CoreMacro

Special Report

An important annual event is when long-time client Mr. X visits BCA strategists at the end of each year to talk about the economic and financial outlook and a write-up of the discussion is published as our Annual Outlook report. Recently, BCA’s former Chief Economist Martin Barnes had the pleasure of a chance encounter with Mr. X at an airport lounge, and this report is an edited transcript of their conversation.

First Republic Bank’s earnings report showed how its struggles have exaggerated the perception of other banks’ distress. Ex-FRC, the banking system appears to be coping with the post-Silicon Valley Bank turmoil pretty well.

Inflation is hot, but inflation expectations are not. We explain the answer to this apparent puzzle and discuss the investment implications. Plus we identify two commodities that are at imminent risk of reversal.

Special Report

Government financing vehicles (LGFVs) are a key component of China’s credit system. LGFV bonds make up a 40% share of the onshore corporate bond market, and loans to LGFVs make up 20% of total loans. LGFV debt-servicing capacity is very weak. What are the ramifications of all of these for Chinese economic growth and financial markets?

European equities continue to inch closer to record highs, yet, their earnings outlook is deteriorating. How can investors build hedging portfolios using the message from earnings and valuations to protect themselves against the growing risk of a pullback?

The latest round of earnings calls from the systemically important banks was encouraging on balance. Households are still flush and still spending and consumer and business delinquencies remain remarkably low. Though a recession is surely coming, it doesn’t seem to be lurking just around the corner.

The dollar has entered a structural bear market. Although the greenback could get a temporary reprieve during the next recession, investors should position for a weaker dollar over the long haul.

China's recovery will be driven by consumer spending in general and on services in particular, while industrial sectors will disappoint.

Investors and regulators would be foolishly complacent if they didn’t consider the possibility that the banking turmoil could reduce credit availability and slow economic activity, but the most recent data suggest that the aggregate banking system is bouncing back nicely.

We Introduce our new macro models for the Eurozone’s equity earnings, which include sectoral forecasts. Find out what they predict for the next six-to-nine months.