Perspectives Pictet

Moody’s downgraded China’s sovereign rating last week. We believe the country is well equipped to deal with debt issues in the short term, but faces profound challenges in the longer term.Moody’s announced on 24 May that it had downgraded China’s long-term local currency and foreign currency issuer ratings to A1 from Aa3, due to its concerns about the rising debt in China. According to our estimate, China’s total debt amounted to Rmb203 trillion as of the end of 2016, equivalent to 261% of...

Zhou Dong Chen's tandem skydive at Skydive Snohomish!

Zhou Dong Chen's tandem skydive at Skydive Snohomish!

Published: 24th May 2017Download issue:English /Français /Deutsch /Español /ItalianoWith the election of Emmanuel Macron as French president, the tide of populism may have been stemmed for the moment in western Europe. Has Europe’s political class found the formula for dealing with the phenomenon? “I wouldn’t bet my investment career on it,” answers Pictet Wealth Management’s (PWM) chief investment manager, Cesar Perez Ruiz, in the June-July issue of ‘Perspectives’. Signs of ‘peak populism’...

Heavy on spending cuts, but containing dubious revenue calculations, the president’s budget plan is unlikely to be adopted by Congress. But we still expect tax cuts by year’s end.President Trump’s budget request was issued yesterday. Higher defence and infrastructure spending are proposed, more than compensated for by drastic cuts in other spending. The consequence is that total outlays are reduced dramatically.On the revenue side, the budget plan was very short on details. It assumes that...

Analysis of the ‘neutral’ rate of interest suggests there is considerable market complacency surrounding the potential for further hikes in the Fed funds rate.Janet Yellen refers regularly to the concept of ‘neutral’ interest rate as a reference point for monetary policy. The neutral rate is very helpful in determining whether the Fed’s monetary stance is relaxed or restrictive and can also provide insight into the Fed’s next possible moves.The financial crisis has had a considerable impact...

While we are revising up our forecast for GDP growth this year, we expect the Bank of Japan will continue with its qualitative and quantitative easing policies.Japan’s GDP grew by 1.6% year-over-year in Q1 in real terms. On a quarter-over-quarter basis, the economy expanded by 2.2% annualised, the highest growth rate since Q1 2016. In light of the stronger-than-expected Q1 figure, we have decided to revise up our 2017 GDP growth forecast for Japan to 1.3% from 0.8% previously.Exports...

Populism could remain a feature of politics in the western world, with the resultant volatility likely to have wide-ranging implications for investors.Populist parties have been on the rise in Western democracies in recent years. They have already achieved two landmark successes, with Brexit and Trump, and are threatening breakthroughs elsewhere. We see six main drivers of the populist surge: rising economic insecurity, globalisation, a technological innovation shock, cultural backlash,...

Populism could remain a feature of politics in the western world, with the resultant volatility likely to have wide-ranging implications for investors.Populist parties have been on the rise in Western democracies in recent years. They have already achieved two landmark successes, with Brexit and Trump, and are threatening breakthroughs elsewhere. We see six main drivers of the populist surge: rising economic insecurity, globalisation, a technological innovation shock, cultural backlash,...

Flash PMI surveys indicate continuation of a “solid and broad” recovery. We expect ECB to move cautiously toward a more neutral policy stance.The euro area May PMI indices remained consistent with Mario Draghi’s assessment of the ongoing recovery as “solid and broad”. The composite flash PMI remained stable at 56.8 in May, against expectations of a small decline. This apparent stability masked further improvement in the largest member states as business confidence outperformed in the French...