Investment Rating - The report indicates a bullish sentiment towards gold, oil, and commodities, with gold showing a year-to-date return of 24.2% [1]. Core Insights - The report emphasizes the trend of US dollar debasement as a primary investment theme, suggesting that this will lead to increased liquidity and a focus on assets like gold and commodities [20]. - It highlights the correlation between the US dollar's performance and political factors, particularly the approval ratings of President Trump, which have historically influenced market sentiment [2][22]. - The report notes a significant inflow into gold and materials, indicating a shift in investor preference towards these assets amid economic uncertainty [18][57]. Summary by Sections Market Performance - Year-to-date performance shows gold at 24.2%, oil at 13.9%, and commodities at 12.1%, while US stocks lag at 1.8% [1]. - The US dollar has depreciated by 12% since Trump's inauguration, which is seen as beneficial for manufacturing in key swing states [2]. Investment Strategies - The report suggests a "permanent portfolio" strategy with a 10-year return of 8.7%, the best since 1992, indicating a strong performance across diversified asset classes [3][4]. - It recommends long positions in bonds, international equities, and gold as a hedge against US dollar debasement and inflation [19][24]. Asset Flows - Recent flows indicate $10 billion to cash, $17 billion to bonds, and $6.7 billion to gold, while equities saw a $15.4 billion outflow [11][57]. - Notably, there was a record inflow of $11.8 billion into materials, reflecting a growing interest in this sector [18][50]. Economic Context - The report discusses the implications of a potential economic boom leading up to the midterm elections, with a focus on how this could affect asset prices and investor behavior [20]. - It also highlights the historical performance of gold and emerging market stocks during previous US dollar bear markets, suggesting they are likely to outperform again [44].

Investment Rating - The report indicates a "Sell" signal based on the BofA Bull & Bear Indicator, which is currently at 9.2, down from 9.4 [68][69]. Core Insights - The report highlights a significant outflow from equities, particularly from China ETFs, with a record outflow of $49.2 billion, while Japan and Europe saw inflows [21][45]. - The investment strategy suggests a rotation towards small and mid-cap stocks, driven by a favorable economic environment and government interventions aimed at affordability [22][27]. - Emerging Markets are positioned to enter a new secular bull market, supported by strong commodity prices and a shift in global economic dynamics [20][40]. Summary by Sections Market Performance - Year-to-date performance shows gold at 14.4%, commodities at 5.2%, and international stocks at 4.5%, while US stocks have only gained 1.0% [1]. - The report notes a significant decline in bond prices, with the 30-year US Treasury down 50% and JGB down 45% from peak to trough in the 2020s [3][18]. Economic Indicators - The report discusses the impact of Fed Chair nominations on yields, noting that yields have increased every time following nominations since 1970 [2][34]. - The MOVE index of Treasury volatility is at a four-year low, indicating market confidence that the new Fed Chair will not push 30-year Treasury yields above the 5% level [2]. Investment Flows - Weekly flows indicate $15.4 billion inflow to bonds and $4.9 billion to gold, while equities experienced a $43.2 billion outflow, marking a record driven by China ETFs [13][45]. - BofA private clients have shown a preference for IG bonds, municipal bonds, and TIPS ETFs, while selling REITs and high-yield bonds [15][51]. Sector Analysis - The report identifies financials and materials as sectors with inflows, while technology and consumer sectors faced outflows [47]. - The analysis suggests that small and mid-cap stocks are likely to outperform larger caps due to favorable policy changes and economic conditions [27][40].

Investment Rating - The report indicates a negative sentiment towards Financials, with record outflows observed, suggesting a cautious investment stance in this sector [2][9][17]. Core Insights - Institutional clients have been the largest net sellers of equities, marking the seventh consecutive week of outflows, with a notable $6.4 billion sold in single stocks [9][20]. - Financials experienced the largest outflows in history, with significant selling across eight of eleven sectors, driven by concerns over policy and earnings despite solid fundamentals [9][17]. - In contrast, Consumer Staples saw the largest inflows recorded, indicating a shift in investor preference towards more stable sectors [9][17]. Summary by Relevant Sections Client Flows - Institutional clients sold equities for the seventh straight week, with a cumulative outflow of $6.4 billion, significantly below the average since 2008 [9][20]. - Hedge funds and retail clients were net buyers, contrasting with institutional selling behavior [20][21]. Sector Performance - Financials led the outflows, with a record $5 billion sold, followed by Technology and Industrials, while Consumer Staples and Health Care saw inflows [9][17][23]. - The report highlights that the trailing 52-week buybacks as a percentage of market cap are at their lowest since early 2024, indicating a potential slowdown in corporate buyback activity [9]. ETF Trends - Fixed Income ETFs recorded a historic inflow week, while equity ETFs saw muted inflows, with clients favoring Growth ETFs over Value and Blend [9][19]. - The report notes that clients sold ETFs in six of eleven sectors, with Technology and Communication Services leading the outflows [9][19].

