Trade
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…
Highlights Investors who are betting on a quick resolution to the U.S./China trade war following the "new NAFTA" deal and the U.S. midterm elections have likely been taken in by false hope. Stay neutral China relative to global stocks, and overweight low-beta sectors within the investable…
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. Within DM, overweight the U.S. in dollar…
Highlights We have deciphered global trade linkages to determine which countries are most at risk from a slowdown in EM/China imports. Our analysis takes into account not only the destinations of shipments but also the types of goods. Peru, Chile, Korea, Malaysia and Thailand are the most…
Highlights The upcoming changes to the Global Industry Classification Standard will substantially alter the sector composition of the MSCI China Investable index, by hollowing out the information technology sector (to the benefit of consumer discretionary and the new communication services…