Latest from BCA Research

In this insight, we provide an update on the Canadian economy, given yesterday’s rate cut, and implications for Canadian assets.

The long-term winners from the generative-AI gold rush are unlikely to be the ‘picks and shovels’ stock Nvidia or the overvalued US superstars of Web 2.0. We discuss the structural investment implications. Plus: time to go tactically overweight global consumer discretionary (RXI).

Global Equity Score remains bullish. Major upgrades were made to Industrials, Consumer Discretionary, and Communication Services in the Sector Model. The Style Indicator continues to favor Large-Cap Value.

MORENA has once again swept the Mexican election: Claudia Sheinbaum will be president, with little to no constraint in Congress. All in all, Mexican politics will remain stable and overall supportive of markets. In the medium term, fiscal spending will return to conservatism and the constitutional reforms will lead to mixed fiscal and economic repercussions. In the long term, however, fiscal and institutional risks will rise. We advise investors to remain overweight Mexican risk assets relative to EM in cyclical and structural time horizons, but prepare for Mexican markets to sell off in absolute and relative terms in the next couple of months.

At the asset class level, the GAA Quant model is overweight equities, underweight bonds, and neutral cash.

Our Portfolio Allocation Summary for June 2024.

Generative AI-related rally resumed in May. Much of the recent market gains are down to excess liquidity that was begotten by the massive pandemic stimulus, creating a dichotomy between multiple economic challenges and exuberant markets. The Fed is unlikely to step in to prevent the bubble as it is currently more worried about the near-term downside for growth than financial stability.

The US economy is in the “Overheating” phase, so stronger growth brings higher inflation. Tight monetary policy means recession is still likely over the next 12 months. Stay defensive.

Special Report

European stocks have massively underperformed US ones since the GFC. Demographics and productivity say this trend will continue, but is that really so?

In this report, we gauge the outlook for the dollar given client visits in Africa.