CHIEF INVESTMENT OFFICE

Capital Market Outlook

September 9, 2024

All data, projections and opinions are as of the date of this report and subject to change.

IN THIS ISSUE
MACRO STRATEGY 
Macro Strategy—Mixed Economic Data Reflect The Transition To The New Economy:
Incoming data have followed the recent pattern. Stronger-than-expected consumer spending. Irene L. Peters, CFA®
Recessionary manufacturing and housing readings. Normalizing labor-market conditions. Easing Director and Senior Macro Strategy Analyst
inflation. Surprises have also continued to tilt negative. With labor demand softening, the Federal
Reserve’s (Fed) focus has shifted from inflation to growth. Encouragingly, favorable disinflation MARKET VIEW 
trends give monetary policymakers the green light to start cutting interest rates in order to Joseph P. Quinlan
balance inflation and employment risks. While financial markets have become anxious to see the Managing Director and Head of CIO Market Strategy
Fed add punch back to the punchbowl, it is encouraging that the credit markets have remained Ariana Chiu
relatively calm, as this is inconsistent with panic over the economic and profits outlook. Wealth Management Analyst
From a longer-term perspective, we believe the data also reflects the economy’s transition to
an increasingly service-oriented, high-technology output mix, sharply accelerated by THOUGHT OF THE WEEK 
government policies and incentives. Kirsten Cabacungan
Market View—What Investors Still Don’t Get About the U.S. Economy: The U.S. Vice President and Investment Strategist
economy continues to confound investors to the upside because investors don’t realize just
how dynamic and diverse the U.S. economy actually is. The American economy isn’t a MARKETS IN REVIEW 
monolith—or a single entity. Rather, it is a $28 trillion hydra-headed behemoth that beats to
the tune of many different sectors often in different stages of the business cycle. To wit: While Data as of 9/9/2024,
more interest-rate sensitive sectors like housing and manufacturing have lagged this year, the and subject to change
offset has been healthy activity in travel and leisure, entertainment, and other service activities.
Capital expenditure (capex) spending on software, cloud computing and related activities has
soared over this decade. Consumer spending, meanwhile, has held up thanks to rising demand Portfolio Considerations
from high-income households, offsetting weak spending from lower-income households.
The U.S. economy is not a one-trick pony. Indeed, when it comes to economic diversity, In the next couple of months market
America’s heterogenous economic base stands in stark contrast to the rest of the world. That activity is likely to be more on edge,
is worth remembering as the markets and economy chop and churn through the volatility in our view. This is typical during
associated with a Fed pivot on monetary policy, political uncertainty about the November election years, whereas, historically,
election, and ever-present geopolitical risks. September and October have usually
Thought of the Week—A Shaky Start to September for Stocks: Recent market fragility been weak months. We would view
may have some investors on edge over what the next few months could bring. Indeed, this weakness as an opportunity to add to
time of year tends to be a more challenging period for U.S. Equity returns. September has Equities and diversify at the same
historically been the worst month during the year on average for the S&P 500 since 1950. time.
Even filtering for years with presidential elections or strong first half advances, history tells a
similar story of more lackluster Equity returns from the end of summer into fall. This month we adjusted our U.S.
Equity sector allocations by upgrading
The focus on weaker seasonality though eclipses the momentum building under the surface.
Not only did stocks recover from the early August selloff by the end of the month, but market Financials to slight overweight, and
breadth improved. Volatility could persist in the weeks ahead, especially as the election downgrading Industrials to neutral.
approaches. But as August taught us, any market turbulence will likely come up against We maintain an overweight to
powerful tailwinds that should continue to be a solid base for continued Equity strength. Equities, with a preference for higher
quality U.S. Large- and Small-caps,
and still favor a significant allocation
to bonds in a diversified portfolio.
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Investment products:
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Please see last page for important disclosure information. 6989374 9/2024
MACRO STRATEGY
Mixed Economic Data Reflect The Transition To The New Economy
Irene L. Peters, CFA®, Director and Senior Macro Strategy Analyst Investment Implications
Despite increased anxiety about the economic outlook, the pattern of incoming data has The Fed has room to ease policy
remained pretty much the same. Labor-market conditions are healthy though continuing to to prolong and broaden the current
normalize. Consumer spending is surprising to the upside as a result of full employment, expansion. This is favorable for the
healthy wage and salary growth, softening inflation, and a still-comfortable personal saving profits outlook and for risk
cushion (Exhibit 1). Housing remains in recession, its eventual recovery wholly dependent on
appetite.
lower interest rates. Manufacturing is muddling along in “mid-cycle” slowdown territory.
Exhibit 1: Personal Saving Still Elevated, But Normalizing Fast.

