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June 15, 2018
Super Mario is back

The saviour of Europe has struck once again. Mario Draghi, the eternal European, rolled out his second put-option by ensuring visibility for the markets regarding future ECB monetary policy. On the menu, he is now proposing a reduction in total monthly assets purchases from 30bn to 15bn from the end of September onwards and winding down the...

8 June 2018
Consumption and protectionism

As protectionist measures and customs tariffs are blooming like poppies in a field of alfalfa, it may be of use to reflect on the founding principles of protectionism. The German economist Friedrich List, who was a fierce opponent of Adam Smith, perceived protectionism as a transitory period enabling national companies to adapt to international competition, which he referred to as “educating protectionism”. Moreover, this is probably the philosophy underlying the Chinese system involving the transfer of technology, limiting capitalistic implantation...

1 June 2018
Italy forced into Europe’s and stock market’s corner.

Italy had backed itself up into a corner with regard to Europe and the markets.

President Mattarella therefore had initially refused to approve a government with its cornerstone (Finance Minister) proving too incompatible with the eurozone system (and even its existence). Two months after the election results, Italy had still not established a government (which is not really a problem for managing current affairs) and the cost of financing its economic agents (state, local authorities, banks, companies, consumers) increased sharply (+150 basis points...

24 May 2018
Italian debt puts markets under pressure

The markets continued to fear the consequences of the projected formation of a government in Italy. Italian long-term rates adjusted by around 60 basis points over the past week. Anticipating an immediate implosion of the eurozone nonetheless seems a little premature. The Greek scenario demonstrated that remaining within a strong monetary region governed by Germany ultimately outweighs the supposed advantages of a disorderly exit and the installation of a local currency.

On the other hand, observing that the euro and the monetary zone as a whole are...

18 May 2018
Will trackers outperform actively managed funds in 2018 ?

It was a complicated week for the financial markets which were faced with US 10-year yields steepening to the 3.1% threshold, followed by a further increase in the price of oil, with the Brent index approaching $80, and then a breakdown (albeit temporary) in the negotiations attempting to form a government in Italy. The two front-runners in the Italian elections, namely the 5-star movement and the League, are said to have finally reached a somewhat utopic agreement proposing a blend of tax stimulus and public spending.

This unholy alliance will...

14 May 2018
Market is Vulnerable, Uncertain, Complex, Ambiguous (VUCA).

VUCA, the acronym drawn from its component words, vulnerable, uncertain, complex and ambiguous, which is applied to the analysis of human organisations, succinctly sums-up the current global situation from an economic & financial and also political point of view.

The withdrawal of the US from the Iranian nuclear agreement has tipped the world into a new era; a period in which the price of crude has breached $70 per barrel on the WTI index, with US 10-year yields becoming durably ensconced at close to 3%, and in which the dollar has wrong-footed...

4 May 2018
Buy in May and sail away ?

The Fed’s view on its rate hike cycle for 2018 has not changed for the time being, despite inflation reaching its 2% target. The central bank also implied that it could allow inflation to creep higher without changing its stance. US bond markets reacted well to the news, with yields remaining relatively stable last week at around 2.95%.

The slowdown in Europe is now a broadly accepted fact, with few observers forecasting a growth rate of close to 2.5% in 2018, particularly as its UK trading partner is beginning to feel the effects of the hesitancy of...

27 April 2018
A good spring for investors

The markets are currently weathering the first-quarter reporting season without any real difficulties. European companies have nonetheless been hit by a strong currency impact, which has wiped-out more than 5% sales growth in many cases, particularly as Q1 2018 is the quarter with the least favourable comparison base.

 Future dollar strength should provide some relief for European companies however. Given the current spread in interest rates, of almost 250 basis points between 10-year Treasury and Bund yields, the dollar is likely to stage a...

20 April 2018
One swallow does not make a summer but…

Although one swallow does not make a summer, the return of this migratory bird from its winter in Africa at the beginning of April has delighted investors. Equity indices have rallied and are now more accurately representing the bullish macroeconomic trend.  

After weathering fears of a potential slowdown in global macroeconomic growth, investors are now focusing more closely on microeconomics. The early reporting season has already revealed that deflationary pressures continue to weigh on the consumer packaged goods sector, notably Unilever and...