Market Insights – September 3rd, 2018

Weekly financial & economic analysis.

Contact us
Wall street sign in the foreground and a huge blurred building in the background in Manhattan, New York, USA.

Essentials

The Argentine peso tumbled almost 20% in a week, even though the benchmark interest rate was raised from 45% to 60% to try and halt the depreciation. The peso had been relatively stable since May, but news that Argentina had asked the IMF to speed up the release of its bailout package spooked the markets and added to the volatility on emerging currencies. Rating agency Fitch lowered its outlook on Italian sovereign debt from stable to negative. This suggests that Italy’s BBB rating could soon be downgraded if the populist government fails to meet its budget commitments to its European partners. Last week, the US consumer confidence index reached an 18-year high, in a clear sign of the country’s solid economic situation. This is good news as we head towards the end of the year, a period buoyed by consumer spending, which accounts for almost 80% of US GDP.

There's the USA, then there's everyone else

Leading financial-market indicators in the USA are telling a very different story from those in other areas of the world. The USA appears to be in a league of its own. How can it be that Wall Street is reaching record highs when most other global stock markets are far from their peaks? Why is it that US interest rates are practically the only ones heading upwards at a time when rates are linger-ing at rock bottom or in negative territory everywhere else? And why is the green-back holding up so well despite the expansion in the US external deficits, while not a week goes by without an emerging-market currency – like the Argentine peso last week – or another peripheral currency – like the Australian dollar – tumbling? It’s true that the US economy is riding high, with unemployment at its lowest in dec-ades and business and consumer confi-dence soaring. But the rest of the world is not faring so poorly either. Of course Europe only recently returned to growth, Japan is struggling to put its long-term disinflation well and truly behind it, and emerging markets are still more eco-nomically volatile than developed coun-tries. But overall the world is doing much better than it was a few years ago, alt-hough that trend seems to be reflected only in US assets. Perhaps it’s all about US monetary policy – the only one that’s close to being back to normal and that has managed to attract a growing num-ber of global savers in search of higher returns IT would make sense that once the taxboost provided by the Trump administration this year is out of the way, the USA will start feeling the effects of an overly strong dollar, which could prompt the Fed to slow down its mone-tary tightening – or even hold it off for a while. That would, in theory, at last shrink the gap with other financial markets around the world. European yields would be able to narrow the spread with US yields, which would give the euro a boost. And global stock markets, which have lagged far behind in terms of their cumulative performance in recent years, would be able to catch up. That is, unless these disparities reflect long-term polit-ical manoeuvring by the USA or obscure a deeper ill.

Is the waiting game over in Europe?

While the US stock market continues to be pushed to new highs by a soaring tech sector, the other global market indexes are struggling, especially those in Europe. There are several reasons for this underperformance. While it’s true that the tech sector is much less pre-dominant on European stock markets, the main factor is probably the renewed political uncertainty both outside the region – such as protectionist fears and the crisis in Turkey – and inside – such as Brexit and the risk of fiscal frenzy in Italy. Investors are extremely bearish about European markets, even though the eurozone economy is doing well and the European Central Bank will soon begin normalising its monetary policy. Going against the consensus, we remain bull-ish on the region’s stock markets and think that the stage is set for a rebound. Earnings have been revised upwards, and fund flows have stabilised following the massive outflows. But what’s really caught our attention is that the euro-zone’s economic news index has risen sharply and is now above that of the USA. Given that growth has no doubt peaked in the USA and Europe is lagging behind, this trend could continue, providing a boost to eurozone stock markets. For the moment, we recom-mend Siemens, Accor, Royal Dutch and ASML. Once the markets turn their atten-tion back to the ECB’s reduced asset purchases, value stocks – such as auto-mobiles and banks – should bounce back.

To go deeper

Legal

Ce site contient des informations relatives à un grand nombre de fonds de placement enregistrés et gérés dans différentes juridictions. Les informations de ce site web ne sont pas destinées aux personnes relevant de juridictions dans lesquelles (en raison de la nationalité des personnes, de leur lieu de résidence ou pour toute autre raison) la diffusion ou l’accès à ce site est interdit. Les personnes soumises à de telles restrictions locales ne doivent pas accéder à ce site web.
Les informations publiées sur ce site ne constituent ni une sollicitation ni une offre, ni une recommandation d’achat ou vente ou de toute autre transaction sur des instruments de placement.

Même si ce site reprend une large sélection de fonds à disposition, il n’englobe pas tous les fonds actuellement disponibles sur le marché. Dès lors, il peut exister des fonds correspondant mieux aux besoins de placement de l’utilisateur, mais qui ne figurent pas sur ce site. L’utilisateur doit être conscient du fait que les prix des parts de fonds de placement peuvent fluctuer vers le haut et vers le bas. En conséquence, la performance passée n’est pas une garantie de la performance future. Par ailleurs, les placements en devises différentes sont sujets aux fluctuations des taux de change.
Avant d’effectuer tout investissement dans un placement collectif, l’utilisateur doit lire impérativement et attentivement les prospectus de vente et les informations clés pour l'investisseur (KIID). Les prospectus et KIIDs des fonds sur ce site sont disponibles sur ce site, mais peuvent également être demandés gratuitement, auprès de Piguet Galland & Cie SA ou de la direction de fonds. L’utilisateur s’engage à lire les clauses de non-responsabilité relative à chaque fonds avant d’effectuer un placement.

Les membres du conseil d’administration ou les collaborateurs de Piguet Galland & Cie SA peuvent détenir ou avoir détenu des participations ou des positions dans les fonds considérés ou peuvent être actifs ou avoir été actifs en tant que teneurs de marché pour ces titres. Par ailleurs, les membres du conseil d’administration ou les collaborateurs de Piguet Galland & Cie SA peuvent entretenir ou avoir entretenu des relations avec les sociétés concernées, peuvent offrir ou avoir offert des services de financement d’entreprise ou autres à ces sociétés ou peuvent siéger ou avoir siégé dans leur comité directeur.
Veuillez préalablement prendre connaissance des Conditions d'Utilisation du Site.

Maecenas consequat purus orci, nec bibendum massa lobortis imperdiet. Vestibulum vel urna efficitur, hendrerit felis sed, interdum enim. Aenean aliquet urna libero, eu posuere arcu volutpat eu. Pellentesque ut metus imperdiet, consequat velit sed, egestas augue. Interdum et malesuada fames ac ante ipsum primis in faucibus. Praesent convallis neque vitae tempor volutpat. Maecenas scelerisque semper dolor id cursus. In vitae justo in eros ornare hendrerit et id tellus. Suspendisse posuere nisl non consectetur consequat. Morbi egestas nunc et nisl dapibus, a consectetur lacus lacinia. Etiam feugiat ante eget luctus varius. Curabitur rutrum, velit eget molestie molestie, ipsum arcu ornare tortor, faucibus congue arcu est eu risus. Sed ut tellus dui. Phasellus feugiat quis ligula eu pretium.

Personal informations
Nos services n'étant disponibles qu'aux résidents suisses, le choix du pays de domicile n'est pas disponible.
You must accept the terms of use.
* required fields