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<keyword id="20154" type="General" weightage="100" keywordseo="tamil-nadu" source="Orion">Tamil Nadu</keyword> Health Minister <keyword id="344917" type="General" weightage="50" keywordseo="ma-subramanian" source="Orion">Ma Subramanian</keyword> inspected the mass fever camp on Friday organised in the <keyword id="6361743" type="General" weightage="50" keywordseo="saidapet" source="Orion">Saidapet</keyword> area in Chennai. Chennai Mayor <keyword id="3346795" type="General" weightage="50" keywordseo="priya-rajan" source="Orion">Priya Rajan</keyword> also joined the Health Minister in inspecting the camps. "About 1000 fever camps have been set up all over Tamil Nadu of which 200 fever camps are in Chennai," Health Minister said. Recently, H3N2 virus fever broke out across the country sparking concerns. The Indian Council of Medical Research (ICMR) in a statement asked the administrations all over to comply with the safety protocols and take necessary precautions. People have been instructed to wear masks and maintain proper hygiene to avoid the virus infection. "Apart from the fever camps, about 11,333 public health centres in the state have been instructed to conduct frequent fever check-ups," said the minister in the statement. "We have adequate medicines for the fever. As of now, there are no severe cases and there is no need to panic." The Health Minister added, "According to ICMR, we have to be cautious with H3N2 virus spread like we were during the Covid Pandemic. People with fever symptoms should isolate themselves as per ICMR guidelines to prevent spread." Reportedly, corona cases have also been increasing in Tamil Nadu and also India, in general. "RTPCR tests are done and the number of tests has been increased. There were only 2 cases last month but now it's 20 to 25 cases in Tamil Nadu and we are preparing to curtail it," assured the Health Minister. Health Minister also said, "As of now it's not a community spread of H3N2 virus in Tamil Nadu. We are taking precautions to make sure it does not spread rapidly and turn into a community spread. I appeal to the people of Tamil Nadu to avoid going to public places if they identify themselves with the symptoms and immediately inform the authorities." According to the administration, the mega fever camps will continue their operations on Saturday, Sunday and also in the coming days in the state. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/science/health/news/long-covid-much-less-likely-after-omicron-infection-study/articleshow/98539407.cms">Long Covid much less likely after Omicron infection: Study</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/karnataka-records-its-first-h3n2-variant-death/articleshow/98539607.cms">Karnataka records its first H3N2 variant death</a>

H3N2 virus: Tamil Nadu sets up 1,000 mega fever camps

<ul><li>An unusual trend has emerged in the current <keyword id="198950" type="PERSON" weightage="60" keywordseo="earnings-season">earnings season</keyword> that hasn't been seen since the early-2000s tech bubble, <a href="https://markets.businessinsider.com/stocks/bac-stock">Bank of America</a> said in a Monday note.</li><li>Companies that beat both profit and revenue estimates are underperforming the most in history, while those missing expectations are outperforming the most in history, according to the bank's analysts.</li><li>The "perverse reactions" could be "a harbinger of a market dip" akin to that seen when the tech bubble burst, they added.</li><li>The lack of alpha could be tied to traders pricing in <keyword id="6357061" type="SPONSORED" weightage="60" keywordseo="earnings">earnings</keyword> and paying more attention to macro trends and the upcoming presidential election, the bank said.</li><li><a href="https://www.businessinsider.com/?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestutm_source=msn.com&amp;utm_medium=referral&amp;utm_content=msn-slideshow&amp;utm_campaign=bodyurl?utm_source=markets&amp;utm_medium=ingestts&amp;utm_medium=ingest">Visit the Business Insider homepage for more stories</a>.</li></ul>Public companies are posting unusually strong quarterly figures, but the market's reaction has been far from consistent.Roughly 37% of <a href="https://markets.businessinsider.com/index/s&amp;p_500_500">S&amp;P 500</a> firms have reported third-quarter earnings so far, with another 40% set to report this week. Nearly seven-in-10 companies have beaten expectations for both revenue and profit, handily exceeding the 40% average share, according to <a href="https://markets.businessinsider.com/stocks/bac-stock">Bank of America</a> data. The figure also represents the strongest second-week earnings performance in data going back to late 2011.Yet the market has been rife with "perverse reactions" to the largely encouraging reports, the bank's analysts said. Earnings beats this season have underperformed the S&amp;P 500 by 0.05 percentage points, the worst in history. Conversely, earnings misses are, on average, outperforming by 0.6 percentage points, the highest in history.The reactions "smack of the tech bubble," the only other period with a similar degree of awkward post-earnings price swings, the team led by <keyword id="1736779" type="PERSON" weightage="60" keywordseo="Savita-Subramanian">Savita Subramanian</keyword> said. The market famously slumped after the unconventional earnings season, suggesting today's trend may be a "harbinger of a market dip," they added.Read more: <a href="https://www.businessinsider.com/stock-market-strategy-blue-wave-stock-pickers-market-value-growth-2020-10">A fund manager overseeing $34 billion says a Biden-led blue wave will jolt the US economy out of stagnant growth. He pinpoints the 3 sectors investors should target as stock-picking conditions ripen</a>The analysts peg the atypical reactions to most earnings news already being priced in. Alpha from beats sits at 63%, signaling that macroeconomic factors and the upcoming presidential election overshadowed better-than-expected earnings, according to <keyword id="6374849" type="UNKNOWN" weightage="60" keywordseo="bank-of-america">Bank of America</keyword>.Macro trends aside, companies guided for an extraordinarily encouraging end of the year. Bank of America's three-month guidance ratio, which tracks bullish versus bearish forecasts, climbed to a record 3.8x through the week. Its three-month earnings revision ratio leaped to its highest level since 2018. The share of above-consensus guidance reached its highest point in a decade, a stark reversal from recent quarters' lack of formal estimates.This week is set to shift earnings reactions into a higher gear, with growth giants including <a href="https://markets.businessinsider.com/stocks/aapl-stock">Apple</a>, <a href="https://markets.businessinsider.com/stocks/amzn-stock">Amazon</a>, and <a href="https://markets.businessinsider.com/stocks/fb-stock">Facebook</a> all set to report. With mega-cap tech stocks holding a disproportionate weighting in major indexes, any misstep can add volatility to an already choppy pre-election trading week.Now read more <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword> coverage from Markets Insider and Business Insider:<a href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-capital-gains-tax-temporary-hurdle-biden-goldman-2020-10-1029721773">A capital-gains tax hike would only temporarily slow the stock market's rally, Goldman Sachs says</a><a href="https://markets.businessinsider.com/news/stocks/ant-group-ipo-billion-largest-ever-jack-ma-alibaba-raise-2020-10-1029721033">Jack Ma's Ant Group aims to raise $34.5 billion in largest IPO of all time</a><a href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-capital-gains-tax-temporary-hurdle-biden-goldman-2020-10-1029721773"></a><a href="https://www.businessinsider.com/stock-picks-to-buy-13-coronavirus-vaccine-bullish-options-strategies-2020-10">GOLDMAN SACHS: Buy these 13 unloved vaccine stocks that have the potential to spike on positive treatment updates</a>

