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The S&P 500 will fall 8% by the end of 2020, according to BOA CHIEF

edited July 2020 in Other Investing

The S&P 500 will fall 8% by the end of 2020, according to Bank of America's equity chief, who says a Joe Biden victory could tank stocks
Shalini Nagarajan
Jul. 10, 2020, 11:48 AM
Brad Barket/Getty

/Bank of America's head of equity research predicts the S&P 500 index will fall to 2,900 by the end of the year, an 8% decline from current levels, MarketWatch said.

"I wouldn't paint myself as a bear, but the risks between here and year-end are completely to the downside," Savita Subramanaian said in a webinar conducted by the bank.
She pointed out that a Joe Biden victory in November could reverse market-friendly policies, and push stocks lower.
For investors favoring stocks that benefit from the coronavirus, she recommended leaning towards consumer staples, industrials, technology, and financials instead./

Whomever will be next POTUS Nov2020, may have issues next year dealing with COVID19 morbidity and mortality. If virus linger on this fall/winter may drag market down /stagnation next 3-24 months

Not sure many investors will highly consider Biden because of high corporate taxation.

His plans for middle income Americans are almost similar to Trump for now, no plans to increase taxation.

Anyone have data for Biden proposed 401k plans / brokerage accounts [? any new fees or taxation plans]


  • Good grief.
  • Can't believe a bank officer would make such a statement on record.
  • I can. It seems finance professionals always whine about a stock market decline when a Democrat may be elected president. I expect to hear similar comments from Joe Kernan, Rick Santelli, Jeffrey Gundlach, Steve Romick,Maria Bartiromo, John Fund,etc. I'll take a stock market decline to get rid of Trump. My only request is that Ms. Subramanaian let MFO know ahead of time when this decline starts so we can prepare accordingly !
  • SP500 down to 2900, ooh

    that sure seems modest to me, with the shiller p/e so high

  • Zero-value opinion/forecast. IIRC the markets tanked hard after Tweety Amin got elected in 2016, too.
  • edited July 2020
    Hi guys, I'm thinking that he might be somewhat right in making this call. Remember, in the last election what was considered a business and economy friendly candicate was elected President. If memory is correct, the S&P 500 Index was up nicely after the November election which Trump won even before Trump took office. If it is viewed that an unfriendly business and economy candicate might get elected President then why would it not stand to reason that the markets might be in for a good pull back? Besides the S&P 500 Index's valuation being streached as I write with a TTM P/E Ratio of about 30; and, the outcome of the upcoming Presidential election being uncertain is another reason that Old_Skeet is trimming his equity allocation. Plus, there is the COVA 19 issue as well.

    To play it from a conserative approach ... I trimmed some from my equity allocation this past week and I plan to trim some more in the coming weeks.
  • That is a false assumption. Often pushed but if you dig into the facts the market actually does better during DEM presidents than GOP presidents. The false narrative that the GOP is much more business friendly is pushed so much so that when a GOP is elected there is a slight bump and when a DEM is elected there is a slight pull back. The GOP continually pushes they are better for the stock market but the numbers say the average DEM gain is 9.7% and average GOP gain is 6.7%. Reason why:? I think most business/corporate publications and corporate brass are more GOP leaning/friendly. It's better for THEM (tax breaks etc...) but not the general stock market.
  • Concur with royal4.
  • edited July 2020
    @Old_Skeet: SHE was just repeating long discredited anti-Democratic blather. Forbes, that well-known anti-capitalist organ of the Democratic Party, has a different take. Some excerpts from a Forbes article on the subject:

    Looking at ... total returns for the S&P 500 during presidencies since 1929, it is clear that U.S. stock returns have been much better when a Democrat was the president; however, it would be a mistake to conclude that stock returns were higher because a Democrat held the presidency.

    There is no conclusive evidence suggesting the president’s party has any statistically significant impact on U.S. equity market returns. Intuitively this makes sense, because stock returns are influenced by a myriad of factors such as valuations, corporate profits, business cycles, monetary policy, etc. In addition, the increasingly global economy (the S&P 500 generates more than 50% of revenues outside the U.S.) makes the actions of a single government less important.

    The stock market is a complex adaptive system in which cause and effect are not easy to link. Market movements, particularly over short periods such as a presidential term (yes, four years is a short-term investment period), are random.

    But a word from the White House: This is just more PHONY FAKE NEWS from Forbe's with their long history of promoting left-wing hate-America HOAXES. They should go back wherever they came from since they obviously don't like it here.

    @Old_Skeet- I was afraid that you might be uncomfortable with the actual facts as mentioned by Forbes, so I included a softened-down Trumpian rant to make you feel a little more at home.
  • I saw the same Forbes article a while ago. It invalidates assertions that the stock market performs better under a Republican president. When I posted the corresponding table on on another site, several staunch Republicans did not appreciate the actual facts.
  • Notice how quiet they get when confronted with actual facts? Absolutely typical.
  • The Forbes article links to a paper (published in 2004) by Campbell & Li titled Alternative Estimates of the Presidential Premium in which they conclude:
    We find that the rift between these results and the results of previous studies employing
    the OLS estimator results from the performance of the stock market across Democratic and
    Republican presidencies during volatile market conditions. During periods of high market
    volatility Democratic administrations have experienced significantly higher stock market returns
    than Republican administrations. Since this large difference in stock market performance has
    occurred during more volatile periods this evidence is down weighted in the WLS and GARCH
    estimators relative to the OLS estimator. Once the effect of stock market performance during
    rather volatile market environments is controlled for the apparent discrepancy between the stock
    market performance of Democrats and Republicans is largely reduced. Accordingly, the apparent
    disconnect between risk and return is partially resolved: these results are consistent with the notion that neither risk nor return is significantly different across the presidential cycle.
    But why would one not count those times of volatile market conditions?

    Maybe the better question is: Under which (if any) party are market conditions more likely to be volatile?
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