Market Compass
September 2019

Edited by the Macro & Market Research Team.
A team of 13 analysts based in Paris, Cologne, Trieste, Milan and Prague runs qualitative and quantitative analysis on macroeconomic and financial issues.

The team translates macro and quant views into investment ideas that feed into the investment process.

  • Ruthless policy is rattling markets. Trump is ramping up pressure on China, while British PM Johnson is suspending parliament for under-pinning his determinedness to deliver Brexit.

  • Uncertainties are harmful for the economy and risk sentiment alike. The fiscal side remains hesitant. The duty of accommodation falls on central banks again, but policy effectiveness is in doubt.

  • Yields are unlikely to bounce back soon. Looming ECB asset purchases and an intense search for yield keep supporting Credit. The risk of equity setbacks has risen, but cautious investor positioning and low yields keep us relatively constructive.

  • We trim overall risk of our investments, expecially in equities.

MARKET COMPASS
SEPTEMBER 2019

RELATED INSIGHTS

EQUITIES: POSITIVE RETURNS AHEAD DESPITE CHALLENGES
Equity markets have rebounded from a historical slump in Q1, with US markets even posting fresh record highs. We acknowledge the risen risks of setbacks amid loftier valuations, elevated political risks (US elections, Brexit and US-China frictions) and Covid uncertainties into autumn.
TAKING MONETARY POLICY TO YET ANOTHER LEVEL
The presentation of the new Long Term goal and strategy on August 27 marks a deep shift in the Fed’s monetary policy. The new way inflation and the labour market will affect monetary policy will result in a marked downward bias to interest rates.