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Webcast
August 6, 2013
BCA Dialogue
August 2013
Ian MacFarlane
Chief Strategist
Global Asset Allocation
Marko Papic
Chief Strategist
Geopolitical Strategy
EM RELATIVE PERFORMANCE APPROACHING 2008 LOWS
400
EQUITY PERFORMANCE*:
EMERGING MARKETS VS DEVELOPED MARKETS
400
300
300
200
200
100
100
© BCA Research 2013
88
92
96
2000
04
* REBASED TO JAN. 1988 = 100 AND SHOWN IN COMMON CURRENCY TERMS;
SOURCE: MSCI INC. (SEE COPYRIGHT DECLARATION)
08
12
MIRRORS THE ECONOMY’S SWINGS
Ann%
Chg
35
Ann%
Chg
CHINA:
SOCIAL FINANCING STOCK
35
30
30
25
25
20
20
15
© BCA Research 2013
04
06
08
10
12
15
RISKS ARE RISING
Bn$
300
Bn$
U.S.:
MARGIN DEBT
300
200
100
200
2
1
0
-1
100
U.S.:
BCA EQUITY SPECULATION INDEX*
2
High Speculation
1
0
-1
Low Speculation
BCA GLOBAL ECONOMIC SENTIMENT INDEX**
2
2
Extreme Optimism
0
0
Extreme Pessimism
-2
© BCA Research 2013
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2000
02
04
06
08
10
12
-2
TOO OPTIMISTIC LONG TERM, TOO PESSIMISTIC SHORT TERM
%
%
U.S.:
4
4
REAL EFFECTIVE FED FUNDS RATE
MARKET EXPECTATION*
2
2
0
0
-2
-2
-4
© BCA Research 2013
08
10
12
14
* DERIVED FROM THE OIS AND CPI INFLATION SWAP CURVES.
16
18
20
-4
GEOPOLITICS A DOWNSIDE RISK TO OIL?
Kg
GOOGLE IRAN REFERENCES* (LS)
IRANIAN ENRICHED URANIUM AT 20%** (RS)
320
100
280
80
240
60
200
160
40
120
20
80
© BCA Research 2013
OCT
6
JAN
APR
JUL
OCT
JAN
APR
JUL
OCT
* INDICATOR REPRESENTS NUMBER OF GOOGLE SEARCHES OF “IRAN NUCLEAR PROGRAM” RELATIVE TO PAST
SEARCHES OF THE TERM. THE INDICATOR IS NORMALIZED AND MEASURED ON A 0-100 SCALE.
** SOURCE: IAEA.
EM POLITICAL RISKS RISING
Th
USD
EMERGING MARKETS*:
-.20
BCA GOVERNANCE INDICATOR** (LS)
GDP PER CAPITA*** (RS)
4200
1.2
1
4000
-.22
BCA GOVERNANCE
INDICATOR
0.8
3800
0.6
-.24
3600 0.4
-.26
0.2
3400
-.28
0
3200 -0.2
© BCA Research 2013
2000 02
7
04
06
08
10
Emerging
Markets
Developed
Markets
© BCA Research 2013
12
* INCLUDES CHINA, BRAZIL, RUSSIA, INDIA, MEXICO, INDONESIA,
TURKEY, MALAYSIA, THE PHILIPPINES, THAILAND, AND SOUTH AFRICA.
** INDICATOR IS AN EQUALLY-WEIGTHED AVERAGE OF THE FOLLOWING
MEASURES: GOVERNMENT EFFECTIVENESS, VOICE AND ACCOUNTABILITY,
POLITICAL STABILITY AND VIOLENCE, RULE OF LAW, AND CONTROL
OF CORRUPTION.
SOURCE: WORLD BANK AND BCA RESEARCH.
*** WEIGHTED BY POPULATION.
SHOWN USING 2011 DATA. INDICATOR IS AN EQUALLYWEIGHTED AVERAGE OF THE FOLLOWING MEASURES:
GOVERNMENT EFFECTIVENESS, VOICE AND ACOUNTABILITY,
POLITICAL STABILITY AND VIOLENCE, RULE OF LAW, AND
CONTROL OF CORUPTION.
SOURCE: WORLD BANK AND BCA RESEARCH CALCULATIONS.
EUROPE: INVESTMENT OR A VALUE-TRAP?
EURO AREA:
REAL EQUITY PRICES*
TREND
TREND +/- TWO STANDARD DEVIATIONS
3.5
3.5
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
© BCA Research 2013
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8
80
85
90
95
2000
05
10
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* DEFLATED BY CONSUMER PRICE INDEX. SHOWN AS A NATURAL LOGARITHM. TIME TREND: 1975 - PRESENT.
JAPAN: INVESTMENT OR A TRADE?
LDP PERFORMANCE IN AGRICUTURAL-HEAVY PREFECTURES
70
60
AVERAGE OF PAST FOUR UPPER HOUSE ELECTIONS
2013 UPPER HOUSE RESULT
50
40
30
20
10
© BCA Research 2013
KAGOSHIMA
MIYAZAKI
TOCHIGI
IBARAKI
FUKUSHIMA
MIYAGI
AOMORI
IWATE
KUMAMOTO
9
HOKKAIDO
0
U.S.: VOLATILITY AHEAD
U.S.
POLICY UNCERTAINTY INDEX* (LS)
VIX VOLATILITY INDEX (RS)
45
220
40
200
35
180
30
160
25
140
20
120
15
© BCA Research 2013
10
10
11
* SOURCE: BAKER, BLOOM, AND DAVIS (2012).
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