Latest from BCA Research
Inflation’s underlying trend was headed lower prior to the Iran war. This makes the recent back-up in bond yields look like an attractive buying opportunity.
The relief rally in stocks can continue a while longer. However, much can still go wrong. As such, we are retaining a 12-month underweight to stocks but are moving to neutral on a short-term tactical horizon.
Outside Asian semiconductor producers, EM corporate earnings and profitability have seen little improvement. Despite the ceasefire in the Middle East, the medium-term outlook for EM stocks is still unattractive.
We remain overweight APAC in both Private Equity and Venture Capital, recognizing the region and its opportunities have evolved meaningfully. Buyouts are growing faster than many realize, driven by Japan, while a deeper reset in fundamentals versus global markets supports stronger upside potential.
Trump’s breaking point is encapsulated by the combined drawdown in stocks plus bonds reaching 12-15 percent. On this basis, we describe how to ‘trade Trump’. Plus, we highlight three positions that should do well independent of Trump’s actions, including a new trade.
The ceasefire announced on Tuesday may signal peak intensity in the Middle East crisis, but sustained energy price pressures will continue to challenge Chinese corporate profitability.
As we publish this regularly scheduled GeoMacro Alpha Report, President Trump is warning of civilization-ending strikes against Iran. A bluff? Stage Five on the Seven Steps of Maximum Pressure? A real threat to use weapons of mass destruction? The odds and pattern of Trump's behavior are skewed towards the former, but even small odds of the latter make trading the next 24 hours dangerous.
Domestic politics suggest that President Trump needs to retreat from the war in Iran, but strategic factors suggest not. Stay defensive for now.
