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Bank of America shows top strategist David Bianco the door

BoA says decision to release Bianco not linked to his upbeat report on the US stock markets, which was panned by critics

A top strategist at Bank of America has been shown the door just three days after releasing an upbeat report on the US stock markets.

Earlier this week, David Bianco, chief equity strategist at Bank of America’s Merrill Lynch, issued a research note in which he predicted the S&P 500 index of the US’s top companies would rally substantially this year. Bianco predicted the index would end the year at 1450, raising his already bullish forecast by 500 points. The week before his prediction, the S&P 500 closed at 1154.

Worried by the sluggish US economy and Europe’s financial woes, many of Bianco’s competitors have slashed their forecasts, including Barclays Capital, Wells Fargo and Yardeni Research. Gina Martin Adams, senior analyst at Wells Fargo, has cut her year-end forecast from 1390 to 1250.

Bianco argued that stock markets were predicting a second recession that he believes is unlikely to materialise. In the note, Bianco said low interest rates, strong corporate earnings and good commodity prices were likely to lead to a substantial rally.

The note was panned by some commentators. The FT’s Alphaville blog asked: “Whatever Merrill Lynch’s David Bianco is smoking, we’d like some of it.” The Zero Hedge blog said Bianco was “perfectly oblivious of the world ending one broke European country at a time.”

Bank sources said his departure had nothing to do with the note. They also said his departure was not part of troubled Bank of America’s plans to axe 40,000 jobs. Bank of America outlined a plan to cut bn in expenses earlier this week as it struggles with the legacy of the credit crisis.

A Bank of America spokeswoman said Bianco had left following a decision to merge the equity division he worked for with Merrill’s “quantitative” division.

Savita Subramanian will now head US equity strategy. © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds