Policy
Commentators often use notions like debt deflation, balance sheet recession, and liquidity trap interchangeably. Yet, these are different concepts. This report develops a framework and provides a diagnosis of China’s economic malaise. A follow-up report will deal with what kind of treatment is needed for a recovery. As a trade, we recommend shorting the EM equity index.
In this special report, we discuss whether the economic conditions necessary for a stronger yen (and higher JGB yields) will materialize over the next 12-to-18 months.
Despite a decline from 7.9% to 6.8% in July, the UK’s headline CPI surprised to the upside. The slowdown in headline CPI mostly reflects the deceleration in the annual inflation for housing, water, electricity, gas and other fuels, which has slowed to 6.8%…
The fiscal impulse philosophies of the two largest economies of the world are set to pull in opposite directions in 2023. After the massive fiscal stimulus of 2020, the US had been cutting back on its deficit. But US fiscal policy is no longer restrictive.…
Japanese real GDP grew at an annualized pace of 6% year-on-year in Q2. Reading the tea leaves from the release, public investment rose by 5% quarter-on-quarter annualized, while residential investment jumped by a whopping 7.7%. The big takeaway, however, was…
The selloff in US Treasuries has accelerated in recent weeks and the 10-year US Treasury yield is quickly approaching the cyclical peak of 4.25% that was set last October. While momentum is certainly on the side of the bond bears, our US Bond team doesn’t see…
On Monday, Asia Pacific equity markets closed in the red due to the news that China’s largest real estate developer, Country Garden, is suspending the trading of some of its bonds. This recent episode is a continuation of Chinese economic woes, which our…
In a recently published report, BCA’s Bank Credit Analyst service reviewed the BCA Valuation Index, alongside three other US equity indicators which are published in Section III of each month’s report. The other indices included in our suite of equity…
Inspired by a client’s questions, we examine the rationale behind the implementation of the trailing stop governing our near-term asset allocation recommendations.
The preliminary release of the University of Michigan’s Consumer Sentiment survey shows US households’ 1-year ahead inflation expectations unexpectedly ticked down from 3.4% to 3.3% in August, surprising consensus estimates of an increase to 3.5%. Similarly,…