CHIEF INVESTMENT OFFICE

Capital Market Outlook

August 28, 2023

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

IN THIS ISSUE MACRO STRATEGY 

Macro Strategy—Thoughts on a 5% World: The low inflation environment of the pre- Robert T. McGee
pandemic era kept nominal gross domestic product (GDP) growth averaging slightly below Managing Director and Head of CIO Macro Strategy
4% after the financial crisis in 2007-2008. A shift toward higher inflation has been apparent
since the Federal Reserve (Fed) amended its Statement on Longer-Run Goals and Monetary MARKET VIEW 
Policy Strategy on August 27, 2020, after a two-year review in 2019-2020. Kirsten Cabacungan
Vice President and Investment Strategist
The new approach to policy makes it more likely that nominal GDP growth and inflation will
average higher in the decade ahead than they did in the decade before the pandemic, with a THOUGHT OF THE WEEK 
shift higher in the U.S. interest rate structure the likely result.
Joseph P. Quinlan
Market View—Late Summer Markets in Review: An August malaise gripped financial Managing Director and Head of CIO Market
Strategy
markets over the last few weeks. U.S. Equities are now on course for their largest monthly
decline this year, and a sharp rise in longer-term U.S. Treasury yields has pushed the
MARKETS IN REVIEW 
overall U.S. bond market close to negative territory.
Bond yields have been gradually moving higher since the beginning of the year, but it has Data as of 8/28/2023,
not been until now that the steady ascent in Equities has stalled out in this way. So, what and subject to change
might this pullback be signaling? Before investors declare an inflection point in markets,
there may be some important nuances to the latest moves to consider first. We unpack
Portfolio Considerations
the details of these finer points below.
We expect some softness in August,
Thought of the Week—The Bull Market in Global Subsidies Deserves Special
which we would use as an opportunity
Watching: Big government is back in the business of business, with China and the U.S.
for long-term growth investors to
leading the global way when it comes to doling out state subsidies. The latter have soared
over the past decade and could ultimately gum up crossborder trade and investment flows, rebalance portfolios. At this point, we
stifle industrial efficiencies and profit margins, and lead to a world even more believe investors should remain
geographically fragmented. neutral across Equities and Fixed
Income, as data continues to point to
The bull market in global subsidies could also leave the world awash in semiconductors, a mixed atmosphere even in a soft-
electrical vehicles, solar panels and related products. National security now trumps profits. landing scenario, our base case since
The “Commanding Heights” have shifted to the public sector—a trend that could create its the start of the year. We maintain our
own risks and rewards when it comes to portfolio construction. preference for Value and high quality
overall. Longer-term investors should
consider small-capitalization shares,
Emerging Markets and the Energy
and Industrials sectors on their “add
to exposures” list as we approach
2024.

Trust and fiduciary services are provided by Bank of America, N.A., Member FDIC and a wholly owned subsidiary of
Bank of America Corporation (“BofA Corp.”).
Investment products:
Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value
Please see last page for important disclosure information. 5907102 8/2023
MACRO STRATEGY
Thoughts on a 5% World
Robert T. McGee, Managing Director and Head of CIO Macro Strategy
Investment Implications
For two decades prior to the pandemic, nominal GDP growth averaged about 4%—the
lowest rate since the 1930s. Since the early 1980s, a strong disinflation trend drove a Higher real and nominal yields in a
secular bull market in bonds, with each successive cyclical peak and valley in interest rates higher long-term inflation
lower than the one before. This culminated in the zero-rate world of the pandemic, environment would shift relative
frequent quantitative easing and the lowest long-term rates in history at the end of the valuations away from long-
long bond bull market. duration Growth stocks toward
shorter-duration Value stocks. We
The surge in inflation and rates since 2021 has broken this 40-year downtrend in both. are maintaining a balanced
The change in the Fed’s Statement of Longer-Run Goals and Monetary Policy Strategy approach with a neutral weight to
that was unanimously approved on August 27, 2020, set the stage for a new higher- Equities and a preference for high
inflation world where nominal growth is likely to rise from the prepandemic 4% pace quality across asset classes.
closer to 5%.

