GeoMacro

Special Report

It is easy to claim that the ECB is failing in light of today’s elevated inflation readings. Yet, the reality is more subtle and the ECB’s performance lays the ground for stronger growth ahead.

Special Report

The aerospace and defense industry faces several short-term headwinds such as the defense budget standoff, supply chain disruptions, and labor shortages. But most of these will clear in the near term, and a relief rally is likely. Ensuing global geopolitical risks and rivalry will remain a long-term tailwind, bolstering the industry over a long-term horizon. Remain overweight.

Special Report

Now that the French pension reforms have been passed, President Macron’s focus will be on the international stage. Where are the risks and opportunities for French assets created by this pivot?

President Erdogan and the Justice and Development Party emerged as the winner of the Turkish general election which was concluded yesterday. This victory means that their expansive policies of the past decade will continue, and Turkish assets will suffer. Across the Aegean, the Greeks voted to reelect the New Democrats under the leadership of Prime Minister Mitsotakis. Their fiscal prudence and structural reforms will be continued as voters had rewarded them with another term in office. Go long Greek versus Turkish equities.

Investors should expect high volatility and a selloff in US stocks over the short run due to the higher-than-usual risk of technical default. Investors should seek shelter in defensive sectors and large cap stocks. Long-dated Treasuries will see yields fall due to the overall macro and geopolitical context even though short-dated Treasuries will continue to suffer from policy uncertainty.

Special Report

In this *Special Report*, we analyze the dollar’s reserve status within the context of geopolitical crosscurrents. In our view, there is more than meets the eye when betting on the end of the dollar’s reserve status.

Special Report

Financial commentators, politicians and policymakers have increasingly been blaming stubbornly high inflation on companies pursuing aggressive pricing strategies to boost earnings and margins. In this Special Report, we investigate the concept of “greedflation” – companies persistently raising prices faster than costs are increasing to pad profit margins - and see if the associated conclusions about corporate pricing power and inflation are borne out by the data in the US, euro area and UK.

The Turkish presidential election will go to a runoff in two weeks, but President Erdogan outperformed his opinion polls. His party, the incumbent AKP, won a majority in parliament. This outcome rewards Turkey’s inflationary policies and as such reinforces our underweight position in Turkish equities. By contrast, the Thai election reinforces our recommendation to stay overweight Southeast Asia relative to global equities.

Erdogan will most likely lose the Turkish election but it could go onto a second round. A strong opposition majority in the assembly would justify a tactical overweight in Turkish equities on a relative basis. For now, go long Turkish equity volatility.

Macro and geopolitical risks may spoil the narrow window for a stock market rally before recessionary trends rise to the fore.