US fiscal, monetary, and foreign policies are unlikely to deliver any dovish surprises for investors in Q4, due to the impending government shutdown, persistent inflation, and instability among OPEC+ and China....
Emergency pandemic fiscal and monetary policy measures buffered households and nonfinancial corporate businesses in ways that have acted to lengthen the lags between monetary policy changes and their effect on the economy. We believe, however, the extended lags are merely delaying the recession, not...
We continue to expect Brent crude to trade just above $101/bbl in 4Q23, and to average $118/bbl in 2024. Higher volatility looms. We expect Russia will cut oil production next year as part of a concerted effort to undermine Biden’s re-election. Oil-demand volatility is set to rise in response to div...
The global downturn will be shallower than it was in 2008 and in 2020 but will last for longer. The primary reason for a more prolonged downturn is that policymakers in the US, Europe, and China will be reluctant to proactively and aggressively stimulate. The combination of rising oil prices, an app...
The biggest misunderstanding in the markets right now is that to keep expected inflation well-anchored at 2 percent, inflation must <i>undershoot</i> 2 percent for some time. This implies that interest rate futures curves are mispriced, and that the probability of a ‘soft landing’ is lower than assu...
China’s reopening faltered and now it is applying moderate stimulus. OPEC 2.0’s production discipline is getting results, with oil prices climbing. The Fed will not be able to deliver dovish surprises in Q4 2023. Investors should expect stock market and commodity volatility and prefer defensive posi...
The Chinese economy will not recover without significant “irrigation-style” stimulus. The latter is still unlikely for the time being. Dim economic fundamentals justify lower valuations of Chinese equities. Lingering deflationary pressures entail even lower interest rates, which is bearish for the R...
In this update to the two Special Reports on FX hedging of global equity portfolios with nine different home currencies, published in 2017, we show that BCA’s proprietary dynamic FX hedging strategies have consistently added value to global equity portfolios. We value quant models as an important in...
We do not see a 1990s type of backdrop but we do see a departure from the 2010s. Structural forces make it unlikely that we will return to the 1990s heydays for LSE. However, evolving cyclical forces provide tailwinds over the next market cycle. In this Special Report we provide a quantitative asses...
