While our central scenario discounts the possibility of Marine Le Pen becoming president, her presence in the second round of the presidential election is likely to create considerable nervousness for investors.Our main scenario, a win for a Europhile politician in the second round of the French presidential elections in May, could result in a small relief rally on markets. However, the National Front’s Marine Le Pen is seen as being one of the two candidates to go through from the first round next Sunday to the second round, causing unease on financial markets.Le Pen can probably only hope to win that second round if voter participation collapses. In the unlikely event that she does win, markets would be considerably shaken.On FX markets, the euro would likely fall by about 6% to 13%Read More »
Articles by Perspectives Pictet
Shale oil has forced the conventional oil industry to reinvent itself. Companies have nevertheless demonstrated terrific powers of adaptation, helped by the high-tech nature of the oil industry.In a ‘lower-for-longer price’ environment, there are still attractive themes and equity stories to play, assuming prices remain broadly above USD45-50 per barrel. Valuations generally remain reasonable, especially on the back of the correction since the start of the year. The growth theme is clearly the shale oil story, where both producers and services companies look well positioned—whatever the oil price, shale oil producers will remain the relative winners. Among ‘the rest’ of the oil sector, the large integrated oil majors look the most attractive investment opportunity, albeit not a growthRead More »
Pictet Wealth Management’s latest positioning in fast-evolving markets. Asset allocationThe first quarter was exceptionally strong for risk assets, and the outlook remains good for developed market (DM) equities.We remain comfortable with our overweight in developed market equities, but it would be wise not to take too much risk in the coming quarter.EM assets may offer attractive opportunities on a tactical basis.CurrenciesThe US dollar probably has only limited further upside, absent a major boost to economic growth.The Swiss franc looks set to retain its safe-haven role.EquitiesThe reflation trade is proving resilient, supported by a good earnings growth outlook.Valuations for DM equities are well above long-run averages and leave little room for disappointment.Fixed incomeWe continueRead More »
Published: Tuesday March 28 2017Alexandre Tavazzi, Global Strategist at Pictet Wealth Management on factors that might hit market valuations.
Published: 28th March 2017Download issue:With President Trump’s plans to ‘reform and repeal’ Obamacare suffering a serious setback in Congress in March, attention is once again turning to the new administration’s plans for tax cuts and fiscal reform. The so-called ‘reflationary trade’, while in large part based on improving economic dynamics, also owes something to expectations that the new US administration will push through with other parts of its economic agenda. This means, writes Pictet Wealth Management’s (PWM) chief investment officer, Cesar Perez Ruiz, in the March-April issue of ‘Perspectives’, that there is potential for an increase in volatility , “especially if there is less than meets the eyes” in Trump’s economic plans. And just as doubts emerge about fiscal stimulus, theRead More »
Pictet Wealth Management’s latest positioning in fast-evolving markets.Asset allocationWe remain comfortable with our overweight position in developed-market (DM) equities and believe there are good reasons to be positive on Japanese equities,With volatility low and risks looming in the short term, this is a good time to add protection to portfolios. We have bought derivative protection on EUR high yield bonds and a call option on gold.Expecting yields on core sovereign bonds to rise further this year, we sold our German Bund positions in EUR and CHF grids in March.Equities in DM are likely to offer superior returns and less volatility than emerging-market (EM) in 2017. However, EM assets may offer attractive opportunities on a tactical basis.CommoditiesOur core scenario does not favourRead More »
Published: 10th March 2017Download issue:The latest edition of Horizon is out, containing Pictet Wealth Management’s updated secular outlook and expected returns for the main asset classes over the next 10 years.Some of the highlights are as follows: Expected ReturnsEquities: below long-term average but still attractive. Our models suggest that global equities can be expected to post a 6% return in US dollars annually for the next 10 years. Such returns look attractive relative to long-term sovereign bonds, but are markedly lower than the 8.6% average long-term annual return of the S&P 500.Government bonds: the bonanza is over. It looks unlikely that bonds will post meaningful positive returns over the next few years. At best, according to our models, 10-year US sovereign bonds can beRead More »
The latest edition of Horizon is out, presenting Pictet Wealth Management’s expected returns for the main asset classes over the next 10 years. We believe that the returns that can be expected from developed-market equities over the next 10 years will be over a third lower than average of the past 46 years. Growth potential and inflation trends suggest that expected annual returns for US equities could decline to just over 5% over the next 10 years, compared with a historic 10-year average of about 7%, for example.Our main conclusion is that there is no such thing as a free lunch. Better returns require taking more risk. According to our calculations, private equity will provide the highest annual returns, but with the greatest volatility risk, while cash (especially Japanese cash) willRead More »
Pictet Wealth Management’s positioning in fast-evolving markets.Asset allocationImproved earnings growth should support attractive returns on developed-market equities.We still expect Treasury yields to rise this year. The 35-year fall in long-term interest rates, during which government bonds provided both strong returns and protection, has probably ended. The protection that government bonds provide for portfolios is therefore set to come at a cost again.Volatility on equity markets is currently low, but tail events look underpriced. Although this stands to be a risk-on year, volatility could be sharply higher than in 2016. We shall continue to keep well diversified portfolios and look for smart ways to protect them.Developed-market (DM) equities are likely to offer superior returns andRead More »
Published: Wednesday January 25 2017Cesar Perez Ruiz, Chief Investment Officer at Pictet, discusses how the return of inflation this year will impact different asset classes.
