Materials
Overweight As trade tensions have eased in recent weeks, we have seen a broad based recovery in trade-oriented stocks. One notable exception is the S&P containers & packaging index which has failed to rally with its peers. This is particularly surprising considering the global trade…
Highlights Portfolio Strategy Looming inflation, the synchronized global capex upcycle and rising real Treasury yields all argue for preferring oil-related to gold-exposed equities. Recent Changes Initiate a long S&P oil & gas exploration & production / short global gold…
Highlights Seasonal capacity restrictions in China during the winter heating months - when pollution from steel mills is particularly high - and continued efforts to limit particulate emissions in major cities will drive steel prices higher. The steel rebar market in China is backwardated,…
Please note that our next publication will be a joint special report with BCA’s Geopolitical Service that will be published on Wednesday, August 1st instead of our usual Monday publishing schedule. Further, there will be no publication on Monday, August 6th. We will be returning to our normal…
There is scant evidence that the character of the equity market advance is changing and the fact that weak balance sheet stocks are no longer outperforming strong balance sheet stocks is giving us pause (Chart 1). Chart 1Time To Pause And Reflect…
Highlights The scale of "de-capacity" reforms is diminishing considerably - old, inefficient capacity shutdowns are declining. Sizable new technologically advanced and ecologically friendly capacity is coming on stream for both steel and coal in 2018 and 2019. We project this will boost steel…
Overweight The S&P containers & packaging index has been recovering in the past few sessions. This follows being caught in the downdraft all global trade-exposed stocks have been reeling from; now fears of a generalized trade war appear to be receding. Certainly the geopolitical spats…
Highlights Capacity cuts in China's steel and aluminum industries over the winter produced little in the way of output reductions, confounding our expectations. The resulting unintended inventory accumulation in Asian markets, reflecting high production relative to demand, and slowing Chinese…
Highlights Key Portfolio Highlights Our portfolio positioning remains firmly behind cyclicals over defensives, driven principally by our key 2018 investment themes: synchronized global capex growth (Chart 1A) and higher interest rates on the back of a pickup in inflation (Chart 1B). The…
Overweight The S&P containers & packaging index has been underperforming since the beginning of the year as the spiking input costs of last year materialized in soft Q4 earnings, compounded by fears over a trade war. However, those costs have fallen substantially since the end of the…