Latest from BCA Research
The Santa Claus rally is a repricing of the "soft landing" scenario as a likely economic outcome. Yet, many investors remain cautious, and harbor significant cash balances. Next year, repricing of various scenarios will continue, and volatility will be elevated. We remain in a "hard landing" camp and recommend defensive stance on a strategic investment horizon.
The recent decline in yields has powered European equities higher, however, this rally cannot last if earnings decline meaningfully. With this in mind, are our earnings models flagging risks for stocks next year?
Global Investment Strategy predicted the surge of inflation in 2021/22 and the immaculate disinflation of 2023. Now their unique framework is predicting a recession in the second half of 2024.
Democrats are favored to win the election until recession materializes. But recession risks are high. Investors should adopt a defensive and conservative strategy in 2024 amid extreme US policy uncertainty.
Falling core inflation in the US over the short run will boost real disposable household income, which will keep consumption – ~ 70% of US GDP – strong. Over the medium- to-longer term – 3 to 5 years out – inflation risks rise as fiscal dominance becomes the Fed’s modus operandi, and economic fragmentation becomes entrenched. War and the expansion of war remains an inflation risk. In this environment, gold remains our preferred hedge.
Meager credit growth and shrinking real wages will keep Thai inflation very low in the coming months. The currency will get support from an improving current account surplus. Fixed-income investors should upgrade Thailand from neutral to overweight within EM domestic bond portfolios.
