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<ul class="summary-list"><li>US stocks raced to record highs after the 2024 presidential election concluded.</li><li>Investors seem certain that President-elect Donald Trump's policies are best for stocks.</li></ul>Wall Street is in love with Donald Trump, as if there was ever any doubt.A robust, multi-year bull market rally for US stocks reached another gear after the businessman-turned-politician <a target="_blank" href="https://www.businessinsider.com/donald-trump-wins-presidential-election-race-2024-11">won the presidential election</a>. The S&amp;P 500 just topped 6,000 for the first time ever, and the tech-focused Nasdaq Composite is also in uncharted territory.Traders are convinced that the bulk of <a target="_blank" href="https://www.businessinsider.com/donald-trump-election-victory-impact-investments-costs-housing-taxes-childcare-2024-11">Trump's economic policies</a>, which include tax cuts and fewer government regulations, will create a business-friendly backdrop that drives stocks higher."Investor sentiment is pro-growth, pro-deregulation, and pro-markets," said David Bahnsen, the chief investment officer at The Bahnsen Group, in recent commentary sent to Business Insider.<h2 id="3e5bdf8a-fc97-4e3d-a950-f23703f0015e">'Animal spirits' have been unleashed</h2>While some are skeptical of the consensus view, <a target="_blank" href="https://www.businessinsider.com/stock-market-outlook-trump-president-economy-tariffs-trade-war-kelly-2024-11">including those who are terrified about tariffs</a>, it looks as if investors broadly are scrambling to add exposure to equities. A staggering $22 billion flowed into exchange-traded funds on Wednesday, which was more than four times higher than the previous record for the day after the US election, according to State Street Global Advisors.Markets may hate uncertainty even more than tax hikes, so it's possible that a Kamala Harris win also could have sparked a relief rally.But that might dismiss how ecstatic big-money investors are about another Trump term, given that the S&amp;P 500 rose over 50% from his victory in 2016 until shortly before the pandemic."Business animal spirits could be rekindled once again from Trump's pro-business approach, which could lead to a more robust capital expenditures and investment environment," said Jeff Schulze, the head of economic and market strategy at ClearBridge Investments, in commentary.That term, "<a target="_blank" href="https://www.investopedia.com/terms/a/animal-spirits.asp">animal spirits,</a>" was coined in the 1930s by famed economist John Maynard Keynes, who remarked that investors' decisions are often driven by intense emotions like greed and fear.Anthony Saglimbene, Ameriprise's chief market strategist, borrowed Keynes' famous phrase to make the same point as Schulze: investors may be euphoric for the foreseeable future."Animal spirits through year-end could push major averages higher as the overhang of the election is removed and investors look to put excess cash to work in stocks," Saglimbene said in commentary.<h2 id="648d2368-71e0-40ed-9ed5-95b7faf9578c">How to invest after Trump's win</h2>Although the US economy <a target="_blank" href="https://www.businessinsider.com/economy-outlook-tariffs-trump-trade-war-slowdown-jpmorgan-david-kelly-2024-10">looks healthy by most measures</a>, many market strategists are counting on an even bigger boom under Trump that <a target="_blank" href="https://www.businessinsider.com/stocks-to-buy-election-investing-strategy-2016-comparison-morgan-stanley-2024-11">would benefit economically sensitive stocks</a>."This broad 'risk-on' mood for the U.S. stock market is cutting across all sectors, but particularly favoring more cyclically sensitive sectors that would benefit from a re-strengthening of the economy and tailwinds to corporate profitability," said Jim Baird, the chief investment officer at Plante Moran Financial Advisors, in written commentary sent to BI.Sectors that are heavily reliant on economic growth, like energy and financials, will stay hot, said Sébastien Page, the head of global multi-asset at T. Rowe Price, in a recent interview."I don't think it's over the top," Page said of the postelection market rally.Several of the strategists and investment chiefs that Business Insider leaned on for this story also cited small caps as a top idea, provided that the economy stays strong and taxes fall."Enough people had been worried about, 'Could we have a credit cycle? Could we have an economic slowdown into next year? What would increases in taxes and regulation do?'" said Sean Gallagher, the global head of Lazard's small-cap equity platform, in an interview.He continued: "Now that's off the table. I think it just increases small-business optimism. I think it'll increase <a target="_blank" href="https://www.investopedia.com/terms/c/capitalexpenditure.asp">CapEx</a>, which has been kind of held back."Smaller companies performed admirably early on in Trump's first tenure, though <a target="_blank" href="https://www.businessinsider.com/cheap-stocks-to-buy-strong-growth-market-outlook-garp-bmo-2024-10">they've lagged large caps for years</a>. Gallagher is highly optimistic about the group again, both because of the economic environment and their valuations, which are <a target="_blank" href="https://www.businessinsider.com/stocks-to-buy-small-mid-caps-market-rotation-outlook-bmo-2024-10">startlingly cheap relative to their peers</a>.Schulze from ClearBridge is also aboard the cyclical and small caps train. The strategist is fired up about what Trump's penchant for lower taxes and limited regulations means for industrials, consumer discretionary stocks, and financials.Saglimbene from Ameriprise concurred again that "the backdrop for financials could improve, as less regulation and the potential for merger/acquisition and capital market activity accelerate."Add the technology sector to the list of winners from less governmental oversight, Bahnsen said. Tech companies seem like a clearer beneficiary since the Federal Trade Commission (FTC) should be less hostile to their interests.For all the optimism in markets, some strategists are branching out from stocks.Jim Thorne, who's the chief market strategist at Canada-based wealth management firm Wellington-Altus, said in commentary that he's most interested in gold and bitcoin, which some have referred to as the yellow metal's digital doppelgänger.The world is awash with cash, making scarce assets like gold and bitcoin more valuable, and Thorne also noted that global economic growth is slowing. That suggests that the path forward for risk assets may not be smooth — even if Trump is successful in his second term."Investors should brace for volatility and shifts in market leadership as we transition to a peacetime economy, shaped by Trump's policies," Thorne said in written commentary.

