Sub-zero interest rates paradigm

In this video, Yves Bonzon, Chief Investment Officer for Pictet Wealth Management, explains how negative interest rates impact the economy and what countries will outperform in this new paradigm.
The February 2015 edition of Perspectives magazine is now available.

Three of the seven key developments for 2015 are already shaping investment strategy

Finally, QE from the ECB

The ECB’s QE will not be a panacea to cure all ills, but it is a necessary prerequisite to prevent the euro area sliding into a deflationary spiral.

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European Central Bank: Mario Draghi claims victory

Expectations were high that Mario Draghi would provide important information about the QE programme (officially called the PSPP: Public sector asset purchase programme). In this regard, Thursday's press conference was disappointing. In fact, the main news was the announcement that sovereign bonds could be purchased even if yields are negative. The other big news was […]

Euro area: on track to normalisation

Four drivers are currently supporting the euro area recovery: the crude oil price drop, euro depreciation, the end of austerity and, finally, expansionary monetary policy. Monetary aggregates have already started the normalisation process ahead of the launch of the ECB’s QE. It is essential that these forces last for a while to give the still […]

Deflation risks, QE and ‘Grexit’ revealing the cracks in the eurozone edifice

Inflation is very subdued throughout the eurozone. But it is not so low just because oil prices have been nosediving. Depressed aggregate demand acts as a fertile breeding-ground for a deflationary spiral to take root. Confronted by this risk, the ECB has at long last provided its unconventional response to meet this challenge. However, unless […]

2015 has already delivered some surprising twists and turns

To start with, the SNB removed its cap on the Swiss franc on 15 January, followed a week later by the ECB’s announcement of its QE package. After the slump in the oil price, the world of investment in 2015 is full of fresh opportunities and new risks.

Oil diluting earnings estimates

The effects of the oil price levelling out at around $50 a barrel are positive overall for the economy. Analysts have already factored the adverse impact that lower oil prices will have on the energy industry’s profits into their estimates for corporate earnings growth, but the consensus does not yet appear to have priced in […]

Euro area: heterogeneous GDP growth among the four biggest economies

According to leading indicators, the euro area is likely to expand at a similar pace in Q1 2015 as in Q4 2014. GDP growth: stronger than expected Eurostat’s preliminary estimate showed that euro area real GDP expanded by 0.3% q-o-q (1.4% q-o-q annualised and 0.9% y-o-y) in Q4, after an expansion of 0.2% q-o-q in Q3. Today’s […]

Three key developments already shaping 2015

Economies throughout the industrialised world have been benefiting from the slump in the price of oil. All the liquidity being injected via the European Central Bank’s quantitative easing programme is providing a welcome pillar of support for the eurozone. On the downside though, the outcome of Greece’s general election has reignited the risks of a […]

United States: another month of disappointing retail sales data

Today’s retail sales report was disappointing. Nevertheless, this set of data was a poor indicator of overall consumption recently and fundamentals are very upbeat. We therefore remain quite optimistic on consumption growth in Q1. Nominal retail sales were surprisingly weak, for the second month in a row. They fell by a heavy 0.8% m-o-m in […]

Three of the seven key developments for 2015 are already shaping investment strategy

Eurozone policy mix remains incomplete The European Central Bank had already signalled its intentions and did not disappoint investors when, on 21 January, it announced a plan to acquire sovereign debt to a minimum of €60bn monthly up to September 2016.To understand what this level of quantitative easing can do to boost the eurozone economy, […]

Euro area: consumers are back!

In the euro area, retail sales recorded a solid advance in Q4, suggesting that private consumption was probably a significant support to growth in Q4 2014. Looking forward, household consumption should be supported by gains in real disposable income owing to the sharp drop in oil prices, moderate improvement in the labour market and relaxed monetary […]

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