Investment Rating - The report indicates a bullish sentiment among investors, with stock allocation at 8-month highs and cash levels at a low of 3.8% [1][13][15]. Core Insights - Investor sentiment is the most bullish since February 2025, with a notable increase in growth optimism and a significant drop in global recession concerns [2][25]. - The most crowded trade is "long gold" at 43%, while the biggest tail risk identified is the "AI bubble" at 33% [3][30]. - A record 54% of investors believe AI stocks are in a bubble, reflecting a shift in sentiment from previous months [35][36]. Summary by Sections Macro & Policy - Global recession concerns are at their lowest since February 2022, with a 6-month surge in growth optimism [2][25]. - Expectations for a soft landing are at 54%, while 33% expect no landing and only 8% foresee a hard landing [26][27]. Risks & Crowds - The most crowded trade is "long gold" (43%), and the primary systemic credit event risk is identified as "private equity/credit" (57%) [3][5][34]. - 60% of investors believe global stocks are overvalued, marking a record high [46]. Asset Allocation - Investors are most overweight in commodities since March 2023, with a net 14% overweight position [62]. - Emerging market equities have seen a significant increase in allocation, now at a net 46% overweight, the highest since February 2021 [67][70]. Trading Ideas - Contrarian trades suggested include long bonds-short stocks and long UK-short EM [4]. Liquidity & Cash Levels - Liquidity conditions are rated positively by 59% of investors, the highest since September 2021 [40][42]. - The average cash level among investors has dropped to 3.8%, indicating a strong inclination towards equities [15][14]. Expectations for Bond Yields - A net 28% of investors expect higher long-term rates in 2026, the highest since June 2022 [43][44]. AI and Productivity - 52% of investors believe AI is already increasing productivity, with expectations for further increases in the coming years [36][38].

Investment Rating - The report indicates a positive investment outlook for the Asia Pacific ex-Japan region, with 90% of investors expecting equities to rise in the next 12 months [2][17]. Core Insights - The global growth forecast is improving, with APAC ex-Japan economic prospects reaching an 11-month high, and over half of respondents anticipating a stronger Japanese economy in the next year [1][3]. - Investor sentiment towards China is notably optimistic, with a net 8% expecting a stronger economy, a significant shift from previous expectations of weakness [4][26]. - Japan remains a favored market, with 7 in 8 panelists expecting positive returns, driven by corporate governance reforms and policy normalization [3][40]. Summary by Sections Economic Outlook - The global growth forecast is gaining momentum, particularly in the APAC ex-Japan region, which has reached an 11-month high [1]. - China's growth outlook is improving, with a notable increase in investor sentiment, as indicated by the China Risk-Love indicator reaching its highest level since April 2021 [4][26]. Market Sentiment - 90% of investors anticipate a rise in APAC ex-Japan equities over the next year, with return expectations at their highest since February 2023 [2][17]. - Japan is viewed positively, with virtually no investors expecting a weaker economy in the next 12 months [3][38]. Sector Preferences - Semiconductors and banks are highlighted as the most favored sectors in Japan, benefiting from higher interest rates and ongoing technological advancements [47]. - In the broader Asia Pacific ex-Japan region, semiconductors, tech hardware, and financial services are the most preferred sectors, while energy and consumer staples are out of favor [52]. Investment Themes - Key investment themes include AI, anti-involution, and corporate value-up programs in Korea, reflecting a focus on innovation and corporate governance [5][60]. - In China, the focus is on AI and semiconductors, while cyclicals and green economy themes have lost traction [54].

Accessible version The Flow Show Bull Risks: Allocation, Asia & Approval Scores on the Doors: bitcoin 11.3%, oil 8.0%, gold 6.8%, commods 5.7%, global stocks 3.9%, US stocks 1.2%, US$ 0.7%, HY bonds 0.3%, IG 0.3%, govt bonds -0.1% YTD. Zeitgeist: "When the market goes up, they should lower rates" Trump on the Fed. Zeitgeist: "Only three certainties are death, taxes, and new highs in Japanese banks." Tale of the Tape: Japan yen weakest vs. China renminbi since 1992 (Chart 6); biggest risk to max bull Q1 cons ...