In the 4% world, inflation averaged a bit below 2% and real growth a bit more than that.
This historically low-trend growth and inflation raised the risk of deflation during cyclical
downturns in a highly leveraged U.S. economy vulnerable to 1930s-like debt-deflation
spirals and caused the fed funds rate to run up against the zero-bound, complicating
monetary policy and ushering in the addition of quantitative easing to the monetary policy
toolbox.

It was also associated with unusually low and negative real interest rates for extended
periods of time. This financial repression of normal market interest rate pressures to avoid
deflation encouraged excessive leverage and risk taking and drove up asset valuations to
historically high levels.

The August 2020 revisions to the Fed’s long-run goals states that, following periods when
inflation has been running persistently below 2%, over time, appropriate monetary policy
will likely aim to achieve inflation moderately above 2% for some time. Since this shift in
policy, inflation has been averaging closer to 4% than 2%. Over the past 75 years, inflation
has averaged closer to 3% than 2%. The 2% goal was abnormally low by modern
standards and created problems associated with the zero-effective bound. While the Fed is
not expected to update its longer-term goals until 2025, speculation is rampant that it will
eventually raise the target. For example, in an op-ed in the August 20 Wall Street Journal
Harvard Professor and former Chairman of the Council of Economic Advisors Jason Furman
makes the case for a higher target. Fed Chair Jay Powell has avoided the obvious point
that a true 2% target requires letting inflation run below that after extended periods when
it’s been above. He also stated at a recent press conference that the Fed would have to
ease before inflation falls below 2%. In short, he still seems committed to keeping
inflation above 2% despite the big overshoot since 2021.

An inflation target closer to 3% coupled with a 2% real growth trend creates a 5%

nominal growth world, which is closer to the long-run U.S. historical experience, which was
less plagued by the zero-rate interest rate bound problem and would presumably obviate
the need for extensive quantitative easing. Importantly it allows real interest rates to be
positive. In short, it sets the stage for the whole interest rate structure to move up closer
to the new, higher-nominal-growth world.

Nominal GDP growth has been in a downtrend since the high-teens pandemic-policy peak
in 2021, reaching a new cycle low just below 5% at a seasonally adjusted annualized rate
during Q2. Most of the decline over the past year reflects falling inflation, as real growth
has actually picked up a bit this year. According to the latest Blue Chip Economic
Indicators, the August consensus forecast for nominal GDP growth in 2023 rose to 5.8%
from 5.5% in July. Since January, when it bottomed at 4%, the consensus forecast for
nominal growth this year has risen steadily, primarily because of upside surprises in real

2 of 8 August 28, 2023 – Capital Market Outlook RETURN TO FIRST PAGE

growth. Despite the upward revisions to the 2023 growth outlook, the consensus forecast
for 2024 has generally drifted lower since January, with analysts expecting nominal GDP to
grow just 3.3% next year, comprising less than 1% real growth and about 2.5% inflation.

Second quarter earnings reports illustrated the problem with such low nominal growth.
Corporate revenue growth is limited by nominal GDP growth; they have been falling
together since the pandemic spike. While Q2 earnings surprised to the upside, they were
still down on a year-over-year (YoY) basis. The persistent earnings recession that began
about a year ago reflects the squeeze that falling inflation is putting on corporate
revenues and margins as wages start to catch up with past inflation while exceeding
current lower inflation. Revenue growth for the S&P 500 fell below 1% on a YoY basis in
Q2, a new cycle low. Low revenue growth is squeezing free cash flow and forcing
companies to reduce buybacks that had been supporting stock prices. Lower earnings are
forcing cost cuts.

Unlike economists, bottoms-up analysts are anticipating a turnaround in revenue and profit
growth next year based on expected monetary easing.

