Economy
It is not unusual for a period of rebounding share prices to occur between an inflation-driven selloff and a growth scare. Initially, stocks rally on falling inflation and prospects of lower interest rates. Then, worries about corporate profits intensify, and equity prices deflate along with falling Treasury yields. This is what happened in the US in 2000-2001 and is likely to occur in the coming months.
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…
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…
Fed Governor Lael Brainard delivered an important speech last week in which she laid out the intellectual justification for the Fed to soon pause its rate hike cycle. This week’s report reviews her arguments and explains how they inform our monetary policy and investment views.
The Conference Board’s Leading Economic Index (LEI) fell by 1.0% m/m in December, following a 1.1% m/m drop in the prior month and below consensus expectations of a 0.7% decline. Non-financial variables led the December decline, particularly gauges of demand…
Preliminary estimates indicate that Eurozone consumer confidence improved in January. The European Commission measure ticked up to -20.9 from -22, corroborating several other indicators pointing to recovering sentiment among businesses and investors. …
US homebuilder stocks have been steadily outperforming in recent months, up 29% since the S&P 500’s October 12 bottom – 18 percentage points above the benchmark index. The nearly 100bp decline in the 30-year mortgage rate since early November,…
BCA Research’s US Investment Strategy service concludes that the biggest banks’ earnings commentary supports the team’s sanguine near-term view. Despite some fraying at the lowest end of the income and wealth distributions, consumers continue to hold deposit…