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.
Upward pressure on Japan’s real bond yield justifies overweighting the yen and underweighting overvalued tech. Plus: two new tactical trades are long JPY/EUR and short platinum.
We upgrade European small caps to maximum overweight and double down on our existing recommendation to go long European small caps relative to US ones.
Alligator Bite #1: As US net portfolio inflows decline (the alligator's upper jaw closes), its current account deficit must narrow (the lower jaw will also shut). Alligator Bite #2: As the US current account deficit shrinks (the lower jaw closes), current account surpluses in the rest of the world will narrow (the upper jaw will come down).
Downward pressure on the pound will rise in the coming months. Inflation will go up, so will bond yields. It’s time to book profits on Egyptian domestic bonds.
This report analyzes China’s persistent deflation, which is rooted in supply-side forces. Consumption support will be slow and incremental, keeping deflationary pressures elevated for the next 6–12 months.
Trump’s immigration policies are protecting the US economy from a sharp rise in unemployment but steering it into a ‘mini stagflation’. Plus: a new tactical trade is to underweight global technology (IXN).
MacroQuant’s US equity z-score is dangerously close to the -1 threshold. Moves below that threshold have reliably coincided with equity bear markets in the past. As such, MacroQuant recommends an underweight on stocks, offset by an overweight on bonds and cash.
Investors should modestly underweight equities in their portfolios and look to turn more aggressively defensive once the whites of the recession’s eyes are visible. We think that will happen within the next few months.