CoreMacro
BCA’s flagship global macro and investment strategy platform, helping investors anticipate regime shifts, connect signals across regions and asset classes, and navigate the world’s most difficult macro questions.
Equities, bonds and commodities are becoming suddenly, unusually, and dangerously correlated. But it cannot last.
Keeping home price gains in check has once again become a top priority for the Chinese authorities, which casts fresh uncertainty on both China's macro policy and growth outlook. Tactically downgrade H shares and expect near term volatility to rise. Strategically, we continue to expect Chinese equities to be positively re-rated against their global peers.
The U.S. dollar's corrective/consolidation phase is over, and it is about to rally. The risk-reward for EM stocks and currencies is extremely unattractive. We are reiterating our recommendation to short a basket of ZAR, BRL, TRY, MYR, IDR and CLP versus the U.S. dollar. There is a value opportunity in the Mexican peso. Go long MXN versus ZAR. Also, double down on the long MXN / short BRL trade.
When earnings growth negatively diverges from GDP growth, the gap rarely closes via a rebound in profit growth. The most notable feature of prior episodes is weak corporate pricing power and the current period is no different; an ongoing profit margin squeeze means earnings in the next few months risk being a disappointment.