Earnings season is repeating a tech-bubble trend filled with counterintuitive market reactions, Bank of America says

<ul><li><a href="https://markets.businessinsider.com/stocks/bac-stock">Bank of America</a> recommends <keyword id="603652" type="PERSON" weightage="60" keywordseo="value-stocks">value stocks</keyword> over growth names as major indexes breach record highs, but warns that <keyword id="2544801" type="PERSON" weightage="60" keywordseo="value-traps">value traps</keyword> could damage investors' portfolios.</li><li>Value traps are stocks that seem inexpensive but are more likely to continue falling than stage a comeback.</li><li><keyword id="6374849" type="UNKNOWN" weightage="60" keywordseo="bank-of-america">Bank of America</keyword> searched for stocks with relative prices falling faster than their earnings, and found that real estate investment trust, telecom, and multi-utilities stocks screen as value traps.</li><li>Investors should pick high-quality names with strong price momentum and fundamentals within the value space, the bank's analysts said.</li><li><a href="https://www.businessinsider.com/?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestutm_source=msn.com&amp;utm_medium=referral&amp;utm_content=msn-slideshow&amp;utm_campaign=bodyurl?utm_source=markets&amp;utm_medium=ingestts&amp;utm_medium=ingest">Visit the Business Insider homepage for more stories</a>.</li></ul><a href="https://markets.businessinsider.com/stocks/bac-stock">Bank of America's</a> analysts prefer holding value stocks over more expensive growth names, but see a handful of traps dotting the investing landscape.Several gauges used by the bank identify the <keyword id="6357440" type="DEFINITION" weightage="60" keywordseo="Stock-Market">stock market</keyword> as extraordinarily expensive. For one, the S&amp;P 500 sits at record highs roughly five months after bottoming out on virus fears, despite the pandemic's economic damage still looming.Stretched valuations across the market's darlings leave the best opportunities in value picks, the team led by <keyword id="1736779" type="PERSON" weightage="60" keywordseo="Savita-Subramanian">Savita Subramanian</keyword> said in a Tuesday note. However, certain inexpensive stocks pose a major threat to investors and should be avoided at current levels, they added.The bank screened for companies and sectors that are inexpensive because relative prices are declining faster than their earnings. Though such stocks may seem like appealing buys at first, the analysts warn that their earnings deterioration can continue and leave investors with a rapidly depreciating asset.Read more: <a href="https://www.businessinsider.com/stock-picks-hedge-funds-favorites-beating-market-investing-ideas-goldman-2020-8">GOLDMAN SACHS: The stocks most loved by hedge funds have smashed the market this year. Here are 15 that those investors flooded into last quarter.</a>Some sectors are fraught with traps specifically due to possible de-rating on pandemic-related risks, the team said, including real estate investment trusts. Others, such as telecom and multi-utilities stocks, have simply underperformed the broader market for too long, and generally need an external booster to drive shares out of their downward spiral. The firm named <a href="https://markets.businessinsider.com/stocks/key-stock">KeyCorp</a>, <a href="https://markets.businessinsider.com/stocks/pru-stock">Prudential</a>, <a href="https://markets.businessinsider.com/stocks/unm-stock">Unum</a>, and <a href="https://markets.businessinsider.com/stocks/well-stock">Welltower</a> as just some of the value traps to be wary of due to below-median forward earnings, revision trends, and price momentum.An easy way to separate the traps from the healthy picks is by screening for market quality, the analysts said. Traditionally cyclical sectors including autos, metals and mining, and semiconductors present strong value opportunities, the bank said, as their fundamentals and price momentum set them up for gains down the road.Some of the bank's recommendations for "quality value" stocks include <a href="https://markets.businessinsider.com/stocks/msft-stock">Microsoft</a>, <a href="https://markets.businessinsider.com/stocks/lnt-stock">Alliant</a>, <a href="https://markets.businessinsider.com/stocks/csco-stock">Cisco</a>, and <a href="https://markets.businessinsider.com/stocks/avgo-stock">Broadcom</a>.Now read more <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword> coverage from Markets Insider and Business Insider:<a href="https://markets.businessinsider.com/news/stocks/new-home-sales-highest-years-housing-market-low-mortgage-rates-2020-8-1029532994">New home sales leap to highest in nearly 14 years as market thrives on low mortgage rates</a><a href="https://www.businessinsider.com/investing-advice-portfolio-strategy-changes-post-covid-world-blackrock-2020-8"></a><a href="https://markets.businessinsider.com/news/stocks/ant-group-ipo-jack-ma-files-record-deal-market-debut-2020-8-1029531900">Jack Ma's Ant Group files for IPO, which could reportedly be the biggest ever</a><a href="https://www.businessinsider.com/investing-advice-portfolio-strategy-changes-post-covid-world-blackrock-2020-8">BlackRock unpacks the 4 biggest changes it has made to portfolios since the crisis began 6 months ago — and shares how it's positioning to thrive in a post-COVID world</a>