2024 dollars per month, annualized

$7,000
Personal saving per capita adjusted for inflation (4-year average)
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
1970 - Jan

1975 - Jan

1980 - Jan

1985 - Jan

1990 - Jan

1995 - Jan

2000 - Jan

2005 - Jan

2010 - Jan

2015 - Jan

2020-Jan
Sources: Bureau of Labor Statistics, Bureau of Economic Analysis (BEA)/Haver Analytics. Chief Investment Office. Data as of August 30, 2024.

Overall, because of its disproportionate size, stronger-than-expected consumer spending has

remained the most consequential for the growth trajectory. With consumer spending
resilient and the Fed on course to cut rates, growth and inflation data still appear consistent
with a “soft landing” in progress despite concerns to the contrary.
On the inflation front, the personal consumption expenditures (PCE) deflator for July
confirms the disinflation signals coming from the consumer price index (CPI), as well as from
surveys of inflation expectations and business pricing power. According to the BEA, PCE
inflation was 2.5% year over year in July. However, it eased sharply on a 3-month annualized
basis, from 4.5% in March to just 0.9%, suggesting the disinflation trend continues. “Core”
PCE inflation—an even better indicator of underlying inflation pressures—was also sharply
lower on a three-month annualized basis to just 1.7%. This suggests that inflation is within a
short distance of the Fed’s 2% target. Inflation is also normalizing globally.
At the same time, Q2 nominal gross domestic product (GDP) growth was revised up to a
5.5% annualized quarterly pace, according to the BEA. Year-over-year, it rose almost 6%,
creating a solid environment for wages, retail sales, and corporate revenue growth that has
precluded the emergence of broad debt-servicing pressures (i.e., increased credit market
stress). Both real GDP and real final sales to domestic purchasers (a better indicator of
underlying domestic demand) were revised up to show robust annualized quarterly gains of
nearly 3% in Q2.
As is typically the case, solid real GDP growth was driven by a sharp reacceleration in
consumer spending from +1.5% annualized in Q1 to +3% in Q2. What’s more, consumer
demand has remained much stronger-than-expected into Q3. According to the BEA, real
spending advanced at a red-hot 4.6% annualized monthly pace in July after rising 3.2% in
June. This sets up real consumer spending for 3% to 4% growth in Q3. Along with smaller,
but positive, contributions to growth expected from real business investment and
government spending, this points to continued healthy GDP performance through Q3 despite
ongoing manufacturing and housing sector recessions. The Atlanta Fed GDPNow currently
pencils in 2.1% real GDP growth in Q3.
Profits have remained strong as a result of robust GDP, consumer spending, and productivity
growth. They have also continued to be enhanced by ongoing beneficial effects on net