That hope for rate cuts continues to get pushed further out into the future as the
economy keeps exceeding expectations. When a slowdown will justify lower rates remains
an open question at this point. The prospects for a 5% nominal growth trend going
forward suggests that a dip to the 3% or 3.5% nominal growth expected next year could
prompt a Fed pivot in the new higher inflation world. Generally, nominal GDP growth in a
3% to 7% range over the cycle would probably allow the Fed to operate without resorting
to zero rates and persistent quantitative easing in the future, like the environment that
prevailed before inflation was so low.

The low-inflation, low-interest rate world that prevailed before the pandemic shifted
investors’ preferences toward Growth stocks that benefit relatively from those conditions
at the expense of Value stocks. While the cyclical slowing of the current economy is
relatively beneficial for Growth stocks, the longer-term structural shift to higher rates and
inflation would favor Value stocks over long-duration Growth stocks. Higher nominal and
real rates are also likely to reduce excessive stretching for yield and the overleveraging
that’s more common in the zero-rate world of the past.

3 of 8 August 28, 2023 – Capital Market Outlook RETURN TO FIRST PAGE

MARKET VIEW
Late Summer Markets in Review
Kirsten Cabacungan, Vice President and Investment Strategist
An August malaise gripped financial markets over the last few weeks. U.S. Equities are now
on course for their largest monthly decline this year, denting the strong uptrend in stocks Investment Implications
since last October. The S&P 500 was down as much as 4.8% for the month off the year-to- We emphasize a more balanced
date high at the end of July and remains down 3.7% after recouping some losses in recent
approached to portfolio
days. 1 Heading into the final months of the summer, investors anticipated some Equity
construction as we continue to
softness, but a significant shoot-up in longer-term government bond yields came more as a
look for catalysts that may support
surprise. The 10-year and 30-year U.S. Treasury yields both climbed around 50 basis points
the sustainability of the market
(bps) from mid-July to late August to reach their highest levels since 2007 and 2011,
respectively. The selloff in U.S. Treasurys pushed the overall U.S. bond market into negative trend and give us more conviction
territory, with gains for the year in the Bloomberg U.S. Aggregate Bond Index nearly wiped to make a tactical adjustment.
out.1 The volatility could very well be attributed to cyclical developments amid a more
resilient economy and hawkish commentary from Fed officials suggesting the possibility for
higher-for-longer rates. Different iterations of that narrative, however, have been gradually
driving bond yields higher since the beginning of the year, and it has not been until now that
the steady ascent in Equities has stalled out in this way. So, what might the latest pullback
be signaling? Could it be just a healthy breather, or is it the start of a deeper rout lower?
Before investors declare an inflection point in markets, there may be some important
nuances to the latest moves to consider.
First, bond yields are still in a peaking process. After more than a year of aggressive
monetary policy tightening, inflation has meaningfully moved lower. The Consumer Price
Index has fallen considerably from its peak of 9.1% last June to 3.2%.1 While still elevated
relative to the Fed’s average 2% target, the rise in consumer prices has come in slower than
expected in the last few months and suggests to some investors that the inflation problem
may be behind us now. Inflation breakevens, or market-derived measures of expected future
inflation, reflect that rosier outlook, with rates across the curve hovering below 2.3%,
signaling confidence in the Fed’s ability to bring inflation down. Rates futures markets have
priced in the end of the Fed’s rate hiking cycle and even rate cuts next year, which would
imply downward pressure on yields from here.
The recent push higher in yields therefore defies these expectations, but it should not be
breaking news that rate risk continues to be two-sided. It is broadly accepted that monetary
policy acts with a long and variable lag. Given that the Fed started tightening policy only a
little over a year ago, it may mean that the effect of the full 525 bps in rate hikes since then
could still take some time to filter through to the economy and markets. In fact, a surge in
real yields, or inflation-adjusted returns on Treasurys, played a greater role in the latest rise
in nominal bond yields than inflation as breakevens marginally moved lower during the
month (Exhibit 1). The yield on 10-year Treasury Inflation-Protected Securities (TIPS) soared
to a 14-year high. Reasons for the breakout in real yields could be the deteriorating picture
of U.S. fiscal health or the move by the Bank of Japan to loosen yield curve control. It could
also be that real yields are on the rise as they continue to reflect the tightening of monetary
policy and adjust to structural changes underway as the economic regime shifts from an
ultra-low-rate environment to a higher one. Still, the downtrend in both expected and
realized inflation remains an encouraging sign, and markets continue to expect that the next
major phase of the rate cycle is lower. As this environment continues to transition, risks of
further rate volatility may persist.
Second, the turn lower in U.S. Equities could be the market reining in stretched
valuations after multiple expansion drove a 20% rally in the first seven months of
the year. The blended 12-month forward price-to-earnings ratio for the S&P 500 climbed
from 16.8x at the end of 2022 to 19.7x by the end of July, sitting well above its 20-year
average of 15.7x.1 The grind higher in valuations came even as forward earnings estimates
trended lower, worrying some investors that the disconnect between the multiple expansion

