Category Archive: 2.) Pictet Macro Analysis

Filter archive by: Show All Show only Articles Show only Videos

Pictet – The Entrepreneurs – Mountain retreat (Abridged version)

2018-05-25

by

The 4th edition of the Pictet Mountain Retreat was held in St Moritz in March 2018 at the heart of the Swiss Alps. It brought together an exclusive group of 50 entrepreneurs and investors in an intimate setting to network, unwind and have fun. This event combines sport, competition, Pictet expertise as well as relaxed …

Read More »

Pictet – The Entrepreneurs – Mountain retreat (Full Version)

2018-05-25

by

The 4th edition of the Pictet Mountain Retreat was held in St Moritz in March 2018 at the heart of the Swiss Alps. It brought together an exclusive group of 50 entrepreneurs and investors in an intimate setting to network, unwind and have fun. This event combines sport, competition, Pictet expertise as well as relaxed …

Read More »

PMIs point to downside risk to near term euro area growth

2018-05-24

by

2018-05-24

Eurozone GDP growth
Euro area flash PMI indices failed to stabilise in May. Details were somewhat less worrying than headline numbers and overall still consistent with a broad-based economic expansion, if only at a slower pace than last year. Our forecast of 2.3% GDP growth in 2018 still holds, but the balance of risks is now clearly tilted to the downside in sharp contrast with the situation prevailing a few months ago.

Read More »

Eurosceptic Italian government faces a reality check

2018-05-22

by

2018-05-22

With the putative M5S-League government publishing its final common programme, we take a look at the road ahead for the Italian economy and for Italian government debt.We expect negative noise surrounding the Italian budget to intensify initially, but believe that negotiations with Brussels will result in compromises eventually, including dilution of the incoming Italian government’s fiscal easing measures. The biggest risks lie with the proposed...

Read More »

Europe chart of the week – Italy’s fiscal buffers

2018-05-18

by

2018-05-18

The incoming government’s fiscal plans could result in a sharp deterioration of Italy’s public finances. However, broader fiscal metrics are better than they were during the euro sovereign crisis.The M5S-League coalition has committed to a significant degree of fiscal easing and to the reversal of some structural reforms. Such policies will put Italy on course for confrontation with Brussels over deficit reduction targets, although at this stage we...

Read More »

Europe chart of the week – Corporate Sector Soft Patch

2018-05-06

by

2018-05-06

Next week’s detailed breakdown of ECB QE monthly data will reveal a marked slowdown in the pace of corporate bonds purchases in April (Corporate Sector Purchase Programme, or CSPP). Indeed, weekly holdings data have been consistent with gross purchases of around EUR3bn in April, down from EUR5.8bn on average in Q1. There are several possible explanations for the drop in gross purchases, but redemptions are not one of them, as they amounted to just...

Read More »

Europe has a lot to lose from trade wars

2018-04-08

by

2018-04-08

Any estimate of the economic costs of protectionist measures, let alone trade wars, is subject to uncertainty given the complexity of global supply chains. A common assumption is that new tariffs on exports will produce small direct effects on GDP growth but more significant indirect effects in the event of escalating trade conflicts, including on domestic investment.

Read More »

Larger-than-expected reduction in French public deficit

2018-03-30

by

2018-03-30

France’s public deficit fell to 2.6% of GDP in 2017 according to INSEE’s preliminary assessment, down from 3.4% in 2016 and below the 3% threshold for the first time since 2007. The outcome was better than the government’s estimate of a 2.9% deficit. If confirmed, France will exit the Excessive Deficit Procedure that the European Commission opened in 2009.

Read More »

Impact of recent tariffs on US and China’s GDP should be limited for now

2018-03-29

by

2018-03-29

The Trump Administration last week announced tariffs of 25% on USD 60bn worth of imports from China (out of USD506bn of total Chinese merchandise imports). The list of products targeted, still has to be thrashed out. The official aim is to sanction China for alleged theft of US firms’ intellectual property; the US Trade Representative (USTR) estimates the damage amounts to USD 50bn.

Read More »

British pound – Smoother transition, stronger sterling

2018-03-28

by

2018-03-28

Recent positive developments in the United Kingdom (UK), namely the transitional deal reached between the UK and the European Union (EU) on 20 March and the strong job market report on 21 March, call for a more positive short-term outlook for the sterling than previously thought. We therefore revise our projections upward for the sterling on the entire time horizon.