2 of 8 September 9, 2024 – Capital Market Outlook RETURN TO FIRST PAGE

interest payments from the Fed’s zero-interest rate pandemic policy. According to BEA data
for Q2, GDP-based corporate profits are at, or within whiskers of fresh highs, depending on
the measures. BofA Global Research indicators through August continue to indicate ongoing
expansion and profits growth.
Strong aggregate profits, combined with looser lending standards in Q3, as reported by the
Fed’s Senior Lending Officer Survey (SLOS), are favorable for credit conditions, business
investment, and labor demand. Fed easing would reinforce this environment, helping
rebalance growth and extend the expansion. Until then, however, all eyes will remain on
employment and consumer spending.
For now, still low unemployment, healthy nominal wages and salaries, slowing inflation, and
drawdowns from unusually large personal saving during the past four years continue to
argue for sustained consumer sector strength. As noted above, in spite of its large recent
decline, the saving rate is still elevated when averaged over the past four years, likely
augmenting consumer spending growth above and beyond that implied by softening real
gains in wages and salaries for a while.
Also positive, household debt-service burdens and leverage remain low, implying substantial
borrowing capacity. According to the SLOS survey, demand for consumer loans has
improved, and bank lending standards for consumer credit have eased sharply since the early
2023 regional bank crisis. Fed rate hikes tend to cause recessions through negative effects
on financial markets, and that crisis had the potential to cause a recession had it not been
for a prompt and successful Fed intervention. Greater access to credit is favorable for the
consumer spending and economic outlook. In addition, massive home-equity accumulation
may also be tapped as the Fed cuts rates and mortgage rates decline enough to provide
additional consumption wherewithal. Elevated profits and profit margins suggest ongoing
support for business investment and hiring.
All in all, until the effects of Fed rate hikes start to kick in, the economy remains highly
dependent on consumer spending. Fortunately, its outlook remains favorable, as lower
interest rates should help offset the drag on growth from normalizing saving. As is typically
the case, housing should be the first to benefit from Fed rate cuts, especially given rock-
bottom homeowner vacancy rates and pent-up remodeling needs, offering additional
positive offsets. Lower rates and an end to the destocking cycle should also add oomph to
U.S. and global manufacturing activity.
Still, structural changes make it unrealistic to expect manufacturing to increase much as a
share of the U.S. economy. They also help explain the diminished sensitivity of economic
growth to manufacturing conditions and high interest rates. Basically, the economy
continues to transition to an increasingly service-oriented and less capital-intensive output
mix. A shift toward high valued added, high-technology production activity at the expense of
other industrial production is under way, in large part encouraged by new government
industrial policy. That’s why, while overall manufacturing has remained in the doldrums,
there’s been enough liquidity to fuel consumption and enough demand from government
investment and industrial policy incentives to keep the Institute for Supply Management
(ISM) manufacturing index at mid-cycle slowdown levels rather than in economywide
recession territory.
Rising uncertainty in anticipation of U.S. elections is not helping the overall business
investment and manufacturing outlook, either, as regulation, corporate tax and trade policy
changes could be particularly consequential this time around. If the weak ISM manufacturing
index for August is any indication, the manufacturing sector remains a drag on economic
growth for now. This makes consumer spending all the more important in coming quarters.

3 of 8 September 9, 2024 – Capital Market Outlook RETURN TO FIRST PAGE

MARKET VIEW
What Investors Still Don’t Get About the U.S. Economy
Joseph P. Quinlan, Managing Director and Head of CIO Market Strategy
Ariana Chiu, Wealth Management Analyst Investment Implications
Like gathering storm clouds, recession concerns have emerged over the U.S. capital markets,
Stay long U.S. assets because no
spawned by weak U.S. manufacturing activity, deteriorating labor market conditions, and a
economy in the world is as dynamic
dormant housing sector, among other factors. These warnings to growth continue to roil the
data-driven behavior of the markets, although amid this fog of uncertainty, we think it is critical and diverse as the U.S. economy.
investors understand the unique nature of the U.S. economy. Sector opportunities run the gamut,
from farm (agriculture) to
Simply put, the economy isn’t a monolith—or a single entity. Rather, it is an extraordinarily
technology (ChatGPT).
diverse and dynamic animal, a $28 trillion hydra-headed behemoth that beats to the tune of
many different sectors. Think agriculture, aerospace, energy, technology, finance, higher
education, pharmaceuticals, entertainment and a host of other industries where the U.S.
remains the global leader.
These sectors, in turn, are very often in different stages of the business cycle, some ebbing
(slowing), while others are flowing (accelerating). To wit, while more interest-rate sensitive
sectors like housing and manufacturing have lagged this year, the offset has been healthy
activity in travel and leisure, entertainment, and related service activities. Or take the fact that
while capex spending on traditional capital equipment has flatlined over most of this decade,
investment in software, cloud computing and related activities has soared (Exhibit 2A).
Consumer spending, meanwhile, has held up this year thanks to rising demand from high-
income households, offsetting weak spending from lower-income households.
At various times over the past decades, the energy sector has been down, while housing and
autos have been up—or vice versa. There have been periods whereby services rose, goods
lagged; Wall Street (finance) swooned, while Main Street (consumption) steamed ahead.
Meanwhile, the great stabilizer of the U.S. economy is the massive and plodding U.S.
healthcare industry, which, valued at $4.5 trillion, has never experienced a recession in the post-
war era (Exhibit 2B).
Exhibit 2: From Health Care to Technology: U.S. Economic Dynamism Persists.
A) Capex Bifurcation: Old Economy vs. New Economy. B) U.S. Health Care Spending Reaches $4.5 Trillion.
Real Private Investment Indexed to 1995 (1995 = 100) USD Trillions
700 5
Intellectual Property Products
600
4
500
400 3