'Animal spirits': 7 market strategists share how to ride the red wave as US stocks surge to new records

<keyword id="22661695" type="General" weightage="20" keywordseo="Regulatory-moves" source="Orion">Regulatory moves</keyword> discouraging <keyword id="19972907" type="General" weightage="20" keywordseo="retail-investors" source="keywords">retail investors</keyword>' <keyword id="22661696" type="General" weightage="20" keywordseo="derivative-market-bets" source="Orion">derivative market bets</keyword> may help the <keyword id="59197" type="General" weightage="20" keywordseo="banking-system" source="Orion">banking system</keyword> garner the much-needed <keyword id="6496248" type="General" weightage="20" keywordseo="deposits" source="Orion">deposits</keyword>, <keyword id="46004" type="General" weightage="20" keywordseo="SBI-Chairman" source="Orion">SBI Chairman</keyword> <keyword id="1937145" type="General" weightage="20" keywordseo="Dinesh-Kumar-Khara" source="Orion">Dinesh Kumar Khara</keyword> has said. Khara said the budget announcements like the tweaks on the short-term and long-term capital gains will not lead to much gains from a deposit accretion perspective. "<keyword id="20031465" type="General" weightage="100" keywordseo="FO" source="keywords">F&amp;O</keyword> (future and options) kind of things are being discouraged for the retail (investor) by the regulator. Those who are resorting to such kind of an instrument, they might come back to the banking system," Khara told PTI over the weekend. It can be noted that concerns over losses incurred by 90 per cent of investors in the derivative trades have led to fears of household savings being blown in speculation rather than being deployed for productive purposes among policymakers. As per <keyword id="20033427" type="General" weightage="20" keywordseo="capital-markets" source="keywords">capital markets</keyword> regulator Sebi, retail investors lost Rs 52,000 crore in such activity in FY24 alone which necessitates a clampdown. Sebi has come up with a seven-point plan to reduce such trades, while some moves in the Union Budget are also targeted to reduce such activities. For the last three years, the deposit growth is unable to keep pace with credit expansion, and Khara said the money is going into alternative avenues like capital markets. He, however, stressed that the bank account is the primary avenue for parking the savings and continue to attract interest, and reminded that there was a phase of deposit growth trailing credit growth in 2011 as well witnessed by the banking system. At present, concerns are being raised about the wedge between the deposit and credit growth leading banks to go slower on granting loans, which can be be detrimental for the overall economic growth. <keyword id="19898108" type="General" weightage="20" keywordseo="SBI" source="keywords" meta.keywordsubtype="org" meta.entityname="SBI" meta.hostid="153" meta.entityid="SBI">SBI</keyword>, the country's largest lender which commands over a fifth of market share, is targeting a credit growth of 15 per cent in FY25 and a deposit growth of 8 per cent, Khara said. Stating that the bank will try to get the deposit growth at 10 per cent, he made it clear that the credit growth target can be achieved even with a slower pace of deposit growth of 8 per cent due to its liquidity position. The bank chose to deploy excess deposits in the past into its investment book and is currently unwinding the same as it caters to the credit demand, Khara said. He said the bank's liquidity coverage ratio stands at 128 per cent and it has decided to keep it over 110 per cent.

