Tuesday , September 17 2019
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Tag Archives: Macroview

Oil market: supply disruption is here

The risk that similar attacks to the ones seen this weekend in Saudi Arabia could disrupt oil supplies, but it does not fundamentally change our medium-term scenario. We still forecast USD50 per barrel for Brent in 2020.After this weekend’s drone attack on the world’s most important crude oil facility, the Saudi Arabian authorities have announced that 5.7 million barrels per day (mbd), half of its daily oil production and 5% of the world total, will be taken off-line. Iran-aligned Houthi...

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Weekly View – The ECB’s last bazooka

The CIO's view of the week ahead.Mario Draghi has now done (nearly) all that it takes to support the euro area economy. With only weeks left in his term as ECB president, Draghi deployed almost all that remains in the central bank’s toolkit. Following last Thursday’s meeting, he confirmed not only the expected interest rate cut, but also the relaunch of the quantitative easing (QE) bond-buying programme. He fell short of lifting issuer limits, which markets took negatively. Christine...

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US-China – Towards a trade truce?

Our central scenario has long been that we would see some lowering of US-China trade tensions ahead of the US presidential elections. But deep-seated issues may prevent a major breakthrough.President Trump is considering offering a ‘limited’ or ‘interim’ trade agreement to China as his advisors prepare the ground for face-to-face talks scheduled for October. He has notably announced that the additional 5% tariffs on Chinese goods scheduled for early October were being pushed back to the...

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Oil prices and the global economy

Low oil prices are good news for disposable income. But they also reflect the risk of oversupply in a world where growth indicators continue to point down. Events since Trump first threatened increased tariffs in 2017 provide a textbook example of how tariffs are transmitted through the global economy. First, the uncertainty they create hurts sentiment. Then, as uncertainty lasts, investments are postponed. Indeed, we are currently seeing a progressive decline in...

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Oil prices and the global economy

Low oil prices are good news for disposable income. But they also reflect the risk of oversupply in a world where growth indicators continue to point down.Events since Trump first threatened increased tariffs in 2017 provide a textbook example of how tariffs are transmitted through the global economy. First, the uncertainty they create hurts sentiment. Then, as uncertainty lasts, investments are postponed. Indeed, we are currently seeing a progressive decline in new orders, industrial...

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Swiss National Bank – Between a rock and a hard place

We expect the Swiss National Bank to stay on hold at its next policy meeting, but a lot will depend on ECB and Fed meetings. Uncertainties and global slowdown are weighing on business investment in Switzerland, while household consumption growth has been slowing. Swiss GDP rose by 0.3% q-o-q in Q2 (down from 0.4% in Q1), mainly due to spending in healthcare, housing and energy. Previous quarters were revised down and now show that Switzerland was in a technical...

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Swiss National Bank – Between a rock and a hard place

We expect the Swiss National Bank to stay on hold at its next policy meeting, but a lot will depend on ECB and Fed meetings.Uncertainties and global slowdown are weighing on business investment in Switzerland, while household consumption growth has been slowing. Swiss GDP rose by 0.3% q-o-q in Q2 (down from 0.4% in Q1), mainly due to spending in healthcare, housing and energy. Previous quarters were revised down and now show that Switzerland was in a technical recession in H2 2018. Unlike...

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Weekly View – Brothers in arms

The CIO's view of the week ahead.Having purged 21 moderate Tory members of parliament (MPs) who opposed him on Brexit, Boris Johnson has had to face the resignation of two high-profile members of his government, Amber Rudd and his own brother, Jo Johnson. British politics will provide more excitement this week, as a law is passed in parliament to prevent a no-deal Brexit. We feel the latest developments lower the probability of a no-deal Brexit on 31 October and support a temporary rebound...

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House View, September 2019

Pictet Wealth Management's latest positioning across asset classes and investment themes.Asset allocationWe remain underweight global equities, but continued stimulus and an economic backdrop that is not catastrophic mean this is nuanced by neutral positions in some regions. We favour stocks of companies that have pricing power as well as those showing healthy dividend growth and low leverage.We are neutral US Treasuries as a way to protect portfolios, but underweight negative-yielding...

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How much ECB QE is needed? Go big, or go home!

We expect the ECB to strengthen its forward guidance by linking the future path of policy rates to a new asset purchase programme.We estimate that a new QE2 programme worth at least EUR600bn would be needed for the ECB to close a 0.50% inflation gap. If anything, the decreasing marginal returns of QE and the risk of a de-anchoring of inflation expectations call for a more aggressive programme.How much does the ECB need to ease? QE size matters, but so do other parameters including the...

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