JFrog stock rises as Cantor Fitzgerald maintains Overweight rating after strong Q2
Investing.com -- BCA Research warned in a note Friday that the so-called "Sell America" trade, marked by rising aversion to U.S. assets, could evolve into a dollar crisis if it persists, though the firm does not expect that outcome for now.
“The ‘Sell America’ trade could metastasize into a dollar crisis if sustained, but we doubt (for now) this will happen,” BCA said in a recent note.
The firm added that even in a downturn, “U.S. assets are still likely to exhibit safe-haven behavior.”
BCA noted its post-election call that “major trade action from the Trump administration would occur this year,” which has now materialized.
According to the firm, the combination of escalating tariffs, limited monetary policy space, and inadequate fiscal stimulus is pushing both the U.S. and global economies toward recession.
“The U.S. and global economies are likely to enter a recession this year barring either a rapid and concrete reversal of some of the tariffs that have been imposed, or the passage of significant fiscal stimulus to counter the trade shock,” BCA wrote.
The firm expects hard economic data to weaken over the next one to three months and said it will reassess its recession forecast if that deterioration fails to materialize by summer.
Meanwhile, a stagflationary outcome—rising inflation alongside weak growth—appears more likely, particularly if governments respond with fiscal stimulus that falls short of supporting household consumption.
“A U.S. fiscal bill will be passed this year but will not likely be large enough to meaningfully support U.S. consumer spending,” the firm said.
In this environment, BCA recommends investors stay underweight equities relative to bonds.
It also favors “defensive equity sector positioning, an overweight stance toward value stocks, an underweight stance toward small caps, and gold over cyclically sensitive commodities.”