Numerous divergences have opened up between global risk assets and global business cycle variables. These gaps are unsustainable, and odds are that the recoupling will occur to the downside with risk assets selling off.
On Wednesday, President Joe Biden announced that a new ban on some US investment into China’s quantum computing, advanced chips and artificial intelligence sectors will come into force next year. This latest escalation is…
The downgrade of the US credit rating highlights the risk of fiscal dominance overriding the Fed’s long-standing monetary dominance focused on its dual mandate. This threatens to push inflation and long-term interest rates higher. It…
China’s CPI and PPI inflation release for July indicates that deflationary pressures dominate the domestic economy. After remaining unchanged in June, consumer prices fell by 0.3% y/y. Meanwhile, the 4.4% y/y drop in…
China has generated 41 percent of the world’s economic growth through the past ten years, al-most double the 22 percent contribution from the US. Now that the Chinese growth engine is failing, we explain why it is arithmetically…
Although the RMB has cheapened, macro conditions are not yet favorable for the Chinese currency. We expect the RMB to decline by at least another 5% in the next six months. A weak currency and subdued economic growth lead us to…
The global economy will not enjoy an “immaculate disinflation” but will suffer a very maculate one due to China’s growth slowdown and restrictive monetary policy in the developed world. Investors should stay overweight low-beta…
Chinese trade data continued to deliver a pessimistic signal about the global manufacturing cycle. The export contraction deepened to -14.5% y/y in US dollar terms in July – below expectations of a -13.2% y/y decline and…
According to BCA Research’s Global Investment Strategy service, EM ex-China equities have potential to outperform China and DM in the remainder of the year. Relative to their own history and compared to other EMs,…
China’s extremely high savings rate is the real culprit behind its current economic woes. The authorities have been slow to stimulate the economy, and the risks of “Japanification” have increased. For now, the fact that China is…