Published: Monday January 16 2017Klaus Hommels, founder of a leading European venture fund, explains his approach to investing in tech start-ups, the qualities he looks for in entrepreneurs and how he identifies new opportunities.As one of Europe’s leading business angels, Klaus Hommels has established a remarkable success record with investments in some of the largest European and worldwide internet start-ups. They include Skype, Facebook, Airbnb, King, QXL/Tradus, Xing and Spotify (where he is a board member). He has also been named European investor of the year by several organisations over the last ten years.Lakestar, the venture capital firm he founded, makes investments ranging in size from EUR500,000 to EUR50 million which gives him the utmost freedom in an inefficient asset classRead More »
Published: Thursday January 12 2017As technological advances and new business models drive strong growth in robotics, artificial intelligence and industrial automation, these sectors are becoming increasingly attractive to investors.Since its early days in the 1960s, robotics has marched steadily into the mainstream, and is now launching disruptive innovations which are permeating the business world and people’s daily lives. The development of artificial intelligence (AI), in particular, is moving robots on from replacing tasks previously carried out by humans into cognition that involves interaction with them.With impressive prospects for growth over the next few years, robotics is also becoming increasingly attractive to investors. One conservative estimate made by the Boston ConsultingRead More »
Published: Monday January 09 2017The development of deep learning AI programmes allows robots to emulate back-up staff in financial institutions, says leading computer scientist Qiang Yang – but they will not completely replace human decision-making.In many financial institutions, expert advisors rely on trading data, company reports and news stories to detect minute market signals and provide clients with investment recommendations. Their work is often supported by teams of interns who analyse corporate history, the competitive environment and market trends in detail.But developments in artificial intelligence (AI) could revolutionise this process, according to Professor Qiang Yang, by replacing those interns with robo-advisors which can replicate their abilities and surpass them inRead More »
Published: Friday January 06 2017Antoine Blondeau, co-founder of a pioneering artificial intelligence company, believes that there are no limits on what can be achieved by scaling up and distributing AI on a truly vast scale.When Antoine Blondeau and three collaborators co-founded Sentient Technology in 2007, they had an ambitious vision. They wanted to help solve some of the world’s most complex problems by harnessing the world’s computer capacity to develop artificial intelligence on a vast scale. And they felt well-positioned to do so, having worked together on the AI technology behind Apple’s Siri, the intelligent personal assistant that helps people get things done.They also saw that the convergence of two important trends would allow them to achieve their aim. One was theRead More »
Published: Tuesday January 03 2017Edgar van Tuyll van Serooskerken, head of Quantitative Strategies at Pictet Wealth Management, explains how Pictet uses machine learning for two purposes: first, to hunt for profitable investment opportunities; and second, to search for patterns in big data that are similar to those of past periods.For the first use, machine learning can sift through the mass of data we now have on the past prices of assets in various classes, on company performance and on macro-economic developments, in order to look for hidden treasure. It will hunt for relationships between data points that could allow us to make returns and we study them with our experts to see if they make sense – we don’t just trust the machine and trade off them.Nonetheless, since 2013 we haveRead More »
Published: Saturday December 31 2016Robots used to be separated from people because of safety concerns, but Professor Antonio Bicchi of the Italian Institute of Technology and Pisa University believes that a new generation of lightweight, soft robots will safely interact with humans in everyday life.The robots that play an essential role in many industries today are rigid and heavy, their mechanical and electronic components programmed by humans to be very accurate in what they do. But as researchers have learnt more about how the human body performs complex tasks, the world of robotics is moving towards devices that operate more like humans – and can interact with them.According to Antonio Bicchi, Professor of Robotics at the University of Pisa in Italy and head of the SoftBots Lab atRead More »
