Europe

Back in May, our foreign exchange team suggested the risk to sterling was to the downside. Indeed, GBP/USD is down 8% from its recent peak. While dollar strength largely explains this move in GBP/USD, there have been other fundamental factors at play. The…

2 years ago

Essentials

Will The UK Avert Recession?

As expected, the UK economy bounced back in August with GDP expanding by 0.2% m/m following a 0.6% m/m decline in July. Yet to the extent that this improvement largely reflects a rebound after strikes weighed down on activity in the prior month, the growth…

2 years ago

Essentials

The European Auto Sector Is A Value Trap

According to BCA Research’s European Investment Strategy service, European automobile and components stocks will suffer over the coming years. The European automobile and components equity sector is cheap, trading at a modest 5.4 times forward earnings or…

2 years ago

Essentials

Global Manufacturing Remains A Concern For European Equities

As we highlighted in a recent Insight, the stronger-than-anticipated improvement in German factory orders should be viewed with some degree of caution. Germany is the European economy most exposed to the global manufacturing sector. Several leading indicators…

2 years ago

CoreMacro

European Auto Sector: A Value Trap

Special Report

European auto stocks are cheap, but even if European carmakers can rise to the challenge created by Chinese EVs, shareholders will suffer.

2 years ago

Europe

Essentials

Rebounding German Factory Orders: False Signal?

August brought some respite for German factories struggling with poor demand this year. After falling by 11.3% m/m in the prior month, German factory orders rebounded by 3.9% m/m in August – beating expectations of a 1.5% m/m increase. In particular, a…

2 years ago

Essentials

Easing UK Labor Market Will Alleviate Wage Pressures

The results of the Bank of England’s latest monthly Decision Maker Panel survey reduces pressure on policymakers to tighten further. Business expectations regarding output price inflation over the coming year fell from 5.0% y/y to 4.8% y/y. Similarly, the…

2 years ago

Essentials

EU CBAM’s Inflationary Impacts

According to BCA Research’s Commodity & Energy Strategy service, the EU carbon tax – aka Carbon Border Adjustment Mechanism (CBAM) – launched Sunday will lead to higher inflation in the medium term (3-5 years out). If enacted, the CBAM will collect…

2 years ago

FICC

The EU’s CBAM: The Road to Hell Is Paved With Green Intentions

The EU’s transition to a carbon tax launched this week via its Carbon Border Adjustment Mechanics (CBAM) will lead to higher inflation in the medium term (3 – 5 years out), and will stoke consumer (i.e., voter) antipathy if it becomes effective in 2026. As a result, the tax will be watered down. Food and energy prices are particularly at risk, as imported fertilizers, and electricity-generation and -transmission components made from steel and aluminum are affected by the CBAM. We remain long oil, gas and metals equity exposure via the XOP, XME and COMT ETFs. We also remain long gold to hedge inflation.

2 years ago

Commodities

Essentials

Mediterranean Bloc: From Foreign Borrowers To Surplus Nations

According to BCA Research’s European Investment Strategy service, the Mediterranean bloc’s move from current account deficit to current account surplus nations greatly limits the risk of a new sovereign debt crisis. A combination of reforms, fiscal rigor,…

2 years ago

Europe

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