Highlights Global equities face near-term downside risks from the trade war, but should be higher in 12 months’ time. Its claims to novelty notwithstanding, Modern Monetary Theory is basically indistinguishable from standard…
The top panel shows that while the 7-day repo rate rose in late-2016 and 2017, the rise was fairly small (on the order of 60 basis points). By contrast, the 3-month repo rate surged, which appears to have been caused by macro-…
Instead of aggressive and broad-based bank lending, this policy push will likely have to come in the form of quasi-fiscal spending, e.g. a significant increase in infrastructure-oriented local government bond issuance (which we…
Highlights The view that the world will sink into a deflationary “ice age” hinges on the assumption that policymakers will make a colossal mistake by failing to do what is in their own best interest. Contrary to popular…
Feature In what has become a tradition, I met with Ms. Mea following client meetings in Europe last week. Ms. Mea is a long-term BCA client who has been following our Emerging Markets Strategy very closely over the years. It was our…
Highlights Looking past the day-to-day noise of trade-related announcements, we view the underlying odds of an actual trade agreement this year to have fallen below 50%. For the purposes of investment strategy, China-exposed investors…
Highlights Even if higher tariffs are imposed tonight, there is a good chance that China and the U.S. will reach a temporary trade truce over the coming weeks. Contrary to President Trump’s assertion, U.S. companies and…
The BoC places a lot of weight on the Business Outlook Survey (BoS) in determining its economic forecasts, and in setting monetary policy. Thus, it is no surprise that in the official statement following the April 24…
The problem for the BoC is that its policy rate of 1.75% remains well below its own estimated neutral range, which is now 2.25%-3.25%. A similar message comes when looking at the neutral real rate (“r-star”) estimate…
In 2018, prior to the year-end correction in U.S. equity markets, the contribution to core PCE inflation from the Financial Services category was a steady 0.5-0.6 percentage points. After the market rout, that contribution has…