Tag Archives: Macroview

Shale oil has forced the conventional oil industry to reinvent itself. Companies have nevertheless demonstrated terrific powers of adaptation, helped by the high-tech nature of the oil industry.In a ‘lower-for-longer price’ environment, there are still attractive themes and equity stories to play, assuming prices remain broadly above USD45-50 per barrel. Valuations generally remain reasonable, especially on the back of the correction since the start of the year. The growth theme is clearly...

Pictet Wealth Management’s latest positioning in fast-evolving markets. Asset allocationThe first quarter was exceptionally strong for risk assets, and the outlook remains good for developed market (DM) equities.We remain comfortable with our overweight in developed market equities, but it would be wise not to take too much risk in the coming quarter.EM assets may offer attractive opportunities on a tactical basis.CurrenciesThe US dollar probably has only limited further upside, absent a...

Job growth was strong in the first quarter as a whole, however, and latest numbers may not lead Fed to change its overall assessment of the economic outlook.Non-farm payrolls increased by 98,000 m-o-m in March, well below consensus expectations (180,000). Adverse weather conditions likely weighed on the aggregate numbers. Moreover, job creation averaged 177,000 in Q1 2017, above the Q4 average of 147,000.Importantly, the US unemployment rate fell to a new cycle low of 4.5% in March, from...

A new development zone south of Beijing could turn out to be the most important domestic infrastructure project in China in the decade to come and lead to large-scale economic change.At the beginning of April, the Chinese government caught people by surprise by unveiling plans to create the Xiong’an New Area, a new development zone about 130 kilometres south of Beijing. According to the announcement, the first phase of development will cover an area of 100 square kilometres, with long-term...

Risk assets had an exceptionally strong first quarter, but a repeat performance will require overcoming numerous obstacles.The first quarter was an exceptional one for risk assets—so exceptional that it is difficult to see how their performance can be repeated in the present quarter without some strong catalysts. According to our analysis, annualised returns on equities in the first quarter were up to three times higher than their historic average in the case of developed-market equities,...

The latest confidence surveys in the euro area have been remarkably strong, adding upside risks to our GDP forecasts, but meaning that the ECB will have to tread carefully.Recent composite purchasing manager surveys for the euro area are consistent with a growth rate of about 0.7% q-o-q in Q1, above our projection of 0.4%, and are pointing to similar levels of growth in Q2. More generally, ‘soft’ survey data and ‘hard’ activity data have been diverging significantly of late, with large...

PMI data in China has continued to move higher, meaning the near-term outlook is strong, but tighter controls on the property sector and on monetary policy point to a slowdown in the second half.The official PMI figures for manufacturing and nonmanufacturing rose again in March, extending a rebound that has been evident since early 2016. Sub-indices also remain on a solid upward trend, with the production and new order sub-indices reaching their highest levels since mid-2014 and the new...

Euro area headline inflation declined by a larger margin than expected. Our main explanation is related to statistical effects.Euro area headline inflation declined for the first time in almost a year, by a larger margin than expected by the consensus. Headline HICP eased to 1.5% in March, from 2.0% in February, while core HICP inflation (excluding energy, food, alcohol and tobacco) dropped to a two-year low of 0.67% y-o-y, from 0.86% in February. The harmonised inflation rate dropped by...

But today's credit report means ECB will have to tread carefully when it comes to reducing the degree of monetary accommodation.The euro area M3 and credit report for February was slightly disappointing overall. Broad money growth (M3) eased from 4.8% to 4.7% y-o-y.  Bank loans to non-financial corporations fell back to 2.0% y-o-y in February, from 2.3% in January, as a result of weaker lending flows across the region.Notwithstanding this modest setback, the euro area credit cycle remains...

Corporate results are in keeping with our central scenario of 10% total returns for global equities this year.Our 2017 scenario, drawn up last December, called for a total annual return of 10% for global equities this year. We attributed the bulk of this performance to a double-digit rise in estimated corporate profits. As the Q4 2016 reporting season draws to a close, 2017 earnings expectations are proving resilient or are being revised upwards. Yet the earnings cycle is turning out to be...