CoreMacro
| Emerging Markets
Research on emerging economies, from in-depth country reports to calls on EM stocks, bonds, and currencies.
EM local bonds face near-term turbulence from rising inflation, global risk aversion, and currency weakness. Use the sell-off to build exposure: medium- and longer-term fundamentals remain favorable.
If President Milei does not ease policy immediately to contain the disinflationary squeeze, he is likely to lose next year's election. This means neoliberal structural reforms will suffer a setback in subsequent years. Close long positions in Argentine assets.
The most bullish development for Brazil from the weekend’s elections was not the higher odds of a right-wing presidency, but the likely president’s (Flávio Bolsonaro) stronghold in Congress. Upgrade Brazilian fixed-income markets to overweight and equities to neutral within their respective EM portfolios.
US bonds will likely continue selling off until tighter financial conditions – most plausibly a double-digit decline in the S&P 500 – cool nominal growth. Higher discount rates will threaten US equity valuations before earnings weaken. AI stocks will peak well ahead of AI capex. Remain downbeat on EM stocks.
We review the track record of our broader investment strategy and individual calls. We also use this opportunity to close several positions that have become stale.
BCA's CoreMacro and Portfolio Construction teams combine two distinct but intersecting lenses to revisit a once heralded opportunity: India. We upgrade India across both public and private markets, but the conviction is not the same everywhere.
If bond yields rise due to widening bond term premiums or escalating inflation expectations, Bessenomics is unlikely to avert a stock-bond collision. Buy back gold mining stocks.
We are downgrading Brazilian equities from neutral to underweight and maintaining our underweights in Brazil's domestic bonds and sovereign credit within their respective EM portfolios. Go long Brazilian 5-year CDS as a short-term trade.
