Latest from BCA Research
Labor market strength and consumers’ evident willingness to dip into their pandemic savings keep our optimistic consumer thesis intact. We remain tactically overweight equities.
European inflation will decline through 2023, which will greatly help households and consumption. But can European inflation remain low after that?
MacroQuant remains bearish on risk assets and the style score turns positive on value vs. growth.
MacroQuant is overweight bonds, underweight equities, and neutral on cash. Within the equity universe, the model is underweight the US and overweight Japan, the UK, and Australia.
Our best calls of the year were long defensives over cyclicals, short Russia and emerging Europe, long aerospace/defense, short Greater China, and long Latin America. Our worst call of the year was long cyber security stocks.
Commodity currencies have been rather resilient, despite the broad rise in the dollar this year. In our view, we are about to experience a big rotation in commodity currency market performance at the crosses, from NZD, to CAD and finally to AUD.
Is China completely abandoning its dynamic zero-COVID policy? When will the economy start recovering? What are the implications for Chinese stocks and China-related assets? Have authorities provided enough financing to property developers? Will developers be able to repay these loans and, if not, who would bear the cost of potential defaults? What should be the strategy for Chinese onshore rates and the RMB?
Recession is not yet fully priced in, so markets have further to fall next year. But watch for a buying opportunity in the second half.