Latest from BCA Research
In a relatively uneventful month, given the action-packed start to 2023, the BCA Score L/S performed well as the outperformance of Safety and Technicals overpowered the underperformance of Value and Size. With this in mind, the USHQ SMID cap portfolio was able to beat its benchmark, however the USHQ Large Cap portfolio low beta tilt in tech held it back and it missed on its benchmark.
Indian EPS growth is set for major disappointments vis-à-vis the lofty expectations. Weak domestic demand amid tight fiscal and monetary policy entails more downside in stock prices. Stay underweight.
The Fed hiked 25 basis points at yesterday’s FOMC meeting while also signaling that the tightening cycle is now on hold. We discuss the short-run and long-run implications for Treasury yields.
China’s reopening, combined with a slew of pro-consumption policy stimuli, will likely boost household consumption by 10% in nominal terms in 2023 from a year ago. Some of the hardest hit service sectors during the pandemic will experience a strong recovery. Within the A-share market, investors should overweight the consumer discretionary sector versus the Chinese CSI300 benchmark.
The Global Equity Score did not change significantly this month and remains bearish, however on the heels of positive momentum, the sector model is now neutral-to-bullish on most growth sectors.
As the Fed meets today, we explain what it did wrong in 1970, 1974, and 1980 that prevented inflation from being exorcised, and the lessons for 2023-24. Plus, we identify a currency cross that could rebound in the next year.
Macro and geopolitical risks may spoil the narrow window for a stock market rally before recessionary trends rise to the fore.
MacroQuant is bearish on equities, overweight bonds, and overweight cash. Within equities, the model favors Europe over the US and is underweight on EM.
The risk-reward of the US dollar is currently positive. If a US recession is not imminent, then US bond yields will move higher, thus supporting the greenback. If the US enters a recession soon, the US dollar will benefit because it is counter-cyclical. Besides, the US dollar has not been as weak as the DXY index suggests.
