Latest from BCA Research
France finds itself in a unique, thorny situation. Can it heave itself out of it? And what does it mean for investors?
In our Alpha report, we deliver our Annual Forecast. The current macro narrative is that the US will continue to outperform the rest of the world, in large part because President Trump will again deliver fiscally led growth and global tariff carnage. In our view, 2025 will be the year of “Peaks.” Peak fiscal profligacy, peak de-globalization hysteria, and peak geopolitical risks. All three will reverse US Exceptionalism. But getting ahead of that trade is folly. For the time being, we concede that it is “America First” on all fronts. Particularly with the Greenback being a momentum currency.
Investors have given up on European assets, which now suffer exceptional discounts to US ones. However, tighter US fiscal policy, the end of Europe’s austerity and deleveraging, the LNG Tsunami about to hit European shores, and the global capex fueled by the Impossible Geopolitical Trinity mean that Europe’s time to shine will soon come back.
The post-COVID recovery has been one of excesses. Government deficits have ballooned, tight labor markets have led to a windfall of consumer spending, and equity valuations have soared on the back of lofty growth expectations. But these excesses will no longer be sustainable in 2025. Our theme for next year is Thin Is Back In. Government budgets, economic growth, and equity valuations will be leaner than investors expect. We discuss this the reasoning behind this macro view and the asset allocation implications that follow from it.
Today, we are unveiling an update to our MacroQuant model. The latest version of the MacroQuant model sees downside risk to stocks going into December and recommends increasing duration exposure in global fixed-income portfolios.
Today, we are unveiling an update to our MacroQuant model. The latest version of the MacroQuant model sees downside risk to stocks going into December and recommends increasing duration exposure in global fixed-income portfolios.
On October 15, speaking at the Economic Club of Chicago, Donald Trump called tariffs “the most beautiful word in the dictionary.” On Monday, he put those words into action by threatening to slap a 25% tariff on all imports from Canada and Mexico, and an additional 10% tariff on Chinese imports. Collectively, the three countries account for 45% of US imports.
The earnings season was good but failed to assuage investor concerns that earnings growth remains concentrated. Tepid earnings and sales beats were somewhat concerning. However, based on company commentaries, the US economy remains sound. While challenges remain, such as slowing global growth, a strong dollar, and weakness among lower-income consumers, companies see them as surmountable. The market expects earnings growth to broaden in 2025. We concur as long as there are no major disruptive events.
This week we conduct a thorough audit of our open positions by revisiting the original basis and subsequent performance of all 13 cyclical recommendations. Following the review, we recommend closing 6 of the 13 positions.