Stocks and the economy prospered in 2023 despite persistent inflation and a host of other challenges, but they may not be so lucky in 2024, according to Bank of America. The bank expects the year ahead to be more challenging, with markets underpricing risks that could make bonds and cash attractive and riskier assets such as stocks less so, investment strategist Michael Hartnett said in his look-ahead at the year to come. “Bulls outperformed bears like us in 2023 but we await the classic combo of bearish Positioning, recessionary Profits & Policy easing, the 3P’s, to flip to ‘full bull,'” Hartnett wrote in Sunday a report for clients. “We believe the risk of a ‘hard landing’ for the economy is higher-than-expected.” In that kind of a climate, Hartnett expects commodities — including copper and oil —to outperform, along with bonds and cash. Far less lucrative returns await global stocks, gold and the U.S. dollar, according to the forecast. As a firm, BofA in September actually upped its S & P 500 forecast to one of the most bullish on Wall Street, projecting the index to close out the year at 4,600. That implies another 1.5% in upside from here during a year in which the large-cap barometer has soared 18% after a tough 2022. However, Hartnett said the bank expects global stocks to advance just another 2%-4% next year, with copper and oil posting double-digit returns and high-yield and investment-grade bonds also among the leaders. “We are sellers of crowded ‘no landing’ plays into recession,” Hartnett said, making a call that includes the “Magnificent Seven” tech stocks along with semiconductors, homebuilders and biotech. The firm is “buyers of ‘hard landing’ plays at onset of recession,” he said, including REITs, banks, defensive stocks, small-cap stocks and China. “If US slowdown causes Fed/politicians to panic ease in election year before inflation close to 2%, that [would be a] catalyst for outperformance of leverage over quality, small over large, value over growth, international over US,” he added. Despite Hartnett’s warnings, BofA overall is looking for a soft landing with easier monetary policy. It expects the Federal Reserve to start cutting interest rates in June and to enact three quarter percentage point reductions by the end of the year.