2010 – roller-coaster ride ahead
The year now drawing to a close has been marked on financial markets by two powerful trends in succession: a downtrend to mid-March followed by a strong uptrend to date. At the end of 2008, Pictet’s Investment Committee in its strategic analysis had predicted a ‘W’-shaped cycle for equities and economies, with 2010 expected to be the year when the second down-leg of the double dip would kick in. The good news is that, on the back of governments’ unprecedentedly aggressive response to the crisis, the risks of the economy relapsing next year have considerably diminished, to such an extent that the worst case, while still potentially menacing, is looking much less likely to happen. This is encouraging news for economies and markets alike, but it also makes formulating our strategic and tactical positioning for 2010 a much more awkward exercise.