Focus

February activity surveys point to robust, but slowing, activity

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Macroeconomic indicators continue to improve, and latest business surveys – while pulling back from January’s high levels – signal robust economic activity. Taking the latest PMIs – which decreased slightly in February – levels point to a strong GDP growth rate this quarter (+0.8% QoQ). We are not as optimistic,… Read More »


Italian election results add uncertainty to bank outlook

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With no easy path to government formation, repeat elections remain a possibility. A prolonged period of political uncertainty could harm Italian banks’ effort to dispose of bad assets and raise equity in the medium term if needed, says Scope Ratings. Equity and credit of listed Italian banks as well as… Read More »


Japan: more tailwinds than headwinds for 2018

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Columbia Threadneedle maintains a positive outlook on Japan and expect more tailwinds (rising corporate profits, tax cuts, Olympics-related demand, rising immigration) to continue. We wrote about our positive outlook on Japan from the viewpoint of corporate governance reform, labour market reform and relative competitiveness of Japanese companies. Our constructive view remains… Read More »


What’s in a correlation?

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US equity indices have tended to go up with bond yields since the turn of the century. History suggests the correlation will remain predominantly positive until 10-year yields reach 5% and we are not convinced lower growth/inflation will change that. An analysis of the dividend yield gap gives the same… Read More »


Surveys decelerate but economic momentum remains robust

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While February economic surveys suggest some slowing, latest PMIs continue to signal solid economic expansion. In particular, February flash PMIs, while losing momentum, remain close to historic highs and suggest broad-based expansion among Eurozone members in the services and manufacturing sectors. Overall, current levels are in line with a 0.9%… Read More »


Six major changes since the financial crisis

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Developed countries’ economies were enjoying robust growth in the first half of 2008, despite some initial cracks that had been appearing since the previous summer. That was ten years ago, and since then, world economic dynamics have transformed completely, as the sources of momentum and adjustment systems have changed, especially… Read More »


Technology and demographic trends in 2018

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Technology remains an important theme. Against a backdrop of changing demographics, it is crucial that companies and investors get technology right. The global financial crisis was a major shock to the system, but earnings have recovered sharply and are continuing to grow amid a global economy that appears to be… Read More »


Embracing volatility

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The abrupt reversal of equity markets in the last few weeks has sent shivers down investors’ spines, particularly as momentum was the dominant factor behind the rally that preceded it. Time to panic? On the contrary, history shows that buying into short-term weakness has been a fruitful strategy for long-term… Read More »


How to profit from a return to volatility

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An explosive start to 2018 has punctured a period of unprecedented market calm. 2017 had provided a particularly challenging hunting ground for stock-picking contrarians, as volatility measures hit record lows. While this momentum-driven market offered opportunity to harvest profit, there was little in the way of alpha-generating ideas. Now the… Read More »


Stronger Cyclical Momentum; Be Patient on Inflation

Gero Jung -

Last quarter GDP growth was solid, in line with expectations as well as leading indicators. In the details, a strong contribution came from Germany (+0.2ppt of quarterly growth), France (0.1ppt), the Netherlands and Spain (0.05ppt), confirming a broad-based recovery. This is likely to support a further reduction in the Eurozone’s… Read More »