1
Bloomberg. August 25, 2023.

4 of 8 August 28, 2023 – Capital Market Outlook RETURN TO FIRST PAGE

and fundamentals could be a sign of an extended market. With investors contending with the
jump in real yields and the potential implications of a higher cost of capital, valuations have
been reeled in a bit, with the forward multiple now around 18.8x. Potential further moves
lower in valuations could depend on the effect of higher borrowing costs on corporate
profits. For now, tight credit spreads are still not pricing in any major challenges to the
health of companies and the economy ahead.
The path forward for Equities then goes back to the question on whether the August
repricing is a short reprieve from the uptrend or the start of longer downtrend. Corporate
earnings will be an important variable in that answer. If investors believe that most of the
pain to earnings has already been felt, then the market should eventually return to its upward
bias. But if uncertainty about corporate earnings persists, and other factors like a spike in the
unemployment rate and China economic woes pressure the economic outlook, then the
August slowdown could translate into further Equity pressure and volatility.
Third, we need to move past this period of historically weak seasonality to get a
better view on the market’s direction. History tells us that August and September tend
to be difficult months for Equity returns, especially during pre-presidential election years.
This month’s decline in Equities has proven no different. While stocks have suffered, losses
have not been extreme enough to fully change outlooks, as investors remain aware of the
seasonally challenging window. Bullish sentiment decreased some in the latest American
Association of Individual Investor Sentiment survey, but the spread between bulls and bears
has not moved to unusually low levels, and fears of broad-based pessimism have not
materialized. And even as rate volatility has picked up, Equity volatility remains more
subdued. The Volatility Index (VIX), a gauge for stock market volatility, spiked as Equities sold
off in the last few weeks but peaked only at 17.9, which is well below its long-term historical
average of 19.6 and a level relatively quiet compared to those from January through May. 2
Until seasonality improves, near-term noise about market weakness could mask some of
these underlying trends.
Against this backdrop, staying measured toward risk in portfolios remains prudent at this
time. Given concerns about the outlook for the economy, monetary policy and corporate
earnings, we remain comfortable with our neutral stance on both stocks and bonds, which
offers us flexibility to either lean into the cycle or de-risk once some of the uncertainty about
where the cycle goes from here fades. We continue to prepare our shopping list for when we
gain greater conviction about the sustainability of the market trend. Near-term softness in
the market may present opportunities for long-term investors to rebalance portfolios. And
while rising yields tends to attract more negative attention, the repricing in the bond market
is now offering investors the most attractive nominal and real yields in over a decade.
Therefore, we prefer a slightly long-duration position, allowing us to take advantage of
higher yields but leaving some room to move longer if rates substantially rise from here.
Exhibit 1: Real Yields Have Taken Off, Driving Nominal Yields Higher.
6%
10-year U.S. Treasury Yield
10-year Inflation Breakeven Rate
4% 10-year U.S. Treasury Inflation-Protected Securities Yield

2%

0%

-2%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Source: Bloomberg. Data as of August 24, 2023. Past performance does not guarantee future results.

