As markets await this week’s big earnings data and more comments from Federal Reserve Chairman Jerome Powell, Bank of America Vice Chairman Keith Banks detailed how best to invest your money this year amid an imminent recession.

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“Bank of America Global Research is still forecasting a recession for 2023. As this happens, they need to get the costs under control quickly,” Banks said on “Morning with Mary” on Monday.

“What we have been told so far is not enough,” he continued, “so we think you will see additional workforce weakness throughout the year.”

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The bank comments came as Powell prepares to speak on Tuesday after the central bank hiked interest rates by a quarter of a point and the likes of Disney, Uber, Lyft, Royal Caribbean, Spirit Airlines and others prepare to release their fourth-quarter earnings report. 2022.


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A number of Wall Street banks are forecasting a downturn this year, including Goldman Sachs, Wells Fargo and Deutsche Bank, although they are unsure of its severity.

Banks are bracing for a recession because persistent and elevated inflation has pushed the Federal Reserve to raise interest rates at the fastest rate since the 1980s, threatening to cut consumer and business spending by raising borrowing costs. Policymakers have already approved seven consecutive rate hikes in 2022, raising the federal funds rate to a range of 4.25% to 4.5% — the highest level since 2007 — and projecting a peak rate of around 5%.

The BofA vice chairman predicted fourth-quarter profits to be lower than expected, marking the start of a slowdown in the economy.

“We think that as the economy slows, revenues will fall and as a result you will start to experience some pressure on margins as well as negative operating leverage, neither of which is conducive to profits,” Banks said.

According to the market expert, margin trading will be limited at first, which will lead to a “flip” of operating leverage.

“It simply means that expenses will start to grow faster than revenues, and none of these factors will be positive for the bottom line,” Banks said.

There’s a lot more liquidity in the market than people think, the executive noted, noting that companies and consumers are “still full of cash.”

“There’s just a lot of liquidity. You must achieve further reduction of this liquidity. We think it will,” Banks said. “Then when this starts to happen as the Fed continues to tighten, we agree that it is hard to imagine at least another Fed hike. [but] most likely two. This is still our forecast, and then you go from there.

Regarding investing in this environment, Banks stressed the importance of equity and fixed income neutral weight.


“We are thinking about the intermediate and long term, both asset classes will work, but we are not adding money to the system now, to the accounts of our investors. We think that you have a chance to enter at a more favorable level. ” said the Vice President.

“Now it is convenient for us to observe the markets. We think we will have a better chance of putting more money into the work,” he added. “When we do that, we’ll probably be looking at things like small caps, mature international, emerging markets, and probably still leaning in favor of value over growth.”


Megan Henny of FOX Business contributed to this report.