Essentials

Bank Credit Analyst

Policymakers will likely continue to stimulate domestic demand via targeted measures and piecemeal stimulus. Yet, the economy will disappoint unless Beijing provides “irrigation-style” stimulus. The latter is not our base case scenario.

Bank Credit Analyst

A massive crackdown on cryptocurrencies and crypto companies began this year in the US. Liquidity has collapsed as a result. This lack of liquidity coupled with the anticipated large-scale liquidation of crypto assets by the US government and other large players could be bearish for prices over the next few months. However, a buying opportunity could emerge by year-end, as new regulatory structures in the rest of the world will finally allow institutional investors to access cryptocurrencies without operational risks. The era of thousands of cryptocurrencies is also probably over, with the space likely to consolidate into a few tokens.

Bank Credit Analyst

Bank Credit Analyst

Bank Credit Analyst

An important annual event is when long-time client Mr. X visits BCA strategists at the end of each year to talk about the economic and financial outlook and a write-up of the discussion is published as our Annual Outlook report. Recently, BCA’s former Chief Economist Martin Barnes had the pleasure of a chance encounter with Mr. X at an airport lounge, and this report is an edited transcript of their conversation.

Special Report

In this volume of BCA Crypto we compare gold against bitcoin. We begin by dispelling some common misconceptions that investors have about gold, and why, at its core, gold is driven more by belief than by intrinsic value. We then proceed to explain why gold still serves an important role in our economy and how it differs from fiat money. Later, we explain how bitcoin is different from other cryptocurrencies, and why it could rival gold as a reserve asset in the future. Finally, we discuss the outlook for bitcoin, as well as which macro factors investor should watch.

Bank Credit Analyst

In Section I, we discuss the implications of the banking crisis that emerged in March. We do not expect what happened in the US or Europe to morph into a full-blown meltdown of the financial system, but this month’s events will likely lead to a further tightening in bank lending standards, raising further the odds of a US recession over the coming year. We continue to recommend an underweight stance toward risky assets versus government bonds over the coming 6-12 months, and defensive positioning within a global equity portfolio. In Section II, we estimate the impact of recently-passed US legislation on US business investment over the structural horizon and conclude that it will indeed boost capex growth over the coming several years. Assets poised to benefit from this trend will likely underperform over the coming year but should be bottom-fished following the next recession.

Bank Credit Analyst

Some quick takes from today’s FOMC meeting.

Bank Credit Analyst

The Fed’s Volckeresque rate-hiking campaign has challenged all banks, but Silicon Valley Bank and Signature Bank were anomalously vulnerable and the Fed’s new lending facility will ease the liquidity pressures on other banks. The current turmoil is not a replay of 2008.

Bank Credit Analyst

Welcome to BCA Crypto - a research series on cryptocurrencies. Over the next few months, we will release a series of reports analyzing this polarizing asset class. In this introductory report we distinguish between fact and fiction, clearing some of the misconceptions that investors often have about the cryptocurrency market, cryptocurrency custody, market participants, risk, return and correlation. We conclude that while the correlation between equities and cryptocurrencies will stay relatively high until the end of the cycle, at least for Bitcoin, this correlation probably peaked last year.