Economic Growth
The next six-to-nine months hold a crucial test of whether the equity market will ratify the soft landing and the Biden administration or not. If so, then markets will rally on policy continuity and likely gridlock. If not, then markets will struggle until the election is over and again in 2025-26.
Commentators often use notions like debt deflation, balance sheet recession, and liquidity trap interchangeably. Yet, these are different concepts. This report develops a framework and provides a diagnosis of China’s economic malaise. A follow-up report will deal with what kind of treatment is needed for a recovery. As a trade, we recommend shorting the EM equity index.
2023 is shaping up as a record-breaking year for global oil demand, according to our colleagues BCA's Commodity & Energy Strategy (CES). By year end, they expect the world will be consuming a record 103.5mm b/d, an increase of 2.6% year-over-year (yoy).…
Mexican financial markets have been this year’s stellar outperformers, both in absolute terms and relative to their EM peers. Naturally, the question arises: how sustainable is this rally? According to our Emerging Markets Strategy team, Mexican markets are…
The conventional wisdom is that China’s economy is overly indebted and too reliant on residential construction and exports as drivers of growth. While there is much truth to these claims, they ignore the underlying problem ailing China: excess savings. High…
The above chart illustrates the BCA Market-Based China Growth Indicator, which is made up of 17 series grouped into four asset class subcomponents: currencies, commodities, equities, and rates/fixed-income. The purpose of the indicator is to act as a broad…
The fiscal impulse philosophies of the two largest economies of the world are set to pull in opposite directions in 2023. After the massive fiscal stimulus of 2020, the US had been cutting back on its deficit. But US fiscal policy is no longer restrictive.…
Despite a decline from 7.9% to 6.8% in July, the UK’s headline CPI surprised to the upside. The slowdown in headline CPI mostly reflects the deceleration in the annual inflation for housing, water, electricity, gas and other fuels, which has slowed to 6.8%…
Japanese real GDP grew at an annualized pace of 6% year-on-year in Q2. Reading the tea leaves from the release, public investment rose by 5% quarter-on-quarter annualized, while residential investment jumped by a whopping 7.7%. The big takeaway, however, was…
The gold/silver ratio (GSR) entered a well-defined tapered wedge formation with downside support near 80, and an upside breakout around the 90 level. Back in 2020, this ratio was caught up in a race towards major overhead resistance at 100, but finally hit a…