Perspectives Pictet

Improving growth and inflation prospects could help the krona against the euro going forward. The krona is also undervalued against the US dollar, based on fundamentals. At its 7 September meeting, Sweden’s Riksbank decided to keep the repo rate unchanged at -0.5% and to continue to purchase government bonds until the end of the year. The Riksbank acknowledged that the Swedish economy was relatively strong and that inflation was beginning to rise.However, the central bank made clear its...

The central bank’s growth and inflation forecasts were left largely unchanged on Sept. 8, but more intervention is in the offing. The ECB kept policy rates and QE unchanged at its 8 September meeting, in line with our expectations. ECB staff forecasts were broadly stable: the 2018 HICP projection, which was left at 1.6%, while the GDP growth was revised down slightly, from 1.7% to 1.6% in 2017 and 2018.The relative stability in the macroeconomic projections reflects, according to the ECB,...

Macroview The ISM manufacturing and nonmanufacturing surveys for August declined sharply. But these surveys are not necessarily a good predictor of economic growth The ISM Manufacturing index in the US fell heavily in August. The 49.4 reading was well below consensus expectations (52.0) and its lowest level since January 2016. The Non-Manufacturing index painted a similar picture, recording its worst monthly fall since the recession of 2008-2009. It dropped from 55.5 in July to 51.4 in...

Macroview While near-term Fed rate hike has been priced in, other factors favour the greenback in the medium term. Alternatives like the Swiss franc and Australian dollar look less attractive. With a December rate hike already largely priced in, further dollar support from Fed tightening could be fairly limited in the next few months, especially as the Fed is likely to lower its rate forecasts for the coming years to take into account increasing concerns about the decline in ‘neutral’ real...

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....

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...

A soft monthly payroll number conceals health of the US jobs market, but a Fed rate hike may not come until December. Non-farm payroll employment rose by a modest 151,000 month on month (m-o-m) in August, below consensus expectations. Moreover, the unemployment rate remained unchanged, wage increases were soft, and the average work week declined surprisingly. However, the disappointing August nonfarm payroll number followed solid numbers in June and July. Overall, job creation has been a...

Extension of quantitative easing (QE) along with changes to how QE works may be in the offing, but an announcement might wait until December. Ahead of its 8 September policy meeting, the European Central Bank (ECB) has expressed its “concerns” over the lack of upward momentum in core inflation. In our view, it is not a question of whether the ECB will ease (QE extension is a given, and more could be needed at some stage in the future), but more about getting the sequence right in order to...

At current levels, the oil price is close to equilibrium, with little in the fundamentals to suggest a sustained move higher in prices in the coming months There were sharp movements in the price over the summer, and further volatility is likely in the coming months. WTI oil prices dropped around 25% between June and early August. Prices subsequently rallied, rising by around 20% to close to USD50/b, before dipping again at the close of August. High inventories played a key role in pushing...

Macroview Euro area inflation remains sluggish, holding out the prospect of further intervention by the ECB before year’s end. Euro area headline inflation remained broadly stable in August, at an annual rate of 0.2%, according to a flash estimate from Eurostat on August 31, while core inflation unexpectedly declined. Excluding energy, food, alcohol and tobacco, prices rose at an annual rate of 0.8% in August, according to the flash estimate, compared with 0.9% in July. The broader picture...