Discouraging retail play in F&O may help banks garner deposits: SBI Chairman

<ul class="summary-list"><li>US bank stocks surged following Donald Trump's presidential election victory.</li><li>Markets see looser regulations and changes in oversight spurring more profits for banks. </li></ul>US bank stocks rallied on Wednesday after Donald Trump <a target="_blank" class="" href="https://www.businessinsider.com/donald-trump-wins-presidential-election-race-2024-11">cruised to victory</a> in the presidential election, with markets eyeing a better environment for dealmaking and lending to drive stronger profits. Shares of the largest US banks soared ahead of the opening bell. JPMorgan and Bank of America both rose 6%, Citi rose 8%, and Wells Fargo jumped 10%. Goldman Sachs and Morgan Stanley climbed 6% and 8%, respectively. The SPDR S&amp;P Bank exchange-traded fund climbed 8%. Investors flocked to <a target="_blank" class="" href="https://www.businessinsider.com/market-impact-presidential-election-scenarios-trump-harris-stocks-bonds-crypto-2024-10">financial stocks</a> as a popular "Trump trade" in the weeks leading up to the election, with allies of the president-elect stating that Trump planned to <a target="_blank" class="" href="https://www.reuters.com/markets/us/if-trump-wins-he-plans-free-wall-street-burdensome-regulations-2024-04-12/">unravel many of the regulations</a> imposed on the banking sector after the 2008 financial crisis.According to Gerard Cassidy, a large-cap bank analyst from RBC Capital Markets, Trump's victory is likely to see some top regulators ousted, including the heads of agencies like the Consumer Protection Bureau and the Office of the Comptroller of the Currency.More banks could also consolidate in the coming years, assuming Trump's cabinet and advisors adopt a "pro-business" stance, Cassidy speculated. Commercial lending could also pick up, potentially causing bank revenue to beat expectations next year, he added."We've been very optimistic and bullish about the bank stocks all year, and last night's win by Trump continues that bullishness," Cassidy said in an interview with <a target="_blank" class="" href="https://www.cnbc.com/video/2024/11/06/outlook-for-banks-from-a-regulatory-standpoint-is-quite-positive-says-rbcs-gerard-cassidy.html">CNBC</a> Wednesday morning. "We're going to see a real change in anti-trust, and we're going to see a change in banking regulation as well, and that's going to be positive for the banks."Leading up to the election, analysts also said they saw a fresh wave of dealmaking under Trump amid a potentially looser anti-trust stance from his administration. That could result in increased advisory revenue for big banks and help drive up profits.

Bank stocks soar after Donald Trump's election victory

New Delhi [India], July 19 (ANI): Households are choosing the <keyword id="20033427" type="General" weightage="20" keywordseo="capital-markets" source="keywords">capital markets</keyword> over the <keyword id="19934118" type="General" weightage="20" keywordseo="banks" source="keywords">banks</keyword> to park or invest their <keyword id="25450" type="General" weightage="20" keywordseo="savings" source="Orion">savings</keyword>, highlighted <keyword id="64190" type="General" weightage="20" keywordseo="RBI-Governor" source="Orion">RBI Governor</keyword> <keyword id="3083263" type="General" weightage="20" keywordseo="Shaktikant-Das" source="Orion">Shaktikant Das</keyword> during his address at FE Modern BFSI (Banking, Financial Services, and Insurance) Summit 2024 on Friday. Governor Das highlighted that traditionally, banks were the primary choice for households to invest their money. However, there has been a noticeable change in consumer behaviour, with a growing preference for capital markets and other <keyword id="5869841" type="General" weightage="20" keywordseo="financial-intermediaries" source="Orion">financial intermediaries</keyword>. He noted, "Households and consumers who traditionally leaned on banks for parking or investing their savings are increasingly turning to the capital markets and other financial intermediaries." This trend indicates a broader diversification of <keyword id="22469312" type="General" weightage="20" keywordseo="household-investments" source="Orion">household investments</keyword> into <keyword id="19929240" type="General" weightage="20" keywordseo="mutual-funds" source="keywords">mutual funds</keyword> and other savings tools, moving away from traditional investment tools. The Governor stated, "While bank deposits continue to remain dominant as a percentage of the financial assets owned by the households, their share has been declining, with households increasingly allocating their savings to Mutual Funds, Insurance Funds, and Pension Funds." Governor Das also pointed out that this shift in investment patterns has significant implications for the banking sector. Banks now need to explore alternative methods to bridge the gap between credit and deposits. He added, "On their part, banks have sought to fill the credit-deposit gap by increasing their reliance on other sources like short-term borrowings and certificates of deposit, etc. This increases their sensitivity to interest rate movements and poses challenges to liquidity management." The Governor further elaborated on the implications of the shift from CASA (Current Account Saving Account) deposits, stressing that banks must remain vigilant and adaptive. He stated that banks need to continuously focus on improving and refining their credit underwriting standards and the pricing of risks to maintain stability and profitability. Reflecting on recent global banking events, Governor Das drew attention to the banking crises in the US and Switzerland in 2023, which highlighted the risks and vulnerabilities inherent in certain business models. He emphasized the importance of learning from these crises to enhance the resilience of the banking sector. "The banking crisis in the US and Switzerland in 2023 has again brought into focus the risks to banking stability from certain business models and their inherent vulnerability," he added.

Household savings are choosing mutual funds over banks to invest savings: RBI Governor

