Latest from BCA Research
Bullish equity sentiment may persist in the second quarter on the Fed’s pause, but tight monetary policy, financial instability, elevated recession odds, extreme US polarization and policy uncertainty, and still-high geopolitical risk should encourage investors to maintain a defensive position for the coming 12 months.
The Global Equity Score, while bearish, increased this month resulting in an upgrade to Technology and Materials Sector Scores. The BCA Style score now favors small cap growth.
MacroQuant is bearish on equities, overweight bonds, and overweight cash. Within equities, the model favors Europe over the US and is neutral on EM.
The OPEC 2.0 supply cuts announced over the weekend will be fundamentally bullish international crude oil prices. According to our model, brent will cross the USD 100/bbl mark by August this year. We believe the cohort is pre-emptively cutting oil supply in response to threats to their economic interest, including risks arising from the higher possibility of recession and rising market volatility following the banking crisis.
We think the banking turmoil set off by Silicon Valley Bank’s failure will prove to be less than it’s been cracked up to be and that it will not derail the near-term equity we expect.
Is the European banking system hiding nasty surprises? How will the recent stress affect European growth and the ECB’s policy outlook?
High rates have hurt real estate and, now, banks. The next shoes to drop: Loan growth, profits, and employment. Stay defensive. Recession is probable, but risk assets have not priced it in.
This week we are sending you a Style Chart Pack, which now includes a standalone macro section, as well as macro, fundamentals, valuations, technicals, and uses of cash charts for the S&P 500, Defensives vs. Cyclicals, Growth vs. Value, and Small vs. Large. In the front section of this publication, we will review recent equity performance, and attempt to answer real estate sector-related questions that are foremost in investors’ minds.