300 2
Equipment
200
1
100
0 0
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 60 63 66 69 72 75 78 81 84 87 90 93 96 99 02 05 08 11 14 17 20

Exhibit 2A) Source: BEA, Haver Analytics. Data as of August 29, 2024. Exhibit 2B) Source: U.S. National Health Expenditure Accounts. Data through 2022, as of September 2024. Latest data available.
The key point is this: Periodic soft patches or downturns in various sectors of the economy are
not uncommon and typically not strong enough to tank the national economy. “Rolling
recessions,” in other words, are commonplace in an economy as large and diverse as the U.S.’
Our economy is not a one-trick pony—in fact, standalone sectors/activities in the U.S. are
greater than most nations’ output.
When it comes to economic diversity, America’s heterogenous economic base stands in
contrast to countries where nearly the entire economy relies on a singular industry, like
Germany’s knack for manufacturing, commodity or agricultural producers in Latin America, or
Taiwan’s dedicated manufacturing of semiconductors. Japan and South Korea are still levered
to consumer electronics and autos; China’s economy rests on the shoulders of capital
investment and real estate. In the Middle East, think of energy. You get the picture.

4 of 8 September 9, 2024 – Capital Market Outlook RETURN TO FIRST PAGE

Bifurcated Consumer Spending. Neither should investors think of the U.S. consumer as a
single entity. Why? Because not all consumers are created equal. While consumers in lower-
income households are feeling the squeeze from higher prices, high-income households are in
better shape and holding their own—i.e., they are out spending, underpinning better-than-
expected U.S. personal consumption levels. Consider the following:
• Just 4.4% of U.S. households account for 15% of total U.S. personal consumption. 1
• The top 10% of U.S. households are responsible for 21.5% of total U.S. consumption –
more than the bottom 30% of households combined.1
• The bottom 10% of households by income devote nearly 75% of their expenditures
toward basics like food, housing and transportation, compared to 55% for the top 10%. 2
• The bottom 10% of households have credit card debt equal to 85% of monthly income,
compared to less than 10% for the top 10%. 3
• U.S. household net worth reached a record $160.8 trillion in Q1 2024. 4
• While 58% of U.S. households own stocks, the top 1% of households owned $16.3 trillion
in corporate equities and mutual fund shares as of Q1 2024 – 38% of the U.S. total.5
• In terms of savings, the bottom 40% of U.S. households have negative savings, while 97%
of households in the top 20% of the income distribution have positive savings. 5
Against this backdrop, the true meaning of the phrase “U.S. consumer” is a little more nuanced
and differentiating than commonly recognized. This “consumer” could either be the worker
toiling in two jobs and barely making ends meet due to higher rent, food costs and insurance,
or it could be the salaried worker who owns a home that has appreciated nicely over the past
few years, as well as a retirement account that has ballooned along with the general market
indices.
How Investors Should Be Thinking About the “R” Word. A final word on one of the most
dreaded words in investing: recession.
First, recessions are commonplace and are all part of the dynamic U.S. business cycle. The U.S.,
according to the National Bureau of Economic Research (NBER), has experienced 12
recessions over the post-war era. The causes or triggers of recession vary, ranging from the
aftereffects of tight monetary and/or fiscal policies to exogenous shocks like the 1973 oil price
shock.
Two, recessions don’t last long—they are more transitory than structural or terminal. The
longest recession of the post-war era was 18 months and associated with the Great Financial
Crisis of 2008/2009. The shortest: the pandemic-related swoon in growth between February
and April 2020. Recessions typically last just over 10 months on average. Taking the long view,
the U.S. economy’s track record for growth in the post-war era is quite remarkable: The U.S.
economy has been in recession only 13% of the time since 1945, expanding the other 87% of
the time.
Three, recessions are periods of reset/revitalization that often leave the economy stronger at
the other end of the downturn. Nothing is more emblematic of the “creative destruction”
narrative of the U.S. economy than a recession. Recessions are akin to forest fires: Just as the
latter clears out the unhealthy trees and underbrush, and re-nourishes the forest floor,
recessions take out weaker companies or corporate zombies, reduce excess capacity, encourage
more innovation, and pave the way for healthier firms/sectors to drive future growth.
The bottom line. Diverse and dynamic is the best way to describe an economy that produces
over 25% of global output with just 4.2% of the world’s population. That is worth remembering
as the markets and economy chop and churn through the volatility associated with a Fed pivot
on monetary policy, political uncertainty about the November election, and ever-present
geopolitical risks. That said, we remain constructive on U.S. Equities of all styles and believe
that at the core of portfolio construction lie U.S. assets. Stay long America.

