Essentials

Bank Credit Analyst

We believe the PBoC’s recent policy stimulus might bolster investor confidence, potentially stabilize onshore Chinese equity prices, and provide modest support to offshore stocks. However, they are unlikely to significantly boost economic growth in the mainland.

Bank Credit Analyst

Bank Credit Analyst

In Section I, we discuss the economic and financial market outlook in the wake of Jerome Powell’s Jackson Hole speech. Equity investors may pursue a bullish rate-cut narrative for a few months, and it is possible that the economic data will remain consistent with a soft landing for a time. However, we recommend selling rather than buying such a rally, given an ongoing decline in labor demand that will ultimately turn recessionary. Investors should remain conservatively positioned. In Section II, we present a list of answers to questions that we have received about our equity portfolio positioning recommendations. We continue to recommend underweighting small caps, overweighting US stocks, and favoring defensive sectors. We are neutral growth versus value for now but expect to downgrade once clear recessionary dynamics emerge.

Bank Credit Analyst

Bank Credit Analyst

In Section I, we note that the US labor market is turning, and that the economy is indeed slowing to a recessionary tipping point. Disinflation continues, but not at a pace that would allow the Fed to cut aggressively outside of the context of a recession. We continue to expect that Donald Trump will win in November, and trade policy under a second Trump presidency represents a significant risk for investors. We continue to recommend conservative positioning over a 6-12 month time horizon. In Section II, we argue 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.

Bank Credit Analyst

The uranium bull market is climbing a wall of doubt. Read more about the underlying supply-demand fundamentals supporting the current bull market.

Bank Credit Analyst

Bank Credit Analyst

In Section I, we examine some concerning signs of US economic weakness that emerged in June. We also discuss portfolio positioning in the face of falling interest rates and cross-check our recommended US equity overweight in the face of extremely optimistic expectations about AI’s impact on growth. We conclude that defensive positioning continues to be warranted. In Section II, we dig into those optimistic expectations for AI. We find that the US equity market is significantly overvalued unless the deployment of AI technology causes a 10-to-20 year productivity surge in line with what occurred during the IT revolution of the 1990s, with persistently high margins on the revenue generated from the improvement in growth. We doubt that AI will end up truly boosting economic activity by this magnitude.

Bank Credit Analyst

The uranium market is at a crossroads of economics and geopolitics. This report presents an overview of supply and demand factors that have led to the formation of the present supply deficit.

Bank Credit Analyst

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.