<ul class="summary-list"><li>The US economy looks strong, judging by GDP growth, profits, productivity, and the labor market.</li><li>JPMorgan Asset Management is upbeat heading into 2025, but a major risk looms.</li></ul>It looks like the most obvious threats to the economy have been neutralized for now, but a veteran strategy chief fears that an under-the-radar risk poses a threat to the global expansion.This economic backdrop bears little resemblance to the <a target="_blank" href="https://www.businessinsider.com/us-economy-stagflation-disaster-high-prices-inflation-high-unemployment-2022-3">so-called stagflationary environment</a> of 2022, a year where <a target="_blank" href="https://www.statista.com/statistics/188185/percent-change-from-preceding-period-in-real-gdp-in-the-us/">US GDP shrank in the first two quarters</a> as <a target="_blank" href="https://www.businessinsider.com/inflation-cpi-price-growth-june-2022-7">inflation hit multi-decade highs</a>.Fast forward to late 2024, and GDP has grown by at least 3% for <a target="_blank" href="https://www.bea.gov/data/gdp/gross-domestic-product">three of the last four quarters</a> and is expected to do so again in the third quarter, according to JPMorgan Asset Management. The firm estimates that consumer spending, which <a target="_blank" href="https://fred.stlouisfed.org/series/DPCERE1Q156NBEA">accounts for about two thirds of US GDP</a>, also likely accelerated to 3.5% on an inflation-adjusted basis last quarter, up from 2.8% in Q2.Meanwhile, price growth is <a target="_blank" href="https://www.businessinsider.com/inflation-september-cpi-consumer-price-index-federal-reserve-interest-rates-2024-10">remarkably close to the Federal Reserve's 2% target</a>, which allowed the US central bank to <a target="_blank" href="https://www.businessinsider.com/fed-cuts-interest-rates-how-much-september-fomc-powell-inflation-2024-9">start the interest rate easing cycle with a bang</a> in mid-September.Perhaps most encouraging is that the labor market appears to be healthy. <a target="_blank" href="https://www.businessinsider.com/september-jobs-report-unemployment-rate-nonfarm-payroll-growth-federal-reserve-2024-10">Job additions easily exceeded estimates</a> in September, and the unemployment rate is <a target="_blank" href="https://www.bls.gov/news.release/pdf/empsit.pdf">in check at 4.1%</a>.Corporate earnings growth, productivity growth, and business fixed investment all seem to be headed in the right direction as well. The same is true of wage growth, which JPMAM found has topped inflation for the last 17 months, underpinning solid consumer spending in the process.These signals have given David Kelly, JPMAM's chief global market strategist, great confidence.The economic outlook "seems remarkably benign with solid economic growth, low unemployment, resilient profits, a slow drift down in inflation, and gradual easing from the Federal Reserve," Kelly said in written commentary on October 28. The market veteran added that there aren't "signs of an imminent change in the economy's path."<h2 id="59ff7859-06ea-46e1-a918-af568c5cb476">A 'tariff'ying risk</h2>That seemingly picturesque backdrop helps explain why the S&amp;P 500 has risen 22% this year and is near record highs. But Kelly believes investors can't let their guards down."Investing has always been as much about risk as about return, and the key to long-term success is being prepared for both," Kelly said in his commentary.Kelly said to be wary of elevated stock valuations — which he and his colleagues at JPMAM <a target="_blank" href="https://www.businessinsider.com/investing-strategy-real-estate-stocks-bonds-portfolio-jpmorgan-asset-management-2024-10">said last week</a> could put a lid on future returns — and the market's heavy tilt toward mega-cap growth companies, even though <a target="_blank" href="https://www.businessinsider.com/cheap-stocks-to-buy-strong-growth-market-outlook-garp-bmo-2024-10">that has been changing</a> in recent months.However, neither of those overhangs is more serious than the potential fallout from a domestic or international political shock. When asked last week about the biggest risk to his long-term outlook, Kelly quickly arrived at an answer: a fierce global trade war marked by escalating tariffs."No matter which set of economists you have sitting here, every one of 'em will tell you that tariffs are not a good idea," Kelly said at JPMAM's <a target="_blank" href="https://www.businessinsider.com/investing-strategy-real-estate-stocks-bonds-portfolio-jpmorgan-asset-management-2024-10">annual long-term capital market assumptions conference</a> on October 21. "You can use it as a threat, though it's kind of like a nuclear threat — the whole point is, if you actually end up using it, you kind of screwed up somewhere."Economists usually disapprove of tariffs, which are taxes on foreign imports, in most cases. Tariffs promise to generate revenue for the home country while aiding domestic industries, but they can drive up consumer prices and prompt counter-tariffs that lead to trade wars.In a worst-case scenario, tariffs would result in higher prices and lower growth due to the waste and inefficiency that they create while hurting importers and exporters in both countries."A trade war could cause us to push up our inflation forecast and push out our growth forecast at the same time," Kelly said at the conference.While Democrats and Republican presidents have leaned on tariffs in the past, it's former President Donald Trump who's <a target="_blank" href="https://thehill.com/business/4945577-trump-tariffs-economy-trade/">promising to implement substantial tariffs</a> in this election cycle.While some say the threat of aggressive tariffs would help the US secure better trade terms, others are skeptical — if not outright scared.Such tariffs <a target="_blank" href="https://www.businessinsider.com/election-trump-harris-economy-inflation-stock-market-volatility-risk-orlik-2024-10">would cause "seismic shocks to the US economy,"</a> Tom Orlik, the chief economist at Bloomberg Economics, said earlier this month. Charles Schwab global investment strategy chief Jeffrey Kleintop <a target="_blank" href="https://www.businessinsider.com/how-to-invest-stock-market-international-investing-strategy-charles-schwab-2024-6">cited tariffs as a top risk</a> back in June. The nonpartisan Peterson Institute <a target="_blank" href="https://www.piie.com/blogs/realtime-economics/2024/trumps-proposed-blanket-tariffs-would-risk-global-trade-war">spoke out against Trump's tariff proposals</a>, as did the right-leaning <a target="_blank" href="https://www.wsj.com/opinion/donald-trump-tariffs-economy-2024-election-kamala-harris-robert-lighthizer-29c07e94">Wall Street Journal editorial board</a>.Although investors may want to take the possibility of tariffs more seriously, Kelly noted that even if they're a major headache, stocks and the economy should still be fine in the long term."I could have said 'pandemic' five years ago, if I'd been incredibly prescient," Kelly said at the conference. "But oddly enough, the global economy bounced back anyway. And so it wouldn't actually have been a very good thing to worry about."