1
Bureau of Economic Analysis. Data as of July 15, 2024.
2
Bureau of Labor Statistics. Data as of September 9, 2023. Latest data available.
3
Federal Reserve Bank of St. Louis. Data as of May 20, 2024.
4
Federal Reserve. Data as of June 7, 2024. Latest data available.
5
Bureau of Economic Analysis. Data as of May 10, 2024.

5 of 8 September 9, 2024 – Capital Market Outlook RETURN TO FIRST PAGE

THOUGHT OF THE WEEK
A Shaky Start to September for Stocks
Kirsten Cabacungan, Vice President and Investment Strategist
U.S. Equities stumbled into September, triggering flashbacks to the early August meltdown. The Portfolio Considerations
S&P 500 declined more than 2% on the day after Labor Day, marking its worst start to
Market activity could remain
September since 2015, and the Volatility Index spiked 33%. Weakness continued through the
week with the S&P 500 logging its worst week this year as a tepid August jobs report weighed choppy in the lead up to the U.S.
on sentiment. election. We would view weakness
as an opportunity to add to U.S.
Recent market fragility may have some investors on edge over what the next few months Equities and leverage portfolio
could bring. Indeed, this time of year tends to be a more challenging period for U.S. Equity rebalancing to diversify areas of
returns. September has historically been the worst month during the year on average for the
over/under exposure as we
S&P 500 since 1950 (Exhibit 3A). Even filtering for years for presidential elections or strong
continue to see tailwinds for the
first-half advances, history tells a similar story of more lackluster Equity returns from the end
of summer into fall. overall Equity uptrend.

The focus on weaker seasonality, though, eclipses the momentum building under the surface.
Not only did stocks recover from the early August selloff by the end of the month, but market
breadth improved. The S&P 500 equal-weighted index kept pace with the market-
capitalization-weighted index in August, even claiming new all-time highs, and maintains a
strong lead so far this quarter (Exhibit 3B). The share of S&P 500 constituents above their
200-day moving average moved closer to 80%, a sign of more stocks rallying and strength in
the broader uptrend (Exhibit 3C).
Volatility could persist in the weeks ahead, especially as the election approaches. But as August
taught us, any market turbulence will likely come up against powerful tailwinds from
fundamental factors including imminent monetary policy easing and a sustained earnings
recovery broadening out which combined should form a solid base for continued Equity
strength. The good news is that seasonality trends have historically improved in the final
months of the year. We remain constructive on U.S. Equities.
Exhibit 3: A September Slump?
A) Stocks have entered a historically weak seasonal period…
S&P 500 Monthly Price Returns Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Average (All Years*) 1.0% -0.1% 1.1% 1.5% 0.2% 0.1% 1.3% 0.0% -0.7% 0.9% 1.8% 1.5%
Median (All Years) 1.6% 0.3% 1.4% 1.3% 0.8% 0.1% 1.3% 0.5% -0.4% 1.0% 2.0% 1.5%
Average (Pres. Election Years) 0.1% -0.4% 0.4% 1.3% 0.1% 1.3% 0.7% 1.3% -0.4% -0.8% 2.0% 1.3%
Median (Pres. Election Years) 0.7% 0.1% 0.9% 0.5% 1.1% 1.8% -0.2% 0.9% 0.4% 0.1% 3.2% 1.3%
Average (Years when 1H>10%) 5.1% 1.7% 2.2% 2.8% 1.2% 2.6% 1.9% -0.8% 0.4% 0.7% 2.3% 3.2%
Median (Years when 1H>10%) 5.0% 1.1% 2.7% 3.2% 1.5% 2.6% 3.1% -0.6% 1.0% 2.0% 2.2% 2.9%
% Positive (All Years) 59.5% 54.1% 64.9% 71.6% 60.8% 55.4% 59.5% 54.1% 43.2% 59.5% 68.9% 74.3%
Max (All Years) 13.2% 7.1% 9.7% 12.7% 9.2% 8.2% 9.1% 11.6% 8.8% 16.3% 10.8% 11.2%
Min (All Years) -8.6% -11.0% -12.5% -9.0% -8.6% -8.6% -7.9% -14.6% -11.9% -21.8% -11.4% -9.2%
2024 1.6% 5.2% 3.1% -4.2% 4.8% 3.5% 1.1% 2.3%

