CoreMacro

Over the past few weeks, global equities have been hit by rising scepticism over the bullish AI narrative and increasing concerns over global growth. Stocks should stabilize in the near term, but the medium-term direction is to the downside. We expect the S&P 500 to drop to 3750 in 2025 and the 10-year Treasury yield to fall to 3%.

Special Report

Today, we are sending you a report recently published by BCA’s Emerging Markets Strategy service titled Little Cash On The Sidelines. Arthur Budaghyan, Chief EM/China Strategist, argues that “cash on the sidelines” in the US is low relative to the market value of investable US securities in general, and US equities in particular.

Special Report

In this Special Report, Jonathan LaBerge of The Bank Credit Analyst argues that the Fed should abandon the framework changes that it made in 2020, both to its inflation and employment objectives. If “structural dovishness” is made a permanent feature of Fed policy, investors can expect more frequent booms and busts in financial markets, and higher odds of future inflation overshoots.

Don't buy the dip. The equity bull market is over. The US will enter a recession in late 2024 or in early 2025.

The conventional wisdom is wrong: Trump is not going to substantially cut taxes once in office; he is going to raise taxes by jacking up tariffs. To the extent that this dampens economic activity, it is bad news for stocks but good news for bonds.

The consensus soft-landing narrative is wrong. The US will fall into a recession in late 2024 or early 2025. We were tactically bullish on stocks most of last year, turned neutral earlier this year, and are going underweight today. We conservatively expect the S&P 500 to drop to 3750 during the coming recession.

Global consumer spending is likely to slow over the coming quarters, culminating in a major economic downturn in late 2024 or early 2025. Investors should maintain benchmark exposure to equities for now but look to turn more defensive by the end of this summer.

The US economy remains on a path towards a recession, most likely starting in late 2024 or early 2025. For now, investors should maintain a benchmark allocation to equities, but employ a barbell strategy of overweighting defensives and materials.

Special Report

In a guest research report, Martin Barnes, BCA’s former Chief Economist, revisits the idea of the Debt Supercycle and discusses how its true end may emerge in response to a fiscal crisis in the US over the coming few years.

There is a path to a soft landing, but it is a narrow one. We estimate that there is only a 20% chance that the US will avoid a recession before the end of 2025. We are currently neutral on global equities, but expect to downgrade stocks to underweight during the summer.