Business Cycles
Global growth will weaken in the coming months, yet monetary authorities worldwide will be reluctant to ease policy. This state of affairs foreshadows a clash between markets and policymakers in the months ahead. China’s recovery is losing steam. The latest divergence between Emerging Asian and LATAM currencies will not last.
The change in the BoE’s tone has likely altered the path for sterling. In this report, we explore if the BoE’s lens for monetary policy is justified, and provide some targets for the pound.
The change in the BoE’s tone has likely altered the path for sterling. In this report, we explore if the BoE’s lens for monetary policy is justified, and provide some targets for the pound.
There is a 50:50 chance of experiencing a major deflationary shock in the next two years, and an even greater likelihood on a longer timeframe. The good news is that several assets provide a good insurance against this risk, and that this insurance is now cheap. Plus we highlight a compelling commodity pair-trade.
Indian EPS growth is set for major disappointments vis-à-vis the lofty expectations. Weak domestic demand amid tight fiscal and monetary policy entails more downside in stock prices. Stay underweight.
Macro and geopolitical risks may spoil the narrow window for a stock market rally before recessionary trends rise to the fore.
The risk-reward of the US dollar is currently positive. If a US recession is not imminent, then US bond yields will move higher, thus supporting the greenback. If the US enters a recession soon, the US dollar will benefit because it is counter-cyclical. Besides, the US dollar has not been as weak as the DXY index suggests.
Yen bulls need patience. The near-term narrative remains bearish on the back of interest-rate differentials. Longer term, it is the most attractive currency the G10, on valuation grounds.
Yen bulls need patience. The near-term narrative remains bearish on the back of interest-rate differentials. Longer term, it is the most attractive currency the G10, on valuation grounds.
China's recovery will be driven by consumer spending in general and on services in particular, while industrial sectors will disappoint.