Developed Countries
Heading into a black hole, you pass a point of no return known as the ‘event horizon’ after which your impending oblivion is sealed. US recessions also have an event horizon, which we are fast approaching. We reveal a leading indicator of this event horizon, and what it means for investment strategy.
CPI inflation in Australia accelerated to 7.8% y/y in Q4, surpassing expectations of a milder increase from 7.3% y/y in Q3 to 7.6% y/y. Price increases are particularly pronounced among the housing (10.7% y/y), food (9.2% y/y) and recreation (9.0% y/y) CPI…
As expected, the Bank of Canada delivered its eighth consecutive rate hike on Wednesday, lifting the policy rate by 25bps to 4.5% and bringing the cumulative increase since the beginning of the tightening cycle last March to 425bps. The key message is that…
Consumers are not the only ones experiencing an improvement in their morale (see Indicator Spotlight). The latest American Association of Individual Investor (AAII) bull-bear survey, released last week, shows that a net 2% of investors were downbeat on the…
According to BCA Research’s Emerging Markets Strategy service, the sustainability of the equity rally depends on whether corporate profits hold up. It is not unusual for a period of equity gains to occur between an inflation-driven selloff and…
Eurozone flash PMIs rebounded in January, corroborating recent signals from other indicators such as the ZEW, Ifo, and Sentix that conditions are improving. The Composite PMI unexpectedly returned to expansionary territory of 50.2 on the back of a 0.9 point…
The outlook for US consumption is a source of debate among BCA strategists. To the extent that it represents two thirds of the US economy, it is also the source of diverging views on the outlook for equities. The BCA House View recommends a defensive…
US S&P 500 operating profit margins have compressed to 15% from 16% in October 2021. Our US Equity Strategists expect this trajectory to continue and project that operating margins will weaken to below their 13% pre-pandemic level. Notably, BCA’s…
The spread between 10-year Italian BTPs and German Bunds has been narrowing in recent months. This decline is consistent with the falling MOVE Index of US Treasury option volatility. However, hawkish rhetoric from ECB Governing Council members –…
BCA Research’s US Bond Strategy service expects the Fed to deliver two more 25 basis point rate hikes before going on hold after the March FOMC meeting. Fed Governor Lael Brainard delivered an important speech last week in which she laid out the…