Read More »

Disentangling the Swiss current account

2018-03-27

by

2018-03-27

Following the Swiss National Bank’s (SNB) publication of Switzerland’s balance of payments data for Q4 2017, in this note we look deeper into the Swiss current account to try to find out why Switzerland persistently runs a surplus and whether or not the current account balance can be used to assess the fair value of the Swiss franc.

Read More »

Europe chart of the week – monetary policy

2018-03-23

by

2018-03-23

Much of recent ECB dovish rhetoric has been building around the (not-sonew) idea that potential growth might be higher than previously thought, implying a larger output gap and lower inflationary pressure, all else equal. The argument is both market-friendly and politically welcome – what we are seeing is the early effects of those painful structural reforms implemented during the crisis. Inflation would be low for good reasons.

Read More »

Pictet Perspectives – What happens when rates rise?

2018-03-19

by

After years of low interest rates, investors need to prepare for a rise in the cost of credit. Since the financial crisis, investors have benefitted from rising bond price, while companies have seen their funding costs decline to the lowest point in decades. But with central banks scaling back their support in response to good economic growth, the years ahead will be very different. Investors need to prepare for a rise in the cost of debt, says...

Read More »

Pictet Perspectives – What happens when rates rise?

2018-03-19

by

After years of low interest rates, investors need to prepare for a rise in the cost of credit. Since the financial crisis, investors have benefitted from rising bond price, while companies have seen their funding costs decline to the lowest point in decades. But with central banks scaling back their support in response to good …

Read More »

Europe chart of the week – Employment

2018-03-17

by

2018-03-17

Euro area employment grew for the 18th consecutive quarter in Q4 2017 (+0.3% q-o-q), and is now 1.5% above its pre-crisis (2008) level. By contrast, hours worked per person employed decreased during the same period, remaining 4% below their pre-crisis level. The two data series have followed divergent trends since the start of the economic recovery. Between Q1 2008 and Q2 2013, the total amount of labour input used by firms decreased massively.

Read More »

ECB begins to rotate forward guidance

2018-03-12

by

2018-03-12

The ECB made one small change to its communication in March consistent with a normalisation process that is likely to remain very gradual. In line with our expectations, today the Governing Council (unanimously) decided to drop its commitment to increase asset purchases “in terms of size and/or duration” if needed, which had steadily become more difficult to justify and less credible anyway.

Read More »

China: February PMIs point to deceleration in industrial activity

2018-03-05

by

2018-03-05

China’s official manufacturing Purchasing Manager Index (PMI) for February, compiled by the National Bureau of Statistics of China and the China Federation of Logistics and Purchasing, came in at 50.3, down from 51.3 in January and 51.6 in December 2017. This is the lowest reading of this gauge since October 2016. The Markit PMI (also known as the Caixin PMI), however, edged up slightly to 51.6 in February from 51.5 in the previous month

Read More »

Europe – ECB preview

2018-03-04

by

2018-03-04

Market participants have enjoyed a protracted period of very low volatility, but it may well have come to an end in 2018. Central banks are often said to be responsible for the disappearance of volatility, for example through their large-scale asset purchases, which have compressed the term premium. But, now that the same central banks are heading for the exit from unconventional policies, they, too, need to relearn how to live with volatility.

Read More »

ECB policy is boosting the Bundesbank’s profits

2018-03-03

by

2018-03-03

Bundesbank's Net Interest Income, 2017
This week the German Bundesbank published its 2017 annual report, which includes a number of interesting figures that are relevant to the broader (monetary) policy debate in the euro area. In particular, the Bundesbank provided details of the amount of securities held on its balance sheet for policy purposes, including QE, at the end of 2017, and the corresponding flows of income stemming from its asset purchases. Remember that QE is largely...

Read More »

Switzerland: So far so good

2018-03-02

by

2018-03-02

According to the State Secretariat for Economic Affairs (SECO)’s quarterly estimates, Swiss real GDP rose by 0.6% q-o-q in Q4 (2.4% q-o-q annualised; 1.9% y-o-y), above consensus expectations (0.5%). The Swiss economy expanded by 1.0% in 2017 overall, in line with our own forecast. This comes after GDP growth of 1.4% in 2016 and 1.2% in 2015.

Read More »