Institution
Merrill, a Bank of America Company: Research & Insights
Merrill’s institutional research maintains a constructive outlook for 2026, driven by an expectation of double-digit S&P 500 earnings growth and resilient U.S. GDP expansion of 2.2%. Analysts argue that current market resilience persists despite geopolitical conflicts and energy price shocks, as structural tailwinds from artificial intelligence investment, productivity gains, and fiscal stimulus continue to support asset price reflation. While the firm maintains an overweight stance on U.S. Equities and Emerging Markets, it advocates for a tactical shift in portfolio construction due to the declining efficacy of traditional 60/40 diversification in an inflation-volatile environment. Specifically, the strategy committee suggests that higher yields remain tolerable, yet recommends integrating real assets and private markets to mitigate risks associated with stocks and bonds increasingly moving in tandem. Ultimately, Merrill’s research underscores a commitment to equities as the primary engine of growth while emphasizing a strategic pivot toward alternative asset classes to cushion against potential drawdowns.
3 reports available
Capital Market Outlook
The report evaluates the U.S. budget deficit, China's trade surplus, and the sustainability of the AI-driven equity bull market. It maintains a constructive, overweight outlook on equities while advising investors to focus on diversification amid potential near-term volatility.
Capital Market Outlook
The report argues that current high Treasury yields are sustainable because they reflect robust economic growth and AI-driven productivity rather than an impending recession. It maintains an overweight position on Equities while warning that shifting stock-bond correlations require more sophisticated diversification strategies.
The Era of Transformation Part One
The Merrill CIO remains overweight Equities, particularly in the U.S. and Emerging Markets, citing a robust 2026 earnings outlook and a supply-driven economic transformation. Despite geopolitical risks and range-bound yields, episodic volatility is viewed as a buying opportunity.
All reports
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