CoreMacro
BCA’s flagship global macro and investment strategy platform, helping investors anticipate regime shifts, connect signals across regions and asset classes, and navigate the world’s most difficult macro questions.
Chilean equities are undergoing a structural re-rating. A political swing back to a pro-business administration, a benign macro backdrop, and a resilient exchange rate will drive Chilean markets’ outperformance versus EM peers.
Our high-frequency indicators show China’s growth momentum weakening further in September, increasing the likelihood of new stimulus in the weeks ahead. We remain tactically cautious on Chinese equities, but strategically constructive on offshore Chinese shares.
While it is not yet time to bet against risk assets, we push back on the increasingly popular ideas that the wealthiest households and/or AI-related capex can keep the expansion going despite the wobbling labor market.
One year in, the EU is progressing slowly in implementing Mario Draghi's recommendations to restore Europe’s competitiveness. The lack of progress is due more to the various pushbacks from European capitals and the lack of proper funding than a lack of ambition. Our overall assessment remains positive, given the EU is adopting many of the priorities from Draghi’s report.
US GDP growth appears to have accelerated even as employment growth has faltered. We will make a final decision in early October when we publish our next Strategy Outlook, but most likely, we will cut our 12-month US recession probability to 40%-to-50% from 60% and turn tactically neutral on stocks, while still retaining a modest equity underweight over a 12-month horizon.
The Fed’s actions tell us that it has chosen to avoid a recession at the cost of moving its inflation goalposts to 3 percent. Thus begins the slippery slope to price instability. Long-term investors should underweight the dollar, own some gold, but better than gold is bitcoin. Plus, a new tactical trade is short GOOGL vs. SPY.
Indonesia’s policy easing will boost domestic demand, but fuel inflation. Current account deficit will widen, and the rupiah will weaken. Stay short the rupiah and go underweight Indonesian stocks, domestic bonds, and sovereign credit in their respective EM portfolios.
