CoreMacro

Colombia has fallen from grace in terms of its healthy macroeconomic fundamentals, business-friendly government policies, and conservative fiscal stances. The economy is experiencing stagflation, public finances are deteriorating rapidly, and political uncertainty will persist. Underweight Colombia across all financial markets relative to their EM benchmarks, and short Colombian bank stocks and the currency versus their Chilean counterparts.

The analysis of complexity is a massive competitive advantage in investing, and from today, clients will be able to monitor the complexities of the world’s 17 major investments on our webpage in real-time.

Special Report

Due to funding constraints, China’s infrastructure investment nominal growth rate will likely slow from 9% in 2023 to about 6% this year. The new issuance of Special Treasury Bonds will prevent a contraction in the country’s infrastructure spending, but it will not lead to an acceleration. Stay cautious in China’s infrastructure plays in general and steel and machinery stocks in particular.

We are not yet ready to downgrade equities on a tactical basis but continue to expect we will eventually do so. We present a checklist of indicators that we are watching to determine when to de-risk.

Special Report

Italy is no longer Europe’s problem child. Investors will be better off reassessing their views of Italian assets, which represent a buying opportunity on a structural time horizon.

MacroQuant downgraded equities from overweight to neutral on a 1-to-3 month horizon. The model maintains a neg­ative view on stocks over a 12-month horizon.

For the first time in at least fifty years, US labour supply is running well below labour demand, meaning the US economy is ‘inverted’. We discuss how and why the economy inverted, and what it means for recession, inflation, and asset allocation. Plus: NVDA is at a consolidation point.

In this Strategy Outlook we examine why, contrary to popular perception, the odds of a global recession over the next 12 months are rising not falling.

Does the recent surprise rate cut by the Swiss National Bank augur other dovish surprises among major central banks in Europe?

Despite a couple of rate cuts in H2 2024, borrowing costs will remain elevated in real terms amid lower inflation in the US and Europe. This and tightening fiscal policy will hinder domestic demand in advanced economies. Domestic demand in China and EM ex-China will remain very tepid, with risks skewed to the downside.