Highlights The path of the least resistance for the U.S. dollar is up; this has far-reaching implications for monetary policy, global growth dynamics and asset prices. Dollar strength reinforces our view to overweight defensives vs.…
A Special Report published yesterday showed that while there have been hints of stabilization in global economic growth, there is a dearth of evidence pointing to a meaningful acceleration. Global manufacturing surveys have stabilized,…
Cyclical sectors have outperformed defensive sectors since mid-summer, but it is dangerous to draw any macro conclusions from the past few months of market action. Cyclical sector outperformance has been driven solely by the tech sector…
History shows that premium valuations for high quality stocks are sustainable when overall final demand is sub-par. Using consumer products as a guide, when real GDP is low and/or volatile, relative P/E multiples tend to reside at the…
Consumer products stocks are likely to move to an even larger valuation premium before the cyclical outperformance phase ends.
Stocks remain well bid despite the questionable fundamental rationale for price gains. The run to new highs has been driven by renewed valuation expansion a dubious trend given the lack of profit growth, the likelihood that the Fed will…
BCA’s defense index has been on a tear recently. The unfortunate structural increase in terrorist activity will embolden governments around the world to step up defense spending (top panel), at a time when the pressure to move…
Equity and Treasury market positioning support the notion of a bounce in risk assets, possibly egged on by dollar weakness.