Essentials

Special Report

In Section II, Jonathan discusses the arguments in favor and against the view that US inflation will be structurally elevated over the longer term. Our base case view remains that US inflation will not be significantly above 2%, but this view may change if US tariffs are put in place permanently and the US avoids a recession.

Special Report

This report is an edited transcript of our recent conversation with Mr. X and his daughter, Ms. X, who visited our office to discuss the rapidly evolving economic outlook. The US and global economies are likely to enter a recession this year barring a decisive tariff reversal or the passage of significant fiscal stimulus. Even the latter is not clearly bullish for stocks, as it risks a stagflationary outcome. Investors should be underweight stocks versus bonds and should respond to clear signs of stagflation by lowering fixed-income portfolio duration. We continue to recommend defensive equity sector positioning, an overweight stance toward value stocks, an underweight stance toward small caps, and gold over cyclically sensitive commodities.

Special Report

As high-stakes US-Iran negotiations begin, investors face yet another geopolitical risk, on top of tariffs and trade war. In this collaborative project, we combined BCA’s scenario analysis, probabilities, and financial market impacts with Axioma/Simcorp’s advanced risk analytics platform to produce a valuable contribution to risk management.

Special Report

In Section II, Jonathan presents a new indicator that investors can use to track the odds of bubble formation in real time and shows how it fits into a larger framework that accurately explains US bear market severity over the past century. The US equity market is not in a bubble today, but it is meaningfully overvalued. Investors should expect a relatively severe cumulative loss from equities in a recession scenario.

Special Report

In Section II, Jonathan presents a checklist that investors can use to confirm whether AI’s purported productivity gains are real. The checklist does not currently suggest that artificial intelligence is meaningfully boosting productivity growth. US equity valuation reflects very significant optimism about AI, underscoring the profound risk facing equity investors if the narrative about AI shifts in a pessimistic direction.

In this report, we reassess our bullish stance on crypto from early 2023, following Bitcoin’s recent all-time highs. While institutional adoption is broadening, there are also signs of excessive exuberance, speculation, and optimism. Given these conditions, a near-term correction appears likely. We are booking profits and will look to re-enter the market at $75,000.

Special Report

This is a follow-up report on Bessenomics – the policy mix that US Treasury Secretary Scott Bessent plans to pursue. The direction of US and global financial markets depends on the amount of fiscal tightening required to bring down US interest rates. Can the Trump administration cut fiscal spending just enough to bring down US bond yields but not cause a recession?

Special Report

Jonathan provides an update on Canada following strong performance from Canadian stocks last year. On a tactical basis, underweight Canada versus global ex-US on the expectation of tariffs targeting Canada and Mexico. Following a sell off, or if a trade war is avoided, investors should place Canadian stocks on upgrade watch with the goal of moving to a modest overweight versus global ex-US.

AI will continue to support future nuclear energy demand. Investors should view the recent pullback as a buying opportunity.