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4 years ago
Yves Bonzon, Group Chief Investment Officer at Swiss Wealth Manager, Julius Baer talks to Gulf Insider on how the pandemic impacted secular trends and opportunities going forward. Did you see a major shift in trends from 2019 to 2020 due to the pandemic? The pandemic did not as much shift secular trends as accelerated them, and substantially at that. When we first formulated the key themes for this decade, we hypothesized the end of the neoliberal era was close and envisioned a new unorthodox policy template which places a greater importance on fiscal stimulus and debt monetization, as suggested by proponents of Modern Monetary Theory (MMT). The immediate policy response to the Covid-19 crisis was taken right out of that MMT policy toolbox – with governments rushing to implement massive stimulus programs, backed by central banks annihilating rates to their lowest levels, while pumping liquidity to support asset prices. Recently, the Federal Reserve Chairman, Jerome Powell, confirmed that the central bank will not even think about raising rates until they see the white in inflation’s eye. This is an extreme departure from the old policy paradigm. How has Covid-19 changed how you look at strategic asset allocation? The Strategic Asset […]
4 years ago
Short-term traders rather than safe-haven seekers have pushed gold prides to record-highs in summer. It looks like prices have moved past their peak for now. The recent sell-off in the gold market brought back memories of the early days of the coronavirus crisis in March. Rapidly rising infection rates and fears of broad-based lockdowns triggered a risk-off move in financial markets, putting pressure on equities and spilling over into the gold market as the US dollar strengthened. While counterintuitive at first sight, such moves are not unusual for gold in times when the risk perception in financial markets changes and investors dump risky assets for US dollars. For many investors, the US dollar itself still is a safe haven. While a stronger US dollar and slightly higher – or rather slightly less negative – US real bond yields look like the triggers of the recent sell-off, neither the one nor the other is sufficient to explain it. Instead, the explanation is rather that trend followers and technical traders have again exited the market after piling into gold during the record run in July and early August. While gold is a safe haven which has proven its track record multiple times […]
4 years ago
In the below interview, Christian Gattiker, Head of Research at Swiss Wealth Manager, Bank Julius Baer talks about how the Covid-19 pandemic has impacted the way clients view investments and what are the key trends shaping the world of tomorrow. How would you describe the current investment scenario in a world that is still tackling the challenges presented by the pandemic? The current investment regime is a globally synchronised and mostly V-shaped recovery, helped by heavy monetary and fiscal stimuli. The world economy entered a synchronised shock-like recession in H1 2020 and is now recovering at different speeds. The main divergence in the speed of the recovery is the amount of fiscal and monetary stimulus available. The US, China and Japan have experienced a 10% downswing in economic output, while Continental Europe has experienced 15% and the UK 20%. Emerging markets have been hit hard but at varying degrees by the pandemic, with Latin America still in the doldrums. We expect most of the mature economies to compensate for about half of the shortfall during Q3, with a much slower pace thereafter. China is the exception, since the world’s second largest economy is back at pre-crisis levels as we speak […]
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