Perspectives Pictet

Although US core retail sales increased only slightly in March and consumer spending growth was probably modest in Q1 overall, we remain sanguine on household spending for the rest of the year. According to the US Department of Commerce, nominal total retail sales fell by 0.3% m-o-m in March, well below consensus expectations (+0.1%). However, February’s number was revised up slightly, from -0.1% to +0.0%. In March, total retail sales were dented by a 2.1% m-o-m fall in nominal auto...

Published: 12th April 2016 Download issue: A trip I took to Hong Kong and Singapore in March proved a useful way to gauge the mood of clients on China’s doorstep. Overall, my meetings with these clients—all entrepreneurs with significant investments in the Middle Kingdom— tended to confirm what other observers have been saying: the Chinese authorities have the resources to ensure the economy attains 6.5%-7% growth this year, and maybe even next year as well, but things may get complicated...

Interesting times for China, some scepticism about the recent market rebound, and prospects for private equity investing are some of the themes in the April edition of 'Perspectives', out now in English In the April issue of Perspectives, Christophe Donay, head of macroeconomic research at Pictet, argues that the Chinese fiscal and monetary authorities still have plentiful resources to ensure that China achieves a growth rate of 6.5-7.0% this year and next. But China will sooner or later...

The worst of the market turmoil is behind us, but the upside for equities looks limited After large market swings in the first quarter, our baseline scenario for 2016 remains intact: we continue to see an absence of momentum for financial markets due to a lack of earnings growth, limited upside due to already rich valuations, and recurring spikes in volatility. In this environment, an active tactical asset allocation is key, in order to boost returns by playing the ups and downs of the...

Published: Wednesday April 06 2016 One of the biggest challenges facing medicine as populations age is the cognitive decline associated with Alzheimer’s, the target of considerable investment in research which has yet to find a cure for patients with this distressing condition. But a pioneering Alzheimer’s prevention clinic at New York-Presbyterian/Weill Cornell Medical Center offers cutting-edge prevention strategies that can delay its onset. The clinic was founded in 2013 by neurologist...

Both the ISM Manufacturing index and its Non-Manufacturing counterpart rose m-o-m in March. However, other economic data recently published were rather weak. Our forecast that GDP will grow by 2.0% in Q1 is revised down to 1.5%. However, our forecast for yearly average growth in 2016 remains unchanged at 2.0%. The ISM Manufacturing survey for March 2016 was published on Friday last week. The headline reading bounced back further from 49.5 in February to an eight-month high of 51.8 in...

Macroview Growth vs. value has been an important theme in long/short hedge fund portfolios--and a recent source of pain for some and profit for others owing to trend reversals this year. Amid slowing growth worldwide, growth stocks have outperformed value both in the US and Europe in the past decade and have been a profitable bet in long/short managers' books. There are some inherent differences in what value stocks represent in the two regions. Looking at the composition of the MSCI US...

Headline inflation was negative for the second consecutive month in March, but core inflation rose above consensus. We expect underlying inflation dynamics will remain subdued this year and it will take time to judge the effectiveness of the ECB's latest easing measures. According to Eurostat’s preliminary estimate, the euro area harmonised index of consumer prices (HICP) inflation rose to -0.08% y-o-y in March from -0.15% y-o-y in February, in line with consensus expectations. The March...

Strong money-supply growth in February enables us to maintain our forecast for euro area real GDP growth unchanged at 1.8% in 2016. Euro area bank credit flows increased again in February, in line with other indicators such as the ECB’s Bank Lending Survey (see the chart below) and quite remarkably given the challenging financial context in February. We continue to believe that the credit cycle has legs. Moreover, we expect the ECB’s new Targeted Long Term Refinancing Operations (TLTRO...

From a low point of less than $30 per barrel in mid-February, oil prices had risen to over $40 by mid-March. If maintained, this rise will have an obvious impact on growth and inflation on both sides of the Atlantic. The use of a sophisticated macro-econometric model provides an insight into just how large the impact might be. Although oil prices have risen, the huge accumulation of oil stocks as a result of overproduction should serve as a brake on oil prices this year and next....