Beware the 'value traps': Bank of America details red flags to watch for when hunting down cheap stocks

Happy Friday eve, readers. I'm Phil Rosen, reporting from New York. A lot's been happening on Capitol Hill this week. Fed Chairman Jerome Powell testified before the House, central bank nominees are talking to the Senate, and the Washington Wizards traded away their star hooper. I'll leave it to you to read up on that last one, but below are the takeaways from Wednesday's Fed comments and how markets have responded.<a href="https://www.businessinsider.com/inflation-cpi-data-fed-decision-good-week-for-the-economy-2023-6"></a>1. Powell spoke before the House Financial Services Committee yesterday following 10 consecutive interest rate hikes and one rate "skip" that the Fed chief made sure to clarify wasn't a "pause."He told lawmakers that the central bank remains "very far" from its 2% inflation target and is likely to raise interest rates further in the coming months, adding that the June respite was to give his colleagues more time to <a href="https://www.businessinsider.com/inflation-cpi-data-fed-decision-good-week-for-the-economy-2023-6">assess economic data</a>."Given how far we've come, it may make sense to move rates higher but to do so at a more moderate pace," Powell said Wednesday.To be sure, consumer inflation has slowed substantially from last year's peak of around 9%.But the latest CPI reading of 4% is still too hot for the Fed, and the central bank's preferred inflation gauge is even higher at 4.7%.Remember, the balance here is to raise borrowing costs to <a href="https://www.businessinsider.com/inflation-cpi-data-fed-decision-good-week-for-the-economy-2023-6">slow the economy down</a> enough to cool inflation, but not so much that growth turns negative and a recession hits.So far, the economy has been more resilient than expected, even as the fed funds rate hovers in the 5% to 5.25% range. Spending and inflation haven't quite eased as much as anticipated, and that's left some Fed officials <a href="https://www.businessinsider.com/inflation-cpi-data-fed-decision-good-week-for-the-economy-2023-6">penciling in a few more hikes</a> for 2023, projections show.Patrick McHenry, chairman of the Financial Services Committee, questioned whether a rate "skip" was contradictory to forecasts for higher rates. Powell effectively said no, but in Fed-speak:"Those two things are entirely consistent. The level to which we raise rates is a separate question from the speed of which we move."Powell noted that his team would make decisions "meeting by meeting," and stick to data-dependent moves."We have been seeing the effects of our policy tightening on demand in <a href="https://www.businessinsider.com/inflation-cpi-data-fed-decision-good-week-for-the-economy-2023-6">the most interest-rate-sensitive sectors</a> of the economy," he said. "It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation."All indications suggest the stock market doesn't like the sound of more rate hikes. Stocks have entered a mini-slump since last week, after massive rallies for a handful of names.The S&amp;P 500 is on a <a href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp500-recession-forecast-probability-hedging-downside-protection-2023-6">three-day losing streak</a>, and recent winners like Tesla, Nvidia, and Apple all slid Wednesday. Goldman Sachs strategists wrote in a note this week that there's still a good chance of upside ahead for the key index, but advised investors to consider <a href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp500-recession-forecast-probability-hedging-downside-protection-2023-6">hedging for a potential recession</a>.The firm gives about a one-in-four shot of an economic downturn, and that could <a href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp500-recession-forecast-probability-hedging-downside-protection-2023-6">drag the S&amp;P 500 down as much as 23%</a>, in their view. What's your reaction to Powell forecasting more interest rate hikes? Tweet me (<a href="https://twitter.com/philrosenn" target="_blank" rel="noopener">@philrosenn</a>) or email me (prosen@insider.com) to let me know.In other news:<a href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-rolling-recession-recovery-limited-downside-ed-yardeni-2023-6"></a><div type="image" title="NYSE" height="561" width="1123" msid="101190723" hostid="261" sizebytes="61084"></div>2. US stock futures fall early Thursday, after Federal Reserve Chair Jerome Powell said more rate hikes are likely ahead. <a href="https://markets.businessinsider.com/premarket?nr_email_referer=1&amp;utm_source=Sailthru&amp;utm_medium=email&amp;utm_content=Opening_bell&amp;utm_campaign=Post%20Blast%20%20:%20The%20stock%20market%20is%20going%20to%20be%20trading%20flat%20as%20long%20as%20risk-free%20assets%20offer%20much%20more%20yield&amp;utm_term=10%20THINGS%20BEFORE%20THE%20OPENING%20BELL%20SEND%20LIST">Check out the latest market moves</a>.3. Earnings on deck: Accenture, Volex, and more, all <a href="https://markets.businessinsider.com/earnings-calendar">reporting</a>.4. Bank of America warned that the classic 60/40 portfolio strategy is on its deathbed. The firm said it's time to ditch the time-tested allocation before a "lost decade" of returns arrives. <a href="https://www.businessinsider.com/how-to-invest-stocks-bonds-portfolio-strategy-bank-of-america-2023-6">Strategists instead recommended pivoting to these 11 investments</a>. 5. A rolling recession in the economy is turning into a rolling recovery. And to market strategist Ed Yardeni, he thinks that should help limit pain in the stock market: "Stocks may be due for a technical correction, but <a href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-rolling-recession-recovery-limited-downside-ed-yardeni-2023-6">the underlying economic fundamentals should limit any downside move."</a>6. The housing market is so tight that home prices are 44% higher than before the pandemic. Between low inventory and high mortgage rates, buyers are facing a historic lack of affordability. <a href="https://markets.businessinsider.com/news/stocks/housing-market-home-prices-inventory-pandemic-mortgage-rates-fed-property-2023-6">Full details</a>.7. AI isn't just a tech story. It's a long-term theme that will see investments across every industry, according to BofA's Savita Subramanian. <a href="https://markets.businessinsider.com/news/stocks/bank-of-america-ai-artificial-intelligence-mega-cap-tech-stocks-2023-6">The bubble-like rally in tech isn't rational, but it could have a long tail.</a>8. This ex-police officer made $12 million in three years buying ATMs. He purchased each one for between $1,800 to $2,200 and operated them as a side hustle. <a href="https://www.businessinsider.com/how-police-officer-made-millions-with-atm-side-hustle-2023-5">The first six he bought generated cash flow of around $3,000 a month</a>.9. Strategists say investors should ride this market rally to new all-time highs. Stocks have caught fire in the last few months, and there's reason to believe they still have room to run. <a href="https://www.businessinsider.com/how-to-invest-stock-market-rally-investing-strategy-outlook-predictions-2023-6">These 10 trades can help you profit from future upside</a>.<a href="https://markets.businessinsider.com/news/stocks/apple-3-trillion-valuation-safety-play-tech-stocks-investing-analysis-2023-6"></a><div type="image" title="Apple share price on June 22, 2023" height="1052" width="1130" msid="101190726" hostid="261" sizebytes="45952"></div>10. This chief investment officer said Apple isn't actually worth its massive, near-$3 trillion valuation. The iPhone maker's shares have climbed more than 40% this year, but that could simply be because it's a safety play for investors. <a href="https://markets.businessinsider.com/news/stocks/apple-3-trillion-valuation-safety-play-tech-stocks-investing-analysis-2023-6">Read more</a>.Curated by Phil Rosen in New York. Feedback or tips? Tweet <a href="https://twitter.com/philrosenn" target="_blank" rel="noopener">@philrosenn</a> or email <a href="mailto:prosen@insider.com" target="_blank" rel="noopener">prosen@insider.com</a>.Edited by Jason Ma in Los Angeles and Hallam Bullock (<a href="https://twitter.com/hallam_bullock" target="_blank" rel="noopener">@hallam_bullock</a>) and Nathan Rennolds (<a href="https://twitter.com/ncrennolds?lang=en" target="_blank" rel="noopener">@ncrennolds</a>) in London.

