Perspectives

Cocktail of inflation and currency tension for 2011

2010 has been quite an eventful year for investors – stock markets have been highly volatile and the economic landscape has been rocked by serious tremors, such as the crisis in Greece. Of course, in the circumstances, it would be comforting to able to inform investors and clients that we are about to witness a […]

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Double decoupling in the global economy

Twelve months ago, we reviewed the major trends we thought likely to influence the global economy and financial markets in the next decade. One year on, it is time to reassess the situation. Pictet’s Strategy Committee met in mid-October to analyse and update our view of the structural framework for investment decisions in the coming […]

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Economic policy’s time has come

The rally in risky assets in September took us by surprise, since our basic macroeconomic scenario has been quite correct. Developed economies, led by the United States, have indeed slowed significantly in recent months. According to our route map, such a slowdown would lead to a new policy mix, including a second round of quantitative […]

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Need for fresh reflationary policy mix

The government in Berlin is perfectly at ease with its rigorous deficit-reduction programme, since it regards the austerity medicine as good for growth. Germany’s Finance Minister,Wolfgang Schäuble, brimming with enthusiasm for the virtues of fiscal austerity, even offered his services to his US counterpart,Treasury SecretaryTimothy Geithner, to explain the wisdom of following what he referred […]

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Uncertainties moving into extra time

Although the sovereign-debt crisis sent the price of the 2040 Hellenic Republic bond below the 50% mark, or under its level before the eurozone’s EUR750bn bailout package, it has barely impinged on US or Japanese government debt securities. At the time of writing, 10-year Japanese government bonds are yielding 1.10%, while benchmark 10-year US Treasuries […]

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Government debt: a financial oil slick?

Financial analysts, pundits and commentators have long warned of the likelihood ofWestern governments running into serious budget deficit problems by 2020, chiefly as a result of the rapidly ageing populations in this part of the world.The financial crisis that flared up in 2008 has only hastened the beginning of serious budget financing problems. 2010 is […]

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Eruptions across Europe

At the time of writing, the finance ministers of the eurozone have just announced officially a three-year aid plan for Greece of 110 billion euros. But what hesitation and procrastination it has taken to get there. Discussions were expected to be bitter and messy, but European politicians have shown themselves to be particularly arrogant in […]

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Markets rocked by sovereign-debt shockwaves

The implementation of exit strategies, particularly through monetary policy, is high on the list of likely factors influencing the markets in 2010. By exposing, unexpectedly early, huge gaps in its public balance sheet, Athens has shown how little room for fiscal manoeuvre governments have after the financial crisis. Paradoxically, these fiscal constraints have reduced the […]

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European markets under a Greek cloud

This month we propose to discuss an investment opportunity completely independent of whether or not Athens has the capacity to honour its commitments or to obtain credits from Brussels.This investment – really – has an AAA rating, a potential performance worthy of a BBB, but also a low correlation to the emerging markets risk factor […]

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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 […]

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