Technical

Highlights Uncovered Interest Rate Parity still works for currencies. However, it needs to be based on a combination of short- and long-term real rates. Currencies are also affected by the global risk appetite, as approximated by corporate spreads, and…

Highlights Portfolio Strategy The consumer staples recovery is sales-driven, underscoring that additional outperformance lies ahead. The lagging hypermarkets and retail food industries are starting to play catch up, reflecting a shift in consumer…

Highlights Portfolio Strategy Operating leverage could surprise on the strong side this year, based on the message from our pricing power and wage growth indicators. REITs are experiencing a playable recovery following the Fed-induced sell-off earlier…

Portfolio Strategy Any meaningful weakness in the U.S. dollar could accelerate the budding recovery in corporate revenue growth after a multiyear malaise. Following this year's underperformance, lift the industrials sector to neutral via an upgrade in…

Highlights Small caps have not consistently outperformed large caps. However, the cyclical nature of small-cap relative performance may provide tactical timing opportunities. Index methodology plays a very important role in the behavior of small-cap…

Highlights The European economy has outperformed that of the U.S. recently, prompting investors to bring forward their estimates of the first ECB rate hike. To make this judgement, one really needs to be positive on EM economies in general, and China in…

Highlights Dusting Off The BCA Bond Model: As central bankers moving away from the hyper-easy monetary policies of the post-crisis era, reverting back to more traditional bond investing tools, like our BCA Bond Model - which focuses on cyclical economic…

Highlights Portfolio Strategy A window has opened up for utilities outperformance. Upgrade to overweight on a short-term (1-3 month) view. Leading indicators of beverage sales have improved, heralding an upgrading in depressed expectations. Stay…

Highlights The locomotive of the U.S. economy, the consumer, remains supported by powerful tailwinds. The Fed will be able to tighten monetary policy relative to other central banks by a higher degree than the market appreciates. The dollar will rise…

Highlights Portfolio Strategy Internal dynamics warn that a broad market consolidation phase has begun. The jump in growth vs. value stocks has provided an opportunity to shift to a neutral style bias. Transports have sold off sharply, but downside…