The economy seems to be firing on all cylinders — but a veteran JPMorgan strategy chief says one underappreciated risk could cause a serious global slowdown

<ul class="summary-list"><li>Goldman Sachs and JPMorgan Asset Management are becoming a bit less bullish.</li><li>Although the US economic outlook is strong, returns may have been pulled forward.</li></ul>A pair of Wall Street juggernauts are getting slightly more skeptical about stocks and bonds, but a compelling investment opportunity may be hiding in plain sight.<div type="image" title="GS 10-year projection" height="1088" width="1508" msid="114505224" hostid="261" sizebytes="75402"></div>Goldman Sachs stole headlines recently by forecasting that <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp500-future-returns-decade-forecast-goldman-sachs-2024-10">US equities will only rise 3% a year in the next decade</a>, down from an average annual gain of 13% in the prior 10 years. The firm's rationale is based on a more challenging backdrop characterized by lofty valuations, an unusually high concentration in the market's biggest stocks, increased recession risk, lower profits, and elevated interest rates.<div type="image" title="GS 10-year projection baseline" height="742" width="1010" msid="114505227" hostid="261" sizebytes="35320"></div>Top minds at JPMorgan Asset Management (JPMAM) agree that stocks might not post the returns that investors have come to expect, though they're not nearly as pessimistic.The firm, which manages $3.5 trillion in assets, expects US large-cap equities to appreciate by 6.7% a year in the next 10 to 15 years, according to its yearly long-term capital market assumptions report released on October 21. For reference, JPMAM thinks global stocks will rise between 7.2% and 8.1% a year in that same span.A mid-single-digit annual gain for US large caps is nothing to sneeze at, though it would be down substantially from <a target="_blank" href="https://www.businessinsider.com/how-to-invest-economy-growth-outlook-recession-risk-inflation-jpmorgan-2022-11">7.9% two years ago</a> and <a target="_blank" href="https://www.businessinsider.com/how-to-invest-stocks-bonds-real-estate-outlook-strategy-jpmorgan-2023-10">7% last year</a>.There's a simple explanation for that marginally more tepid outlook: US stocks have been on a tear. And while <a target="_blank" href="https://www.businessinsider.com/stock-market-outlook-prediction-2025-how-to-invest-rally-trader-2024-10">some bulls are emboldened</a> by the S&amp;P 500's excellent track record, JPMAM strategists worry that the market has pulled forward future gains."Near the bottom of all these pages, we put a little statement saying, "Past performance is not indicative of future returns.' That's actually not true," said David Kelly, JPMAM's chief global market strategist, at a press conference about the report. "Past great performance is indicative of a more difficult environment going forward."The S&amp;P 500 is on pace to rise by at least 10% <a target="_blank" href="https://www.macrotrends.net/2526/sp-500-historical-annual-returns">for the fifth time since 2018</a> and the 11th time since the financial crisis, including what's been a 22.7% gain in 2024. That strength, combined with already-rich valuations, led JPMAM to cut its long-term projection for US large caps.<div type="image" title="JPMAM valuations" height="926" width="1038" msid="114505230" hostid="261" sizebytes="32120"></div>However, Kelly said the downward shift was gradual since the economic growth outlook is promising. The firm is calling for US real GDP of 2% in the long term, which is the highest mark since the pandemic, along with 2.4% inflation, which is down for the third consecutive year."The very good news is that we think that the foundations for the US economy and the global economy look better than they did a year ago," Kelly said. "We got through some of our more significant worries on inflation; economic growth looks pretty solid."<div type="image" title="JPMAM US GDP forecast" height="828" width="1032" msid="114505215" hostid="261" sizebytes="15222"></div><h2 id="ee7765b8-415d-46ac-862a-90df145c611f">As the 60-40 portfolio loses steam, real estate can take the baton</h2>Lower stock returns are expected to drag down the traditional 60-40 stock-bond portfolio, which JPMAM now says should fetch 6.4% a year for the next decade or so.That forecast is down from 7% last year and 7.2% heading into 2023, though it's higher than the <a target="_blank" href="https://www.businessinsider.com/alternative-investing-strategy-60-40-portfolio-bitcoin-outlook-inflation-jpmorgan-2021-11">4.3% mark in late 2021</a>, where US large caps were only expected to climb 4.1% a year in the long term after an outstanding rebound from the early pandemic lows.Bonds, which make up the second half of that calculus, have a solid but unremarkable outlook.US bonds broadly are expected to return 4.6% in the long term — down from 5.1% last year and the same as two years ago — while the US 10-year Treasury note is projected to fetch 4.2%, versus 4.6% last year and 4% two years ago. Meanwhile, high-yield bonds should deliver a 6.1% gain in the long term, compared to 6.5% last year and 6.8% two years ago.After accounting for inflation, JPMAM expects the standard 60-40 portfolio to return less than 5% in the long term, and the same is true of large-cap stocks and bonds. While such gains may be satisfactory for some, it would take over 16 years for an investor to double their money.Those looking for a more compelling investment opportunity should consider real estate, according to JPMAM. Unlike stocks and bonds, the firm's projected returns for that asset class are steadily rising, from 5.7% two years ago to 7.5% in late 2023 to 8.1% this year.US core real estate is projected to yield close to 6%, up from just over 4% a few years ago and well above the 10-year's yield of 4.2%. Real estate isn't cheap based on <a target="_blank" href="https://www.investopedia.com/terms/c/capitalizationrate.asp">capitalization rates</a>, which measure how much money a property generates relative to its market value, but JPMAM believes the asset class is an exceptional value relative to other yield-generating investments.<div type="image" title="Real estate vs 10-year yield" height="924" width="1032" msid="114505221" hostid="261" sizebytes="34048"></div>"If you were to look at this on a spread basis, the cap-rates spread would tell you that real estate looks a little bit expensive," said David Lebovitz, a global market strategist for JPMAM, at the conference. "But if you look at the all-in yield and think of that as your valuation and your starting point, we're looking at a generational opportunity."Monica Issar, JPMorgan Private Bank's global head of multi-asset and portfolio solutions, echoed that sentiment."This is absolutely the largest generational opportunity to invest in real estate in a long time," Issar said at the conference.Commercial real estate looks especially compelling, Issar said. Unlike residential real estate, which has held up well in recent years — as evidenced by <a target="_blank" href="https://fred.stlouisfed.org/series/MSPUS">remarkably resilient home prices</a> despite <a target="_blank" href="https://www.freddiemac.com/pmms">still-elevated mortgage rates</a> — office buildings have struggled to regain their value since the pandemic ushered in a new era of remote work for millions of Americans.As companies reduced their physical presence or eschewed offices altogether, demand for commercial spaces has taken a massive hit. However, Issar thinks that risk is reflected in prices."All we've been reading about and all we've been seeing is price declines and discussions about empty buildings," Issar said. "This is a time for investors to step in, move into attractive pricing, move into asset classes like non-core real estate."Investors can bet on a commercial real estate rebound by working with <a target="_blank" href="https://am.jpmorgan.com/us/en/asset-management/institutional/investment-strategies/alternatives/real-estate/">JPMAM's team</a>, or on their own through publicly traded real estate investment trusts (REITs). JPMAM didn't outline any specific investments to make, but Issar threw out a few ideas to help investors brainstorm."Think of multifamily housing; think of student housing around campuses; think of cell towers and data centers," Issar said. "That is the modernization of the new direct real estate that is going to be really attractive for investors in the future."

