Perspectives Pictet

The downward revision to 3Q GDP will make the Italian government’s targets more difficult to achieve and complicate the budget debate with Europe.The Italian statistical office’s (ISTAT) final reading showed that the economy shrank 0.1% q-o-q (-0.5% q-o-q annualised) in Q3, whereas a preliminary reading on October 30 showed that growth was flat. The details were quite negative and confirmed the idiosyncrasy of the Italian economy. Unlikely other euro area economies, net trade contributed...

Switzerland’s growth unexpectedly contracted in the third quarter, pushing down our GDP growth forecast. Recent softening in the euro area also casts doubts about the pace of monetary tightening by the SNB.The strong growth enjoyed by the Swiss economy since Q1 2017 came suddenly to an end in Q3 18, when real GDP shrank unexpectedly by 0.2% q-o-q (-0.9% q-o-q annualised). This is much lower than consensus expectations of +0.4% and is down from an average of +0.8% in H1 2018.Details show that...

The effective corporate tax rate plummets in the wake of Trump tax cuts.US corporates are delivering strong profits and this robust profit picture is further enhanced by a sharp drop in the corporate tax burden.According to NIPA (national accounts) data, the effective tax rate for the year ending in Q3 2018 reached a new low of 11.9%.President Trump’s December 2017 tax cuts led to a lower federal statutory tax rate of 21% (from 35% prior), but firms still have several options to bring down...

Uncertainty remains high with outcomes that could have consequences beyond the UK.Having secured formal approval of the divorce deal from EU leaders on 25 November, Prime Minister Theresa May now faces the far bigger challenge of securing UK parliamentary approval by mid-December. Both political and economic uncertainty could remain elevated until the 29 March deadline.The tail risk of a no-deal Brexit on 29 March remains high, although there is still room for alternatives, including an...

Download issue:English /Français /Deutsch /Español /ItalianoAs the recent upsurge in volatility shows, the outlook for risk assets is becoming more uncertain than ever. Trade wars, doubts about economic and corporate growth prospects, big fluctuations in oil prices and the winding down of expansionary monetary policies, not to mention gathering political and geopolitical tensions, have all contributed to market wobbles since early October.How to respond, especially as, according to César...

The CIO office’s view of the week ahead.Brexit and oil kept their centre stage positions in last week’s headlines. Despite initial opposition from France and Spain, all 27 EU members agreed to Theresa May’s Brexit deal by lunchtime at Sunday’s European Council meeting. Could this be an indication of how poor the deal is for the UK? Despite May’s insistence that there is no alternative and this is the only deal available, we think she will have a hard time convincing the UK parliament and...

People born between 1981 and 1996 are radically changing the patterns of consumption established by their predecessors, in ways that are adversely affecting some industries and favouring companies which take advantage of the increasing spending power of younger consumers.Millennials are a group of people who were born between 1981 and 1996, which makes them between 22 and 37 years old in 2018. They are important for two reasons: there are more than 80 million millennials in the US today,...

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European Commission deems Italy's budget noncompliant with EU rules.This week, the European Commission issued its opinion on Italy’s budget plans. Deeming them noncompliant with the EU’s budgetary rules, it recommended that an Excessive Deficit Procedure (EDP) be opened.Of the options available to the EU, a debt-based EDP would be the most difficult for Italy to deal with, as it would last longer and require Italy to ensure its debt stock diminishes at “a satisfactory pace”.On the positive...

Although highly uncertain, any truce between the US and China at the G20 meeting could delay new tariffs.A new low point in trade tensions between the US and China was reached in September 2018 when the US placed an additional 10% duty on roughly USD200 billion of Chinese imports. However, since then, hints at a potential ‘détente’ have focused on the G20 summit in Buenos Aires at the end of November, with hopes that progress there could delay the setting of tariffs on all Chinese imports...