Using macroeconomic regimes for asset allocation We have identified three broad growth and inflation regimes. Analysis of the combined macroeconomic regimes shows a high degree of correlation between these regimes and asset returns. Using growth and inflation data stretching back to the end of World War Two, we have developed a methodology that identifies nine […]
At this mature stage of the business cycle, it makes sense to consider the possible next steps in economic policy, given that we believe it is likely that central banks and governments will do their utmost to prop up the bull equity market as well as economic growth. (This will be especially true in the […]
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 […]
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 […]
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 […]
*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 […]
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, […]
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 […]
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 […]
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 […]
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