Europe

In this update to the two Special Reports on FX hedging of global equity portfolios with nine different home currencies, published in 2017, we show that BCA’s proprietary dynamic FX hedging strategies have consistently added value to global equity portfolios. We value quant models as an important input in our decision-making process, but we do not suggest any investor to slavishly follow them, because models cannot capture all the important fundamental changes, as demonstrated in the details of this report.

The ECB is done lifting interest rate for the cycle and its next move will be a cut next year. Yet, European rates will climb even higher in the second half of the decade.

While we are sympathetic to the view that the Fed could temporarily achieve a soft landing, we are skeptical that it could stick that landing for very long. Stocks could strengthen into year-end, with small caps potentially leading the charge. But the rally will fizzle out next year as the global economy begins to sink into recession.

In this report, we review our European fixed income strategy recommendations ahead of tomorrow’s critical ECB meeting

The euro has weakened sharply since mid-July as US growth continues to outperform that of the Eurozone. Is a new bear market afoot for the common currency?