2
Bloomberg. August 25, 2023.

5 of 8 August 28, 2023 – Capital Market Outlook RETURN TO FIRST PAGE

THOUGHT OF THE WEEK
The Bull Market in Global Subsidies Deserves Special Watching
Joseph P. Quinlan, Managing Director and Head of CIO Market Strategy
Government activism has gone into overdrive around the world, as evidenced in Exhibit 2. Investment Implications
According to data from Global Trade Alert, the number of policies classified as government Ballooning state subsidies could
interventions (ala trade tariffs, investment restrictions, and public sector subsidies in the
ultimately weigh on the
way of loans and tax incentives) has soared this decade, topping 40,000 in 2022. There is
efficiencies and profit margins of
a bull market in global subsidies, in other words, that puts at risk global investment and
such sectors as renewables (solar
trade flows, the efficiency of global supply chains and, ultimately, global earnings growth.
and wind), electric vehicles,
Leading the way in the subsidies race: China and the U.S., or the world’s two largest batteries and related
economies locked in an economic arms race to be No. 1 in renewable energies, electric goods/services. A great deal of
vehicles, artificial intelligence, semiconductor manufacturing and related cutting-edge supply is about to hit the market
technologies. While subsides are nothing new in China’s command-and-control economy, courtesy of rising state subsidies,
they are in the U.S., with the Biden administration’s full-throttled embrace of industrial and without commensurate
policies via the mega-legislative programs of the Infrastructure and Jobs Act, the Inflation demand, profits could suffer.
Reduction Act (IRA), and Chips and Science Act.

The good news: These programs have triggered a wave of new factory construction
outlays in the U.S., which totaled $196 billion in June, up 80% from the same period a year
ago. The bad news: America’s muscular industrial policies have not gone unnoticed nor
uncontested around the world. The subsidies race between the U.S. and China has
triggered a global spirit with the European Union, Germany, France, Japan, Canada, the
United Kingdom and a handful of other nations offering their own subsidies and incentives
to attract capital investment.

All of that said, a key risk down the road is that the global subsidies race—spurred on by
national security concerns, not profits—ultimately leaves the world awash in
semiconductors, electrical batteries, solar panels and other subsidized goods. The resulting
bubble in global capacity would do nothing but create economic inefficiencies and hammer
the profit margins of numerous firms. Stay tuned.

Exhibit 2: Big Government is Back in Business.

Number of Active Government Interventions in Thousands, by Type (End of Year)
45
40 Others Import Tariffs Subsidies

35
30
25
20
15
10
5
0
08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Source: Global Trade Alert. Data as of August 9, 2023. Others include import bans, import quotas, etc.

6 of 8 August 28, 2023 – Capital Market Outlook RETURN TO FIRST PAGE

MARKETS IN REVIEW

Equities
Total Return in USD (%) Economic Forecasts (as of 8/25/2023)
Current WTD MTD YTD 2022A Q1 2023A Q2 2023A Q3 2023E Q4 2023E 2023E
DJIA 34,346.90 -0.4 -3.2 5.1 Real global GDP (% y/y annualized) 3.6 - - - - 3.0
NASDAQ 13,590.65 2.3 -5.2 30.6 Real U.S. GDP (% q/q annualized) 2.1 2.0 2.4 2.0 1.5 2.1
S&P 500 4,405.71 0.8 -3.9 16.0 CPI inflation (% y/y) 8.0 5.8 4.0 3.4 3.3 4.1
S&P 400 Mid Cap 2,579.20 0.0 -5.4 7.3 Core CPI inflation (% y/y) 6.1 5.6 5.2 4.3 3.8 4.7
Russell 2000 1,853.63 -0.3 -7.3 6.3 Unemployment rate (%) 3.6 3.5 3.5 3.7 3.8 3.6
MSCI World 2,911.99 0.5 -4.8 13.2 Fed funds rate, end period (%) 4.33 4.83 5.08 5.38 5.63 5.63
MSCI EAFE 2,053.48 -0.2 -6.4 7.9
MSCI Emerging Markets 971.04 0.7 -7.1 3.6 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
Fixed Income† year and can express upside/downside to these forecasts. Historical data is sourced from Bloomberg, FactSet, and
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 5.08 0.32 -1.48 0.62 Sources: BofA Global Research; GWIM ISC as of August 25, 2023.
Agencies 5.12 -0.01 -0.31 1.50
Municipals 3.84 -0.40 -1.81 1.21
U.S. Investment Grade Credit 5.13 0.28 -1.58 0.41 Asset Class Weightings (as of 8/8/2023) CIO Equity Sector Views
International 5.77 0.61 -1.78 1.72 CIO View CIO View
High Yield 8.65 0.42 -0.66 6.13 Asset Class Underweight Neutral Overweight Sector Underweight Neutral Overweight
90 Day Yield 5.46 5.43 5.40 4.34
neutral yellow

