CoreMacro
BCA’s flagship global macro and investment strategy platform, helping investors anticipate regime shifts, connect signals across regions and asset classes, and navigate the world’s most difficult macro questions.
Chinese A-shares will probably begin forming a volatile bottom. The basis is that authorities will likely throw the kitchen sink at the onshore market in an attempt to stabilize share prices. The same is not true for offshore listed stocks. Hong Kong-traded Chinese share prices will likely continue to fall. Beijing is less concerned with offshore stocks as their holders are primarily foreign investors.
Easier financial conditions, rising home prices, rebounding consumer sentiment, and a stabilization in manufacturing activity all augur well for near-term US growth prospects. An unsustainably low savings rate is a key risk to the US economic outlook. Our revised forecast is centered on a recession starting in late 2024 or early 2025.
The disinflation to date has been benign because it has come almost entirely from improving supply. But the supply-side tailwind has exhausted, so the last mile of the journey to 2 percent inflation will be the hardest, especially in the US and the UK. We discuss the investment implications. Plus, we highlight an interesting sector pair-trade.
The stars have aligned for a major outperformance of Chilean stocks versus the EM equity benchmark. Plummeting inflation in Chile will push monetary authorities to continue their aggressive rate cuts, engineering a quick economic recovery this year. We maintain our overweight stance on Chilean stocks and fixed income, and recommend investors go long Chilean banks / short the overall EM index, buy 10-year government bonds, and go long CLP / short COP.
Our Central Bank Monitors support European central bankers’ decision to hold rates steady. Find out what it means for European fixed-income portfolio allocation.
The Saudi economy is facing internal and external headwinds. The geopolitical conflict is also escalating in the Middle East. EM equity portfolios should stay neutral on Saudi stocks. EM sovereign credit portfolios should upgrade Saudi Arabia from neutral to overweight.
Following the release of the white paper yesterday, today we are sending you the inaugural issue of the MacroQuant Monthly, a report summarizing the output of our next-generation MacroQuant 2.0 model.
We describe and explain the wide disparity of wage inflation across G7 economies, and discuss what it means for the Fed, ECB, BoE, and BoJ policy moves in the coming year. Plus: we highlight two investments ripe for reversal, and two investments ripe for rebound.