Jerome Powell says the Fed is still 'very far' on inflation

<div class="KonaFilter image-container display-table"><div><div class="image on-image">Reuters / Lucas Jackson</div></div></div><ul><li>Bank of America breaks down what could be the most effective use of the additional capital that corporations get from the GOP tax plan.</li><li>The firm says that mergers and acquisitions is an ideal use, and could hit a record in 2018, while downplaying the positive effect of share buybacks and capital expenditures.</li></ul> At this point, everyone knows that the <a href="http://www.businessinsider.com/category/tax-cuts-and-jobs-act" target="_blank" rel="noopener">GOP tax plan</a> is going to give corporations a huge windfall of cash to use. The real question now is how they'll use that money.The equity strategy team at Bank of America Merrill Lynch boosted its 2018 <a href="http://www.businessinsider.com/category/earnings-growth" target="_blank" rel="noopener">profit growth</a> forecast by 10% in anticipation of this influx of capital, and it has a few ideas about what might be the best use for it. And interestingly enough, BAML's recommendation doesn't match up with what many amateur observers expect.One of the most popular - and controversial - expected uses of tax proceeds is the practice of companies buying back their own shares. It's a method that can spur stock price appreciation by simply reducing the number of shares outstanding, but it's also something many skeptics have criticized for failing to boost the <a href="http://www.businessinsider.com/category/economy" target="_blank" rel="noopener">economy</a>.In BAML's mind, that debate is beside the point. They note in the chart below that buybacks haven't been helping shares to the degree they once did. In fact, the cumulative relative performance of the companies that repurchase the most stock has declined since November 2013.<div class="KonaFilter image-container display-table"><div><div class="image on-image">Bank of America Merrill Lynch</div></div></div>OK, but what if those companies reinvested that money into their core businesses? It's another option being bandied about by speculators, but BAML warns that it too could underwhelm in the end.Also known as capital expenditures (capex), this practice of reinvestment is one favored by investors. BAML conducted a survey asking fund managers what they'd most like to see, and found capex spending to be the resounding winner.<div class="KonaFilter image-container display-table"><div><div class="image on-image">Bank of America Merrill Lynch</div></div></div>But BAML is quick to point out that this sentiment may be misguided. The firm finds that, since 1986, the companies with the highest ratio of capex to sales have underperformed the market by 2.2 percentage points per year."Investors have been clamoring for capex for the past five years, but companies tend to build when accelerating demand butts up against capacity constraints," Savita Subramanian, BAML's head of US equity and derivatives strategy, wrote in a client note. "Capex has more to do with growth, capacity and credit than it does tax policy."That all leads BAML to identify what it thinks will be the best use of tax reform proceeds: <a href="http://www.businessinsider.com/category/ma" target="_blank" rel="noopener">M&amp;A</a>. Its stance stems from what they describe as "disruptive forces" that will force large companies to consolidate. That consolidation will also be driven by an ongoing cyclical recovery that isn't anywhere near finished, at least from a sales concentration standpoint, the firm says.So how strong will M&amp;A be in 2018? BAML says it could reach record-breaking levels."A strong bull market, accelerating GDP growth and rising confidence have historically suggested strong and improving M&amp;A trends," said Subramanian. "This may be especially true with the spread between return on capital and the cost of capital at a record high for the S&amp;P 500."Get the latest Bank of America stock price<a href="http://markets.businessinsider.com/stock/BAC-Quote"> here.</a> <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/lebron-james-eats-diet-workout-routine-2017-6">Here's how LeBron James stays in incredible shape</a></h3> <div> </div> </div>

