Tag Archives: Macroview

Pictet Wealth Management’s latest positioning in fast-evolving markets.Asset allocationWe remain constructive on equities, which are being underpinned in particular by robust earnings growth.However, there are signs of pressure, especially in forex markets, and occasional spikes in volatility are likely, notably as a result of geopolitical risk. It is worth considering risk mitigation for portfolios put options on equity indices are one way to protect some of the downside.US tax cuts could...

Global growth, post-hurricane reconstruction and higher oil prices are all provided a boost to the US growth outlook. But uncertainty still hangs over tax cuts and the Fed.We are raising our US GDP forecast for 2017 (+0.1 percentage point to 2.3%) and 2018 (+0.3 point to 2.0%) on the back of stronger momentum in Q4 2017. Accelerating global growth is a tailwind for the US economy – as seen in the recent sharp pick up in exports, particularly to emerging markets. Reconstruction efforts in the...

The Australian and New Zealand dollar are among the most expensive currencies. The former looks especially vulnerable to a mild pullback.At their November monetary meeting, both the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) kept their official cash rates unchanged at, respectively, 1.50% and 1.75%.The RBA sounded relatively cautious given low wage growth and high household debt. The RBNZ was more upbeat in light of the potential for more fiscal stimulus under...

Greater visibility on the ECB’s plans for dealing with the overhang of non-performing loans would help banks and the euro area recovery.The ECB has become under renewed pressure over its recent guidance on non-performing loans (NPL) and its plan to force banks to increase provisions against bad loans. The backlash, including at this week’s European parliament hearing of Danièle Nouy, Chair of the Supervisory Board, was fuelled by various gripes, including whether the ECB has gone beyond its...

Tax reform could help sluggish demand for corporate loans, but unlikely to be a game changer when it comes to business investment.A key question for the 2018 US outlook, and beyond, is whether US firms will finally open their purses and invest more after years of frugality. Investment is key to sustaining the current expansion. Recent buoyant business surveys like the ISM manufacturing index seem to point that way. However, a chasm has opened between what firms are saying and what they do....

October non-farm payrolls provided another sign of the US economy’s strength. But tepid wage growth means the Fed will likely remain cautious.October payrolls showed the US economy remains in fine fettle, as underlying payroll growth remained firm. Robust labour-market signals echo recent solid business surveys, strong job opening data, and very low levels of initial jobless claims.Payrolls rose 261,000, reversing some hurricane-related weakness (payroll growth was only 18,000 in September)....

Accelerating growth in France and Italy should make the ECB more confident about its plans for policy normalisation.The current leg of the euro area recovery is about both quantitative and qualitative improvement in the economic outlook.Trend GDP growth in France and Italy has risen to 2.2% and 1.8%, respectively, on an annualised basis. Those countries are catching up with the strongest member states, more than compensating for the moderate growth slowdown we forecast in Germany and...

Janet Yellen’s likely successor is cut from the same cloth as Janet Yellen. The Fed will remain prudent when it comes to rate hikes, but its stance on banking deregulation will merit watching.On 2 November, President Trump nominated Jerome (‘Jay’) Powell to succeed Janet Yellen at the helm of the Federal Reserve System, confirming recent press speculation. The next step before the new Fed chairman can enter office next February is Senate confirmation. This looks unlikely to be problematic...

After a much-anticipated 25bp rate hike, further normalisation of policy will be conditional on progress in Brexit talks.The Bank of England (BoE) has raised rates for the first time in over a decade, while it hinted at a “limited and gradual” tightening cycle. Meanwhile, the assessment of the supply-side was downgraded once again amid “considerable risks” to the economic outlook. A 25bp rate hike alone is unlikely to have a material impact on the economy, beyond a small increase in the...

The USD has recovered against the euro of late, but the greenback could soon run out of steam.The US dollar has appreciated against the euro since 8 September and is getting close to our short-term forecast of USD1.15 per EUR. This recovery has been mainly driven by supportive US data, monetary policy divergence and hopes of tax reform.In the short term, robust US economic activity, a Fed that is still in rate-hiking mode and the still broadly negative sentiment surrounding the US dollar (as...