Research Highlights

A just-published report reinforced our call for euro area outperformance in a global equity portfolio. While stock performance has perked up significantly in recent weeks, the depressed level of euro area 12-month forward earnings relative to those of the global benchmark underscores that there is ample room for the recent upturn to run. An expected……

A just-published report updated our view on the U.S. inflation outlook. Last year’s spike is unwinding, driven by falling goods prices. Year-over-year core inflation will continue to decline as goods inflation drops and eventually as rental inflation cools. This will be short-term bond-supportive as it will encourage the Fed to halt its policy tightening likely……

A just-published report updated our multi-asset recommendations, and outlined our return expectations for the main global capital markets in 2023. After a very taxing 2022, global equities and bonds should deliver better returns this year, but the ride will be bumpy, consistent with late-cycle conditions. Elevated uncertainty and the likelihood of another bond yield upleg……

A just-published report examined the investment opportunities and risks ahead, after what was a very difficult year for most investors. Fortunately, our absolute return performance was able to capture the major financial market swings in 2022, significantly benefiting the aggregate performance of the MRB TradeBook. Our recommended investment portfolio had generated a profit of 15%,……

A just-released webinar featured MRB’s senior research team’s high-conviction and non-consensus investment ideas for 2023. The webinar also included a Q&A session where clients inquired about the topics that were most critical in positioning their portfolios for next year. One of the keys to investment strategy is to understand where the world is in terms……

A just-published report revisited the unique macro and bond market environment 40 years ago. The report concluded that a thorough understanding of the evolution in investor perceptions and bond market pricing during the 1980s’ shift in the secular inflation trend will prove valuable for investment strategy in the years to come. It is common for……

A just-published report outlined the expected global financial market performance in the year ahead. The current risk-on phase will likely last for a few months, but the 6-12 month investment climate will remain challenging given economic growth and policy uncertainty, and despite better valuations than a year ago. Investors are already overly optimistic about Fed……

A just-published report highlighted the near-run opportunities that exist as a consequence of the cyclical uptrend in government bond yields once again pausing, which has allowed a risk-on phase to take hold. We have the euro area as one of our top candidates for providing a positive surprise in 2023, and indeed euro area assets……

A just-published report updated our 10-year projections for all the major global asset categories. Although the long-term outlook for a balanced portfolio has improved following this year’s steep price declines, the end of the 40-year downtrend in interest rates heralds a more challenging investment climate than has prevailed in recent decades. Setting realistic return expectations……

A just-published report revisited our theme of toppling dominoes in response to rising interest rates, and related investment opportunities – both long and short. The surge in the global cost of capital has dampened growth conditions but is unlikely to trigger a global recession that resets the economic cycle and/or sustainably dampens inflation toward central……

A just-published report pointed out that major central banks will soon shift to a more moderate pace of hikes notwithstanding Fed Chairman’s Powell’s press conference caveats. In the near-term bonds remain oversold and have moved in lockstep with expected policy rates, such that the risks to G7 government bond yields are to the upside. While……

A just-published report updated our view on both the short-term potential for a reprieve in beleaguered global financial markets, and the still worrisome cyclical picture characterized as historically high and (likely) sticky inflation in the developed world. One strategic position, where we have recently increased our exposure to, reflects being long a structurally attractive asset……

A just-published report examined global financial market prospects after what has been a relentless stretch of bad news. How might the environment evolve if things turn more favorable, or at least less bad? Global equities and G7 bonds are now deeply oversold, while the U.S. dollar is extremely overbought. Some possible catalysts for at least……

A just-published report updated our views on global capital markets, highlighting both the deeply oversold conditions that exist for most assets, yet the deteriorating economic outlook and sticky inflation in the developed world. A countertrend bounce could develop after the brutal price declines in recent months. However, the cycle is not over in terms of……

A just-published report updated our multi-asset recommendations, noting that the environment was becoming increasingly risky with global growth slowing, yet inflation has stayed high and is proving sticky in the developed world. The level of policy rates and bond yields is not yet historically elevated, especially in real terms, but the relentlessness nature and speed……

A just-published report updated our fixed-income investment strategy and positioning, and recommended trimming pro-growth allocations on near-term strength. Although the BoE has, temporarily, arrested a riot in the U.K. Gilt market, that was threatening all major government bond markets, the pressure on global bond yields remains on the upside. Growth prospects are decelerating steadily, but……

We have noted that the next recession likely would be triggered by the snapping of some of the global “weak links”. The U.K. was near the top of weak link list, and its currency and asset markets took a “pounding” last week. The U.K.’s conflicting fiscal and monetary policies collided at a time when inflation……

A just-published report examined the perceptions and expectations in the Treasury market and at the Fed. It concluded that there is still considerable potential upside in bond yields and the fed funds rate on a cyclical basis. The Fed was seduced by the persistence of low inflation last decade and significantly lowered its estimate of……

A just-published report examined the stellar performance of U.S. corporate profits. Although the growth rate has peaked, the coming deceleration should be moderate rather than pronounced. The U.S. corporate sector continues to fire, with profits surging in the second quarter to an all-time high relative to GDP, underscoring the extraordinary pricing power and global prominence……

A just-published report updated our outlook for the U.S. economy, and reiterated that underlying conditions remain resilient. Consequently, we do not agree with the forward market’s expectations of policy rate cuts next year. We remain cyclically bearish towards bonds because the Fed’s (and the Treasury market’s) expectations do not add up, i.e. are not consistent:……

A just-published report reiterated that the summer rally in equities and credit should persist as inflation rates are peaking and global government bond markets have settled into a period of calm. However, the cyclical outlook remains risky for all financial markets, as inflation is not likely to return to most central bank’s target of 2%,……

A just-published report updated our outlook for U.S. inflation. As anticipated, last week’s July CPI report confirmed that inflation has peaked, and we expect a moderation in the coming months. This, in turn, will allow the Fed to slow its rate hikes this autumn and likely pause by yearend. However, despite a meaningful deceleration in……

A just-published report updated our multi-asset recommendations, noting that global stocks have rebounded moderately since their mid-June low from an extreme oversold level, on optimism that central banks will throttle back their rate hiking path. Still, they have recouped only a fraction of the first-half losses and there is scope for a further bounce in……

A just-published report updated our tactical investment strategy, and further shifted the MRB TradeBook in a more pro-growth direction. The drawdown in global equity markets in the first half of the year dramatically improved valuations and pushed markets to technical extremes, in terms of momentum and sentiment. Most importantly, the checklist for a risk-on phase……

A just-published report updated our longer-term macro-economic and policy outlook, in view of the sharp swing in sentiment that is now expecting a recession, perhaps imminently. Global growth is slowing but our analysis highlighted that monetary conditions are not the cause of economic stress, and many of the factors currently slowing growth are temporary in……

A just-published report updated our view on the U.S. economic outlook, and concluded that: “the probability of a U.S. recession in the coming year is not high, although the odds of a forced Fed error triggering a recession are increasing with every strong inflation print”. The conditions consistent with a recession do not exist, in……

A just-published report updated our views on the outlook for the major global financial markets. Risk asset prices are now discounting a recession, even though underlying economic momentum and forward-looking gauges are still generally positive. Three necessary ingredients to end the current risk-off environment are: a consolidation in government bond yields; a reversal in the……

A just-published report updated our multi-asset recommendations. Anxiety about the global growth outlook will persist in the near run, but the most likely outcome on a 6-12 month horizon is that the economic expansion will be sustained. Thus, portfolio returns should soon improve, initially reflecting more stable bond returns and, ultimately, better equity returns. Nevertheless,……