26 news articles are available

03/01/2019 Cross Asset

Fed "quantitative tightening" is close to its end

Fed communication has moved significantly towards a much more dovish tone in the past two months. The change in communication has been twofold, both on rates (the Fed became "patient" and "flexible" on the rate outlook) and on prospects for the so-called quantitative tightening (no longer any "autopilot" in balance-sheet runoff). In this piece we focus on the second tool of Fed policy, analyzing rationales and targets behind balance sheet normalization, which have been detailed and widely expressed in recent Fed communication released by Chairman Powell, other Fed governors and the minutes of the January FOMC meeting. An earlier end to "quantitative tightening" (QT) has become likelier, working in combination with a more dovish stance on rates.

02/07/2019 Investment Talks, Perspectives

China more appealing based on progress in trade negotiations

Chinese New Year brings some hopes on the trade front, as some details are emerging on progress with the negotiations. We expect some sort of conditional deal to be reached; however, uncertainty regarding the bilateral negotiations is likely to persist, particularly because at the core of the discussion there are structural issues such as intellectual property protection, and subsidies and SOEs (Stated-Owned Enterprises), which are not likely to be fully addressed in the short term.

02/07/2019 Cross Asset

Macro: A year in two stages

2019 begins with a synchronized global slowdown. All recently published data, particularly trade and manufacturing data, show that economic activity is slowing in all countries simultaneously. In China, exports and imports contracted sharply in December, as did most Asian economies. In Europe, growth also seems to be slowing more sharply than expected. Germany - the Eurozone economy most exposed to the manufacturing sector and world trade - seems to be the most affected. Finally, in the US, business investment shows early signs of weakness (deterioration of ISM indexes or confidence of small businesses); and the rise in credit spreads will certainly weigh on investment in 2019. In these conditions, should we fear a fall in global growth? Or is it a temporary slowdown?

01/17/2019 Perspectives

Time to Increase Risk Exposure

We think that risk assets have now reset to more attractive levels and some “entry points” for long-term investors are materializing in emerging market (EM) assets and developed market (DM) credit, both of which suffered brutal valuation resets last year, the former in the first part of 2018 and the latter at the end of the year. European equities could follow in this “entry” sequence, but we believe more robust opportunities will materialize later in the year as the European elections in May (and Brexit) could continue to weigh on investor sentiment.

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