Weekly analysis

09 Jan

Is a recession looming in Germany and the Eurozone?

Contraction over the last quarter in Germany? Leading indicators rather bleak. ECB remains confident. Policy rates unchanged. New opportunities in equities. Key points GDP growth down -0.2% in Q3 German industrial output drops -1.9% Slowdown in Europe is intensifying Five largest EU economies are weakening Leading indicators not optimistic Confidence gives way to concern Euro [...]
04 Jan

Robust job market and economic cycle in the US

Fed stays the course. Record job creation and wage increases. Long-term interest rates no longer contracting. Equity markets on the upswing. Caution on earnings expectations. Key points Federal Reserve stays the course in spite of market jitters 0.25% rate hike to 2.5% Fed marginally reduces its growth outlook for 2019 to +2.5% Job market will [...]
18 Dec

UK: A referendum as a last resort?

Worrisome decline in GDP growth (+0.1%). Theresa May has no plan B. Increasing likelihood of a referendum. Intolerable costs of a “no deal”. Avoid equities and bonds. Key points Theresa May will play her last card in January Why not consider a plan B? New referendum to break the deadlock Only 34% of the British [...]
15 Dec

Fears of a yield curve inversion in the US are unfounded

Yield curve inversion still synonymous with recession? Flattening versus inversion. Current situation and outlook. The Fed is not dogmatic. Unfounded fears. Key points Markets spooked in December by the risk of a yield curve inversion Risk-off mode prevails everywhere What yield curve inversion are we talking about exactly? Yield curve flattening rather than inverting? Is [...]
10 Dec

Sharp slowdown in Japan: GDP drops by -0.6% in Q3

Sharpest contraction of GDP since 2014. Economic rally in Q4. Stabilisation of the yen. Leading indicators weighed down by uncertainty. Inflation reaches +1.4%. Nikkei on the upswing. Key points Unexpected growth shock in Q3; Japanese GDP dropped by -0.6%, or -2.5% yoy Exports pick up in Q4 Trade balance turned negative Imports jumped by +19.9% [...]
05 Dec

Swiss GDP weakens in the wake of German decline

GDP contracts by -0.2% in Q3. Swiss growth remains dependent on German economy. Normal yield curve. Stabilisation of the franc. Positive outlook on equities. Points clés Euphoria gives way to bewilderment Downward revision of the growth outlook for Swiss GDP Surprise collapse of economic momentum in Q3 Swiss economy impacted by trade tensions between Beijing [...]
27 Nov

No impact of stock market volatility on foreign exchange markets

Dollar temporarily at an advantage. Euro expected to rise. Depreciation of the franc. Upswing in emerging currencies. Pound still hostage to Brexit. Weak yen. Key points The increase in stock market volatility did not significantly impact foreign exchange markets Limited rise of the trade-weighted dollar The increasing pace of growth is temporarily lending strength to [...]
21 Nov

Interest rate markets are benefitting from rising uncertainty

Temporary easing in international bond markets. Correlations remain high among major markets. Inflation still moderate. Avoid the Eurozone and the high yield segment. Key points Interest rate markets broadly benefitting from uncertainty in October US market offers very attractive opportunities Long-term interest rates likely to tighten in the Eurozone Adjustment of long-term rates in the [...]
04 Oct

Trade tensions weighing on European GDP

Slowdown in growth. Ambiguous leading indicators. End of quantitative easing. Paradigm shift with regard to long-term rates. Attractive European equity risk premium. Weekly Analysis Key points Slower GDP growth in Q2 (+0.4%), +2.1% yoy GDP growth hampered by decline in foreign trade Trade surplus down 45% in July Leading indicators losing momentum German economy is [...]
03 Oct

US economy is doing well. Beware the adverse effects of tariffs.

Exceptional GDP growth of +4.2% in Q2. Inevitable deceleration in 2019. Risk centred on tariffs. Long-term rate increase. Keep an eye on profits. Caution with regard to the S&P 500. Key points Exceptional GDP growth of +4.2% in Q2 Eighth rate hike by the Fed, moving towards the 3.1% fed funds target for 2019 Fed [...]