Japan

In this chartbook, we look at the balance of payments across DM and EM countries. The US does not fare well, but neither do a few other countries.

Upward pressure on Japan’s real bond yield justifies overweighting the yen and underweighting overvalued tech. Plus: two new tactical trades are long JPY/EUR and short platinum.

This week our three screeners identify stocks that are likely to keep delivering deliver earnings surprises in the US, European small caps that are high quality and mean reverting, and Japanese large caps picks across GICS 1 sectors.  

Acute geopolitical risks, like a massive oil shock, may be abating. But structural geopolitical risk remains high and could upset a blithe market. Cyclical economic risks are underrated as the US slows down and China continues to stumble. Investors should book some profits in anticipation of tariff implementation and a downturn in hard economic data.

Investors should modestly underweight equities in their portfolios and look to turn more aggressively defensive once the whites of the recession’s eyes are visible. We think that will happen within the next few months.

In this note, we reaffirm our underweight position in JGBs and long yen positions given the BoJ’s meeting overnight.  

In this FX note, we provide a rationale for why it is important to pay attention to technical indicators, while still keeping your eyeball on the structural factors that drive currencies. This report answers the following questions: 1. Should you buy or sell the USD over a three-to-six month period from the pure lens of our proven technical indicators and 2. What are the best tactical cross trades among currencies.