Category: Weekly Analysis

10 Jan

Financial market outlook and liquidity cycle in 2020

400 billion in cash injections in Q4. Expansion or status quo in 2020? High earnings expectations. Extreme equity valuations. More risks than opportunities. Key points Massive and questionable cash injections in Q4 400 billion in new liquidity Why has the Fed intervened so massively? Dangerous interdependency between markets and monetary policy Financial markets gamble on [...]
06 Jan

Changing uncertainty at the start of the new year in the US

Reduced trade tensions. Rising uncertainty relating to the elections. Resurgence of geopolitical risks. +2% GDP growth in 2020. Extreme equity valuations. Key points Real GDP growth of approximately +2.2% in 2019 and +2% in 2020 Risk of polarisation between the Democrats’ and Republicans’ political programmes Election year could prove turbulent for investors Growth in 2020 [...]
13 Dec

Voters put an end to political foot-dragging in the UK

Conservatives win absolute majority. The path to Brexit is becoming clearer. Lower levels of uncertainty favourable to the pound. Long-term rates rise. BOE ready to cut rates. Key points British voters are done with political foot-dragging on Brexit Brexit will happen In a good position to negotiate a softer Brexit Although a technical recession was [...]
06 Dec

Slight recovery in the Eurozone despite weakness in Germany

GDP up +0.2% in Q3. Germany holds out on the edge of recession. ECB maintains status quo. Change of outlook for long-term rates. Valuations in Europe’s favour. Key points Q3 slightly better than expected in the Eurozone Growth in Q3 driven by consumption, government spending and exports Leading indicators leave room for doubt Consumer confidence [...]
03 Dec

Sharp economic slowdown in Japan in Q3

Anaemic GDP growth of +0.1% in Q3. Consumption slows. Exports contract. BOJ in holding pattern pending a government stimulus plan. Key points GDP growth in Japan ground to a halt in Q3 (+0.1%) Exports fell further, but the trade balance is once again showing a surplus Industrial output dipped again at year-end after showing some [...]
28 Oct

Switzerland’s GDP strengthens in Q3, surprising forecasters

Nominal GDP has passed the CHF 700 billion per year mark. Equity valuations above their historical average. Clear overvaluation of the Swiss franc in terms of PPP. Key points Swiss GDP’s +0.4% growth rate in Q3 comes as a favourable surprise to forecasters Switzerland’s GDP exceeds CHF 700 billion per year for the first time [...]
26 Sep

Actual risks of recession in the US overestimated

GDP up +2.2% in 2019. Declining nominal and real rates beneficial to the economy. Leading indicators still wavering. Rebound in long-term rates. Beware of PE ratios. Key points Excessive pessimism unfounded but ultimately favourable to economic growth Nominal and real rates will support economic momentum The Fed confirms +2.2% GDP growth expectations for 2019 Economic [...]
24 Sep

Supreme Court reduces threat of no-deal Brexit

GDP down -0.2% in Q2. Real risk of recession. Likelihood of no-deal withdrawal decreases. BOE in wait-and-see mode. Possible upswing of long-term sterling rates. Key points Boris Johnson’s strategy defeated by the Supreme Court Threat of a no-deal Brexit diminishes A technical recession might be avoided following the -0.2% decline in GDP in Q2 The [...]
19 Sep

Can European growth recover without Germany?

GDP up +0.2% in Q2. Germany poses a problem. The ECB to inject 20bn/month for two years. Rebound of the euro. Asset rotation favourable to European equities. Key points Contraction of Germany’s GDP hampers growth in Europe Underlying trends in consumption and investment remain positive Leading indicators may have seen the worst and finally seem [...]
17 Sep

Private and public spending boost Japanese GDP

GDP up +0.3% in Q2. Consumption still robust. Exports plunge. BOJ could decide to sit tight. Earnings of listed firms down. Key points Japanese GDP maintains positive momentum in Q2 with +0.3% growth Consumption, up +0.6%, bolsters growth Falling exports (-10.2% in August), in particular to Asia, hurt Japanese economy Trade deficit shrinks to -136 [...]