Financial markets slumped with the tough talk that followed last week’s FOMC meeting, but investors should recognize that the tone of the Fed’s communications is conditioned upon the inflation backdrop. Once it improves, Chair Powell and his colleagues will be able to relax their rhetoric....
In this report, we identify 5 key signposts that will mark a turn in the dollar. These include technical conditions, foreign real interest rates, US (and global) yield curves, Chinese economic conditions and geopolitics. We then assess whether it is time to short the dollar....
The Fed will slow the pace of rate increases but the terminal rate will be higher than initially expected. The Fed will not pivot any time soon. Economic pain is unavoidable. Equities will bottom shortly before economic growth bottoms....
As the FOMC explicitly acknowledged this week, monetary policy operates with substantial lags. We see the risks to stocks as tilted to the upside over the next 6 months but are neutral on global equities over a 12-month horizon....
US equities had a strong October after a positive start to the earnings season with USHQ and the benchmark returning 9.05% and 4.89% respectively. USHQ outperformed in all sectors except Energy and Industrials. The BCA Score Long/Short also performed well following strong returns from the Value, Saf...
Copper markets will remain tight on the back of growing physical deficits and pressure on capex. Policy-rate increases by central banks, uncertainty over re-opening in China and its fiscal-stimulus plans in the short run restrain risk taking. In the long run, the implications of China’s inward turn ...
Provided that US inflation is due to excess demand rather than supply constraints, demand destruction will likely be needed to bring core inflation below 3.5%. Such growth contraction is positive for counter-cyclical currencies like the US dollar. In China, the Party's focus is to alleviate structur...
MacroQuant downgraded IT to bearish and upgraded Communication Services to neutral. The model remains bearish on Equities and still favors defensives sectors and Energy....
Older workers have deserted the labour force in the US and the UK, but not so in the Euro area and Japan. The result is that wage inflation is red hot in the US and the UK, but not so in the Euro area and Japan. Hence, the Bank of Japan is right to remain a lone dove, the ECB must pivot from its ube...
