Latest from BCA Research

In this insight, we provide an update on the Norwegian krone, with attractive trade ideas over a long-term horizon. Shorter-term, our neutral-to-positive view on the dollar keeps us on the sidelines for USD/NOK.

Despite the economy being on the verge of a recession, the South African Reserve Bank will not ease policy meaningfully. Doing so will accentuate the currency depreciation, which, in turn, will push up bond yields – an outcome the central bank would like to prevent.

Bank Credit Analyst

In this BCA Special Report, we ask what policies investors should expect if Donald Trump wins the 2024 Presidential election. The answer is that a second Trump term would be much less positive for risky assets than the first. While the US will remain democratic and geopolitically preeminent no matter the outcome of the 2024 election, a second term Trump administration would likely oversee large budget deficits, continued wealth inequality, labor shortages, high import prices, and an erosion of checks and balances, possibly including at the Federal Reserve. Trade policy under a second Trump presidency represents the greatest cyclical risk to investors, and the sequencing of policies in general will be important to monitor. An early legislative priority of immigration over tax cuts, alongside the rapid imposition of new tariffs, would be the worst alignment for risky assets.

Bank Credit Analyst

In Section I, we argue that the December FOMC meeting has caused the “soft landing” narrative to penetrate the psyche of “Main Street”, which is now impacting the real economy. But if a pickup in sentiment and growth works against the pace of disinflation on which expectations of rate cuts were predicated, then the economy has a “circular reference” problem. A true “no landing” scenario would likely prevent Fed rate cuts, which would cause a large hawkish shock. That would put pressure on equity multiples via both a higher risk-free rate and equity risk premium. In Section II, we ask what policies investors should expect if Donald Trump wins the 2024 Presidential election. The answer is that a second Trump term would be much less positive for risky assets than the first.

Bank Credit Analyst

In this BCA Special Report, we ask what policies investors should expect if Donald Trump wins the 2024 Presidential election. The answer is that a second Trump term would be much less positive for risky assets than the first. While the US will remain democratic and geopolitically preeminent no matter the outcome of the 2024 election, a second term Trump administration would likely oversee large budget deficits, continued wealth inequality, labor shortages, high import prices, and an erosion of checks and balances, possibly including at the Federal Reserve. Trade policy under a second Trump presidency represents the greatest cyclical risk to investors, and the sequencing of policies in general will be important to monitor. An early legislative priority of immigration over tax cuts, alongside the rapid imposition of new tariffs, would be the worst alignment for risky assets.

Special Report

In this BCA Special Report, we ask what policies investors should expect if Donald Trump wins the 2024 Presidential election. The answer is that a second Trump term would be much less positive for risky assets than the first. While the US will remain democratic and geopolitically preeminent no matter the outcome of the 2024 election, a second term Trump administration would likely oversee large budget deficits, continued wealth inequality, labor shortages, high import prices, and an erosion of checks and balances, possibly including at the Federal Reserve. Trade policy under a second Trump presidency represents the greatest cyclical risk to investors, and the sequencing of policies in general will be important to monitor. An early legislative priority of immigration over tax cuts, alongside the rapid imposition of new tariffs, would be the worst alignment for risky assets.

MacroQuant upgraded equities to overweight in February on a tactical short-term (1-to-3 month) horizon, but it continues to see downside risks to stocks on a medium-term (12-month) horizon. Consistent with the model’s relatively somber medium-term growth outlook, it sees more downside for bond yields on a 12-month horizon than on a 1-to-3 month horizon.

Naturally occurring hydrogen as a clean-energy source has the potential to satisfy significant energy demand growth at low cost. Oil and gas E+P companies and pipelines are ideally positioned to take a leading role in this clean-energy evolution, given their core competencies include large-scale resource extraction, storing and transporting gaseous commodities. Blending gold hydrogen with natural gas in pipeline systems could accelerate the industry’s learning curve in finding and delivering clean-energy fuels.

Continue overweighting Mexican stocks, sovereign credit, and local bonds relative to their respective EM benchmarks. That said, the peso is overbought and will correct versus the US dollar. Therefore, we recommend that investors hedge the currency risk for their outright long positions in Mexican equity and local bond markets for the next few months.

The US ‘immaculate disinflation’ has run its course, given that labour force participation is topping out. This leaves the Fed with a dilemma. Settle for price inflation stabilising at 3 percent, and cut rates early to avoid higher unemployment. Or, not cut rates early and go the final mile to 2 percent price inflation, at the risk of higher unemployment. We discuss which way the Fed is likely to tilt, and the investment implications. Plus: China is oversold while Japan is overbought.