BANK OF AMERICA: Tax cuts could lead to record mega-mergers

<div class="KonaFilter image-container display-table"><div><div class="image on-image"><a href="https://www.flickr.com/photos/rdecom/6990221148">U.S. Army RDECOM / Flickr</a></div></div></div><ul><li>Out of all the most appealing areas of the US stock market, Bank of America Merrill Lynch identifies biotech as the No. 1 option.</li><li>The firm likes biotech's ideal combination of relatively cheap valuation, high expected growth and considerable upside potential.</li></ul> Right now, it seems like there's opportunity in the stock market no matter where you look.Tech companies are surging to yet another series of record highs following <a href="http://www.businessinsider.com/amazon-stock-price-3q-earnings-call-options-2017-10" target="_blank" rel="noopener noreferrer">blockbuster earnings</a> reports for many of the sector's mega-cap titans. Wall Street strategists are getting more <a href="http://www.businessinsider.com/earnings-season-wall-street-banks-bullish-for-different-reasons-2017-10" target="_blank" rel="noopener noreferrer">bullish on banks</a> as rate hikes loom. And that's not to mention the stocks set to <a href="http://www.businessinsider.com/trump-tax-reform-plan-wall-street-reaction-2017-9" target="_blank" rel="noopener noreferrer">benefit most from tax reform</a>.But Bank of America Merrill Lynch sees one industry standing above them all: <a href="http://markets.businessinsider.com/etfs/iShares-Nasdaq-Biotechnology-ETF" target="_blank" rel="noopener noreferrer">biotech</a>.To them, drug developers offer an ideal combination of attractive pricing and upside growth - unlike their tech stock counterparts, which are sitting near the most expensive on record. BAML also likes the upside offered by biotech based on how traders are currently positioned on the sector, especially when compared to the crowded tech trade.Back in late September, BAML head US equity strategist Savita Subramanian wrote the following about drug developers: "Biotech trades at one of the biggest discounts to history of all industries, suggesting over 40% implied upside if its relative P/E reverted back to its long-term average."An update of that analysis shows that biotech now has an implied potential upside of 42%.Here's a list of BAML's best sector opportunities:<div class="KonaFilter image-container display-table"><div><div class="image on-image">Bank of America Merrill LynchBiotech is the best opportunity in the stock market, says BAML.</div></div></div>Another area of the stock market that BAML highlighted in a recent client note is consumer staples. While the firm still only has the equivalent of a neutral rating on the space, it notes that it's trading at the most attractive valuation in 6 1/2 years."Today, staples now looks cheap versus history," Subramanian wrote in a client note on Monday. "Coupled with its earnings resiliency during downturns, staples is currently our preferred defensive sector after our overweight healthcare."<div class="KonaFilter image-container display-table"><div><div class="image on-image">Bank of America Merrill Lynch</div></div></div>Get the latest Bank of America stock price<a href="http://markets.businessinsider.com/stock/BAC-Quote"> here.</a> <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/jack-ma-alibaba-sings-hits-at-chinese-music-festival-2017-10">Watch billionaire Jack Ma sing his heart out during a surprise performance at a music festival</a></h3> <div> </div> </div>

