Japan

This week, our three screeners cover equity plays in: Gold mining stocks, Japanese Staples, and Implicit Dividend Yield. 

This report looks at the FX implications of the Trump tariffs, and the review of our Q1 trades.

Tariffs will make a difficult job almost impossible. Hitting and sustaining a precise 2 percent inflation target is more about luck than judgement. It requires both the starting point for inflation expectations and any inflation/deflation shock to combine perfectly to 2 percent. While structural inflation expectations in the euro area and Japan could be close to 2 percent, those in the US and the UK will be stuck uncomfortably above 2 percent. We discuss the investment implications for rates and FX. Plus: gold is vulnerable to a tactical reversal.

Given the meetings between the Bank of Japan, the Bank of England, and the Swiss National Bank, our highest convictions views are:
Overweight UK Gilts. It is also time to sell sterling. We are short sterling, as of 1.30. 
Underweight JGBs. Correspondingly, be long the yen. 
A short CHF/JPY position remains a core holding. Selling GBP/JPY is also a great trade.

The Trump slump is nearing a temporary reprieve, with a playable countertrend rally in stocks and a tactical rebound in the dollar. Go tactically long USD/SEK. For long-term investors though, the AI bubble still has a lot of air to come out.