Published: Thursday December 29 2016The MIT scientist, co-author of the bestselling book on The Second Machine Age, discusses the impact of digital technologies on work, the economy and society, and how human beings should adapt as the pace of change accelerates.What led you to set up the Initiative on the Digital Economy at MIT’s business school?My colleague Erik Brynjolfsson and I co-founded the Initiative because we felt that there was a need to study how technological progress was radically changing the business world, changing economies, changing societies. It needed a dedicated academic home where we could do research, host conversations and bring people together – work aimed at helping businesses understand how to navigate this important transition and harness the power ofRead More »
Published: 28th December 2016Download issue:Humankind is moving from an information age to the age of intelligent machines, with consequences for the world of work, the economy and society. The transition is driven by the explosion in the amount of digital data that is now available, artificial intelligence (AI) programmes that can analyse the data for the benefit of humanity, and intelligent robots that are able to work independently.The Winter 2016 edition of Pictet Report includes a talk with the co-author of a best-selling book on the second machine age, who says these developments mean that machines are now able to beat human beings at their own game. As a result, they are acquiring astonishing capabilities in a range of activities previously in the realm of science fiction.OtherRead More »
Published: 30th November 2016Download issue:This Chronicle presents the highlights from The Family Consilium held in Gstaad in June 2016. Topics covered include: emerging disruptions in geopolitics, disruptive forces in technology, how investors might respond to the changing financial environment, and strategies to manage the challenges of passing wealth from one generation to the next. Other highlights are Elif Shafak, Turkey’s most-read female author, on the growing political opposition to liberal democracy around the world and what it means for women, and cultural commentator Lucy Johnston on the latest technologies and innovations—including drones and virtual reality devices. We hope that you find this edition of Chronicle enlightening and inspiring, and that you will distribute it toRead More »
Published: Friday November 11 2016The switch from monetary to fiscal stimulus, and a rise in earnings growth for the first time in two years looked like being two of the big themes for 2017. To these must now be added a third one: the unpredictability of a president Trump. Cesar Perez Ruiz, Pictet’s Chief Investment Officer, discusses the road ahead.
We are cautious about the impact of a Trump presidency and are not changing our economic forecasts at this time. Uncertainty about how Trump will govern make near-term volatility spikes likely.A Trump presidency could see major changes in policy on many themes such as fiscal policy, trade policy, immigration, the environment, financial regulation, healthcare, social security, and supervision of the Fed. However, it remains highly uncertain whether Trump will in fact pursue the policies he aired during the campaign.On fiscal policy, Trump has made proposals that would boost government spending in general, and expenditure on infrastructure in particular. We could see a meaningful fiscal stimulus, equivalent to 0.5 to 1.0 percentage points of GDP over 2017-18. But it remains to be seenRead More »
Published: 7th November 2016Download issue:In spite of large doses of policy easing, inflation and global growth remain tepid. With the effectiveness of existing monetary policy styles therefore being increasingly questioned, the November 2016 issue of Perspectives looks at three of the most plausible alternatives.One is asset-price targeting. Could central banks assume responsibility for ensuring the stability of asset prices as well as price stability? Christophe Donay, head asset of asset allocation and macro research thinks this style raises too many questions and therefore “is not quite ready” to become the next monetary policy ‘style’. An alternative calls for central banks to target nominal GDP. This style would involve central banks running pro-active policies to maximize GDPRead More »
Published: Tuesday November 01 2016The third Next Generation event took place in Geneva with 50 Next Gens in attendance from 22 different nationalities.The event was a great success, focusing both on the challenges and solutions the rising generation face in todays complex environment. Presentations offered both solid educational platforms and fostered lively workshops, providing a unique opportunity for like-minded peers to exchange opinions and advice. Among Pictet expert speakers, we had the pleasure of welcoming, Kathryn McCarthy, Advisor to Families and Family Offices; Myriam Vander Elst, Vice President of Development Europe, Epic Foundation; and Ann Makosinski, Serial Inventor.