BANK OF AMERICA: There's one area of the stock market that stands above the rest

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div></div></div>Morgan Stanley's Adam Parker expects more gains for stocks in 2015.
"We head into 2015 bullish for the 3rd straight year," Parker wrote in Morgan Stanley's new 2015 Global Strategy Outlook report. "Our 12-month forward target for year-end 2015 is 2275, offering about 10% upside to today's price, based on 7% earnings growth in 2015 and 2016 and modest further multiple expansion to near 17x forward earnings."
Parker's expectation for more multiple expansion (that is the ratio of stock price-to-earnings) flies in the face of of the bears who warn the already elevated multiples will contract bringing stock prices down with them. Indeed, you could actually argue he's going against <a href="http://www.businessinsider.com/morgan-stanley-raises-2013-sp500-target-2013-3">his old self</a>: after misforecasting the multiple back in 2012 he wrote, "<a href="http://www.businessinsider.com/jp-morgans-tom-lee-2012-2012-12">Only the hubristic deign to project the market multiple.</a>"
You could say Parker and his colleagues are actively trolling the bears with the title of their note: "<a href="https://twitter.com/bySamRo/status/539158891666636800/photo/1">Equities: It Ain't A Bubble Yet</a>." Here's more color from his note:
Multiple higher? The core of our thesis is that we are in the middle of a long US expansion, one that may last until 2020. Economic factors like consumer confidence, financial obligations, and delinquencies are all improving and the consumer may be more insulated than investors think from a back-up in yields, given 75% of their financial obligations are in the form of a mortgage, close to 90% of all mortgages are 30-year fixed, and the average mortgage is termed out at the lowest rate ever. Corporate behavior may also favor a long expansion. Capital spending remains constrained, inventory levels look under control, hiring remains muted, and M&amp;A is still nascent. Furthermore, credit metrics generally look benign. Financial obligations have been pushed out several years, and the interest-bearing portion of today's loans looks quite manageable given high interest coverage. Taking these factors into account, we generally think it pays to remain sanguine.
That's a pretty encouraging framework, and all of it fits into his ongoing thesis that the <a href="http://www.businessinsider.com/morgan-stanley-sp-500-3000-2014-9">S&amp;P 500 could hit 3,000 by 2020</a> before topping out.
For some context, here's a look at the forward earnings multiple Parker believes could go higher. Via <a href="http://www.factset.com/insight">Factset</a>.
<div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image"><a title_source="FactSet" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/547b87daeab8ea261d0a0dcc-960/screen shot 2014-11-30 at 4.07.22 pm.png"></a><a href="http://www.factset.com/insight">FactSet</a></div></div></div>
With that 2,275 target, Parker becomes the <a href="http://www.businessinsider.com/wall-street-2015-expectations-nov-27-2014-11">second most bullish Wall Street strategist</a> followed by Business Insider. Below are some of the other calls.
<ul>
<li>Credit Suisse's Andrew Garthwaite: 2,100</li>
<li><a href="http://www.businessinsider.com/goldman-sachs-2015-sp-500-target-2100-2014-11">Goldman Sachs' David Kostin</a>: 2,100</li>
<li><a href="http://www.businessinsider.com/barclays-2015-global-equity-outlook-2014-11">Barclays' Jonathan Glionna</a>: 2,100</li>
<li><a href="http://www.businessinsider.com/deutsch-bank-raises-sp-500-target-2014-9">Deutsche Bank's David Bianco:</a> 2,150</li>
<li><a href="http://www.businessinsider.com/citi-asia-clients-bullish-on-us-stocks-2014-11">Citi's Tobias Levkovich:</a> 2,200</li>
<li><a href="http://www.businessinsider.com/bank-of-america-2015-sp-500-forecast-2200-2014-11">Bank of America Merrill Lynch's Savita Subramanian</a>: 2,200</li>
<li><a href="http://www.businessinsider.com/ubs-2015-sp-500-forecast-2014-11">UBS's Julian Emanuel</a>: 2,225</li>
<li><a href="http://www.businessinsider.com/oppenheimer-2015-sp-500-outllook-2014-11">Oppenheimer's John Stoltzfus</a>: 2,311</li>
</ul>
It's worth noting that Parker isn't blind to the risks out there. 
"Besides the appearance of signs of late-cycle behavior, the biggest risk in our view to the US market outlook is a slowdown in the US economy," he writes. "A run of bad data on jobs or ISM surveys would leave us dealing with less liquidity (post tapering) and less growth, likely instilling some incremental fear of an earnings plateau or decline."
This is on top of uncertainty regarding how the Federal Reserve plans to execute tighter monetary policy.
Parker's bear-case scenario sees the S&amp;P 500 dropping 17% to 1,700.

MORGAN STANLEY: Stocks 'Ain't A Bubble Yet'

As India’s new Finance Minister, <keyword id="42575" type="PERSON" weightage="60" keywordseo="Arun-Jaitley">Arun Jaitley</keyword>, took the oath of office administered by President Pranab Mukherjee, one wonders if the thought crossed his mind that one of the major problems he would be facing soon is the taxmen’s battles with foreign firms – a legacy handed down by the current President when he held the finance job. 
 <keyword id="15492" type="CITY" weightage="100" keywordseo="Vodafone">Vodafone</keyword>, IBM, Nokia and Shell are just some of the foreign majors embroiled in disputes with the Indian tax authorities. The sums involved are mindboggling –Vodafone is supposed to owe in the region of Rs 20,000 crore; Nokia has been hit with a Rs 2,400 crore tax claim; IBM has Rs 6,857 crore outstanding tax notice against it and Shell has been told it needs to pay an additional Rs 5,000 crore in taxes. 
 
Corporate chieftains around the globe, who might have been thinking about investing in the country, were made to rethink. There have been other consequences and Singapore finally overtook Mauritius as the preferred destination for foreign investors to route their money through, because the former provides better legal protection in cases involving foreign tax liabilities. 
 
For many observers, the genesis of these tax wars is the Vodafone dispute. When the Supreme Court decided in favour of the telecom major on whether it owed taxes to the Indian exchequer over its acquisition of the Indian operations of Hong Kong-based Hutchison Whampoa, the then Finance Minister Pranab Mukherjee went to the unprecedented extent of revising the tax laws to introduce a retrospective liability. 
This, at a time, when India’s most important selling pitch against its ‘bigger and better’ rival China was that the rule of law and the independence of the judiciary system prevailed in the country unlike the wheeling and dealing that happened behind the bamboo curtain in China. 
 Fast forward a few years and you found India’s economy in the doldrums – recording sub-5% <keyword id="35050" type="CITY" weightage="80" keywordseo="gdp">GDP</keyword> growth. The long-term consequences of India’s tax adventurism are certainly being felt even now. The new BJP government has two courses it can pursue. One is to introduce more clarity and transparency in laws governing areas like transfer pricing and M&amp;A, which typically bedevil foreign investments. The other is to speed up the arbitration proceedings in cases like Vodafone, which got completely tangled up in the previous government’s larger dysfunction. 
 
