Protectionism/Competitive devaluation

There is growing evidence that Trump and the U.S.A. are winning not only the war of words, but also the actual trade war, even though it is still early days. Chart 1 clearly depicts that the S&P 500 is having a stellar year compared with the rest of the world's bourses, leaving in the dust the…

Dear Client, We had intended to send you the second part of our two-part special report on long-term inflation risks this week, but given the sharp moves in the dollar and emerging market assets, we decided to write this bulletin instead. Barring any further major market turbulence, we will send…

Dear Client, This week we are sending you a Special Report written by Mark McClellan, Chief Strategist, The Bank Credit Analyst, Marko Papic, Chief Strategist, Geopolitical Strategy and our very own Chris Bowes, Associate Editor, U.S. Equity Strategy. This report deals with the implications of…

Highlights If the U.S. Treasury intervenes to push the greenback lower, it would only have a temporary impact. Ultimately, interventions work if they are matched with easy monetary policy. However, U.S. monetary policy will only be tightened going forward. Because inflation expectations have…

Highlights Xi Jinping is trying to do two things at once: ease policy while cracking down on systemic financial risk; The trade war with the U.S. is a genuine crisis for China and is eliciting fiscal stimulus; Credit growth is far more likely to "hold the line" than it is to explode upward or…

Highlights The 2018 dollar rally is principally the consequence of the slowdown in global industrial activity and global trade, itself a reverberation of China's efforts to de-lever and reform its economy. For China, reforms and deleveraging are here to stay, suggesting the dollar rally and EM…

According to market lore, one should never say, "It's Different This Time". But every time is always different: there is a never a previous period that perfectly matches the current environment. That is why forecasting is so difficult and why all model-based predictions should be treated with…

Highlights Paradox 1: U.S. growth will slow, and this will force the Fed to raise rates MORE quickly. Paradox 2: China will try to stimulate its economy, and this will HURT commodities and other risk assets. Paradox 3: Global rebalancing will require the euro area and Japan to have LARGER…

Dear Client, This week I am sending you a Special Report written by Mark McClellan, Chief Strategist of the monthly Bank Credit Analyst. Mark deals with the implications of the U.S./Sino trade war for U.S. equity sectors. He identifies the next products to be targeted with higher tariffs on both…

Highlights President Trump has expressed dissatisfaction with the Fed's policy tightening. However, we do not think he will be able to influence policy in a dovish fashion this cycle. Trump has suggested that many nations are manipulating their exchange rates to the detriment of the U.S. We do…