B) …but it comes amid improved market breadth… C) …and signs of broadening market leadership.
Price Return S&P 500 S&P 500 Equal Weight Percent of S&P 500 Constituents Above their 200-day Moving Average
12% 100%
10.2% 90%
10% 80% Threshold
80%
8% 7.4%
70%
6% 5.3% 60%
3.9% 50%
4%
40%
2% 1.1% 30%
0% 20%
-2% 10%
-4% -3.1% 0%
Mar-22

May-22
Jan-22

Sep-22

Jan-23
Mar-23

May-23

Sep-23

Mar-24

May-24
Jan-24

Sep-24
Nov-22

Nov-23
Jul-22

Jul-23

Jul-24

-6%
Q1 2024 Q2 2024 Q3 2024*
Exhibit 3A) *Refers to data from 1950-2023. Note: the color gradient denotes where each monthly return ranks within the 12 months of the year, with dark green indicating the strongest
monthly return and dark red indicating the weakest monthly return. Source: Bloomberg. Data as of September 4, 2024. Exhibit 3B) **Q3 2024 data through September 4, 2024. Source:
Bloomberg. Data as of September 4, 2024. Exhibit 3C) Source: Bloomberg. Data as of September 4, 2024. Indexes are unmanaged and do not take into account fees or expenses. It is not possible
to invest directly in an index. Past performance is no guarantee of future results.

6 of 8 September 9, 2024 – Capital Market Outlook RETURN TO FIRST PAGE

MARKETS IN REVIEW

Equities
Total Return in USD (%) Economic Forecasts (as of 9/6/2024)
Current WTD MTD YTD 2024E Q1 2024A Q2 2024A Q3 2024E Q4 2024E 2025E
DJIA 40,345.41 -2.9 -2.9 8.5 Real global GDP (% y/y annualized) 3.1 - - - - 3.3
NASDAQ 16,690.83 -5.8 -5.8 11.7 Real U.S. GDP (% q/q annualized) 2.7 1.4 3.0 2.5 2.0 2.2
S&P 500 5,408.42 -4.2 -4.2 14.5 CPI inflation (% y/y) 2.8 3.2 3.2 2.5 2.2 2.0
S&P 400 Mid Cap 2,939.41 -4.9 -4.9 6.8 Core CPI inflation (% y/y) 3.3 3.8 3.4 3.2 3.0 2.6
Russell 2000 2,091.41 -5.7 -5.7 4.1 Unemployment rate (%) 4.0 3.8 4.0 4.2 4.2 4.2
MSCI World 3,518.58 -3.9 -3.9 12.2 Fed funds rate, end period (%) 4.88 5.33 5.33 5.13 4.88 3.88
MSCI EAFE 2,383.01 -2.8 -2.8 8.8
MSCI Emerging Markets 1,074.89 -2.2 -2.2 7.1 The forecasts in the table above are the base line view from BofA Global Research. The Global Wealth & Investment
Management (GWIM) Investment Strategy Committee (ISC) may make adjustments to this view over the course of the
year and can express upside/downside to these forecasts. Historical data is sourced from Bloomberg, FactSet, and
Fixed Income† Haver Analytics. There can be no assurance that the forecasts will be achieved. Economic or financial forecasts are
Total Return in USD (%) inherently limited and should not be relied on as indicators of future investment performance.
Current WTD MTD YTD A = Actual. E/* = Estimate.
Corporate & Government 4.11 1.31 1.31 4.31 Sources: BofA Global Research; GWIM ISC as of September 6, 2024.
Agencies 4.10 0.79 0.79 4.10
Municipals 3.37 0.51 0.51 1.81
U.S. Investment Grade Credit 4.21 1.29 1.29 4.40 Asset Class Weightings (as of 9/3/2024) CIO Equity Sector Views
International 4.76 1.27 1.27 4.80 CIO View CIO View
High Yield 7.24 0.25 0.25 6.55 Asset Class Underweight Neutral Overweight Sector Underweight Neutral Overweight
slight overweight green