Unfortunately, once the precedent has been set and it has been proved that the Indian government can go to the extent of changing laws retrospectively to get its way, it could be extremely difficult to convince investors that similar instances will not take place in the future. And the same applies for the industries, especially when laws like the Land Acquisition Act was pushed through by the UPA government. It is obvious that the Pandora’s Box can easily open if governments have an agenda to pursue. 
 
Meanwhile, Prime Minister Narendra Modi inherits a fragile fiscal situation and he will have to consult with Jaitley (the latter has to present the new Budget) whether making major tax concessions is possible in the present state of government finances. 
 As the BJP must have found out during its poll campaign, it is easier to make ambitious promises in the heat of the battle, like its proposal to abolish <keyword id="6354751" type="COMPANY" weightage="100" keywordseo="Income-Tax">income tax</keyword>, than implement them when the time arrives. 
 
Maverick leaders of the BJP, such as Subramanian Swamy, who went to town against the UPA’s tax terrorism, do not find a place in the new government. Instead, Jaitley’s background as a high profile lawyer might provide just the skills he needs as he tries to untangle the legal wrangles that the policies of the previous regime has left for him to deal with. 
Image: Thinkstock

Taxes
That Could Hinder India’s Growth Story

In 2014, Wall Street's stock market forecasts <a href="http://www.businessinsider.com/strategists-2014-sp-500-targets-2014-1">proved too conservative</a>.&#xa0;
The S&amp;P 500 closed the year at 2,058, above the year-end forecast of all but one strategist - FundStrat's Tom Lee.&#xa0;
For 2015, Wall Street sees stocks gaining some ground, but few strategists are calling for the fourth straight year of double-digit gains from stocks.&#xa0;
The average year-end target on the S&amp;P 500 is 2,225 on earnings of $125.35, with the median forecast for the S&amp;P 500 to rise to 2,213 on earnings of $126.
Tom Lee is a big bull again, as is Oppenheimer's John Stoltzfus and RBC's Jonathan Golub, while David Kostin at Goldman Sachs is a bit more cautious.
Here are the outlooks, ranked from lowest to highest:
<a href="http://www.businessinsider.com/goldman-sachs-2015-sp-500-target-2100-2014-11">Goldman Sachs' David Kostin: S&amp;P 500: 2,100, EPS: $122.00</a>
"We forecast US stocks will deliver a modest total return of 5% in 2015, in line with profit growth.&#xa0;The US economy will expand at a brisk pace. Corporations will boost sales and keep margins elevated allowing managements to both invest for growth and return cash to shareholders via buybacks and dividends. Investors will cheer these positive fundamental developments." 
<a href="http://www.businessinsider.com/barclays-2015-global-equity-outlook-2014-11">Barclays' Jonathan Gilonna: S&amp;P 500: 2,100, EPS $127.00</a>
"We believe US equities are transitioning out of a recovery rally and into a period of lower returns as the benefits of margin expansion and share repurchases prove to be already priced in and a return of faster revenue growth becomes a prerequisite for another re-rating higher. We forecast the S&amp;P 500 to reach 2100 by the end of 2015. We expect faster earnings growth outside the US in 2015 and, with lower valuations and a looser policy stance, we prefer 'international' stocks over US stocks. One of the reasons this strategy did not work in 2014 was the heavy positioning toward overseas markets established during 2013 and early 2014. This appears much less extreme now and therefore likely to be less of a constraint on our view in 2015.
Credit Suisse's Andrew Garthwaite: S&amp;P 500&#xa0;2,100, EPS: $123.70
"We remain optimistic on equities for the first half of 2015 but fear a significant&#xa0;market correction in the second half. Consequently, our year-end forecast for the&#xa0;S&amp;P 500 is 2,100, below our mid-year target of 2,200.&#xa0;In 2015, central bank balance sheets are likely to expand at a more rapid rate than&#xa0;in 2014. This helps to support excess liquidity and equity valuations.&#xa0;We expect profit margins to peak toward the end of 2015 as labor regains pricing&#xa0;power and borrowing costs move higher. We are 4% below consensus for US EPS&#xa0;growth in 2015."
<a href="http://www.businessinsider.com/deutsch-bank-raises-sp-500-target-2014-9">Deutsche Bank's David Bianco: S&amp;P 500: 2,150, EPS: $123.00</a>
"We still expect a long lasting economic expansion of moderate growth, which should rival the US record of 10 years with S&amp;P EPS growth averaging 6% until the next recession, on 5% sales growth, flat margins, 1% share shrink," Bianco wrote. "Despite entering the latter years of a typical expansion and high margins vs. history, we now think the trailing S&amp;P PE should average 17 vs. 16 until elevated recession risk returns."<a href="http://www.businessinsider.com/deutsch-bank-raises-sp-500-target-2014-9"></a>
<a href="http://www.businessinsider.com/btigs-2015-sp-500-forecast-2200-2014-12">BTIG's Dan Greenhaus: S&amp;P 500: 2,200, EPS: $126.00</a>
"We believe the bias for stock prices in general remains to the upside, underpinned by a growing economy, low interest rates and increasingly, cheaper oil ...&#xa0;With operating margins at elevated levels, top line growth is poised to more quickly bleed through to the bottom line, thus supporting earnings." Recall that Greenhaus channeled Britney Spears' 2001 song "I'm Not a Girl, Not Yet a Woman" to express his thoughts on the market: "Not a bull, not yet a bear."
<a href="http://www.businessinsider.com/citi-asia-clients-bullish-on-us-stocks-2014-11">Citi's Tobias Levkovich: S&amp;P 500: 2,200, EPS: $127.50</a>