Equities
Overweight green

    Healthcare    
2 Year Yield 5.08 4.94 4.88 4.43
Slight overweight green

U.S. Large Cap

Slight overweight green

    Energy    
10 Year Yield 4.24 4.25 3.96 3.87 U.S. Mid Cap
Slight overweight green

   
Slight overweight green

30 Year Yield 4.28 4.38 4.01 3.96 neutral yellow

Utilities    
U.S. Small-cap    
Slight underweight orange Consumer Neutral yellow

   
International Developed     Staples
Commodities & Currencies Emerging Markets
Neutral yellow

    Information Neutral yellow

   
Total Return in USD (%) Neutral yellow

Technology
Fixed Income    
Commodities Current WTD MTD YTD
U.S. Investment- slight overweight green
Communication Neutral yellow

   
Bloomberg Commodity 237.62 1.3 -1.4 -3.4    
grade Taxable Services
WTI Crude $/Barrel†† 79.83 -1.7 -2.4 -0.5 International
neutral yellow

    Industrials
Neutral yellow

   
Gold Spot $/Ounce†† 1,914.96 1.4 -2.6 5.0 Slight underweight orange

Global High Yield Taxable

Neutral yellow

    Financials    
Total Return in USD (%) U.S. Investment Grade
slight underweight orange
Slight underweight orange

    Materials    
Prior Prior 2022 Tax Exempt slight underweight orange

U.S. High Yield Tax Exempt

Slight underweight orange

Real Estate    
Currencies Current Week End Month End Year End    

EUR/USD 1.08 1.09 1.10 1.07 Alternative Investments* Consumer Underweight red

   
Discretionary
USD/JPY 146.44 145.39 142.29 131.12 Hedge Funds
USD/CNH 7.29 7.31 7.15 6.92 Private Equity
Real Estate
S&P Sector Returns Tangible Assets /
Commodities
Information Technology 2.6% Cash
Consumer Discretionary 1.1%
*Many products that pursue Alternative Investment strategies, specifically Private Equity and Hedge Funds, are available
Communication Services 1.0% only to qualified investors. CIO asset class views are relative to the CIO Strategic Asset Allocation (SAA) of a multi-asset
Real Estate 0.8% portfolio. Source: Chief Investment Office as of August 8, 2023. All sector and asset allocation recommendations must be
Industrials 0.3% considered in the context of an individual investor’s goals, time horizon, liquidity needs and risk tolerance. Not all
Utilities 0.3% recommendations will be in the best interest of all investors.
Financials 0.1%
Materials 0.0%
Healthcare -0.1%
Consumer Staples -0.7%
Energy -1.4%
-2% -1% 0% 1% 2% 3%

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

8/21/2023 to 8/25/2023. †Bloomberg Barclays Indices. ††Spot price
returns. All data as of the 8/25/2023 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 August 28, 2023 – 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 stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States.
Bloomberg U.S. Aggregate Bond Index is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States.
Consumer price index an index of the variation in prices paid by typical consumers for retail goods and other items.
Volatility Index (VIX) s 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.

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. Stocks of small-cap and mid-cap companies pose special risks, including possible illiquidity and greater
price volatility than stocks 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. Bonds
are subject to interest rate, inflation and credit risks. 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. 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.
© 2023 Bank of America Corporation. All rights reserved.

8 of 8 August 28, 2023 – Capital Market Outlook RETURN TO FIRST PAGE