Strategy Report

Corporate Profits: Recession Is Bad, Deflation Is Worse

28 Jan 2016

by Arthur Budaghyan, Chief EM/China Strategist Ayman Kawtharani,

Corporate profits are more sensitive to selling prices than to volumes. Falling prices even amid mildly rising volumes could produce a meaningful profit contraction. Stay with deflation trades. In particular, maintain the short EM stocks / long U.S. 30-year Treasurys position. Indian stocks are still pricey and will deflate further in absolute terms.

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BCA Research | Emerging Markets Strategy

Critical input for global and EM investors as it provides global macro investment themes as well as recommendations for EM equities, currencies, and fixed income.