China faces a delicate rebalancing

China is going through a transition phase, and the Chinese authorities face a tricky challenge to avoid a crash, explains Christophe Donay, Chief Strategist at Pictet Wealth Management.

Should investors focus on Developed or Emerging markets?

Emerging Market equities will suffer from a stronger dollar and lower commodities prices in comparison with Domestic Market equities, explains Alexandre Tavazzi, Chief Equity Strategist at Pictet Wealth Management.

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United States: non-manufacturing index has jumped to high levels so far in Q3

Taken together, recent indices point towards economic growth running above 4% in July-August. We continue to expect growth to prove robust in H2 2015. The ISM Manufacturing index fell further in August The ISM Manufacturing survey for August 2015 was published on Tuesday this week. The headline reading dipped further from 52.7 in July to 51.1 […]

Hedge funds minimise damages amid market turmoil

August was a month that many would rather forget, with markets witnessing a painful correction as the Chinese slowdown exacerbated global deflation fears. Volatility spiked to four-year highs and market conditions became challenging – to say the least – but hedge funds seem to have weathered the storm. While they weren’t immune to the shock, […]

United States: consumption growth still likely to settle at some 3.0% in Q3

July data on household consumption and income were published today. Real consumption rose by 0.2% m-o-m in July, slightly below consensus estimates (+0.3%). Already published data on retail sales and car sales for July had been quite upbeat, suggesting a more solid reading. However, in line with the revised Q2 GDP data published yesterday, previous […]

Euro area: credit recovery is gaining traction

The data on monetary aggregates confirms that credit dynamics are improving further. One development of note was the fact that, for the first time since April 2012, the annual growth rate in loans to non-financial corporations was back in positive territory. Monetary aggregates: above consensus expectations The annual rate of expansion in the euro area […]

United States: second quarter GDP growth revised up to 3.7%

Q2 GDP has been revised markedly upwards to now show a growth rate of 3.7% q-o-q annualised. We stand by our expectation for robust growth to continue in H2 2015. Real GDP for Q2 has been revised significantly upwards. According to the second estimate published today, GDP grew by 3.7% q-o-q annualised, an outcome more […]

Germany: solid export performance

Detailed German GDP data showed that economic growth in Q2 was fuelled by exports, whereas domestic demand was on the weak side. Looking ahead, the latest round of German business surveys (PMIs, Ifo) have continued to be quite resilient despite financial market turbulence and worries about the Chinese economy. The survey outcomes are still consistent with […]

Correction in China calls for diversification

There is a risk of a financial and economic crash in China, creating considerable contagion to the rest of the world. However, we think that the Chinese authorities are likely to succeed in stabilising the economy. China’s slowdown creates concerns Underlying the current market turmoil are concerns about China’s economic slowdown. The country has been […]

European PMI surveys: resilient despite worries about China’s economy

In August, Flash PMIs for the euro area came in above consensus expectations. The July-August average Composite PMI is now consistent with real GDP growth running at around 0.4% q-o-q in the euro area in Q3, in line with our scenario. One development of note was the increase posted by the Manufacturing ‘New Export Orders’ […]

New monetary policy regime will continue to support equities

Equity valuations in the US and Europe are now back to levels last seen during the emergence of the dotcom bubble and ahead of the 2008-09 financial crisis. Although developed market equity valuations are stretched, they could continue to rise — contrary to consensus. The current bullishness is built less on earnings growth, which remains […]

US and Europe Q2 Earnings Results: positive surprises but no game changer

As the second quarter earnings season draws to its end, we review here the main numbers and draw some conclusions for investors. US earnings: strong profit margins and strong financials Almost all S&P500 (456) companies published their Q2 results. At the sales level, 46% of companies beat their estimates; meanwhile, the corresponding number was 54% […]

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