'Generational opportunity': Invest in real estate as stock and bond returns shrink, according to $3.5 trillion JPMorgan Asset Management

<ul class="summary-list"><li>Financials have outperformed this earnings season.</li><li>That proves cyclical stocks are poised for gains, Morgan Stanley says.</li></ul>As earnings season heats up there's one corner of the stock market that's outperforming expectations, Morgan Stanley says.Analysts at the bank say that cyclicals—stocks that follow the rough trajectory of the economic cycle—have beaten estimates across the board so far, indicating that cyclical shares yet to report are primed for big earnings beats.Cyclicals tend to be more economically sensitive, rising and falling with the economy's growth cycle. The group includes stocks in the industrials, financials, and energy sectors. They stand apart from defensive stocks, which tend to be safer bets when the economy is weakening and include sectors like consumer staples, utilities, and healthcare. The analysts, led by the bank's chief investment officer, Mike Wilson, cite a lower earnings bar as the key reason for their bullishness in this sector of the stock market.Third-quarter consensus earnings-per-share estimates were down 4% in the three months before earnings season, largely due to cyclical industries, the analysts say.Financials have outperformed so far due to lowered expectations, and now, the analysts say, other cyclical sectors will likely follow that trend."In other words, the bar has been lowered into earnings season for cyclical pockets in particular, and stocks are being rewarded for clearing that lowered bar—Financials were the first example of this and groups such as Capital Goods and Consumer Services could follow," the analysts wrote on Monday. They say the majority, or 92%, of large-cap banks that they cover, have beaten on operating earnings-per-share, and all of them have beaten on revenue so far.As a result, financial stocks were the best-performing sector in the S&amp;P 500 in the last two weeks, up 5.6% to outpace the overall index's 3% gain in that time.Morgan Stanley had <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/financial-stocks-bank-cyclicals-investment-advise-jobs-data-morgan-stanley-2024-10">shifted to cyclicals</a> and upgraded financials to overweight earlier this month due to a host of economic factors."Our upgrade of the sector in early October was based on accelerating capital markets activity, a 'de-risked' set-up into earnings season, as well as supportive relative valuation and positioning (among additional drivers)," the analysts said.

