Fixed Income

The first stop of the EIS Special Series: PIGS Have Wings takes us to Portugal.

Contrary to the prevalent belief in the global investment community, goods/merchandise inventories in the US and East Asia are rather elevated. Financial markets respond to final demand fluctuations, not inventory restocking. Global manufacturing/trade will continue contracting, even though the pace of contraction might moderate in the near run. We recommend that investors fade the current rally.

We investigate the recent increase in unemployment with the goal of determining whether it is flagging an imminent US recession.

Poland’s inflation will stay elevated. And yet, its return to the European mainstream has improved its financial market outlook. Accordingly, we are recommending new trades on Polish equity, fixed income, and currency.

The soft-landing narrative has gotten nowhere at BCA but appears to be making some headway with broker-dealers and investors. We are preparing to lean against it once it pushes equity prices a little higher.