Research Highlights

MRB’s latest report updates our investment strategy amidst the uncertainty of the war in the Middle East. As occurred during the tariff war last year, investors face frequent setbacks and U-turns. The combatants have diverging war aims and incentives for a ceasefire, and the U.S. administration has frequently reversed course while executing its policies. Concern…

In a report last week, we examined the outlook for U.S. bank stocks and the banking industry as a whole in view of the bearish news in the private credit space “U.S. Bank Stocks: How Big Of A Threat Is Private Credit?”. Indeed, bank lending to non-depository financial institutions has grown rapidly in the past…

We examined the sensitivity of global growth to the ongoing energy shock in several reports last week. Critical to the outlook, global spending on crude oil as a share of GDP is not historically high and is well below the levels that have triggered or contributed to previous economic downturns. Because the major countries/regions are…

Last week we published two reports that updated our global multi-asset investment recommendations. The near-run outlook is highly uncertain and investors, having been far too optimistic, are rushing into the safety of cash. Events in the Middle East will dominate the headlines until geopolitical tensions and oil prices crest. At this juncture, we do not…

Last week we published two MRB Theme Reports on our longstanding theme of “A Bubbly World”. After a long period of extraordinarily high returns, the macro foundations supporting asset bubbles are slowly eroding and the prospects for continued rapid asset price inflation are diminishing. Forceful policy reflation and abundant liquidity conditions have inflated a wide…

Bond markets and DM central banks remain convinced that inflation will return to the low and stable environment that existed prior to the pandemic. Indeed, headline inflation has declined considerably from the peak hit after the world economy “re-opened” earlier this decade. However, inflation has stalled above the average levels recorded in the prior two…

While the woes of A.I. and related plays have recently dominated the headlines, global bank shares have been gaining momentum, consistent with MRB’s investment recommendations. In a research report last week, we highlighted the structural improvement in the sector’s profitability. Forward earnings and ROE are poised to rise further in the year ahead in response…

In a research report last week, we noted that there is mounting evidence that supports another cyclical upleg in long-dated government bond yields. Specifically, global economic growth conditions are strengthening and inflation is set to surprise to the upside. Most central banks have already shifted into the “pause club”, and a “hike club” is now…

Japanese government bond yields (JGBs) have soared in recent months, most recently on concerns about the unfunded budget deficit under the proposed expansionary fiscal policies of new Prime Minister Takaichi. That said, what may look like a toxic outlook for Japanese debt is tempered by several mitigating factors, which imply that a debt crisis is…

After being relatively quiet for much of 2025, developed market (DM) government bond markets have weakened anew this year. Prospects for better economic growth in a wide range of countries/regions, plus sticky DM inflation and accommodative monetary conditions bode poorly for bond market returns. So far, equity and credit markets have continued to ignore the…

One of MRB’s core fixed-income themes is that the Fed and bond market are mirroring (inversely) the 1980s. Market participants are often reluctant to embrace long-term shifts in underlying macro forces, as they become wedded to their previous mental frameworks. This is especially true at secular turning points in inflation, causing central banks and bond…

The top-down outlook points to solid economic growth and the outperformance of equities versus bonds in the year ahead. However, we expect low returns for both equities and bonds, with the former vulnerable to a sizeable correction(s) and the latter to outright losses. Widespread investor optimism/complacency about equities and bonds leaves both asset classes increasingly…

Every year MRB publishes a series of outlook reports during December that outline our investment strategy and positioning for all the major global asset markets. MRB’s base-case scenario is that global economic growth momentum will firm and broaden next year, partially in response to policy stimulus provided in 2025. This should bolster investor confidence in…

The challenge for investors in 2026 will be to sort out the conflicting forces between accommodative (or early-cycle) policy settings amidst a mature (or late-cycle) economic and investment environment, where pockets of speculative froth have taken hold. Global monetary conditions have been accommodative which has sustained strong asset price inflation. However, there will be many…

