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.
Outside of Germany, European growth fares better than many believe. Will this hidden resilience help the euro and push German yields higher?
Clients have been pushing back on our recession call on the grounds that it is incompatible with the economy’s second-half acceleration and the more recent easing in financial conditions. We examine both of those points in the course of doing some pushing back of our own.
Signs that we are entering the last phase of a bubble are building up. Can European equities benefit from a new tech mania?
Households have ramped up their cash holdings since the end of 2019, but the absence of an empirical link between cash and consumption leads us to believe that we’ve modestly overestimated the risk of consumer-driven overheating.
Recessions often begin seemingly out of the blue when the economy’s temperature falls enough to set in motion adverse feedback loops that cause unemployment to rise. We expect the US economy to suddenly freeze over towards the end of this year or in early 2025. For now, a benchmark allocation to equities is appropriate, but a more defensive stance will be necessary later this year.
Over the next six months, the deterioration in non-US growth will occur earlier and be more pronounced than in the US. This expectation reinforces our confidence to bet on the strength of the US dollar. As usual, the flip side of the US dollar strength will be weakness in EM risk assets.
Our Valentine’s Day report is about two love stories: the infatuation with US tech and China’s infatuation with housing. We describe how these love stories will end, and why Europe could be the winner.
