Latest from BCA Research

Special Report

Our recommendations for blogs and X’s (on the economy, financial markets, asset allocation, bonds, quants, energy, real estate, geopolitics, and specific countries and regions) to try over the holidays.

Global Investment Strategy predicted the surge of inflation in 2021/22 and the immaculate disinflation of 2023. Now their unique framework is predicting a recession in the second half of 2024.

Democrats are favored to win the election until recession materializes. But recession risks are high. Investors should adopt a defensive and conservative strategy in 2024 amid extreme US policy uncertainty.

Special Report

The overarching macro theme for China in 2024 will be deflation and its impact on the economy, macro policies, and financial markets. Widespread deflation, in combination with high debt levels and falling real estate prices, has unleashed debt deflation and balance sheet recession dynamics. The latter are rendering monetary policy inefficient.

Falling core inflation in the US over the short run will boost real disposable household income, which will keep consumption – ~ 70% of US GDP – strong. Over the medium- to-longer term – 3 to 5 years out – inflation risks rise as fiscal dominance becomes the Fed’s modus operandi, and economic fragmentation becomes entrenched. War and the expansion of war remains an inflation risk. In this environment, gold remains our preferred hedge.

Meager credit growth and shrinking real wages will keep Thai inflation very low in the coming months. The currency will get support from an improving current account surplus. Fixed-income investors should upgrade Thailand from neutral to overweight within EM domestic bond portfolios.

Special Report

In this Special Report, we take an in-depth look at the outlook for monetary policy in Australia and discuss the impact of an elevated policy rate on the economy. We recommend an underweight country allocation to Australian government bonds and look for opportunities to go long the Australian dollar.

Illegal immigration into the US has skyrocketed to record levels. Correctly accounting for this, US real consumption growth on a per head basis is already fragile. Meanwhile, the real bond yield is only now approaching the pain point that typically triggers a recession. Ahead of the upcoming US jobs report, we point out what it would take for the Joshi rule real-time US recession indicator to breach its event horizon. And how to position in stocks and bonds, both tactically and cyclically. Plus: potential turning points in Biotech and Genome, ADBE, and Taiwan versus China.

In this update we break down Q3 2023 earnings. We found positive surprises from mega caps masked a relatively normal earnings season. Both USHQ portfolios moderately underperformed their benchmarks as market optimism for a soft landing hurt the low volatility, high quality tilt of the BCA Score.

This month the BCA Sector Score upgraded Consumer Staples and Communication Services. In response, Energy finally fell out of the top spot. Also, the BCA Style Score continues to favor large cap growth. To give context to the global style tilts, we break down the factor long/short performance by region and suggest some screens.