90 Day Yield 5.05 5.11 5.11 5.33 Equities    

slight overweight green

Slight overweight green

Energy    
2 Year Yield 3.65 3.92 3.92 4.25 U.S. Large-cap     Healthcare
slight overweight green

   
10 Year Yield 3.71 3.90 3.90 3.88
Slight overweight green

U.S. Mid-cap    
Consumer slight overweight green

30 Year Yield 4.02 4.20 4.20 4.03    

slight overweight green

U.S. Small-cap     Discretionary

Slight underweight orange

International Developed    
Moved from Neutral to slight overweight green

Commodities & Currencies Neutral yellow

Financials    
Emerging Markets    
Total Return in USD (%) slight underweight orange Information Neutral yellow

Fixed Income        
Technology
Commodities Current WTD MTD YTD U.S. Investment- neutral yellow

    Communication Neutral yellow

Bloomberg Commodity 223.16 -2.4 -2.4 -1.4 grade Taxable    

neutral yellow
Services
WTI Crude $/Barrel†† 67.67 -8.0 -8.0 -5.6 International     Moved from slightly overweight to Neutral Yellow

Industrials    
Slight underweight orange

Gold Spot $/Ounce†† 2497.41 -0.2 -0.2 21.1 Global High Yield Taxable    
Neutral yellow

U.S. Investment-grade slight underweight orange

   
Real Estate    
Total Return in USD (%) Tax Exempt slight underweight orange

Prior Prior 2022

Slight underweight orange
Utilities    
U.S. High Yield Tax Exempt    
Currencies Current Week End Month End Year End
slight underweight orange

Alternative Investments* Materials    

EUR/USD 1.11 1.10 1.10 1.10 Consumer
Hedge Funds
Neutral

underweight red

   
USD/JPY 142.30 146.17 146.17 141.04 Private Equity
Neutral

Staples
USD/CNH 7.09 7.09 7.09 7.13 Tangible Assets /
Neutral

Commodities
Real Estate
Neutral

S&P Sector Returns Cash

Consumer Staples 0.6% *Many products that pursue Alternative Investment strategies, specifically Private Equity and Hedge Funds, are available
Real Estate 0.2% only to qualified investors. CIO asset class views are relative to the CIO Strategic Asset Allocation (SAA) of a multi-asset
Utilities -0.5% portfolio. Source: Chief Investment Office as of September 3, 2024. All sector and asset allocation recommendations must be
Healthcare -2.1% considered in the context of an individual investor’s goals, time horizon, liquidity needs and risk tolerance. Not all
Consumer Discretionary -2.8% recommendations will be in the best interest of all investors.
Financials -3.2%
Industrials -4.3%
Materials -4.7%
Communication Services -5.0%
Energy -5.6%
Information Technology -7.1%
-8% -6% -4% -2% 0% 2%

Sources: Bloomberg; Factset. Total Returns from the period of

9/3/2024 to 9/6/2024. †Bloomberg Barclays Indices. ††Spot price
returns. All data as of the 9/6/2024 close. Data would differ if a
different time period was displayed. Short-term performance shown
to illustrate more recent trend. Past performance is no guarantee
of future results.

