Perspectives Pictet

Investment in the transition to clean energy is being driven by innovation, the improved economics of renewables and energy storage, health concerns about rising air pollution, and government regulation to reduce energy consumption and emission.It was in 2007 that Pictet launched a strategy that focused on renewable energy which was then fashionable but not cost-effective in comparison with more traditional sources. However, the strategy has changed considerably and is now much broader and...

Falling momentum in new car sales, together with the threat of US tariffs is adding to the uncertainty facing the European car industry.Last weekend’s G7 summit in Canada ended badly, with President Trump withdrawing his support for the summit’s final statement. Heightening tensions between Europe and the US are Trump’s hints that the White House is considering import tariffs on cars and car parts.German firms would be the most impacted if such tariffs were introduced. According to Eurostat,...

The ECB provides a pretty clear signal that quantitative easing will be wound up at the end of this year, with a first rate hike coming in 2H 19.Based on its upgraded assessment of the inflation outlook, the ECB delivered the QE tapering that the market expected, signalling the end of net asset purchases in December 2018 following a final three-month extension of EUR15bn per month. Importantly, today’s decision is flexible and conditional, “subject to incoming data” confirming the inflation...

The fiscal policies of the new Italian government will determine the trajectory for Italian debt. The high uncertainty means we are bearish on euro area peripheral bonds.At 132% of GDP, Italy has the second-highest public debt load in the euro area after Greece. Italy’s debt ratio has remained broadly stable over the past five years, but the sustainability of public debt remains highly vulnerable to shocks, let alone a recession or financial crisis.In addition, here are still lots of...

Fed rate hikes this year are on auto pilot. But things could change in 2019.As widely expected, on 13 June the Federal Reserve raised its fed funds target rate range by 25bps (and the interest rate on excess reserves by 20bps), bringing the range to 1.75-2.0%. The ‘dot plot’ median (Fed members’ forecasts of future rate hikes) rose from three rate hikes in 2018 to four. Fed members still expected three additional hikes next year.A fed funds rate of up to 2% is new territory for the Fed,...

Is discount pressure on new car sales a signal of weaker demand?Amid all the good macro signals from the US economy lately (see our Flash Note about May payrolls, for instance), new car sales present a mixed picture. Car sales have virtually plateaued in the US, averaging 17.06 million so far this year (January-May), up only +0.3% from the same period last year.One way to assess prospects for new car sales ahead is to look at the price index. From it, one can gauge the extent of discounting...

Trade tensions could continue to have an impact, but we have a more constructive view on emerging-market currencies than at the start of the year.Despite recent moderation in the US dollar and in the 10-year US Treasury yield, emerging-market (EM) currencies remain under pressure, especially as a result of a recent escalation in trade tensions. Asian currencies have outperformed their emerging peers. The stability of the Chinese renminbi is likely serving as an anchor for Asian currencies,...

Leaving aside energy prices, there was only modest upward pressure on inflation in May.Rising energy prices continued to push up US inflation in May, but excluding this volatile category, underlying inflationary pressures remained tame, in contrast with the very solid labour market and above-potential GDP growth. This modest inflation picture is echoed by still-soft wage growth (below 3% y-o-y) and well-anchored consumer inflation expectations. In other words, there are still no signs that...

[embedded content] This year has clearly been defined by market volatility – and it feels a long way from the boom times of last year. But the message from Alexandre Tavazzi – a global strategist at Pictet Wealth Management – is that growth remains robust and investors simply need to be more nimble. He spoke from the Latam Family Office Master Class in the Bahamas.

This year has clearly been defined by market volatility – and it feels a long way from the boom times of last year. But the message from Alexandre Tavazzi – a global strategist at Pictet Wealth Management – is that growth remains robust and investors simply need to be more nimble. He spoke from the Latam Family Office Master Class in the Bahamas.