The return of inflation is clearly one of the top themes of 2021 and the post-pandemic economic revival. In addition to the temporary effects associated with supply chain bottlenecks (semiconductors, energy, copper, etc.) during a sudden upturn, there is the
CIO Views Markets responded to mixed data from the US and China and to the potential tapering from central banks. We are also seeing inflation (energy and food) and a deceleration in China. As a result, while staying neutral on
Equities have remained buoyant over the past weeks despite some challenges (China regulation, Afghanistan crisis), primarily due to the exceptional earnings seasons in the US and Europe. Looking ahead, we identify three main themes: the spread of the Delta Covid
Investors have enjoyed stellar performances over the last twelve months. A 60/40 traditional global equity/bond portfolio1 returned around 19% on a one-year horizon, well above even the rosiest expectations of the recovery from the Covid-19-induced slump. The S&P 500 is
Special Europe: invest in the recovery In a nutshell As the European economy is recovering from the largest economic shock of modern history, we are revising our growth and inflation assumptions to the upside. Although the path to recovery is
Equities have remained buoyant over the past weeks despite some challenges (China regulation, Afghanistan crisis), primarily due to the exceptional earnings seasons in the US and Europe. Looking ahead, we identify three main themes: the spread of the Delta Covid
The European economy is emerging from its worst economic slump since the Great Depression. As the vaccine rollout progresses quickly across the continent, mitigation measures and travel bans are being lifted, allowing growth to revive. As the European economy recovers,
The first half of 2021 has been witness to exceptional growth in demand fueled in large part fiscal stimulus and waning Covid-related restrictions. Latest data release indicates the major economies may be at the onset of high-water mark of economic
Over the past year, the Chinese government has instituted a variety of regulatory measures that have unnerved investors. There have been anti-trust measures against e-commerce giants, new data security laws to prevent companies from transferring information abroad, new capital requirements
The EU formally adopted in June its new objective of cutting the bloc’s greenhouse gas emissions by 55% by 2030 versus 1990. This represents a substantial increase in the bloc’s ambition compared to the previous 40% reduction target and sets
Global Investment Views The past weeks have confirmed that phase one of the ‘great recovery’ is now behind us. We have entered a new sequence: PMIs decelerating from their peaks and concerns about the spread of the Delta Covid19 variant
Today, all eyes are on Europe. While the strongest national European football teams are animating a great competition, which is also signalling a sort of return to normality for Europeans, investors’ appetite for European equities is back and for good
Waters appear calm, but there are strong undercurrents. Large economies are at different stages of their journey towards peak acceleration, but rising…
The Covid-19 crisis has transformed the world with far reaching consequences that markets are now starting to assess. The most important one being what will be left of the Great Recovery following the crisis. Different narratives are evolving at this
We are already reaching the peak of economic acceleration. What matters going forward is what will be left of this bounce in growth and inflation. Markets are pricing in a Goldilocks scenario: low inflation and higher growth at trend, but we will
US long-term yields have risen in recent months on expectations of strong economic growth fueled by fiscal stimulus. Eurozone long-term government yields have followed this movement in a limited way, as Eurozone economies have been hit hard by the Covid-19
We maintain the narrative and probabilities of our central and alternative scenarios. In our central scenario, equities outperform on the back of abundant liquidity, improving fundamentals and accommodative monetary policy. Vaccine-resistant virus variants, hawkish policy surprises and geopolitical tensions are
In the current post Covid-19 recovery phase, we see three main themes that multi-asset investors should focus on: one more tactical, in terms of risk allocation, and two more structural. – First, as the recovery advances, investors should embrace more
April started on a positive note for financial markets, after an exceptional first quarter, with divergent fortunes for equities and global bonds. Going forward, the progression of the recovery will likely be the key market driver, leading to greater divergences.
Rising UST yields amid hopes of economic recovery are causing the markets to question whether the Fed will pause its bond-buying programme. We don’t think the Fed will change its accommodative stance in the near term. However, investors should prepare
Rising UST yields amid hopes of economic recovery are causing the markets to question whether the Fed will pause its bond-buying programme. We don’t think the Fed will change its accommodative stance in the near term. However, investors should prepare …
The proliferation of crypto-currencies (CCs) and the popularity of these assets among investors has led us to question their nature, function, valuation and potential development. CCs are at the crossroads of technological innovation, finance and monetary policy.
