Business Cycles
Since the low of 27 October last year, MSCI US has rallied by 19.1% and this rally has been firmly driven by cyclical sectors. Performance-wise Information Technology (IT), Communication Services and Financials and Real Estate have been the top performing…
According to BCA Research’s European Investment Strategy service, European sovereign bonds in the periphery offer more upside than high-yield (HY) corporate bonds. Many question the outlook for peripheral bonds in Europe due to the ECB’s shrinking balance…
A recent slew of macroeconomic data has reassured us that the runway to a recession is longer than many thought. However, that positive realization comes with two caveats. First, the Fed pivot is not imminent, and the magnitude of rate cuts may disappoint. Second, the recession has been delayed but not avoided. Further, geopolitical risk is elevated. We will overweight Tech on the next dip and upgrade Retail to an overweight.
Is the rebound in European PMIs enough to boost the appeal of European risk assets?
Friday’s US Personal Income and Outlays report for December delivered a positive update on the US economy. On the growth side, the data confirm the signal from the Q4 GDP release that consumer spending continues to power the US economy. The robust 0.5%…
According to BCA Research’s The Bank Credit Analyst service, there are two important flaws in the market’s “Goldilocks” narrative. First, investors are assuming inflation will fully return to target this year because core inflation ex-housing is already at…
With the latest PCE release confirming that the disinflation process is intact (see The Numbers), a key question facing investors is around the timing of the Fed’s pivot to rate cuts. Indeed, the US inflation surprise index has collapsed from its mid-2021…
Over the past few months, falling inflation has provided a boost to real wages in the Euro Area which returned to growth in 2023Q3 after 9 consecutive quarters of decline. This dynamic in turn improved the purchasing power of households, boosting their morale…
Germany’s IFO survey is sending a warning. The Business Climate Index unexpectedly fell for the second month in a row in January. Importantly, increased pessimism about the current situation and the outlook are driving this deterioration in sentiment among…
The Q4 2023 US GDP print delivered a positive message on economic conditions. Although real GDP growth decelerated from 4.9% to 3.3%, it came in well above consensus expectations of 2.0% and the Atlanta Fed’s GDPNow estimate of 2.4%. Consumers once again…