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Equities

The Inflation Expectations Time-Bomb

The market does not grasp the implied depths of recessions that will be needed to prevent inflation expectations from un-anchoring. Among the major economies, the most vulnerable to a deep recession is the UK. We explain why, and some investment implications. Plus: the yen is a rebound candidate, while Japanese equities are a reversal candidate.

Counterpoint by Dhaval Joshi
Unwarranted Policy Tightening
In a recent report, our Emerging Markets Strategy team posited that the bear market in Malaysian stocks will be prolonged. Disinflationary forces have taken hold of the Malaysian economy: money supply has plunged, bond yields are falling, and the yield…
Daily Insights
European Aerospace And Defense Stocks Are Hot
European aerospace and defense stocks are on the offense. Year-to-date, they are up 20% in absolute terms and 24% relative to their US counterparts, both in US dollar terms. The relative 12-month forward earnings suggest that this outperformance still has…
Daily Insights
Hit, Miss, Moving Forward

Momentum, high cash balances, FOMO, and expectations of soft landing drive the market higher. This rally may continue for a while, but macroeconomic headwinds are intensifying and will eventually derail the rally. It is too early to celebrate victory.

US Equity Strategy by Irene Tunkel
So Much For Détente?

Talks of a détente are premature and there is no domestic political basis in China or the US to support a true détente. Investors should not underappreciate global risk, on the basis of a détente, and should avoid Greater China equities in the next 18 months.

Geopolitical Strategy, Global Investment Strategy by Matt Gertken
Turkey: Time To Go In?

Assuming yesterday’s policy rate hike is a sign that Turkey is finally veering towards orthodox economic policies; should investors rush in?

Emerging Markets Strategy by Rajeeb Pramanik
Risky Asset Prices, A Looming Recession, And The Japanese Yen
The Japanese yen is typically a counter-cyclical currency. As shown in the chart above, the correlation between global stock prices and the yen is usually negative. However, over the past year, the yen’s correlation with risky asset prices has shifted…
Daily Insights
Will Energy Stocks Continue Underperforming?
For the most part, the US equity rally has been rather narrow this year – concentrated among stocks that investors perceive will be the key winners of recent AI developments. In the first five months of the year, only three S&P 500 sectors were in the…
Daily Insights
Watch Interest Rates, Not The Balance Sheet
According to BCA Research’s US Bond Strategy service, when the Fed’s interest rate and balance sheet policies are sending opposite signals, listen to interest rates. There seems to be some worry among investors that the coming increase in Treasury cash…
Daily Insights
Upgrading Japanese Stocks To Neutral
Japanese equities have been outperforming their global peers in recent months. Their 8.5% rally so far in Q2 exceeds the MSCI’s All Country World Index’s 5.6% gain over this period. Japan has not experienced the same inflationary overshoot plaguing most…
Daily Insights

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