Category Archive: 2.) Pictet Macro Analysis

Weekly View – M&A Boom

M&A (mergers and acquisitions) activity is on the rise, as companies coming out of the pandemic with strong balance sheets shop for buying opportunities. Last week ACS, a Spanish construction group, approached Italian transport company Atlantia to buy Italy’s largest motorway network. Two big funds are also eyeing Dutch telecommunications company KPN as a potential acquisition target.

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House View, April 2021

We believe that robust earnings growth will overcome concerns about rate increases. Within a neutral position on developed-market equities, we believe sectoral rotation will continue and we remain overweight cyclical markets like the UK and Japan. But while we believe the attractiveness of stocks subject to wild valuation swings will fade, we continue to like cash-rich ‘structural grower’ stocks.

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House View, November 2020

The upsurge in covid-19 cases will likely hurt global economic prospects in the current quarter. With a Democrat 'blue wave' failing materialise in the US elections, hopes of a substantial spending bill have faded and there is risk that US household incomes suffer as existing support measures fade. In the meantime, covid-19 infections continue surge in the US. 

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Weekly View – A sure thing

Signs from last week’s SURE programme to finance partial unemployment schemes are highly encouraging for the EU’s plans for recovery fund issuance which could start, we believe, in mid-2021. Last week’s SURE issue was close to 14 times oversubscribed at a rate lower than that for French government bonds of comparable duration.

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Weekly View – Biden time for markets

Donald Trump’s poll numbers were looking increasingly unhealthy at the time of writing, but at least the cocktail of drugs administered to the coronavirus-stricken President appears to have worked.

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House View, October 2020

Rising coronavirus cases accompanied by flagging recovery momentum and a fractious run-up to the US elections make prospects for equities highly reliant on 3Q results and further policy stimulus. Against this background we have downgraded our stance on euro area equities from neutral to underweight, following a similar downgrade for US equities in August.

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Weekly View – No breakfast at Tiffany’s

The impact of political tensions on business is ever more apparent: LVMH of France will not, after all, proceed with the purchase of Tiffany of the US. If, as seems likely, the hand of the French government was involved, this is solid evidence that political sensitivities are increasingly influencing cross-border deals – something that is likely to remain the case just as M&A in general has been declining.

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House View, September 2020

A surge in new covid-19 cases in a number of countries has interrupted progress towards normality, yet the effects of the virus are becoming more manageable and positive world H2 growth is achievable.

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Weekly View – Election nerves increase

The sell-off in stocks last week showed a certain nervousness about the sharp run-up in tech stocks and the role of big option bets. Indeed, prices in some instances had risen too fast. But this was a technical correction. With the US tech titans generating free cash flow, we do not believe we are facing a repeat of the bursting of the dot-com bubble in 2000. 

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Weekly View – The Last Samurai

The CIO office’s view of the week ahead.We are in the midst of a decisive elections season, from the surprise, poll-defying victory of the conservative coalition in Australia and Indian general elections last weekend to the European parliament elections in the week ahead.

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House View, August 2020

We have revised up our euro area GDP forecast for 2020 to -8.5%, mainly due to improving data in Germany, which is better positioned to recover rapidly from the downturn than its European peers. Meanwhile, the US economy has shown signs of flatlining amid escalating covid-19 cases in the South. Consumer confidence has taken a hit, while weekly unemployment claims have been rising again.

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Horizon 2020: long-term investing in a world marked by pandemic

The sudden, violent recession triggered by this year’s covid-19 outbreak provides further impetus to pre-existing economic and market dynamics.

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Weekly view – The summer grind

All kinds of reasons can be advanced for the tit-for-tat closure of the Chinese consulate in Houston and its US equivalent in Chengdu. These range from a dispute over quarantine requirements for US diplomats returning to China to an attempt by the Trump Administration to distract from troubling virus news and a real threat to American intellectual property and privacy.

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Weekly view – Fog warning

Coronavirus cases in the US are rising and high frequency data in the US such as retail foot traffic and employee working hours have flatlined. Meanwhile, in Q2 results, USD36 bn in trading and fixed-income revenues managed to make up for higher loan provisions for US banks.

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Weekly View – Alive and kicking

In spite of renewed fears of coronavirus clusters in Beijing, data last week suggested the more consumer-oriented sides of the Chinese economy were tracking improvements in industry, with a year-on-year increase in auto sales in May. UK retail sales were also encouraging, but the biggest surprise came from the US where May’s 18% rise in retail sales month on month was double analysts’ expectations.

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Weekly View – Reality check

The short-term pull-back in stock prices last week on the back of persistent virus concerns in the US and elsewhere shows the market remains jittery despite the massive run-up in prices since late March. May data from China showed a relatively fast rebound on the supply side of the economy, but a much slower take-off in consumption, suggesting a ‘reverse square root’ kind of recovery for economies rather than the ‘v’-shaped one markets have been...

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Weekly View – One country, two systems at risk

Last week, German chancellor Merkel delivered a surprise about-face when she and French president Macron announced a proposal for a EUR 500bn recovery fund in the wake of the coronavirus crisis. The unprecedented plan involves the distribution of grants, rather than loans, to member states in economic need.

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Modern Monetary Theory makes inroads following coronavirus crisis

US policymakers’ bold actions in response to the coronavirus bear some traces of the free-wheeling deficits, repressed interest rates and central bank activism (money creation) that form the cornerstones of the Modern Monetary Theory (MMT) playbook.

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House View, May 2020

With leading economies likely facing double-digit declines in GDP in Q1 and Q2, we expect Brent oil in the USD10–20 range in Q2 before reaching a long-term equilibrium of USD18 at year’s end. With consumers tempted to remain cautious, the oil sector in deep difficulty and a big rise in unemployment, we expect dire Q2 GDP figures for the US. We have reduced our GDP forecast for 2020 as a whole to -7.7%.

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A reality check on China’s return to work

The recent recovery in industrial activity seems to have stalled, probably because of the collapse in external demand and high levels of vigilance inside China. Since the large-scale coronavirus infection was contained, the Chinese government has been trying hard to get the economy back on track. The end of the lockdown in Wuhan after two in a half months is an important milestone in that respect.

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