Author Archive

Taking account of regime shifts

Predicting the returns for different asset classes is the Holy Grail of asset allocation. The problem is that risk premiums and returns are instable over time. According to our analysis, over the long term (our data stretches back 115 years) there is a 90 percent probability of achieving an annual average return of 8 percent […]

US-China Relations: A ‘politics bull trend’ creates a fertile ground for trade tensions

Today we are witnessing a redefinition of international relations and a new, although likely unstable, global equilibrium. The trade dispute unfolding today between the US and China should be seen in light of shifting structural trends that have developed over the last few decades. We expect rationality will eventually prevail, but the outlook is muddled […]

Innovation shock reshapes economic dynamics

When analysing the current economic regime and assessing the potential for a shift in that regime, it is vital to take innovation into account. Demographic trends and productivity gains are commonly identified as the two main drivers of real economic growth. And innovation is a critical contributor to productivity growth. Robert J Gordon, in his […]

Mr. Donay goes to Washington*

*With apologies to Frank Capra. Christophe Donay, Head of Asset Allocation & Macroeconomic Research, Pictet Wealth Management. Meetings  I had in Washington in May touched on four main themes: i) economic policy; ii) trade policy; iii) US politics; and iv) energy and innovation. i. Economic policy. The top economic policy officials I met in the […]

The world growth engine is humming

Christophe Donay, Chief Strategist, Head of Asset Allocation & Macro Research, Pictet Wealth Management Since the beginning of the year, depending on currency, many asset classes have recorded negative or only marginally positive returns. In US dollar terms, US and global equity indices (MSCI World) have produced total returns of below 0.5% since 1 January, […]

Geopolitical and political risks – some important challenges ahead

Over the past year and more, market fundamentals have managed to overcome the occasional short-term bouts of volatility triggered by political and geopolitical factors. But we cannot dismiss the possibility that these factors will impinge more forcefully on economies and financial markets in the period ahead. Many of the sources of risk and uncertainty are […]

A spectacular return to pure supply-side economics

Since the sub-prime crisis 10 years ago, the US economy has been stuck in a growth regime that is modest by past standards, with deflationary pressures persisting in spite of an historically low unemployment rate. It is against this backdrop that the tax reform finally ratified in the last days of 2017 was greeted as […]

Increasing growth visibility would reassure investors

The current growth phase of the economic cycle started almost nine years ago in the U.S. and some emerging countries, making it the second-longest period of expansion in modern American history after the 1960s. But, increasingly, the question of whether a new recession is imminent or not has been coming up in discussions about scenarios […]

The populist wave may be yet to peak

Populist parties have been on the rise in Western democracies in recent years. They have already achieved two landmark successes, with Brexit and Trump, and are threatening breakthroughs elsewhere. We see six main drivers of the populist surge: rising economic insecurity, globalisation, a technological innovation shock, cultural backlash, broader socio-economic change, and fragmentation of information […]

Macron victory still raises questions for markets

The first round of the French presidential election has come as a relief for markets as a pro-European, reformist candidate came first and now looks very likely to win the second round. For once, opinion polls were fairly accurate in capturing voting intentions and last-minute momentum. But the result of the first round is not […]

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