Market rally doesn't need a Fed rate cut in December, says Bank of America's Chris Hyzy

Market Outlook - Short-term market weakness is attributed to reduced expectations of a December Fed rate cut, but the market's underlying strength extends through 2026 due to a better profit cycle [2][3] - The market is factoring in a better profit cycle through 2026, supported by easier financial conditions and liquidity [3] - Taking advantage of market weakness is advised, as the current situation lacks fundamental news [6][9] Key Economic Drivers - Digital infrastructure, beyond just AI, is a significant driver, with substantial room for growth [4] - Boomer spending in travel, leisure, and entertainment is masking weakness in lower-end consumer spending, contributing to overall healthy consumer spending [4][5] - Profit momentum is a crucial factor driving the market, creating a flywheel effect [5] Portfolio Strategy - Overweighting equities is recommended, utilizing market weakness for strategic entry [9] - A neutral allocation to non-dollar assets is advised for dollar-based investors, acknowledging slowing growth in Europe and the UK, but picking up in Japan [12][13] - Concerns about an AI bubble are premature, as debt financing has not yet reached levels that cannot be substantiated by cash flows [9][10]