Weekly View Pictet Wealth Management’s near-term view on the economy and financial markets 18 October 2016. Last week saw profit-taking on equity markets. Chinese export data unsettled Asian markets (the MSCI Asia ex-Japan fell 2.4% in local currency), but had no notable effect on developed markets (the S&P500 lost 1% in local currency while the Stoxx 600 edged up 0.1%). Cyclicals did better than defensives. A turnaround in earnings growth forecasts following several disappointing years could favour value and cyclicals at the expense of defensives. We are watching Q3 earnings results closely for confirmation of such a turnaround. Sovereign yield curves steepened across developed markets last week. US 10-year Treasury yields reached 1.8% on Friday, in a belated reaction to rising wageRead More »
[embedded content] Published: Wednesday October 12 2016 Sally Osberg, who has lead the Skoll Foundation since its creation in year 2000, spoke to an audiance of 80 entrepreneurs and investors at The Pictet Entrepreneur Summit Seminar held in Geneva in September 2016. Sally said that to be successful, a social entrepreneur has to really understand the system that creates the problem – the actors and the forces – in order to intervene at a high leverage point. In this conversation, she explains the approach taken by the Skoll Foundation and how they work with social entrepreneurs.Read More »
Published: 11th October 2016 Download issue: Both main candidates in the US presidential election have outlined their plans in numerous areas. Whoever wins, both are promising to raise government spending, especially on infrastructure. Writing in the October issue of Perspectives, Pictet Wealth Management’s chief economist Bernard Lambert outlines various scenarios. Should Hilary Clinton win the presidency but the Democrats fail to win a majority in the House of Representatives in congressional elections, “the additional fiscal stimulus should be modest” , boosting GDP by 0.2-0.4% in 2017-2018. But if Donald Trump wins and the Republicans maintain control of both houses of Congress, “we could see a much more meaningful boost”, adding 0.5-1.0% to GDP in the same period, according toRead More »
Published: Thursday October 06 2016 Born in Brescia in 1963, Piero Gandini looked to be an unlikely candidate to succeed his father as head of Flos, Italy’s leading designer lighting producer. He describes his teenage years as a wild time, in which his school attendance was irregular and he devoted his life to socialising with his friends. Today, however, he is CEO of the family company, working with many of the world’s greatest designers to create innovative lamps sold across the globe. ‘My father did not know what to do with me when I was a teenager,’ he says. ‘So after military service he decided to send me to work at the company’s German subsidiary. Located in the small town of Euskirchen near Cologne, it was not a great place for a young Italian, but without distractions I found thatRead More »
Published: 13th September 2016 Download issue: The summer months were good for risk assets, though things may get bumpier in the months ahead. But alongside this study in chiaroscuro, the September issue of Perspectives offers a brighter picture of investment opportunities. Pictet chief strategist Christophe Donay admits that “prospects for portfolio returns look far weaker than they did in the past” as the extraordinary measures introduced by central banks to combat low growth and inflation continue to bite. Yet all is not lost. In-house research suggests that private equity has consistently outperformed equities since the beginning of the century. Top-quartile private equity funds manage to generate sufficiently high returns to compensate for the long-term nature of the investment., withRead More »
Published: Tuesday September 06 2016Read full article from Pictet Report hereCaroline Reyl, head of Pictet Premium Brand Fund, on megatrends in premium brandsPremium brands have proved to be profitable long-term investments, offering strong revenue growth, superior operating margins and robust balance sheets over the long term. There are four fundamental megatrends behind their success in driving returns, whether it be in food, drinks, cosmetics, hotels or autos.The polarisation of demand. Consumers are prepared to pay a lot for brands that produce exceptional and prestigious goods and services, while at the same time wanting to pay very little for common consumer products. This is not just the case for affluent consumers: mid-market consumers, especially in emerging markets, areRead More »
Published: Tuesday September 06 2016PDF version of this article available hereWith almost 300 years of history, Rémy Martin is one of the world’s leading cognacs, selling 24 million bottles a year to consumers in Europe, North America and Asia. In 1990–91, it joined forces with a much younger premium spirit — the orange-flavoured liqueur first sold by the Cointreau brothers in 1875. The merged Rémy Cointreau group also owns a range of other spirits, including Mount Gay rum, Metaxa brandy and Bruichladdich Scotch whisky.Rémy Martin dates back to 1724 when a young winegrower of the same name started selling cognac. It was quickly recognised for its excellence by King Louis XV who in 1738 granted Martin the rare right to plant new vines in the Cognac region. It is classed as a Fine ChampagneRead More »