Igor de maack  cercle
March 16, 2018
Is everything which is exaggerated meaningless?

“You’re fired” was effectively Donald Trump’s comment to his Secretary of State Rex Tillerson, in an eerie echo of The Apprentice TV show formerly hosted by the US President. US presidential authority is not to be judged solely in terms of human resources management however.

He also blocked the proposed merger between the Singapore-based group...

12 March 2018
Donald Trump set the tone for stock markets

There was finally no surge in market volatility following the results of the Italian elections, unlike after last year’s referendum. It can therefore ironically be deduced that almost thirty million Italians voted to oust Matteo Renzi. However, his PD party, like all of the others, may still hold the balance of power in the formation of a ruling coalition, or simply provide legislative support to a technocratic government. As usual, there is no certitude regarding Italian governance. The markets are used to such a state of affairs however and the...

5 March 2018
Europe lag behind Wall Street despite good economic indicators

The world of capitalism has once again been struck by the paradoxical Donald Trump who has announced plans to implement customs tariffs on imports of steel (25%) and aluminium (10%) to the US.

These protectionist measures, which were already largely proposed during the presidential campaign, have rattled the equity markets as we head into March, particularly in Europe. Although the indices resisted the flash crash in the US in February, Europe is now underperforming the US significantly in local currency terms. The CAC 40 is even outperforming the DAX...

23 February 2018
Market influenced by technical factors

Since February’s Great Correction, the markets have entered into a technical, volatile and uncertain phase. They regularly test the levels and supports adored by chartists: 1.25 for the euro/dollar, USD 70 for oil and 2.9-3% for US 10-year government bonds. Fundamental data remain positive also in the US, where the Fed admitted to being surprised by the magnitude of the effect triggered by the tax reform.

Residential construction posted strong growth in January (+9.7% in housing starts), and business climate surveys also registered satisfactory levels...

16 February 2018
Stock markets steam higher as US inflation picking up

Investors were delighted to be able to enjoy an intimate dinner date with their darling inflation on Saint-Valentine’s day.

US inflation figures published on 14th February, the traditional day for lovers, added even more weight to future inflationary outlook. The consumer price index (CPI), which is the key statistic that mere mortals observe, came in at 2.1% vs 2.5% a year earlier. It was the personal consumer expenditure index (PCE) however which requires deeper analysis as this data has served as the basis used by the Fed for setting its target at...

9 February 2018
Markets chill

A chill fell over financial markets last week which seemed to reflect the cold spell in the weather which has taken hold over the past month or so.

Two sharp intra-day corrections in the US market of over 4% constitute an initial response to the surge in 10-year yields from 2 - 2.8% over the past few months. This monetary normalisation process, kicked-off by the central banks, should not be perceived solely as a risk for investors despite the VIX volatility index being driven to a level rarely seen, at 37 vs 11 at the start of the year. Return on...

2 February 2018
Fixed income floods

The soft comfortable bond rug is being pulled out from under equity investors’ feet. The US 10-year bond yield target of 3% no longer appears unattainable particularly as this level is now almost compatible with current economic momentum. In the same way as rivers start to rise before bursting their banks, investors had seen the potential bond flood-risk warning and should now expect a change in paradigm in the fixed-income markets. However, the recent turnaround may well be considered salutary as the situation was becoming almost untenable among some...

26 January 2018
Currency War and tax Peace.

Although the week began with the temporary resolution of the shutdown in the US administration (until the next scheduled meeting between the Democrats and the Republicans on 8th February), forex trends drove the markets last week. The declaration by Steve Mnuchin regarding the positive effect of a weak dollar propelled the greenback to 1.25 vs the euro without triggering any real cause for concern for Mario Draghi given the strength of the European recovery.

A long position in the yen (one of the last weak currencies against the euro and dollar among...

19 January 2018
Is 2018 will be as good as 2017?

Is 2018 will be as good as 2017? This is currently the burning question among investors, particularly as the beginning of this year remains bullish both in terms of trends, with US indices hitting new highs and certain European markets already returning almost annual performances, and also in terms of heavy traded volumes. Driven by strong macroeconomic data, as illustrated by the latest Chinese GDP growth rate of 6.9%, equity markets appear to be ignoring the risks which are potentially looming, such as higher interest rates, currency volatility and...