Perspectives Pictet

Recent equity market peaks coincided with the ECB and BoJ decisions to impose negative rates. From December 1st to last Friday, the MSCI World index declined by 14%. During the same period, the MSCI world banks index declined by 24%. Recent chronology of events Since 2009 and up until recently, central bank action has helped to stabilise equity markets. Looking at recent events, it now seems that the opposite is becoming true. The last two monetary decisions (ECB on 3 December 2015 and BoJ...

High-Yield in both the US and euro zone has experienced significant stress since the start of the year, posting negative total return performances. High-Yield (HY) corporate bonds have continued to suffer since the start of the year, posting a negative total return of 4.6% for the US index and 3.6% for the equivalent index in euro. It comes as no surprise that the worst-performing US sector was energy, down 18.3%, and the best performer was super retail, with a meagre 0.1% gain. Many...

Today’s retail sales report was reassuring. We remain sanguine on consumption growth in 2016. Unsurprisingly, Fed Chair Yellen acknowledged the downside risks to the growth outlook but did not rule out a hike in March. Nominal total retail sales rose by 0.2% m-o-m in January, slightly above consensus expectations (+0.1%). Moreover, December’s number was revised up from -0.1% to +0.2%. Total sales were dented by a 3.1% m-o-m fall in nominal sales at gasoline stations (on the back of lower...

Euro area real GDP grew by 0.3% q-o-q in Q4, in line with consensus expectations. Based on evidence from core countries, private consumption was once again the main driver of GDP growth. According to Eurostat’s preliminary estimate, euro area real GDP grew by 0.3% q-o-q in Q4 (1.1% q-o-q annualised; 1.5% y-o-y), in line with consensus expectations and at the same pace as in Q3. No breakdown is available at this stage, but evidence from core countries suggests that private consumption was...

European financial stocks have sold off sharply in recent weeks, raising concerns about a new banking crisis. European banks have been underperforming the European equity market to much the same degree as US banks have been underperforming the US market, suggesting that there is no specific issue with European banks. However, the banking sector is vulnerable to pressure on earnings expectations from wider concerns about the global economy, which will continue to weigh on bank stocks....

Published: 12th February 2016 Download issue: A turbulent start to a volatile year Global markets had a very difficult start to 2016, with equity markets experiencing one of the largest January falls in history, currency markets also seeing major disruption, and a sharp widening of spreads on high yield corporate bonds. By the end of the month, though, there were signs that a rebound was underway. Although the magnitude of the sell-off was clearly a concern, these developments are not out...

[embedded content] Published: Thursday February 11 2016 Pictet Wealth Management just released “Wealth”, the mobile application allowing clients to interact digitally with Pictet and have their portfolio at their fingertips. The application runs on iPhones & Android smartphones and is available in four languages: English, French, German and Spanish. Clients residing in Switzerland can download and connect to the “Wealth” app from the App Store or the Google Play store. European clients...

Despite the deeply negative inflation rate, the SNB has become somewhat less sensitive to persistent undershoots of its inflation target. According to Swiss Federal Statistical Office, consumer prices in Switzerland remained broadly stable at -1.3% y-o-y in January, in line with consensus expectations and thus marking the seventeenth consecutive month in negative territory. Core inflation (headline CPI excluding food, beverages, tobacco, seasonal products, energy and fuels) was stable at...

Macroview Equity markets made one of their worst starts to a New Year since 1900, with the MSCI World index tumbling 6% in January. Uncertainties related to the slowdown in China’s economy cranked up financial stresses and strains on companies producing raw materials. In addition, the US dollar’s rise was an added volatility factor as it increased the cost of debt issued by emerging-market borrowers. Falls of 5% on the S&P 500, 6.4% on the Stoxx Europe 600 and 7.4% on the Topix in...

Macroview Tactical trading hedge funds are known for their long term decorrelation with traditional assets. After a news-heavy year so far, markets are gearing up for further volatility. Increased uncertainty and volatility offers opportunities for tactical traders, providing a differentiated source of returns. It has been a bumpy start to 2016. Amid sharp sell-offs on financial markets, it may seem that there is no place to hide. However, certain hedge fund managers think otherwise. For...