Deceptive calm

Market calm is deceptive: concerns about turns in the monetary cycle are being expressed in forex rather than equities.
Pictet Wealth Management

Responsible Investing

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Perspectives, August-September 2017

Up or down?, “Perspectives”, August-September 2017

Equity markets set for a pause

Economic cycles have resynchronised, but this looks to be only a temporary phenomenon.
Pictet Report, Summer 2017

Security in a digital world

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Political fragmentation means Jamaica coalition is the only option

Angela Merkel looks set to secure a fourth term as Chancellor amid growing fragmentation and a surge in far-right support. The only arithmetically possible options are another Grand Coalition (ruled out by the SPD) and a Jamaica coalition between the CDU-CSU, FDP and the Greens (very difficult due to diverging positions on a wide range […]

Business surveys show strong end to Q3 in euro area

Flash PMI surveys for the euro area ended the third quarter on a strong note. The composite flash PMI increased to 56.7 in September from 55.7 in August against consensus expectations for a stable print (55.6). The breakdown by sub-indices showed pretty strong signals in most forward-looking components, with the sole weak spot manufacturing new […]

Euro area cyclical inflation is on the rise

Euro area cyclical inflation has been slowly rising over the past few months, from low levels. Several measures of underlying inflation have broken out of the tight range around which they have fluctuated for the past three years. The ECB’s ‘super core’ inflation rate rose to a three-year high of 1.04% in August, with other […]

Euro area, revisiting the past once again

Revisions to GDP figures have been massive in the euro area and in Switzerland following the publication of Q2 GDP data. The resultant changes in our forecasts are mechanical, and do not reflect a change in our growth profile for H2 2017 and beyond. Recent data released by Eurostat have resulted in a further upward […]

QE put to bed, the focus shifts to rate hikes

As widely expected, the Federal Reserve announced at its 20 September meeting the start of the ‘normalisation’ of its balance sheet; some of its bond holdings will not be reinvested from October on. The Fed’s balance sheet should therefore start to shrink gradually. Fed chair Janet Yellen justified this decision by saying that “stimulus is […]

High equity valuations leave no room for disappointment

Our core scenario for global equities for the next 18 months is built on three active risk factors (drivers): earnings growth, valuations and currency fluctuations. Of the three, earnings growth will be the most significant for return generation. After two strong quarterly reporting seasons, the positive base effect that boosted earnings growth in Europe in […]

Trump more focused on trade deficit than budget deficit

Second-quarter current account data from the US Bureau of Economic Analysis showed once again a sizeable trade deficit, particularly in merchandise trade excluding energy. The energy boom driven by shale gas and light oil has reduced the US’s dependency on energy imports, in turn improving the headline current-account reading. But the US is still a […]

Moderate deceleration underway in China

The latest data on China’s economic activity point to a slowdown in China’s growth momentum in the third quarter, after the positive surprise of the first half of the year. We expect growth to continue to moderate for the rest of 2017 and into 2018, but the pace of deceleration may be fairly modest. We […]

Fed may open door for December rate increase

The Fed is widely expected to announce a partial shrinkage of its balance sheet at its 20 September meeting, in line with the guidance it provided in June. We also expect Yellen to point to the possibility of another rate hike soon (while remaining vague about the exact timing), dependent on further improvements in inflation. […]

Scenarios for QExit

The European Central Bank (ECB) is expected to announce the bulk of its decisions on quantitative easing (QE) at its 26 October meeting. We would expect a broad commitment to extend QE beyond 2017 at a reduced pace, but several options are possible and additional technical details could be postponed to the 14 December meeting. […]

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