Latest from BCA Research

Signs that the median voter is moving to the left are everywhere. Markets will cheer the move as it means more government spending. In the long term, it depends if policymakers stop at fiscal stimulus. In this Monthly Report, BCA's Geopolitical Strategy reviews prospects for "Bremorse," latest in the U.S. election, Italian political crisis, tensions in South China Sea, and the long-term future of Europe.

The choppy bottoming process in the Chinese economy will likely continue in the coming quarters. Second quarter GDP numbers to be released later this week will likely indicate that the economic downtrend has halted. Our model is currently predicting a pickup in Chinese growth for the first time since 2013.

The breakout in the S&P 500 could boost flows to EM, and momentum could overwhelm fundamentals for several weeks. Nevertheless, U.S. interest rate expectations will rise and it, along with weak EM profits, will cap upside in EM risk assets. Take profits on our short EM stocks/long 30-year U.S. Treasurys position. Reduce short exposure to EM currencies by closing the currency trades where the long side is partially against the yen.

Bank Credit Analyst

Long-time subscriber Mr. X recently visited our office to discuss three issues: Brexit, the outlook for China and the seeming contraction between the performance of equity and bond markets. This Special Report is a transcript of our conversation and, not surprisingly, the broad conclusions supported a cautious investment strategy.

A spike in economic uncertainty explains the recent move lower in Treasury yields. Given the resilience of global growth, we expect yields to rise as uncertainty ebbs in the coming months.

Special Report

Today, on a tactical basis, we are moving our allocation on EM hard currency bonds to neutral from underweight. In this Special Report, we elaborate on the reasons leading to this decision.

Our Cyclical Indicator Update reveals that a defensive portfolio strategy remains the best bet to navigate the crosscurrents of stagnant profit/economic growth yet abundant global liquidity.