After September’s negative performance, last week proved one of the strongest in a while for equity markets. This rebound followed news that the Biden administration will start to tackle the supply-chain and logistics issues that have been preventing deliveries. The ports of Los Angeles, the busiest in the US, will begin operating around the clock seven days per week to ease cargo bottlenecks that have led to shortages and higher costs for consumers. Showing some relaxation in long-term inflation fears, 10-year US Treasury yields declined slightly last week. Such ongoing supply issues, in addition to labour shortages across the US economy, have also driven up the cost of US shale oil production, further reinforcing strong crude oil prices. This has helped send
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After September’s negative performance, last week proved one of the strongest in a while for equity markets. This rebound followed news that the Biden administration will start to tackle the supply-chain and logistics issues that have been preventing deliveries. The ports of Los Angeles, the busiest in the US, will begin operating around the clock seven days per week to ease cargo bottlenecks that have led to shortages and higher costs for consumers. Showing some relaxation in long-term inflation fears, 10-year US Treasury yields declined slightly last week. Such ongoing supply issues, in addition to labour shortages across the US economy, have also driven up the cost of US shale oil production, further reinforcing strong crude oil prices. This has helped send commodities prices to a new all-time highs. The infrastructure needed to increase production is one reason why we are positive on real assets.
The US consumer price index came in higher than expected at an annual 5.4% in September. However, core inflation showed signs of peaking. The latest inflation numbers confirm our view that the US Federal Reserve will announce a start to tapering of its asset purchases in the coming weeks. In Europe, Bank of England officials have increasingly been arguing for rate hikes while in China, the September producer price index (PPI) came in at its highest level since 1995. The Chinese government also suggested that risks around the troubled developer Evergrande have been contained at the same time as it takes steps to constrain property developers’ mortgage activities.
Many of our 2021 investment themes continue to gain traction. Recently, our Green Marshall Plan theme has been bolstered by China’s immense 100-gigawatt wind and solar project and French president Macron’s France 2030 investment plan, which includes EUR30 bn to decarbonise French industry and make France a world leader in green hydrogen. The third-quarter earnings season kicked off last week with strong bank results. Some luxury retailers also reaffirmed guidance for the rest of the year, which, on top of stronger-than-expected retail sales figures, helped support equity markets last week. Despite a tactically neutral stance, we remain constructive on equities. Finally, M&A and flotation volumes for 2021 are double last year’s, which supports our overweight on private equity and hedge funds and particularly our preference for event-driven hedge fund strategies.
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China’s high-yield bond crisis continued last week, with yields on the ICE BofA index of Chinese high-yield US dollar bonds moving above 18% at one stage last week, the highest level in a decade. Further nervousness was caused by one real-estate issuer’s decision not to reimburse USD200 mn of offshore bonds–despite having USD4 bn in cash on its balance sheet.
Pictet – Perspectives: Where to invest until 2022
2021-10-08
As we near year’s end, markets have been increasingly expressing concerns grow about growth momentum, supply bottlenecks and events in China. But César Pérez Ruiz, CIO at Pictet Wealth Management, remains constructive, believing we are still in the middle of the recovery cycle. He continues to see opportunities in companies with pricing power and those keyed into the green economy, as well as in alternatives like hedge funds and real estate (a good hedge against the risk that inflation endures).
House View, October 2021
2021-10-05
We maintain our tactically neutral position on equities, with the notable exception of Japan, where we see scope for a re-start to Abenomics and for Japanese stocks to continue to close their performance gap with their peers in other developed markets.
Weekly View – “The lady is not tapering”
2021-09-14
As expected, last week the European Central Bank hinted at a “moderate” reduction of the bond buying it undertakes as part of its Pandemic Emergency Purchase Programme (PEPP). But ECB president Christine Lagarde refrained from providing a precise timeline and she was adamant that a reduction in PEPP purchases did not mean the ECB would tighten financing conditions.
Weekly View – 50 years later
2021-08-17
The rosy US employment picture helped push equities to a new high as US inflation moderated in July. Those looking to fill roles now exceed those looking for work, compelling some small and mid-sized companies to raise wages. Higher prices seem to be keeping the US consumer in check, however, with consumer sentiment hitting its lowest level in a decade.
Swiss hotel sector: 14.3 percent rise in overnight stays in first six months of 2021
2021-08-04
The hotel sector registered 11.4 million overnight stays in Switzerland in the first half of 2021, representing an increase of 14.3% (+1.4 million) compared with the same period of 2020. With a total of 9.2 million units, domestic demand rose by 55.3% (+3.3 million). Foreign visitors registered a 45.4% decrease (–1.8 million) with 2.2 million overnight stays.
Weekly View – Staying on script
2021-07-20
Big US banks released their 2Q earnings last week. The figures were good thanks to robust growth in investment-banking income as well as a drop in loan-loss provisions. But banks also reported that wage costs were beginning to rise, and while a booming housing market has boosted mortgage-loan business, the renewed retreat in long-term yields has been a drag on interest income.
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