Recession-Hard/Soft Landing
Highlights U.S. domestic demand will remain robust for the foreseeable future thanks to fiscal stimulus, stronger credit growth, a falling savings rate, and plentiful sources of pent-up demand. Economic and financial imbalances in the U.S. are also muted…
Highlights So What? Go long Brent / short S&P 500. The risk of a recession in 2019 is underappreciated. Why? The likelihood is increasing of a geopolitically-induced supply-side shock that pushes crude prices above $100 per barrel in the…
Highlights Macro outlook: Global growth will continue to decelerate into early next year on the back of brewing EM stresses and an underwhelming policy response from China. Equities: Stay neutral for now, while underweighting EM relative to DM stocks.…
Predictions On The Next Major Downturn…
Highlights Prediction 1: A major financial downturn will trigger the next major economic downturn, and not the other way round. Prediction 2: The straw that will break the back of a fragile financial system will be the global long bond yield rising by 60…
Highlights Valuation measures and technical indicators are widely followed market gauges, but neither set of metrics dependably warns of impending bear markets. Recessions might, however, as they almost always overlap with bear markets. A simple…
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…
Highlights We have downgraded our 12-month recommendation on global equities and credit from overweight to neutral. If macro developments evolve as expected, then we will shift to an outright bearish stance on risk assets later this year or early 2019 in…
Highlights The labor market continues to tighten and pressure the Fed. Tightening financial conditions suggest more muted returns for U.S. dollar assets and are associated with a peak in cyclical sectors. BCA's proprietary Monetary Indicator (MI) has…
Looking Beyond The Next Few Months The next couple of months could remain tricky for equity markets. But, with economic growth set to remain above trend for another year or so and central banks cautious about the pace of monetary tightening, we continue…