There is an affordability problem caused by the relentless rise in U.S. and developed market (DM) consumer price levels. The latter continues to climb at a more rapid pace than the pre-2020 trend. Good economic growth is probable in 2026 and will be welcome by the Republicans heading into next November’s U.S. mid-term elections. However,…

We examined the growing risk of an end to the relentless bull market in equities and most other risk asset markets. Financial markets have pockets of excess that typically have only been seen during a speculative frenzy and near an equity market top. The offset is that global monetary and fiscal policies are easy, removing…

A just-published report updated our view on the U.S. employment outlook, and concluded that there is no cause for alarm, even though payroll growth has slowed considerably. There have been repeated bouts of (temporary) angst that the U.S. economy was faltering throughout the post-2009 period. The current candidate for triggering a recession is the sharp…

We examined the long-term equity market outlook in a report last week, and concluded that the secular bull run in U.S. equities that began in 2009 is extended. Many of the powerful tailwinds are now fully discounted, and in some cases cresting/reversing. While a bear market catalyst is still absent, current pricing implies a material…

A just-published report updated our outlook for the Chinese economy, and concluded that it continues to chug along near its trend growth rate. While activity is not as weak as China bears have been expecting, growth is also unlikely to provide any upside fireworks. China’s overall export performance has been a positive surprise this year,…

The U.S. dollar has recently confounded both bulls and bears. After nose-diving in the opening months of 2025, the dollar has mostly tracked sideways since mid-year. We see this stability as just a pause in an ongoing cyclical downtrend. Further Fed rate cuts, a stand-pat ECB and additional (albeit glacial) BoJ rate hikes, plus a…

We remain overweight Japan within a global equity portfolio, encouraged by the prospect of a more pro-growth new prime Minister. The economic and corporate profit backdrop was already positive for Japan and the prospect of a more pro-growth government following the election of Senae Takaichi as LDP leader triggered a strong equity rally early last…

A just-published report concluded that while it is tempting to bet on a continuation of recent equity market momentum, i.e. favoring the U.S. and technology stocks within a global equity portfolio, this strategy has a poor risk-reward profile going forward. We believe that it is prudent to take advantage of supportive monetary policies to diversify…

The Fed confirmed on Wednesday that it is now just focussing on maximizing employment, rather than also trying to bring inflation back down to 2%. A just-published report noted that even as the FOMC voted to lower its policy rate, it also upgraded its economic outlook, lowered its forecast for the unemployment rate and even…

A just-published report updated our outlook for the U.S. labor market, concluding that the labor market is in a non-recessionary low hiring funk, with overall policy uncertainty keeping firms cautious and low immigration restraining labor supply. It is only at the very front of the age distribution (workers aged 20 to 24 years) where there…

A just-published report updated our absolute return portfolio, which remains positioned for a pro-growth backdrop. However, we acknowledge that the environment is becoming increasingly frothy and risk asset market valuations are stretched. Nevertheless, already plentiful liquidity conditions are set to receive another shot of stimulus with the Fed set to resume lowering its policy rate….

A just-published report noted that U.S. corporate profits remained solid in Q2 despite increased tariffs and choppy economic performance during the quarter. The outlook is still fairly positive, albeit expectations are elevated, underscoring that the equity market could hit some bouts of turbulence if earnings suffer even minor disappointments. S&P 500 companies delivered better-than-expected second-quarter…

A just-published report examined the key drivers of economic and capital markets’ performance. The challenge for investors is that these variables are difficult to forecast. These known unknowns include the rate of productivity growth in the major economies, the related potential GDP growth rate, the size of the output gap and its relationship with inflation, the…

Last week’s U.S. CPI report was widely seen as benign and consistent with imminent Fed easing, which helped to sustain gains in risk asset markets. This spin ignored the fact that the report again confirmed that underlying inflation has flattened off well above the levels of recent decades as well as the Fed’s 2% target…

A just-published report examined the prospects for the U.S. labor market in view of the sharp deceleration in payroll growth this spring. Our research highlighted that weaker employment gains since May were a symptom of the spike in trade policy uncertainty (which has since ebbed somewhat) as well as a U-turn in immigration, rather than…

