April insights from Pictet Wealth Management’s Asset Allocation & Macro Research team The current decline in US profit margins would usually herald a recession. The continued decline in earnings expectations is a concern, and suggests limited upside for equities. But if the resources sector is stripped out, the trend is much less worrying. Moreover, fears of […]
In the April issue of Perspectives, Christophe Donay, head of macroeconomic research at Pictet, argues that the Chinese fiscal and monetary authorities still have plentiful resources to ensure that China achieves a growth rate of 6.5-7.0% this year and next. But China will sooner or later face Donay’s version of a ‘financial trilemma’ stemming from […]
Lending to the economy reached record levels in China in January, suggesting that the authorities are prepared to do more to support growth. A stabilisation of the yuan and an admission by the authorities of mistakes in their approach to financial markets are also positive signs. Market fears around China may therefore temporarily abate. However, […]
Chinese equity markets experienced a substantial sell-off in early January, with the CSI 300 losing 7% on both 4 and 7 January. This sent jitters across global financial markets. The latest bout of market instability in China does not appear to have been related to any change in the country’s economic fundamentals. Rather, a conjunction […]
If we look back to our core economic scenario outlined in November last year, three of the key developments we had pinpointed already materialised in January this year: firm anchoring of US growth; quantitative easing at the European Central Bank (ECB); resurgence of systemic risk in the eurozone. On the latter score, the constructive talks […]
The global economy is becoming increasingly desynchronised. A shift in macroeconomic regime has materialised in the US, with the business and economic cycle taking over as driver from monetary policy. In Europe, pressure is mounting on the European Central Bank (ECB) to unfurl a programme of quantitative easing (QE) at a time when tumbling oil […]
The US Federal Reserve’s exit strategy by tapering its quantitative easing is part and parcel of the process of normalisation that the growth and inflation regimes of the world’s premier economy are undergoing. In contrast, the European Central Bank (ECB) may well have to push through more measures yet to counter the risk posed by […]
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