation. All rights reserved.
Wednesday Mar 27, 2024
Geopolitical calm would help, until then Europe tied to cyclical shifts
Wednesday Mar 27, 2024
Wednesday Mar 27, 2024
A number of things can go right for Europe
Earlier this month, BofA Securities hosted a Global Investor Summit in Rome, Italy. In attendance were corporate executives, prominent investors, policy experts, members of BofA management and several BofA Global Research strategists. Topics ranged from private capital to understanding central banks to the future of Europe. Michael Hartnett suggests that while European markets have been doing well, you often hear a less bullish view of the world in the region. Perhaps this is because of Europe's dependency issues, from energy to trade and beyond. But European stocks have done well at times of geopolitical peace. And Europe, with its dependence on trade, may benefit from the improving indicators that several BofA Research strategists have been highlighting. Join us in this special Europe-focused episode.
You may also enjoy listening to the Merrill Perspectives podcast, featuring conversations on the big stories, news and trends affecting your everyday financial life.
"Bank of America" and “BofA Securities” are the marketing names for the global banking businesses and global markets businesses (which includes BofA Global Research) of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, trading, research, strategic advisory, and other investment banking and markets activities are performed globally by affiliates of Bank of America Corporation, including, in the United States, BofA Securities, Inc. a registered broker-dealer and Member of FINRA and SIPC, and, in other jurisdictions, by locally registered entities.
©2024 Bank of America Corporation. All rights reserved.
Wednesday Mar 20, 2024
Rate hikes mostly kept these markets from emerging, but shifting cycle helps EM
Wednesday Mar 20, 2024
Wednesday Mar 20, 2024
Global growth matters for Emerging Markets
At the start of the year, markets were pricing in three rate cuts by June and now, the likelihood of one cut by June is close to 50/50 based on market implied probabilities. But while delayed rate cuts complicate the bull case for Emerging Markets (EM), David Hauner does point out that expectations for cuts have slid partly because of stronger economies, a positive for EM. Still, further delays in rate cuts would likely be a short-term negative for EM assets. Elections could create volatility as well. But a significant portion of EM outperformance does come around Fed cutting cycles and sentiment on China can't get much worse. David is bullish on EM over the medium-term, he discusses why, what elections could mean, the significance of what appears to be a trough in global PMIs and the tactical opportunities in EM.
You may also enjoy listening to the Merrill Perspectives podcast, featuring conversations on the big stories, news and trends affecting your everyday financial life.
"Bank of America" and “BofA Securities” are the marketing names for the global banking businesses and global markets businesses (which includes BofA Global Research) of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, trading, research, strategic advisory, and other investment banking and markets activities are performed globally by affiliates of Bank of America Corporation, including, in the United States, BofA Securities, Inc. a registered broker-dealer and Member of FINRA and SIPC, and, in other jurisdictions, by locally registered entities.
©2024 Bank of America Corporation. All rights reserved.
Monday Mar 18, 2024
ESG is evolving, but not going away; new EU rules to have broad impact
Monday Mar 18, 2024
Monday Mar 18, 2024
ESG topics still impacting stocks and there's more to come
US ESG funds faced a challenging 2023, seeing net outflows of around $7.1 billion, but strong markets meant that assets under management grew strongly. In the US, ESG regulations have historically been market driven, unlike the specific directives in the EU, but more recently the regulatory landscape in the US has seen a flurry of initiatives. For investors, there is state legislation that seeks to penalize managers who boycott fossil fuels and firearms manufacturers and legislation in other states that seeks to keep pensions from investing in fossil fuels and firearms. There have been legal challenges to California's legislation but changes coming from the EU will still be relevant for global companies regardless of the California outcomes. The SEC will vote on the long-awaited climate disclosure rule later today. Dimple Gosai hosts Michael Littenberg of law firm Ropes & Gray to discuss the evolving ESG regulatory landscape and which regulations may impact ESG investors.
You may also enjoy listening to the Merrill Perspectives podcast, featuring conversations on the big stories, news and trends affecting your everyday financial life.
"Bank of America" and “BofA Securities” are the marketing names for the global banking businesses and global markets businesses (which includes BofA Global Research) of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, trading, research, strategic advisory, and other investment banking and markets activities are performed globally by affiliates of Bank of America Corporation, including, in the United States, BofA Securities, Inc. a registered broker-dealer and Member of FINRA and SIPC, and, in other jurisdictions, by locally registered entities.
©2024 Bank of America Corporation. All rights reserved.