Investment Rating - The report maintains a very bullish investment rating with a BofA Bull & Bear Indicator at 9.0, indicating a favorable outlook for equities despite recent outflows from tech stocks and emerging market debt [13][36]. Core Insights - The report emphasizes a strategy of "long boom, short bubble," suggesting that investors should focus on value cyclicals while reducing exposure to high-risk assets [18]. - It highlights the significant inflows into cash and bonds, with $148.5 billion flowing into cash and $11.1 billion into bonds, indicating a cautious market sentiment [10][16]. - The report notes that geopolitical tensions are driving investors to seek hedges, particularly in energy and materials, with Venezuela and the Arctic being key areas of interest due to their substantial oil reserves [2][18]. Summary by Sections Market Performance - Year-to-date performance shows Bitcoin at 4.1%, gold at 2.9%, global stocks at 2.9%, and US stocks at 1.5%, while oil has declined by 1.7% [1]. - The report indicates that historically, oil has been the best-performing asset three months following a war, with returns of 8.3% [3]. Investment Flows - Recent flows indicate $2.2 billion into stocks, $1.1 billion into gold, and $1.1 billion into crypto, while there were significant outflows from US stocks ($19.0 billion) and emerging market debt ($6.0 billion) [10][16]. - The report notes that private clients have shifted their allocations, with a focus on high dividend stocks, munis, and REITs, while selling bank loans and tech stocks [12]. Asset Allocation Strategy - The recommended strategy for 2026 includes long positions in bonds, international stocks, and gold, while shorting investment-grade bonds and the US dollar [19]. - The report suggests that the optimal time to go long is when market sentiment is bearish, and the Fed is easing, which aligns with current market conditions [17]. Geopolitical Context - The report discusses the geopolitical landscape, noting that the US's shift from exceptionalism to expansionism could favor a contrarian long position on the US dollar [2]. - It highlights the potential for safe-haven demand to spread to the US dollar due to geopolitical tensions, particularly in relation to oil prices [18].

Accessible version The Flow Show Quiz Show Chart 2: Ferrari crashing vs General Motors Ferrari vs General Motors (price relative) Source: BofA Global Investment Strategy, Bloomberg BofA GLOBAL RESEARCH Dec'25 0 2 4 6 8 10 12 14 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 Ferrari vs General Motors (USD price relative) Scores on the Doors: gold 62.1%, stocks 20.3%, IG bonds 10.0%, HY 9.9%, govt bonds 6.0%, commodities 5.9%, cash 4.0%, bitcoin -2.7%, US dollar -9.4%, oil -19.5% YTD. BofA Bull & Bear Indicator: ...

Investment Rating - The report suggests a bullish outlook on commodities, particularly recommending long positions in commodities and oil/energy as the best trades for 2026 [3][4]. Core Insights - The report highlights a significant shift in market dynamics, indicating that commodities are outperforming bonds in the current inflationary growth environment, contrasting with the previous era of secular stagnation [2][3]. - It notes that LatAm stocks have increased by 56% year-to-date, indicating strong performance in the region [3]. - The report emphasizes the importance of monitoring bond market reactions to the "run-it-hot" trade, as they pose a potential threat to stock and credit market upside in 2026 [4]. Summary by Sections Market Performance - Year-to-date performance shows gold at 59.1%, stocks at 19.6%, and commodities at 6.7%, while oil has declined by 16.8% [2]. - The report indicates that the biggest inflows have been into cash ($112.3 billion) and bonds ($15.4 billion), with a notable outflow from tech stocks [13][17]. Investment Strategies - The report advocates for long positions in commodities and oil/energy, viewing them as contrarian trades that are likely to yield positive returns in 2026 [3]. - It suggests tactical long positions in zero coupon bonds in anticipation of Fed cuts, while also recommending mid-cap stocks as a favorable investment due to their relative undervaluation [16]. Economic Indicators - The BofA Bull & Bear Indicator has decreased to 6.0, indicating a neutral sentiment in the market [60]. - The report notes that the current economic environment is characterized by rising bond yields in Japan and China, which are seen as secular floors for global yields [18]. Sector Analysis - Inflows into high-yield bonds ($2.3 billion) and emerging market debt ($2.4 billion) are highlighted, indicating a positive sentiment towards these sectors [17]. - The report also mentions significant outflows from tech stocks, suggesting a shift in investor preference towards more stable sectors [17][40].

Accessible version BofA Securities Equity Client Flow Trends Flows out of Tech at multi-year records Biggest equity ETF inflows in over 3 years; Value>Growth Exhibit 3: Rolling 4-wk avg. Tech flows as a % of Tech mkt. cap now the most (-) since mid-'21 Rolling four-week average net buying (selling) of Tech stocks by our clients ($mn) Hedge funds/institutional clients bought last week's dip More big Tech outflows (at multi-year extremes) Source: BofA Securities -0.05% -0.04% -0.03% -0.02% -0.01% 0.00% 0.01% ...