Ugly divergence in Europe vs. the Great Deleveraging in the US

Alpha can be deined as the extra return generated from actively managing an asset class compared  to the return secured by straightforward passive management exposure to an asset class. As, by their very deinition, aggregated returns obtained by all investors collectively must be equal to the return on the market overall, alpha is tantamount to a zero-sum game. Put simply, […]

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Deleveraging forces at work in the background

The first quarter of 2012 ended on a uniformly positive note for risk assets.They were given a boost, initially, by the European Central Bank’s 180-degree shift to an activist approach to monetary policy, and then by persistent and carefully stage-managed rumours of a third round of quantitative easing by the US Federal Reserve. By no […]

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Central banks’ coincident quantitative easing

By shifting from an allocation structured on the basis of asset classes to one organised along the lines of strategies and risk factors, we are in effect choosing to focus on three very distinct categories of equities. First, at the strategic allocation level, we distinguish between defensives and growth stocks. Second, for the portion of […]

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ECB pumping out fresh liquidity and hope

The first of November 2011 will probably come to be seen as a key crossroads in the eurozone crisis – the momentwhenJean-ClaudeTrichethandedthehelmof the European Central Bank on to Mario Draghi.The final year of ECB President Trichet’s term of office only served to confirm what we had been criticising for a number of years: pursuit in […]

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Non-normal is the new normal

The world has changed dramatically since 2008. The initial financial crisis, rooted in housing-market bubbles, especially in the US, and all the toxic assets acquired lock, stock and barrel primarily by the world’s leading investment banks, degenerated into a debilitating crisis of confidence worldwide with its epicentre in Europe: distrust initially of the banks, then […]

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2012: mixed outlook of reflation hopes and deflation fears

In arriving at scenarios for our tactical asset allocation for 2012, our team of macroeconomic analysts have sought to evaluate how the main asset classes are likely to perform depending on differing levels of volatility. Volatility is generally expressed in terms of theVIX Index that measures expected volatility on the S&P 500, the index of […]

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Europe: some respite from the debt crisis

As we do every autumn, Pictet’s Strategic Investment Committee’s October meeting was devoted to reappraising key underlying economic and market trends at work. Assessing what has happened over the last 12 months Broadly speaking, events of the last twelve months have unfolded in a manner more or less consistent with the secular trends we had […]

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Deflation threatening once again

For some time now, we have been predicting a gold price of USD2,000 an ounce by the middle of this decade. Upheavals in financial markets this summer have already pushed the bullion price up towards that level: on 23 August gold hit a new all-time high of USD1,913. Should we now presume its bull run […]

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Summer of tension

Although markets have been bouncing back and forth during the first six months of the year, the performance of various styles of strategy has been frustrating for most investors.Take June, for example: between the 1st and 24th, the S&P 500 underperformed 10-year US Treasuries by almost 8 percentage points, but, in the last four trading […]

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