Earnings so far prove that investors should stick with stocks in this corner of the market, Morgan Stanley says

<ul class="summary-list"><li>The S&amp;P 500 could lose a quarter of its value next year, according to Stifel.</li><li>The benchmark index looks like it's caught in a "mania," the firm's strategists said in a note.</li></ul>The S&amp;P 500 looks like it's in the midst of another "mania," and investors could see a steep drop in the benchmark index sometime next year, according to Stifel.Strategists at the investment firm pointed to lofty valuations, with the S&amp;P 500 breaking through a <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-today-sp500-hits-another-record-high-q3-earnings-2024-10">series of record highs</a> this year on the back of an improving <a target="_blank" class="" href="https://www.businessinsider.com/fed-interest-rate-cuts-outlook-economy-recession-no-landing-borrowing-2024-10#:~:text=The%20no%2Dlanding%20scenario%20%E2%80%94%20in,enough%20to%20provide%20meaningful%20relief.">economic outlook</a>, expectations for <a target="_blank" class="" href="https://www.businessinsider.com/fed-interest-rates-cut-jerome-powell-labor-market-mortgage-pantheon-2024-9">Fed rate cuts</a>, and hype for <a target="_blank" class="" href="https://www.businessinsider.com/ai-stocks-nvidia-rally-how-to-invest-strategy-crypto-bitcoin-2024-5">artificial intelligence</a>.But the benchmark index now looks similar to the past four manias that have taken place, the firm said, comparing the current investing environment to the pandemic stock boom, the dot-com bubble, and stock run-ups in the 1920s and late 1800s.Growth returns "excess of Value" in today's market look "almost exactly the same" as they did leading up to the 1929 stock crash, the firm added.<div type="image" title="Graph showing S&amp;P 500 price to earnings ratio over trendline" height="952" width="1068" msid="114291451" hostid="261" sizebytes="96400"></div>"We took a clean sheet look at the equity market and came away with the same smh (shaking my head) emoji reaction. Despite all the soft-ladning and Fed rate cut optimism, the S&amp;P 500 up almost 40% y/y has simply over-shot," strategists said in a note on Tuesday.If the S&amp;P 500 follows the path of a "classic mania," that implies the benchmark index will rally to around 6,400 before falling back to 4,750 next year, strategists said."Sure, we can cherry-pick with the best of them and apply the most over-valued cyclically adjusted valuation level of the past 35 years to show about 10% further upside, but that same analysis of a century of manias also returns the S&amp;P 500 in 2025 to where 2024 began (down 26% from that prospective peak)," the note added.Stocks could be challenged next year due to the uncertain outlook for Fed rate cuts, the strategists suggested. While the Fed has signaled more cuts are coming, central bankers also risk <a target="_blank" class="" href="https://www.businessinsider.com/inflation-outlook-fed-interest-rate-cuts-jobs-report-us-economy-2024-10">undermining their inflation goals</a> if they cut rates too soon. "The conclusion … is that if the Fed cuts rates in 2025 absent a recession (two 25's as this year comes to a close do not count) then that would be a mistake, with investors paying the price in latter 2025 / 2026, based on historical precedent," strategists wrote.Investors could be impacted for the long-term, they added, pointing to previous manias, which historically led to weak stock returns over the following decade."Or at least that has been the case for the past three generations, making manias as disruptive for capital markets on the way down as they are euphoric on the way up," they said.A handful of other Wall Street forecasters have also said <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/dietrich-stock-market-outlook-bubble-crash-spx-recession-economy-fed-2024-6">stocks</a> <a target="_blank" class="" href="https://www.businessinsider.com/stock-market-outlook-bubble-crash-rosenberg-grantham-summers-recession-economy-2024-3">look</a> <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-crash-1929-prediction-sp500-outlook-overvalued-john-hussman-2024-3">overvalued</a>, but investors remain generally optimistic about the outlook for equities, particularly as they expect more rate cuts into 2025.

The stock market is in a 'mania' that will push it higher before a potential 26% drop in 2025, Stifel says

