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Profits are strong, but investment is still sluggish

A major feature of the US growth recovery since mid-2009 has been the significant improvement in corporate profits. But improvement has been mostly achieved at the expense of investment (capex) and wage growth, which have been kept on a tight leash. This has puzzled policymakers, including the Federal Reserve, which has been somewhat disorientated by […]

Income growth supports recovery of Japanese consumption

Following a strong rebound in Q2, the momentum behind consumer spending in Japan seems to have moderated somewhat in July. Retail sales in Japan grew by 1.9% y-o-y, down slightly from 2.2% in June and 2.5% in Q2. Despite the softer momentum, the recovery in Japan’s consumer sector, which started roughly in the second half […]

Responsible Investing

At Pictet, Sustainability and Responsibility have always been integral to the philosophy that is engrained across all our activities, helping us to confront the challenges posed by powerful disruptive forces currently reshaping the global economy, which investors cannot afford to ignore. Many companies describe themselves as responsible corporate citizens. No doubt many are. But at […]

Positive margin dynamics, but stretched equity valuations

The Q2 2017 reporting season demonstrated that corporate results dynamics remain robust across developed economies. Sales and profit figures came in well above estimates in the US, Europe and Japan. The trend for profit growth has sustained equity markets’ total returns in the year to date. But due to the weakness of the US currency, […]

Japan’s economy delivers a positive surprise

The first estimate of Japan’s Q2 GDP showed growth of 1.0% quarter over quarter (q-o-q) in real terms, or 4.0% annualised, beating the consensus estimates (1.6% annualised) by a wide margin. We have therefore decided to revise up our 2017 GDP forecast for Japan to 1.9% from 1.3%. Unlike previous quarters, when the recovery was […]

Business survey points to continued euro area strength

Markit’s composite flash purchasing managers index (PMI) for the euro area remained broadly stable at 55.8 in August, slightly above consensus expectations (55.5). By sector, the manufacturing PMI increased to 57.4, from 56.6 in July, offsetting a decline in the services PMI (-0.5 points to 54.9). The euro area composite PMI is now consistent with […]

US economy: Too-loose financial conditions versus too-low inflation

Several Federal Reserve (Fed) officials, and a few foreign central bankers, will meet for their traditional August gathering in Jackson Hole, Wyoming, on 24–26 August. Fed Chair Janet Yellen will give the opening speech on Friday (08:00 local time, 16:00 Geneva), but with neither a Q&A session, nor a scheduled media briefing. Unlike her predecessor, […]

North Korea: Spikes in tensions look set to continue

The tensions between North Korea and the US that rose a notch in early August are rooted in the deep sense of insecurity of the regime of Kim Jong Un. A significant new stage in North Korea’s nuclear programme has now been reached, and the regime appears to believe that developing a credible nuclear deterrent […]

The fourth industrial revolution is transforming corporates’ prospects

Amid a growing challenge from the emerging world, US and European industrial companies must be at the forefront of technological innovation to stay competitive. With the fourth industrial revolution, a new industrial era is opening up: digitisation. The fields of application of digitisation are vast, covering all aspects of industrial production, from the conception of […]

The ECB and the euro, from Amsterdam to Sintra

The trade-weighted EUR has appreciated by 4.8% since the ECB’s June meeting. ECB models and Mario Draghi’s rule of thumb suggest that a stronger currency could lower euro area inflation by about 30-40bp in 2018-2019, all else being equal. But all else is not equal, and the euro area economy is in a very different […]

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