Latest from BCA Research

US Treasuries typically outperform both equities and global government bonds during downturns. Recent political shifts could lessen that outperformance this cycle, but we doubt it will disappear completely.

Special Report

Do not play the bounce in US and global cyclical assets as Trump backpedals from the trade war. China will talk, but the pace will be slow and the outcome disappointing. Fiscal stimulus will surprise marginally in the EU, China, and even the US, but still may not rescue the business cycle.

This week, our three screeners all cover equity plays centered around safe stock selection within Equity Analyzer.

Although the sell-off in the US dollar and relative outperformance of non-US stocks will pause over the coming months as a global recession begins, the fading of US exceptionalism will still cause the dollar to weaken and US stocks to underperform over a multi-year horizon.

Bank Credit Analyst

This report is an edited transcript of our recent conversation with Mr. X and his daughter, Ms. X, who visited our office to discuss the rapidly evolving economic outlook. The US and global economies are likely to enter a recession this year barring a decisive tariff reversal or the passage of significant fiscal stimulus. Even the latter is not clearly bullish for stocks, as it risks a stagflationary outcome. Investors should be underweight stocks versus bonds and should respond to clear signs of stagflation by lowering fixed-income portfolio duration. We continue to recommend defensive equity sector positioning, an overweight stance toward value stocks, an underweight stance toward small caps, and gold over cyclically sensitive commodities.

Bessenomics has failed so far. The key pillars of Bessent’s policy mix – achieving lower interest rates and robust economic growth – have been severely jeopardized. The US dollar has depreciated for different reasons than Bessent had envisioned and has pushed up long-term US bond yields. A trade deal between the US and China will likely come too late to preclude a major downshift in global growth.

Amid the storm of global financial uncertainty, Argentina stands out as a free-market safe haven. The lifting of currency controls was the last step taken by this country to embrace market mechanisms. We recommend that investors buy Argentine equities, sovereign credit, and domestic bonds, and overweight Argentina within EM equity and fixed-income portfolios.

Special Report

Following the escalation of the US-China trade war, the Reserve Bank of Australia is priced to cut rates most aggressively among its G10 peers. Across the Tasman Sea, the Reserve Bank of New Zealand has already cut rates aggressively, but the economy has yet to respond to this policy easing. This Special Report will examine the prospects of monetary policy for both of these central banks.

The European economies are facing a major deflationary shock. We recommend that investors stay long a basket of Central European (CE3) domestic bonds. They should also upgrade CE3 bonds and stocks in their respective EM portfolios.