The rotation towards value is a key theme of our 2021 investment outlook. As the US economy moves towards reopening and a return to normalcy, we expect an overly accommodative Federal Reserve (Fed) to let the economy ‘run hot’ in
The case for investing at the top of the capital structure. From an investment perspective, which trends do you envisage for private debt markets in 2021? Market trends appear favourable for the asset class on both the supply and the
After decades of sound performance, doubts have been cast on the ability of the equity value strategy to keep delivering in the aftermath of the 2008 Global Financial Crisis. Indeed, in a context marked by low yields, sluggish growth and subdued inflation …
This article assesses the communication of the European Central Bank (ECB) using Natural Language Processing (NLP) techniques. We show the evolution of discourse over time and capture the main themes of interest for the central bank that go beyond its traditional mandate of maintaining price stability, enlightening …
A year of divergence 2021 outlook 2020: an extraordinary year 2021: an unsynchronised recovery After an unprecedented 2020 marked by the most severe recession in modern history and a global pandemic still underway, we enter 2021 with a mildly positive
As widely expected, the core of the deal is a zero-tariff/zero-quota free trade agreement for goods. This means that EU-UK trade will be much less affected than if the UK had ‘crashed out’ without a deal, to be governed solely
2020 has been an unprecedented year in modern history, with the Covid-19 pandemic leading to the deepest global recession post World War II that has affected the most countries simultaneously since the 1870s (World Bank). This big shock is not
Interest rates are at an all-time low, and even if inflation eventually picks up, it could take some time. Central banks, the first pillar of the investment cycle, are adjusting and are resolutely accompanying governments in this final battle against
2021 Outlook and Beyond The US election outcome and the hopes that the Covid-19 vaccine will be a tangible reality by the end of the year or the beginning of 2021 bode well for a worldwide economic recovery. China is
"Marked by the most severe recession in modern history, 2020 was an unprecedented year. With the global pandemic continuing, we enter 2021 with a mildly positive outlook for the upcoming recovery, but with the assumption that the path to pre-crisis
Quarterly Update As noted in our previous reports the much-awaited global recovery from the onset of Covid-19 is facing significant headwinds. As the fallout from the crisis becomes clearer in scope and view, ensuing challenges remain daunting. The interplay between
CIO INSIGHTS Liquidity in global financial markets came under extreme pressure in late February/March, when market participants started fearing that the Covid-19 outbreak would become a global pandemic. The resulting lockdown measures threw the global economy into an unprecedented deep
Vice President Mike Pence and Senator Kamala Harris met yesterday in their one and only Vice Presidential debate in Salt Lake City. This was the second most important milestone in the 2020 Presidential election, and early indications on the morning
CROSS ASSET Investment Strategy Monthly #10 October 2020 Investors have been dealing with rising volatility in equities and initial signs of a fall in the extreme market complacency over the last few months. This is leading to some key divergences
The Fed announced an inflection of its long-term objectives by making the 2% inflation threshold not a high limit, but an average objective over time, i.e. it will not harden not its monetary policy in the event of one-off inflation
The ongoing Covid-19 crisis and the resulting market turmoil have confirmed a preexisting trend within equity investing: the increasing relevance of integrating ESG criteria and sustainability into the investment decision. We believe doing so will add value both in terms
The appetite for risk assets has remained strong over the summer lull. This summer season has seen both the confirmation of existing themes and the emergence of new ones. On the former, the decoupling between the real economy and financial
This article studies the impact of carbon risk on stock pricing. To address this, we consider the seminal approach of Görgen et al. (2019), who proposed estimating the carbon financial risk of equities by their carbon beta.
Medium and Long-Term Return Forecasts | Q3 – 2020 All signs indicate we have passed the inflection point of the Covid-19 pandemic crisis, even if this signals a clearer picture moving forward, different uncertainties are emerging. Our latest forecasts, incorporating
Overview: The Asia region was the first part of the world to be hit by the Covid-19 outbreak, but it has also been the first region to navigate a way out of it, thanks to its good management of the
As we enter the summer, conflicting forces in major equity markets have led to a period of temporary equilibrium between fear (risk of second wave, low bond yields, high gold prices) and greed (equities rallying as a result of economies
The New Silk Road routes. A significant first step in this direction was the Belt and Road Initiative (BRI, also referred to as the New Silk Road), which was proposed by the Chinese government in 2013 with the aim of
The agreement reached among EU leaders at the end of the longest European Council in history regarding a comprehensive package worth €1,824bn – including the Multiannual Financial Framework (MFF) and the Next Generation EU (NGEU) instrument – is a significant
Covid-19 accelerated markets’ entropy and risk takers will evolve their investment approaches Crises create disruption and Covid-19 is no exception, bringing new complexities, new opportunities and new risks to the investment landscape. From our research angle, we realised that the
US fixed income can be a valuable source of diversification for European investors, but in the past the cost of hedging of the US Dollar exposure was high, neutralizing this benefit. The situation has changed, and the cost of hedging
Cyclical conditions are turning more positive for Europe. Easing geopolitical risk and the prospect of massive fiscal resources (national and EU-wide) and monetary support could support a recovery in 2021. The improved …
Covid-19 has triggered a sequence of economic and financial market narratives and is giving way to a new status quo characterised by extreme fiscal and monetary measures, to which markets have responded well, though some volatility has returned in the
From a long-term investment perspective, the unprecedented global crisis caused by the Covid-19 pandemic brings along both challenges and opportunities, which constitute two sides of the same coin for institutional investors such as pension funds. Beyond the unavoidable market turmoil,
