GeoMacro

The geopolitical backdrop remains negative despite some marginally less negative news. China’s stimulus is not yet large or fast enough to prevent a market riot. Two of our preferred equity regions, ASEAN and Europe, are struggling to outperform. Investors should stay defensive overall.

Investors should underweight global equities and risk assets; overweight US stocks relative to global; and overweight defensive sectors versus cyclicals.

Special Report

Countries and commercial operators are racing into space to accrue economic gain from space exploration. In coming years, the space industry will continue to grow, as humans venture into space for tourism, mining, farming, and even habitation. The industry is still in its infancy but has tremendous potential. We believe it is one of the next big investment ideas. We will monitor the theme and take on investment exposure once it matures.

Investors should prepare for an equity market pullback this fall, prefer Treasuries over stocks, and US defensives over cyclicals. A pullback could also morph into another bear market given that monetary policy is tight, policy uncertainty will spike, global growth is slowing, and geopolitical risks are still high.

Special Report

The next six-to-nine months hold a crucial test of whether the equity market will ratify the soft landing and the Biden administration or not. If so, then markets will rally on policy continuity and likely gridlock. If not, then markets will struggle until the election is over and again in 2025-26.

Special Report

The next six-to-nine months hold a crucial test of whether the equity market will ratify the soft landing and the Biden administration or not. If so, then markets will rally on policy continuity and likely gridlock. If not, then markets will struggle until the election is over and again in 2025-26.

The global economy will not enjoy an “immaculate disinflation” but will suffer a very maculate one due to China’s growth slowdown and restrictive monetary policy in the developed world. Investors should stay overweight low-beta assets.

Special Report

The odds of Russia cutting oil output will rise going into 4Q23, as Ukraine’s endgame increases pressure on it, and it actively seeks to undermine President Biden’s re-election. We reckon a 2mm b/d cut would push Brent above $140/bbl by December 2024. This would push inflation and inflation expectations higher and raise the odds of more Fed rate hikes. BCA Commodity & Energy Strategy will remain long the COMT and XOP ETFs. At tonight’s close, we will be getting long December 2024 $100/bbl Brent calls.

Special Report

The Supreme Court is a generator of certainty rather than uncertainty for US markets. In the event of a constitutional crisis, a court intervention will likely reduce volatility.

The snap election which took place on Sunday resulted in a political deadlock in Spain. No single party has won enough seats to form a government. More importantly, both the left-wing bloc and the right-bloc fell short of the 176-seat majority needed in the 350-seat lower house. Negotiations are taking place as we publish, but neither side can see a clear and straightforward path to form a working government. Spain is heading into a political deadlock.