Perspectives Pictet

Chinese exports declined in September, but strong construction activity means there is upside risk to our 6.5% growth forecast for 2016. Headline exports for China fell by 10% in September year-over-year (y-o-y), compared with a 2.8% drop in August. This significant downturn was partly due to a high base-year effect. The notable increase in Chinese exports in September 2015 (even after seasonal adjustments) makes the year-over-year comparison particularly unfavourable. In our view, the...

A suspension of bond purchases by the ECB in the event of downgrade would be huge risk to outlook. Ratings agency DBRS is due to issue an update of its rating for Portugal on Friday, 21 October. Among the four rating agencies used by the ECB, only DBRS still has an investment-grade rating for Portuguese sovereign bonds (OTs). Even a one-notch downgrade by DRBS would push its rating of Portugal down to speculative status, and would effectively render Portuguese sovereign bonds ineligible for...

Macroview While we expect no concrete action at this week’s policy meeting, we believe extension of QE is coming and bond scarcity issues will be addressed. We do not expect any new action to be announced at the ECB’s policy meeting on Thursday, but we do expect that the ECB will reiterate that the size of its asset-purchase programme and its duration are exclusively a function of the inflation outlook. We also expect that the bank will hammer home the message that it has the flexibility to...

Macroview Our forecasts for US GDP growth remain unchanged, and we continue to expect a 25bp rate hike in December, followed by two others in 2017. Core retail sales in the U.S. rose by ‘only’ 0.1% month on month ( m-o-m) in September, below consensus expectations. Moreover, the July number was revised down. The result was that core retail sales were almost flat (+0.3% quarter on quarter (q-o-q) annualised in Q3), much lower than the 6.9% rise seen in Q2. Nevertheless, we continue to believe...

[embedded content] Published: Wednesday October 12 2016Sally 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...

Published: 11th October 2016Download 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...

Slowdown in job creation and uptick in unemployment should not deter Fed from raising rates in December. Non-farm payrolls in the US rose by 156,000 month-on-month (m-o-m) in September, below consensus expectations, while nonfarm payrolls in July and August taken together were 7,000 lower than previous estimates. All in all, this was a slightly disappointing report, in contrast with a string of strong US economic indicators published in recent days, including the ISM indices for...

With the UK set to start talks on leaving the EU, and with the country’s ability to attract funding to cover its current-account deficit uncertain, downward pressure on sterling is likely to continue. Sterling declined by roughly 6% against the US dollar within a few minutes on currency markets on 7 October. Whatever the reasons for the sudden plunge, and although there was a rapid (but partial) recovery in sterling’s value, it is quite worrying to see a major currency moving so much...

Published: Thursday October 06 2016Born 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...

The ISM indices signal a broad-based upturn in US economic activity and are consistent with our forecast of GDP growth of 2.5% in the third quarter. Figures released at the beginning of October revealed that the US ISM Manufacturing index rose to 51.5 in September from 49.4 in August, above consensus expectations (50.4). The ISM Non-Manufacturing ISM index posted its largest month over month increase on record, rising to a solid 57.1 in September from 51.4 in August.Forward-looking...