Protectionism/Competitive devaluation

Mr. X and his daughter, Ms. X, are long-time BCA clients who visit our office toward the end of each year to discuss the economic and financial market outlook. This report is an edited transcript of our recent conversation. Mr. X: I have been eagerly looking forward to this meeting given the…

Mr. X and his daughter, Ms. X, are long-time BCA clients who visit our office toward the end of each year to discuss the economic and financial market outlook. This report is an edited transcript of our recent conversation. Mr. X: I have been eagerly looking forward to this meeting given the…

Highlights The October credit and housing market data present a gloomy picture for Chinese domestic demand. Trade remains buoyant, but exports are set to decline materially over the coming months. Many investors are focused too much on external demand and not enough on Chinese domestic demand…

Dear Client, Barring any major market developments, we will not be sending you a report next week. Instead, I will be working with my colleagues on BCA's Annual Outlook, which will be published on Monday, November 26. The outlook will feature a wide-ranging discussion with Mr. X and his daughter…

Highlights So What? The Trump administration is focusing on re-election in 2020, which could push the recession call into 2021. Why? The midterms were investment-relevant, just not in the way most of our clients thought. We are downgrading our alarmism on Iran; Trump is aware of his…

Highlights The correction in global equities is not yet over, but we would turn more constructive if stocks retreated about 6% from current levels. Among the many things bothering investors, the fate of the Chinese economy remains high on the list. Chinese growth continues to slow, with the…

Highlights The Fed remains on a tightening course as the U.S. economy has no spare capacity, yet growth in the rest of the world is suffering as EM financial conditions are tightening. It will take more pain for the Fed to capitulate and pause its 25-basis-points-per-quarter hiking campaign.…

Highlights So What? More downside to CNY/USD ahead. Why? The trade war is spilling into political and military arenas, making it harder to de-escalate and negotiate a trade deal. Official U.S. and Chinese rhetoric is increasingly antagonistic, reflecting once-in-a-generation policy shifts…

Highlights Heightening geopolitical tensions between the U.S. and China, higher U.S. bond yields, tightening U.S. dollar liquidity and weakening EM/China growth - all combined - constitute a bitter cocktail for EM. Barring a meaningful improvement in Chinese growth, higher U.S. bond yields…