Latest from BCA Research

In this Strategy Outlook, we present the major investment themes and views we see playing out next year and beyond.

We expect a bullish gold environment in 2023, conditional on a more dovish Fed. We are hesitant to go strategically long gold, since our view hinges on one variable: US monetary policy. We remain tactically bullish gold to take advantage of the reduced pace of US rate hikes.

Special Report

For the first time in decades, the Fed is raising rates while the US Leading Economic Indicator has fallen into contractionary territory and the global manufacturing PMI’s new orders sub-index has dropped below 50. Hence, the outlook for global stocks is currently poor. However, the underperformance of EM equities versus the US is in a late stage. We are putting EM stocks on an upgrade watch list and recommend buying EM domestic bonds opportunistically.

The pandemic gave older Americans and Brits a massive carrot and stick to retire early. The carrot being a surge in wealth, the stick being a risk to health. In other major economies, the carrots and sticks were smaller or non-existent. Hence, the shortage of older workers, and the resulting wage inflation, is a specific US and UK problem. We go through the important economic and investment implications for 2023.

Special Report

Investors should maintain a conservative and defensive strategy until recession risks are clearly reduced.

Investors should maintain a conservative and defensive strategy until recession risks are clearly reduced.

This month we begin tracking a US small-to-mid cap BCA Score strategy (USHQ SMID) along with the original USHQ strategy focused on the US Large cap space. Both strategies outperformed the benchmarks in November despite the BCA Score long/short finishing the month flat after an early month rally in low ranked stocks inspired by the US CPI release.

Special Report

China’s infrastructure investment growth rate will likely slow from its current nominal 14% to 4-6% in 2023H1, on a year-over-year basis. Funding constraints and a shrinking pool of good projects will cap the upside in China’s overall infrastructure fixed-asset investment (FAI) in the next six months.

This week we present our Portfolio Allocation Summary for December 2022.

Special Report

2023 will be another challenging year for the US equity market, characterized by the Fed’s battle with inflation, slowing economic growth, and earnings contraction. The S&P 500 is likely to reach new lows in the first half of the year falling as much as 20-25%, only to rebound sharply in the second half, once all the bad news is priced in.