BCA Research has set out five tactical calls based on recent political and geopolitical developments, saying investors should “long USD, overweight US versus Europe, overweight Europe versus China, and short oil.”
The analysts argued in a note this week that events surrounding President Donald Trump are central to market direction.
“All these issues are connected in ways that stem from President Trump’s political vulnerability – he needs to take action without destroying the economy or bull market,” BCA said.
Among the developments cited, BCA pointed to Trump’s moves to “pack the Federal Reserve board,” Russia rejecting “Trump’s olive branch,” worsening U.S.-China trade talks “over tech trade,” and the deployment of U.S. naval forces “into position around Venezuela.”
In Europe, BCA highlighted that “France’s government started to collapse (again).”
BCA noted that the Treasury market has so far taken Trump’s efforts to influence monetary policy in stride.
“The Treasury market is not yet reacting negatively to Trump’s attempt to fire a Fed governor and manipulate the country’s interest rates,” analysts wrote.
However, they warned that could change “if the Supreme Court endorses his action, which is no longer our base case. Or it will happen later, whenever the Fed makes a dovish mistake.”
BCA emphasised that while many of these developments may appear separate, they are closely linked through Trump’s political standing and the balancing act between aggressive action and economic stability.
“The Russo-China bloc, Venezuela, and France are all seeing developments that imply some contrarian tactical views,” the analysts concluded.
