Just one month ago, BofA's excited head equity strategist Savita Subramanian told Barron's that storm clouds would disperse and that the S&P would close out 2016 at 2,200, incidentally the same level as her year ago forecast for where 2015 would close. Fast forward to today and things are far less euphoric.
This is what Savita writes in a note released overnight:
Last week a Central Banker made the most incredible admission in the history of banking.
It came from the Bank of Japan.
The Bank of Japan has been the leader in global Keynesian insanity. The US Federal Reserve launched its first QE program in 2008. The European Central Bank launched its first QE program in 2015.
The Bank of Japan first launched QE back in 2001.
Two months ago, before the Fed's rate hike was largely perceived as a market-spooking policy mistake, we laid out Deutsche Bank's three stage scenario on how to trade "The Fed's Upcoming "Policy Error", one which could be summarized as follows: the 10Y starts off strong, weakens into the summer to 2.50% on tantrum fears, then proceeds to surge higher as the Fed acknowledges its error, and hits a yield of 2.00% at the end of the year.
Three months ago, we noted that if there’s anything the IMF is good at, it’s cutting global growth forecasts, something the Fund did for the fourth time in twelve months in October.
While "exceptional' America has been at the butt-end of some superlatives it might prefer not to be recently, the following chart from BofAML's Michael Hartnett showing the world according to free-float equity market capitalization shows that USA is still #1 after all...
Via The World Economic Forum,
The US, with a market cap of $19.8 trillion, is the biggest and represents 52% of the world’s market cap. Japan is in second place at $3 trillion, followed by the UK at $2.7 trillion, and then France at $1.3 trillion.