Tag Archives: Macroview

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....

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...

January’s employment report showed soft job gains. However, this was above all a statistical payback. Unemployment dropped, wage increases were higher than expected and the average workweek inched up. The overall situation remains healthy in the US labour market. Non-farm payroll employment rose by a soft 151,000 m-o-m in January, below consensus expectations (190,000). December’s figure was revised down (from 292,000 to 262,000), but November’s number was revised up (from 252,000 to...

With downside risks to the euro area outlook intensifying in recent weeks, we expect the ECB to respond by easing monetary conditions further. We leave our 1.8% growth expectation for 2016, largely based on improving prospects for domestic demand. Although we have left our forecasts for euro area GDP unchanged – 1.8% growth expected in 2016, well above trend – downside risks have intensified in recent weeks. There are both good and bad reasons to worry about the recovery but, in short,...

The US ISM Manufacturing index remained stuck at quite low levels and the Non-Manufacturing index declined further heavily. However, it remained pitched at a still relatively healthy level. The ISM Manufacturing index stabilised at a low level in January. But its Non-Manufacturing counterpart fell further heavily, although it remained pitched at a still relatively healthy level. Nevertheless, together with most other economic data published recently, these surveys unfortunately confirm...

Macroview We see signs that the sell-off is bottoming out, and believe that the triggers for a rebound are coming into place. On 26 January, we explained that we expected the turmoil on global equity markets to abate in the near future. Several of the possible triggers for a rebound on equity markets that we identified are now materialising: Policy support from central banks. The Bank of Japan (BoJ) unexpectedly announced last week that it is cutting interest rates into negative...

Quarterly wage data (ECI) for Q4 pointed to modest increases with no apparent pick-up in wage inflation. Although the January FOMC statement was not so dovish, we continue to believe the Fed will remain on hold in March. Besides GDP data, today saw some other key data being published: the quarterly Employment Cost Index (ECI), admittedly the most reliable measure of wages and salaries. Following Wednesday’s less-dovish-than-hoped FOMC statement, prolonged uncertainty over inflation...

The economy ended last year with soft momentum, and the sharp tightening in US financial and monetary conditions will undoubtedly weigh on US economic growth over the coming months. However, we remain upbeat about consumption and the housing sector. US real GDP, curbed by lower stockbuilding and a slowdown in consumption growth, grew by a soft 0.7% in Q4. We have cut our forecast for 2016. However, we still expect reasonably healthy growth (2.0%). In Q4 2015, US real GDP grew by a weak...