Latest from BCA Research

The market has been held hostage by surging rates. Zombie companies are “alive” and are multiplying – they are highly sensitive to surging borrowing costs. Underweight Utilities to reduce portfolio duration. Maintain neutral positioning of Basic Materials but take a granular approach to allocations within the sector.

Households’ excess pandemic savings will eventually run out, but we continue to disagree with the widespread view that they’re already gone or entirely in the hands of the wealthy. Consumers’ demise continues to be greatly exaggerated.

Special Report

European auto stocks are cheap, but even if European carmakers can rise to the challenge created by Chinese EVs, shareholders will suffer.

An update to our US bond strategy following this morning’s employment report.

In this report, we explore some trading opportunities after a volatile few weeks for FX markets.

Special Report

India’s intake of industrial commodities is 10-to-20 times as small as China’s. Capital goods are five times as small. Hence, India is not in a position to offset any decline in Chinese demand for these commodities and goods.

India’s intake of industrial commodities is 10-to-20 times as small as China’s. Capital goods are five times as small. Hence, India is not in a position to offset any decline in Chinese demand for these commodities and goods.

The EU’s transition to a carbon tax launched this week via its Carbon Border Adjustment Mechanics (CBAM) will lead to higher inflation in the medium term (3 – 5 years out), and will stoke consumer (i.e., voter) antipathy if it becomes effective in 2026. As a result, the tax will be watered down. Food and energy prices are particularly at risk, as imported fertilizers, and electricity-generation and -transmission components made from steel and aluminum are affected by the CBAM. We remain long oil, gas and metals equity exposure via the XOP, XME and COMT ETFs. We also remain long gold to hedge inflation.

Both USHQ portfolios outperformed their benchmark and the BCA Score L/S posted its best month of the year. In fact its one-month return in the top decile of all monthly returns. The BCA Score is constructed to provide downside protection in times of turmoil, and last month was no exception.

There is a connection between the bond market meltdown and Republican Party’s meltdown. Investors should expect more short-term financial market volatility as a result of the triple whammy of high bond yields, high oil prices, and a strong dollar.