Latest from BCA Research
A short insight on the ECB and near-term implications for European asset markets.
Republicans are favored in the House and Senate even if they do not win the White House. A Democratic sweep is a 20% risk. The policy implication would be inflationary, but not so much as under a Republican sweep. Election uncertainty should increasingly weigh on cyclical and high-beta assets in the second half of 2024.
In this insight, we provide an update on the Canadian economy, given yesterday’s rate cut, and implications for Canadian assets.
The long-term winners from the generative-AI gold rush are unlikely to be the ‘picks and shovels’ stock Nvidia or the overvalued US superstars of Web 2.0. We discuss the structural investment implications. Plus: time to go tactically overweight global consumer discretionary (RXI).
Global Equity Score remains bullish. Major upgrades were made to Industrials, Consumer Discretionary, and Communication Services in the Sector Model. The Style Indicator continues to favor Large-Cap Value.
MORENA has once again swept the Mexican election: Claudia Sheinbaum will be president, with little to no constraint in Congress. All in all, Mexican politics will remain stable and overall supportive of markets. In the medium term, fiscal spending will return to conservatism and the constitutional reforms will lead to mixed fiscal and economic repercussions. In the long term, however, fiscal and institutional risks will rise. We advise investors to remain overweight Mexican risk assets relative to EM in cyclical and structural time horizons, but prepare for Mexican markets to sell off in absolute and relative terms in the next couple of months.
At the asset class level, the GAA Quant model is overweight equities, underweight bonds, and neutral cash.
The US economy is in the “Overheating” phase, so stronger growth brings higher inflation. Tight monetary policy means recession is still likely over the next 12 months. Stay defensive.