Canada Signals Delay in US Tariff Deal as Talks Shift to USMCA Review 
Dollar Holds Firm Ahead of Global Central Bank Decisions as Yen, Sterling and Euro React 
Japan Exports to U.S. Rebound in November as Tariff Impact Eases, Boosting BOJ Rate Hike Expectations 
Asian Fund Managers Turn More Optimistic on Growth but Curb Equity Return Expectations: BofA Survey 
Japan Inflation Holds Firm in November as BOJ Nears Key Rate Hike Decision 
U.S. Stock Futures Edge Higher as Micron Earnings Boost AI Sentiment Ahead of CPI Data 
Silver Prices Hit Record High as Safe-Haven Demand Surges Amid U.S. Economic Uncertainty 
Oil Prices Steady in Asia but Headed for Weekly Loss on Supply Glut Concerns 
Asian Currencies Slip as Dollar Strengthens; Indian Rupee Rebounds on Intervention Hopes 
Chinese Robotaxi Stocks Rally as Tesla Boosts Autonomous Driving Optimism 
Oil Prices Rebound as Trump Orders Blockade of Sanctioned Venezuelan Tankers 
U.S. Dollar Steadies Near October Lows as Rate Cut Expectations Keep Markets on Edge 
Oil Prices Climb on Venezuela Blockade, Russia Sanctions Fears, and Supply Risks 
Gold and Silver Surge as Safe Haven Demand Rises on U.S. Economic Uncertainty 
BOJ Poised for Historic Rate Hike as Japan Signals Shift Toward Monetary Normalization 
U.S. Stock Futures Slip After CPI-Fueled Rally as Markets Weigh Economic Uncertainty 
New Zealand Business Confidence Hits 30-Year High as Economic Outlook Improves 
Despite a recent rally in Chinese equities, many investors remain uncertain about its sustainability. Bank of America (BofA) strategists suggest the potential for a re-rating of Chinese stocks. However, U.S. mutual funds appear underprepared for a sustained rally. Of the 50 S&P 500 stocks most sensitive to the MSCI China index, only 13 are overweight in aggregate fund holdings, indicating investors are more prepared for a brief uptick or a "head-fake" than a prolonged surge in China-exposed equities.
Fed Rate Cuts and a Shift Toward Equity Income
With expectations of the Federal Reserve cutting interest rates by around 2 percentage points, BofA predicts retirees might shift their cash from money market funds into higher dividend-yielding equities. However, large operators (LOs) have increasingly favored long-term growth (LTG) stocks over those with high dividend yields. This shift is evident in the record-low aggregate dividend yield of fund holdings compared to the S&P 500. Additionally, retail investors have been leaning towards tech and growth stocks, with four of the top five most widely held stocks in Merrill accounts being tech-related.
Defensive Stance Despite Economic Optimism
While BofA economists have raised their GDP and earnings forecasts through 2025, both long-only (LO) and hedge funds (HF) remain defensively positioned. Despite the Fed starting an easing cycle, these funds continue to hedge against potential economic downturns. BofA contends that this "double-stimulative" environment—where both profits and rate cuts are at play—could favor cyclical stocks over defensive ones, potentially positioning value stocks to lead as profits improve.
Tax Loss Harvesting: Potential Volatility in October
BofA anticipates that October could bring about tax loss harvesting, a strategy employed since the Tax Reform Act of 1986. Historically, stocks that fall 10% or more by the end of September tend to underperform the S&P 500 in October by 85 basis points. According to BofA, these trends may create headwinds for certain stocks before a potential rebound in November.