A just-published report examined the growing prospects that the U.S. Federal Reserve will lose its independence and be forced by the administration to slash its policy rate, regardless of economic conditions and the inflation outlook. Removing the Fed’s independence and slashing policy rates would drive short-term interest rates lower but would risk a bond market…

A just-published report updated our views on EM currencies. While the solid rebound in the EM currency basket this year means that these currencies are now overbought, we anticipate more upside ahead and reiterated our overweight stance on the EM within a global FX portfolio. A combination of cyclical and structural tailwinds will support the…

A just-published report examined a number of topic global investment issues and updated our investment recommendations. Two hot topics this week were: the independence of the U.S. Federal Reserve and whether Chair Powell would be fired; and the issue of who really pays for higher U.S. tariffs. The answer to the second question is clear:…

A just-published report updated our global investment recommendations and strategy. After a string of political “wins” and the rekindling of animal spirits in financial markets, it was not surprising that President Trump would return to the tariff war. In contrast with earlier this year, however, investors are mostly ignoring the rhetoric, as Trump has provided…

A just-published report argued that it has been challenging for investors to assess economic growth prospects and their impact on financial markets because the U.S. has experienced massive policy crosscurrents in recent months. Fiscal, monetary and trade policies are all in flux and the report helped frame these crosscurrents and provide an investment outlook.

A just-published report updated the performance of our MRB TradeBook over the first half of the year, highlighting that once again the portfolio outperformed the global multi-asset benchmark portfolio with much lower volatility. Global financial markets have experienced major swings so far this year, due to extreme policy shifts. One big theme this year, which…

A just-published report updated our view on Fed policy following the latest FOMC meeting. The policy rate was left unchanged, but the DOT plot shows that two rate cuts are anticipated by year-end. The FOMC has a dovish bias and has been looking for an opportunity to cut rates further. The economy and, more recently,…

A just-published report provided an update of our views on the U.S. exceptionalism trade. The latter was a long-running theme that resulted in significant overvaluation of U.S. assets, in both absolute terms and relative to global alternatives. U.S. policies this year have provided a wake-up call for global investors, highlighting the danger of holding excessive allocations…

A just-published report updated our multi-asset recommendations and the main highlight was an unwinding of our tactical move taken in March to protect against what had become an increasingly dangerous tariff war. The U.S. administration has since pivoted and although elevated U.S. policy uncertainty will persist, a resilient U.S. and global economy should support risk…

A just-published report updated our outlook for U.S. corporate profits following yet another solid quarterly performance. Although analysts have lowered S&P 500 EPS estimates for 2025 and 2026, consensus forecasts are still too optimistic based on our analyses. Such forecasts include the implicit assumption that already historically elevated profit margins will increase significantly further, which…

A just-published report updated our global fixed-income strategy. While the U.S.-led trade war is not over and may yet witness some steps back (such as occurred late last week), the risks to long-dated government bond yields are tilting to the upside. Bond market drivers are shifting from worries about a global recession and expectations of…

A just-published report provided an update on our global investment stance, noting that risk-on could persist for a while longer barring a flip back by President Trump to aggressive tariff threats and actions. One unique pattern throughout the post-pandemic economic expansion has been the persistent front-running of Fed rate cuts, despite the largest rise in…

A just-published report provided an update on our investment stance, noting that the recent easing in tensions over U.S. tariffs had reduced some economic downside risks, providing a lift to risk asset prices. However, the trade war is far from over and economic uncertainty will remain elevated. The report provided a scenario analysis as a…

A recent report argued that growth challenges, brand disruption, regulatory risks, and decelerating fundamentals make the consumer staples sector’s earnings less predictable than in prior years.  Macro uncertainties amid rising global trade tensions have supported the year-to-date outperformance of U.S. consumer staples stocks. However, the move lacks fundamental support. The sector’s forward earnings momentum is…