Latest from BCA Research

Special Report

Stocks perform worse in presidential election years than average years, especially in the first half of the year, and especially if the ruling party ends up falling from power. Investors should take risk off the table until the unemployment rate peaks.

The euro has weakened sharply since mid-July as US growth continues to outperform that of the Eurozone. Is a new bear market afoot for the common currency?

Magnificent Seven leadership is neither a new nor an unnatural phenomenon. There is no shortage of reasons why equities might have already made a top, but investors should not be tricked into thinking that the rally was somehow specious.

Our Portfolio Allocation Summary for September 2023.

In this week’s report, we assess the key reasons why the dollar has risen, and if that is set to continue.

If we look at global growth as an aircraft, the plane is experiencing failing engines and will lose more altitude in the coming months. Yet, neither Chinese authorities, nor the Fed or the ECB will be quick to come to the rescue as global growth downshifts. These dynamics herald a stronger US dollar and lower EM risk asset prices.

Special Report

Carbon credits as an asset class are becoming increasingly investable. Given that the structural bull case for this asset class is compelling, strategic investors should long carbon credits. However tactical investors should book profits or consider merits of a short position, since prices are likely to correct over the next 12-24 months.

Both USHQ portfolios outperformed along with the BCA Score long/short. We also provide an early look at a factor timing model we have been developing. It currently favors Technicals, Quality, and Size.

The CCP’s fiscal measures and property-market support are important steps to deal with China’s liquidity trap. The fiscal measures are the first such direct aid to households and small firms seen since 2020, which included tax relief and waived social security contributions, according to the IMF. The size of the programs has not been disclosed. If they are successful, global commodity demand will get a boost at the margin, particularly oil and base metals. We remain long equity ETFs to retain exposure to energy and metal producers and refiners, and long the COMT ETF for direct commodity exposure.

The geopolitical backdrop remains negative despite some marginally less negative news. China’s stimulus is not yet large or fast enough to prevent a market riot. Two of our preferred equity regions, ASEAN and Europe, are struggling to outperform. Investors should stay defensive overall.