Weekly analysis

10 Jul

US corporate earnings could fall by -44% in Q2

GDP is expected to fall by -32% in Q2, will not return to 2019 levels before 2022. The Fed systematises yield curve control. End of interest rate volatility. Complacency on equities. Key points Annualised GDP contraction of -32% in Q2? GDP contraction of -5.5% in 2020 followed by a +3.9% recovery in 2021 Sharp rise [...]
25 Jun

European recovery plan could also bolster the euro

ECB injects EUR 1,350 billion. Banks borrow EUR 1,300 billion at negative yields. Debt pooling and monetisation are moving forward. Recovery plan favourable to the euro. Key points ECB is on every front ECB lends banks an additional 1,300 billion at negative yields ECB underwrites the fiscal expansion of European states An 1,800 billion recovery [...]
17 Jun

In April, UK sees sharpest drop in GDP (-20.4%) since 1703

Brutal economic shock in April. BOE must boost its action. Stability of the pound. Negative UK Treasury yields. FTSE100 benefits from favourable relative valuations. Key points The UK’s economy is headed for the worst economic recession in Europe Intense shock in April, the worst is probably over Exceptional governmental measures for a unique situation The [...]
11 Jun

USD 2 trillion to pull Japan’s economy out of recession

Slide into recession in Q1. -20% contraction expected in Q2. Record budget for growth. Economic pick-up in Q3. Drop in corporate earnings. Excessive valuation of the Nikkei. Key points Japan’s GDP resisted well to Covid-19 in Q1 Recession is likely to take a turn for the worse in Q2 Record budget approved to support Japan’s [...]
08 Jun

Swiss GDP down -2.6% with a more brutal shock in store for Q2

-10% contraction expected in Q2. Economic recovery will take place in H2. SNB will not change course. Weakening of the franc. Gradual rebound of long-term rates. Reduce equity risk. Key points Switzerland’s GDP contracts more sharply in Q1 than experts expected The drop in GDP in Q1 is actually due to only two weeks of [...]
22 May

Rise in gold fuels rise in silver, platinum and palladium

Fundamentals favourable to precious metals. Sharp rise in investment demand. Reduction of the gold/silver price ratio favourable to silver. Palladium benefits from a special situation. Key points Stock market panic temporarily weighed on precious metals in March 2020 Most key factors for precious metal prices are favourable Sharp rise in investment demand 100 million gold [...]
06 May

Markets not ready for a cold war between China and the US

Renewed tensions with China inevitable. Who will be the best president to contain China? Market have not yet factored in political tensions. Key points Presidential campaign already focusing on Covid-19 crisis President Trump can no longer count on a positive economic record Time has come for a frontal attack Monetisation of debt will lend wings [...]
01 May

Sell in May, reduce risk in anticipation of reality check

Beware the new wave of euphoria. Return of volatility in May. Liquidity driving the stock market recovery. Reduce risk after best month since 1987. Buy gold and silver. Key points New wave of euphoria after wave of panic Beware the return of volatility in May Stock market recovery mainly driven by massive liquidity injections Low [...]
30 Mar

Two trillion to counter the effects of Covid-19 in the US

Drastic change in health strategy. Massive backing by the Fed. Historic tax package. Slump in growth in Q2. The presidency to the Democrats? Rebound in equities. Key points Trump capitulates in the face of the magnitude of the health crisis in the US The US is the new epicentre of the crisis Alarmist estimates of [...]
24 Mar

Why the economic recovery in China will be relatively robust

Whatever the magnitude of the shock in Q1, what matters is the strength of the upswing in Q2. Sharp recovery of GDP. Inventory rebuild not to be underestimated. Rise in equities. Key points China did not just halt its economy in February, it also implemented a series of extraordinary stimulus measures What can we expect [...]