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Marko PapicChief Strategist Geopolitical Strategy
BCA DialogueMay – June 2013
WebcastMay 28, 2013
Ian MacFarlaneChief Strategist Global Asset Allocation
2
FRONTIER MARKETS: THE NEXT PLAY?
© BCA Research 2013
100
80
60
40
20
8000 10000
FM ex.GCC (2012)
REAL GDP PPP PER CAPITA IN 2005 INTERNATIONAL DOLLARS
MA
RK
ET
CA
P A
S A
% O
F G
DP
SOURCE: THE WORLD BANK AND BCA CALCULATIONS.
STRENGTH OF LEGAL RIGHTS
2012 LEVEL (LS)2004-2012 CHANGE (RS)
7
6
5
4
3
2
1
0.6
0.5
0.4
0.3
0.2
0.1
DM EM FM
SOURCE: THE WORLD BANK AND BCA CALCULATIONS.
© BCA Research 2013
3
SHRINKING DEFICIT IS A GAME CHANGER
© BCA Research 2013
10
8
6
4
2
0
-2
50 60 70 80 90 2000 10 20
10
8
6
4
2
0
-2
U.S. FEDERAL BUDGET DEFICIT*(AS A PERCENT OF GDP)
% OfGDP
* RED BARS DENOTE CBO DEFICIT PROJECTIONS.
% OfGDP
Mean = 2.24% of GDP
4
CONGRESSIONAL VS. NATIONAL PARTY
© BCA Research 2013
400
200
0
-200
-400
60 70 80 90 2000 10
400
200
0
-200
-400
BALANCE OF POWERIN THE WHITE HOUSE*
SMOOTHED**
* DEMOCRATIC MINUS REPUBLICAN CANDIDATE ELECTORAL COLLEGE VOTES.** SMOOTHED USING HP-FILTER.
160
120
80
40
0
-40
60 70 80 90 2000 10
160
120
80
40
0
-40
BALANCE OF POWER IN CONGRESS*
SMOOTHED**
* DEMOCRATIC MINUS REPUBLICAN HOUSE REPRESENTATIVES.** SMOOTHED USING HP-FILTER.
© BCA Research 2013
Democraticcontrol
Republicancontrol
Democraticcontrol
Republicancontrol
5
CHINA – JAPAN RISKS
© BCA Research 2013
130
110
90
70
50
30
90 94 98 02 06 10
130
110
90
70
50
30
MILITARY EXPENDITURE*:
CHINA JAPAN
BnUSD
* SHOWN IN CONSTANT 2010 U.S. DOLLARS. SOURCE: STOCKHOLM INTERNATIONAL PEACE RESEARCH INSTITUTE.
1500
1000
500
0
80 90 2000 10
1500
1000
500
0
EXPORTS: CHINA JAPAN
SHOWN AS 12-MONTH MOVING TOTAL.
BnUSD
BnUSD
BnUSD
© BCA Research 2013
6
FRANCE IS A RISK
© BCA Research 2013
2
1
0
-1
-2
70 80 90 2000 10
2
1
0
-1
-2
REAL GDP GROWTH:FRANCE MINUS GERMANY
Ann%Chg
Ann%Chg
5
4
3
2
1
0
-1
-2
70 80 90 2000 10
5
4
3
2
1
0
-1
-2
UNEMPLOYMENT RATE:FRANCE MINUS GERMANY
% %
© BCA Research 2013
7
RISKS IN MIDDLE EAST
© BCA Research 2013
9
8
7
6
5
4
3
12 14 16 18 20
9
8
7
6
5
4
3
IRAQ OIL PRODUCTION*:
CENTRAL ESTIMATE HIGH ESTIMATE
Mn Bbl/Day
SOURCE: INTERNATIONAL ENERGY AGENCY (2012).
Mn Bbl/Day
