Latest from BCA Research
We maintain our 12-month US recession probability at 60%. However, until the “whites of the recession’s eyes” are more clearly visible, we would refrain from moving to a fully defensive stance.
A deflationary shock from shrinking exports will ripple throughout the Korean economy. We are downgrading the KOSPI from overweight to neutral and reiterating a long position in 10-year domestic bonds, currency unhedged.
The Q2 reporting season underscores the resilience of corporate earnings, supporting our bullish outlook for equities, an outlook further bolstered by expectations of fiscal and monetary easing. However, for now, we are booking profits, closing overweights in Technology and Growth, and initiating a new overweight in Real Estate.
This week our three screeners identify: Broader and more accessible tech-driven equities, US equities exposed to cryptocurrencies, and doubling-down on top-decile stocks.
Economic activity and hiring cooled significantly in the first half of the year. The most important question for investors is whether this signals an imminent increase in labor market slack.
A high US tariff and the lingering uncertainties on the US-India trade deal will hurt investors sentiment. This and contracting corporate profits will push share prices lower. Stay underweight Indian stocks.
Investors should stick to a defensive stance in the very near term as the Russia-Ukraine conflict and persistent trade tensions cause market volatility.
Over the first half of 2025, AI capex outpaced both consumption and all other investments in its contribution to US growth. Like all other capex cycles this one will end in tears. However, the indicators we track suggest that AI capex can continue supporting growth and markets for now. Remain Neutral on equities. Upgrade Health Care to Overweight and downgrade Consumer Staples to Neutral. Buy tail risk protection.
