Latest from BCA Research

China's economic recovery will be led by consumer spending on services rather than the industrial sector. The current equity market leadership – outperformance by tech stocks – is unsustainable. Persistent deflationary forces will compel policymakers to inject more liquidity and bring down interest rates to reflate the economy. Hence, the RMB will resume its decline against the USD soon.

Slowing growth would be bad for equities, but so would stronger growth since it would mean more rate hikes.

Bank Credit Analyst

Bank Credit Analyst

In Section I, we note that the global growth outlook has modestly deteriorated over the past month, despite an improving 12-month outlook for Chinese domestic demand in response to the imminent end of the nation’s “dynamic zero-COVID” policy. Investors should remain conservatively positioned over the coming year, as we recommended in our Annual Outlook report. In Section II, we examine whether the structural risks facing global stocks are higher or lower today than they were prior to the global financial crisis, and what that implies for stock and bond risk premia.

This week, we look at the latest data releases in the G10, along with implications for all the major currencies.

In this, our final report of a tumultuous year, we summarize our policy outlook for the “Big 4” central banks – the Fed, the ECB, the Bank of England (BoE) and the BoJ – and the associated bond market implications for 2023.

The only feasible way for Brazil to stabilize its public debt-to-GDP ratio is by having nominal GDP growth meaningfully above government borrowing costs. This requires large fiscal stimulus to boost nominal GDP and much lower interest rates. These factors will constitute the economic policy anchor of Lula’s 3.0 presidency. When markets begin to price this in, the outcome will be chronic downward pressure on the currency.

Special Report

This week we present our outlook for the Fed in 2023.

Vietnamese stocks can remain shaky for a few more months. But they have cheapened considerably, and equity portfolios with longer terms investment horizon should overweight them in EM, Emerging Asia and Frontier Market portfolios.

Special Report

For the final publication of 2022, I am sending you a Special Report, The 2024 Election: A "Way Too Soon" Forecast penned by Chief US Political Strategist Matt Gertken. Matt argues that the Democratic Party is slightly favored to retain the White House in 2024 unless there is a recession. Since recession odds are fairly high, Republicans have a nearly even chance of winning. But they must also resolve their internal leadership struggle, which will be difficult.