Latest from BCA Research
Investors should hold gold, build up some cash, tactically overweight US equities relative to global, and prepare for at least minor oil supply shocks – possibly major shocks – as the Israel-Iran war escalates.
This week our three screeners explore equity trades in Robotics, European Quality and Technical, and Hong Kong.
Israel has taken unilateral action against Iran on June 12. According to the media reports, the following are the key developments: Israel has attacked multiple targets across Iran, including in the capital Tehran. Israeli Prime Minister Benjamin Netanyahu has stated that the Operation Rising Lion would “continue for as many days as it takes to remove” the alleged Iranian nuclear threat. The US has stated that it did not participate in the attack, calling Israel’s action unilateral.
The perfectly synchronised moves in US, Japanese, German, and UK 30-year bond yields through the past two months are odd… and irrational. These irrational moves present compelling investment opportunities.
The London Sino-US trade talks offered hope of de-escalation, but Chinese equities remain under pressure from deflationary headwinds and lack a clear macro catalyst to trend higher.
While we anticipate higher inflation in June, it looks increasingly likely that the price impact from tariffs will be less aggressive and long-lasting than many feared.
Bond market volatility will spike again in the near term. The Fed is committed to an easing cycle yet the Trump administration’s signature fiscal policy action will stimulate the economy. Tariffs are supposed to keep the budget deficit contained but they are inflationary.
This month, we flip the order of our chartpack. We focus on the secular/long-term first. Both because we think that we have something profound to say and because we believe that our tactical call has very little new value-add. We remain convinced, as we have been for over a year, that President Trump is not willing to upend decades of US trade policy.
