In our Alpha report, we explain how to trade the trade war and then conduct a scenario analysis for global asset allocation. The short version is that a policy induced recession has to be traded based on policy, not hard macroeconomic data....
The US High Quality (USHQ) portfolio outperformed on the margin through April, returning -0.6%, whilst its SPY benchmark returned -1.2%. On a trailing three-month basis, performance remains robust vs. benchmark, with USHQ generating +230bps of excess return. Volatility and drawdown are lower too....
In the long run, Mexico will emerge as one of the biggest winners of US tariffs as the US diversifies supply chains away from China. In the medium term, however, a US growth slowdown and tariffs will push Mexico into recession. In EM portfolios, we remain overweight Mexican equities, domestic bonds,...
In the front section of the chart pack, we review April and YTD market performance, provide an update on the Q1 earnings season, examine the outlook for the Magnificent Seven, and adjust portfolio positioning....
The Q1 US GDP contraction and inflation dynamics reinforce our defensive asset allocation. GDP missed estimates and contracted -0.3% annualized, led by a sharp slowdown in net exports. Consumption slid to 1.8% from 4.0%, reflecting falling consumer confidence. Business investment rose modestly, like...
We apply our systematic approach to investing based on economic, inflation, and monetary policy surprises to the major global bond markets. The economic regimes defined by the current macro-surprises setup confirm our existing fixed-income portfolio tactical recommendations....
Hard aggregate macro data series remain solid, but surveys of businesses and consumers continue to worsen and the list of consumer-facing companies lowering earnings estimates gets longer by the week. We believe surging equities are ignoring the adverse effects of tariffs and reiterate our defensive...
This week, our three screeners cover: Favoring European equities over US equities, cybersecurity stocks, and large caps with large moves in their BCA Score....
Oil has borne the brunt of the year-to-date deterioration in cyclically sensitive financial assets. It is a key underperformer both within the commodity space and among global risk assets. This underperformance underscores that in addition to the trade war-induced headwind to demand, bearish supply-...
This week’s report looks at Japan, with the recent BoJ meeting. While a trade war has injected uncertainty into the Japanese economy, our conviction remains high that JGBs will underperform other government bond markets, and the yen will ultimately rally. That said, JPY is due for a tactical pullbac...