<ul class="summary-list"><li>Bitcoin could hit a fresh all-time high ahead of the presidential election, Standard Chartered says.</li><li>The firm is taking its cues from MicroStrategy, a bitcoin-linked stock trading at a premium to the token. </li></ul><a target="_blank" href="https://markets.businessinsider.com/currencies/btc-usd?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">Bitcoin</a> bulls have been searching for<a target="_blank" href="https://markets.businessinsider.com/news/currencies/bitcoin-price-outlook-explained-cryptocurrency-record-high-interest-rates-fed-2024-3"> another all-time high</a> for more than six months. It might finally come in the next few weeks, Standard Chartered says.In new research, head of digital asset research Geoff Kendrick estimated that the token could hit $73,800 before November's US presidential election, a 12% gain from current levels.To back this, Kendrick cited a shifting pattern in how bitcoin has traded against <a target="_blank" href="https://markets.businessinsider.com/stocks/mstr-stock">MicroStrategy</a>, a firm best known for accumulating massive amounts of the token — a stockpile that recent reached <a target="_blank" class="" href="https://www.theblock.co/post/320655/microstrategy-trillion-dollar-valuation-bitcoin-bank-michael-saylor-bernstein">252,000 bitcoins</a>.As the chart below shows, after trading relatively in lockstep with bitcoin throughout 2024, MicroStrategy has broken out. Kendrick says the two fundamental factors responsible for that premium are likely to drive bitcoin higher, closing the gap over time.<div type="image" title="Chart comparing bitcoin's price to Microstrategy's net asset value multiple." height="1238" width="2000" msid="114259736" hostid="261" sizebytes="36938"></div>The first of those factors is news from last month that BNY Mellon was exempted from SAB 121, an unpopular legislation that forces dealers to list crypto on their balance sheets. Easing regulation is <a target="_blank" href="https://markets.businessinsider.com/news/currencies/bitcoin-price-outlook-forecast-cryptocurrency-catalyst-regulation-interest-rates-trump-2024-5">often a cited tailwind for bitcoin</a>.Second, SAB 121 exemptions go hand-in-hand with MicroStrategy's announced plan to become a "bitcoin bank," offering <a target="_blank" class="" href="https://www.theblock.co/post/320655/microstrategy-trillion-dollar-valuation-bitcoin-bank-michael-saylor-bernstein">bitcoin capital market instruments down the road</a>. Kendrick expects a future exemption could allow the firm to earn yield by lending out bitcoin."The link between these two for me is that as the broader digital asset ecosystem becomes more legitimate/accessible, MSTR's multiple goes up," Kendrick said.In Kendrick's mind, the outcome of the presidential election is secondary to these bullish forces, with both Trump and Harris victories boding well for the token."As we approach the US election ... the broader digital asset ecosystem is indeed becoming more likely to become mainstream," he wrote.Kendrick has previously expressed that both candidates should boost the asset long-term, though Kendrick says a Donald Trump presidency would be the more bullish of the two outcomes. If the Republican candidate returns to the White House, he estimates that bitcoin could surge as high as <a target="_blank" href="https://markets.businessinsider.com/news/currencies/bitcoin-price-outlook-record-high-trump-harris-election-crypto-regulation-2024-9">$125,000 by the end of 2024.</a>

Why bitcoin has 12% upside in the weeks before the election, Standard Chartered says

<ul class="summary-list"><li>Positioning in financial stocks is light relative to other sectors, Morgan Stanley says.</li><li>They see the group as underappreciated, and cite its exposure to ongoing economic strength.</li></ul>Investors are lingering in defensive trades that don't take advantage of the economy's ongoing strength, Morgan Stanley said, highlighting opportunities in underinvested sectors.The firm — which just last week upgraded cyclical stocks to "overweight" relative to defensives — highlighted the financials group as particularly attractive.Morgan Stanley said net exposure to financials is in the bottom 15th percentile of a historical data series that that goes back to 2010. And as the chart below shows, it's also the most lightly owned of any sector.<div type="image" title="A Morgan Stanley chart showing equity sector exposure." height="1448" width="2366" msid="114226247" hostid="261" sizebytes="104460"></div>But Mike Wilson, the bank's CIO and chief US equity strategist, sees a combination of headwinds that could lift financial stocks. "In our view, this creates opportunity in [the financial] sector that we upgraded to overweight last week given: rebounding capital markets activity, a better loan growth environment in 2025, an acceleration in buybacks post Basel Endgame re-proposal, and attractive relative valuation," he wrote.Bank stocks also have more attractive valuations after de-risking last month after large-cap dealers signaled caution on their operating environment in September. Morgan Stanley noted that this weakness lowered earnings-season expectations for investors, making it easier for major lenders to outperform forecasts.<a target="_blank" href="https://markets.businessinsider.com/stocks/jpm-stock">JPMorgan</a> and <a target="_blank" href="https://markets.businessinsider.com/stocks/wfc-stock">Wells Fargo</a> have jumped since publishing better-than-expected earnings reports last week. Since Friday's open, these banks are up 3.8% and 8.8%, respectively.Despite this, the market's appetite for financials hasn't yet materialized, Wilson found. But this isn't just limited to bank stocks — investors are also passing up on other cyclical sectors, concentrating exposure in defensive and quality names.Utilities, healthcare, and real estate — which are defensive plays — are among four sectors with the highest net exposure.According to Wilson, this shows that investors are still positioning themselves for a soft-growth scenario, which seems less likely given in light of recent macroeconomic trends.Though Morgan Stanley moved to neutral on cyclicals versus defensives late last month, it upgraded cyclicals to overweight last week after September's <a target="_blank" href="https://www.businessinsider.com/september-jobs-report-unemployment-rate-nonfarm-payroll-growth-federal-reserve-2024-10">jobs report surged past Wall Street forecasts</a>."As several key macro data points have come in better than expected (namely the jobs report and the ISM Services Index) following the Fed's 50bp rate cut, cyclicals have begun to show relative strength," Wilson said.At the same time, rates market yields are moving higher, indicating that growth concerns are falling.According to the note, cyclicals such as industrials, financials, and energy move up when yields rise, whereas defensive stocks are negatively correlated to higher rates.

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