After heading to Asia for year-end client meetings, Levkovich wrote: "A 10% total return in the next 13-14 months was perceived as being too conservative by many even as our year-end target is in line with mean and median top-down forecasts ...&#xa0;Interestingly, several clients suggested that our outlook was far below the bullishness expressed by other even when our numbers are pretty much well within the Street's consensus."
<a href="http://www.businessinsider.com/bank-of-america-2015-sp-500-forecast-2200-2014-11">Bank of America Merrill Lynch's Savita Subramanian: S&amp;P 500: 2,200, EPS: $126.00</a>
"Stocks certainly look more attractive than bonds, but the case for stocks versus other asset classes is less clear ...&#xa0;"So while returns may compress from the outsized gains we have seen over the last several years, we remain constructive on equities.&#xa0;The bull market in stocks is not over, in our view." Subramanian also said that "big, old and ugly" stocks could be leaders in 2015 while investors might be better served leaving the "new, shiny, exciting IPOs alone." 
<a href="http://www.businessinsider.com/ubs-2015-sp-500-forecast-2014-11">UBS' Julian Emmanuel: S&amp;P 500: 2,225, EPS: $126.00</a>
"The S&amp;P 500 has risen 200% since the bull market began in March 2009 - not unprecedented by historical standards. Buoyed by strong corporate balance sheets positioned to drive further M&amp;A, the prospect of solid GDP anchoring steady earnings growth, and a Fed set to raise interest rates while mindful of incoming data, we expect the advancing tide to continue rolling. We forecast a 2015 year-end S&amp;P 500 price of 2,225 on the back of earnings growth and modest multiple expansion, typical in a maturing rally."
<a href="http://www.businessinsider.com/bmo-belskis-2015-sp-500-outlook-2014-12">BMO's Brian Belski: S&amp;P 500: 2,250, EPS: $126.00</a>
"Given the combination of improving economic conditions and rebounding earnings growth, we believe 2015 will represent another year of solid gains for US stocks. Our models suggest a year-end S&amp;P 500 price target of 2,250 on EPS of $126. ...&#xa0;[T]he average age of plant and equipment is at its highest levels in 50 and 15 years, respectively. The way we see it is that there is a tremendous amount of pent-up investment spending demand and ... we believe the next logical step for companies to improve growth prospects is to invest in their businesses."
<a href="http://www.businessinsider.com/morgan-stanley-2015-sp-500-target-2014-11">Morgan Stanley's Adam Parker: S&amp;P 500: 2,275, EPS: $126.10</a>
"We head into 2015 bullish for the 3rd straight year. Our 12-month forward target for year-end 2015 is 2275, offering about 10% upside to today's price, based on 7% earnings growth in 2015 and 2016 and modest further multiple expansion to near 17x forward earnings ...&#xa0;Multiple higher? The core of our thesis is that we are in the middle of a long US expansion, one that may last until 2020. Economic factors like consumer confidence, financial obligations, and delinquencies are all improving and the consumer may be more insulated than investors think from a back-up in yields, given 75% of their financial obligations are in the form of a mortgage, close to 90% of all mortgages are 30-year fixed, and the average mortgage is termed out at the lowest rate ever ... Taking these factors into account, we generally think it pays to remain sanguine."
<a href="http://www.businessinsider.com/oppenheimer-2015-sp-500-outllook-2014-11">Oppenheimer's John Stoltzfus: S&amp;P 500: 2,311, EPS: $126.00</a>
"We expect the market to reach our target level on a combination of: sustained economic growth, corporate revenue and earnings growth (on the back of US expansion and process of international recovery), as well as further multiple expansion justified by the continued relative attractiveness of US equities on valuation, dividends and buybacks." Stoltzfus added that investors in the current bull market are more worried about what can go wrong than at any point in the last 30 years. "It's no secret that 'animal spirits' and 'irrational exuberance' have been in measured if not short supply this bull market. We think that's really a good thing and likely to carry stocks higher toward our target in 2015."
<a href="http://www.businessinsider.com/rbc-golub-2015-sp-500-target-2014-12">RBC's Jonathan Golub: S&amp;P 500: 2,325, EPS: $130.00</a>
As Business Insider's Sam Ro wrote: "Golub believes 2015, as in 2014, will be highlighted by healthy US GDP growth, lackluster global growth with China and Japan getting worse, elevated profit margins, low volatility, and most multiple expansion, that is higher price/earnings (P/E) multiples.&#xa0;Golub believes corporate revenues will track GDP higher. But earnings growth will pick up as companies clamp down on selling, general, and administrative (SG&amp;A expenses)." Golub added, "Going forward, we believe that SG&amp;A will be the most important driver of margins as compensation grows at a slower pace than revenues. In our view, this should provide 1- 2% of upside per year."
<a href="http://www.businessinsider.com/fundstrat-tom-lee-2015-forecast-2014-12">FundStrat's Tom Lee: S&amp;P 500: 2,325, EPS: $129.00</a>
"The current bull market is not going to end simply because 'stocks have gone up too much' ...&#xa0;The buyside is fairly cautious, seeing downside stemming from: (i) deflationary pressures of the 40% year-over-year oil decline, deceleration in China, Eurozone weakness, and the&#xa0;<a href="http://www.businessinsider.com/inflation-expectations-are-still-falling-2014-11">fall in 5-year inflation breakevens</a>; and (ii) Fed&#xa0;<a href="http://www.businessinsider.com/janet-yellen-press-conference-december-17-2014-12">monetary tightening</a>&#xa0;...&#xa0;Capital stock is again showing signs of pent-up demand, and as a consequence, companies and households will have to invest. In other words,&#xa0;<a href="http://www.businessinsider.com/us-pent-up-demand-charts-2013-7">obsolescence is playing a role here</a>. Equipment needs to be replaced as it reaches the end of its useful life."

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