7 of 8 September 9, 2024 – Capital Market Outlook RETURN TO FIRST PAGE

Index Definitions
Securities indexes assume reinvestment of all distributions and interest payments. Indexes are unmanaged and do not take into account fees or expenses. It is not possible to invest
directly in an index. Indexes are all based in U.S. dollars.
S&P 500 Index is a market-capitalization-weighted index that is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 leading companies and covers
approximately 80% of available market capitalization.
Consumer price index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
Institute for Supply Management (ISM) manufacturing Index is a monthly indicator of U.S. economic activity based on a survey of purchasing managers at manufacturing firms nationwide.
Volatility Index (VIX) is the ticker symbol and the popular name for the Chicago Board Options Exchange's CBOE Volatility Index, a popular measure of the stock market's expectation of volatility
based on S&P 500 index options.
S&P 500 equal-weighted Index is the equal-weight version of the widely-used S&P 500. The index includes the same constituents as the capitalization weighted S&P 500, but each company in
the S&P 500 EWI is allocated a fixed weight - or 0.2% of the index total at each quarterly rebalance.
S&P 500 market-capitalization-weighted index is weighted by market capitalization, so each constituent's share in the overall index is based on the total market value of all its outstanding
shares. Constituents with larger market caps carry a higher percentage weighting in the index, while smaller market caps have lower weightings.

Important Disclosures
Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.
Bank of America, Merrill, their affiliates and advisors do not provide legal, tax or accounting advice. Clients should consult their legal and/or tax advisors before making any financial decisions.
This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of
America, Merrill or any affiliate to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.
The Chief Investment Office (“CIO”) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions
oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp.").
The Global Wealth & Investment Management Investment Strategy Committee (“GWIM ISC”) is responsible for developing and coordinating recommendations for short-term and long-term
investment strategy and market views encompassing markets, economic indicators, asset classes and other market-related projections affecting GWIM.
BofA Global Research is research produced by BofA Securities, Inc. (“BofAS”) and/or one or more of its affiliates. BofAS is a registered broker-dealer, Member SIPC and wholly owned subsidiary of
Bank of America Corporation.
All recommendations must be considered in the context of an individual investor’s goals, time horizon, liquidity needs and risk tolerance. Not all recommendations will be in the best interest of all
investors.
Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.
Investments have varying degrees of risk. Some of the risks involved with equity securities include the possibility that the value of the stocks may fluctuate in response to events specific to the
companies or markets, as well as economic, political or social events in the U.S. or abroad. Small cap and mid cap companies pose special risks, including possible illiquidity and greater price volatility
than funds consisting of larger, more established companies. Investing in fixed-income securities may involve certain risks, including the credit quality of individual issuers, possible prepayments,
market or economic developments and yields and share price fluctuations due to changes in interest rates. When interest rates go up, bond prices typically drop, and vice versa. Treasury bills are
less volatile than longer-term fixed income securities and are guaranteed as to timely payment of principal and interest by the U.S. government. Bonds are subject to interest rate, inflation and
credit risks. Investments in foreign securities (including ADRs) involve special risks, including foreign currency risk and the possibility of substantial volatility due to adverse political, economic or
other developments. These risks are magnified for investments made in emerging markets. Investments in a certain industry or sector may pose additional risk due to lack of diversification and
sector concentration. There are special risks associated with an investment in commodities including market price fluctuations, regulatory changes, interest rate changes, credit risk, economic
changes and the impact of adverse political or financial factors.
Alternative investments are speculative and involve a high degree of risk.
Alternative investments are intended for qualified investors only. Alternative Investments such as derivatives, hedge funds, private equity funds, and funds of funds can result in higher return
potential but also higher loss potential. Changes in economic conditions or other circumstances may adversely affect your investments. Before you invest in alternative investments, you should
consider your overall financial situation, how much money you have to invest, your need for liquidity, and your tolerance for risk.
Nonfinancial assets, such as closely held businesses, real estate, fine art, oil, gas and mineral properties, and timber, farm and ranch land, are complex in nature and involve risks including total loss
of value. Special risk considerations include natural events (for example, earthquakes or fires), complex tax considerations, and lack of liquidity. Nonfinancial assets are not in the best interest of all
investors. Always consult with your independent attorney, tax advisor, investment manager, and insurance agent for final recommendations and before changing or implementing any financial, tax,
or estate planning strategy.
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