CoreMacro

Concerns about the savings rate’s sustainability ease after adjusting for retirements and capital gains. The US economy continues to grow at a pace that is neither too hot nor too cold and investors should remain fully invested in risk assets.

Special Report

Europe’s earnings recovery is increasingly difficult to dismiss. Margins, ROE, ROIC, and capital efficiency have all improved, while banks have re-emerged as an earnings engine. Cyclical conditions remain supportive, and the structural picture continues to improve: higher investment, improving productivity, and EU reforms could give the recovery staying power.

Special Report

We propose a unified framework for predicting the direction of short-term interest rates and long-term bond yields that brings together three approaches: 1) the saving-investment approach; 2) the Taylor rule approach; and 3) the portfolio balance approach. Our analysis suggests that bond yields in the US and many other countries have increased mainly because of a higher neutral interest rate and a larger term premium. Given the risk of a further rise in inflation expectations, investors should overweight inflation-linked bonds.

Special Report

China’s manufacturing edge should endure in the next few years. AI will challenge the country’s advantage in some industries, but geopolitics and weakening productive investment pose greater threats to sustaining China’s industrial leadership.

We review the track record of our broader investment strategy and individual calls. We also use this opportunity to close several positions that have become stale.

MacroQuant recommends a slight underweight position in equities, counterbalanced by a slight overweight to bonds, and a significant overweight to cash. The model is positive on the US dollar, modestly negative on gold, and bullish on copper and oil.

Special Report

Poland’s near-term growth story remains compelling: surging EU investment should cushion European weakness and support equity outperformance. But the clock is ticking. Demographics, skills shortages, and fiscal deterioration will increasingly constrain convergence. Favor Polish equities and the belly of the curve; expect further near-term zloty weakness against the euro.

BCA's CoreMacro and Portfolio Construction teams combine two distinct but intersecting lenses to revisit a once heralded opportunity: India. We upgrade India across both public and private markets, but the conviction is not the same everywhere.

If bond yields rise due to widening bond term premiums or escalating inflation expectations, Bessenomics is unlikely to avert a stock-bond collision. Buy back gold mining stocks.

In this report, we highlight notable developments on both sides of China’s BoP: a widening external surplus on the current account side, and shifts in how that surplus is recycled abroad through BoP financial account.