Investment letters

Pension funds

09/2020

Extreme Polarisation

by Pascal Blackburne, CIO

Photograph: European Commission 2020

Social tensions are rampant in the US, ahead of what promises to be not just a tightly contested, but potentially also a disorderly, presidential election. In financial markets, the performance gap between “wanted” and “unwanted” stocks continues to expand. Such polarisation in both the political and financial spheres – not to mention between Wall Street and Main Street – argues for some protective action in investment portfolios.

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Pension funds

08/2020

The EU Rises to the Occasion

by Pascal Blackburne, CIO

Photograph: European Commission 2020

On 21 July, after 90 hours of fraught and arduous negotiations, EU leaders agreed to a landmark EUR 750 billion rescue package. The mix between grants and loans had to be sweetened, amongst other concessions, and the road to implementation remains long, but the news is doubly positive: the ECB should no longer be alone in supporting economic recovery and the EU edifice is not about to implode.

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Pension funds

07/2020

Germany in Charge

by Pascal Blackburne, CIO

The European Union (EU) is entering a particularly crucial six-month period – that should see deployment of its “revolutionary” pandemic recovery fund and the conclusion of the Brexit saga – under strong and almost complete German leadership. A lucky coincidence or a strategic turning point from a global geopolitical perspective?

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Pension funds

06/2020

Next Generation

by Pascal Blackburne, CIO

Even as lockdown measures are progressively eased, all eyes remain focused on the Covid-19 public health crisis. Its economic impact is clearly huge, as are the various public support packages being deployed across the globe. But one should not forget that the economic and – especially – (geo)political situation was difficult already before the pandemic broke out. Brexit, US-China tensions, European Union cohesion: these issues, to name just a few, are still very much present.

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Pension funds

05/2020

Central Bank Independance

by Pascal Blackburne, CIO

“Extraordinary” monetary policies enacted during the 2007-2008 Great Financial Crisis (GFC) never actually came to be reversed – save for a brief attempt in the US, thwarted by President Trump. And this Covid-19 crisis is taking central banks a step further into uncharted territory, at the risk of becoming but the financing arm of (increasingly authoritarian) governments.

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Pension funds

04/2020

How Long a Shutdown ?

by Pascal Blackburne, CIO

Photograph: REUTERS/Carlo Allegri

With almost half of the world population currently in confinement, the question is not whether recession will occur but how long it will last. In turn, this depends crucially on medical developments: might any of the ongoing tests of (combinations of) existing drugs soon be found to work or will a return to “normal” social and economic activities have to wait for a vaccine?

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Pension funds

03/2020

The long and the short of the Coronavirus

by Pascal Blackburne, CIO

With the coronavirus having now spread well beyond the borders of China, governments across the globe are taking drastic action – under intense media pressure – to contain the epidemic. Scientists warn that these measures might not succeed, but also provide reassurance as to the potency of this new form of flu. One thing is certain, though: from an economic standpoint, the worst is yet to come. Which explains why stock markets have gone into panic mode.

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Pension funds

02/2020

From Euphoria to Anxiety

by Pascal Blackburne & Luc Synaeghel

How fast the mood can change in the space of just a few weeks. Having begun the new decade on a high note, financial markets have since had to contend with the spreading of the Chinese coronavirus, blatant US-Europe divergences on the subject of climate change at the World Economic Forum, the Brexit D-day and presidential impeachment proceedings in the US Senate. Still, from a fundamental perspective, the picture remains one of low interest rates and supportive government policies, meaning few investment alternatives to equities – for the time being.

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Pension funds

01/2020

Reflecting on 2019

by Pascal Blackburne & Luc Synaeghel

2019 proved a most peculiar year, one of multiple and fast-evolving risks, as well as stark Wall Street/Main street contrast – making the ride for investors less easy than full-period financial returns would suggest.

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Pension funds

12/2019

Why Both US and China Want a Deal

by Pascal Blackburne & Luc Synaeghel

Only a few days to go before the December 15 tariff deadline and still there is no sign of the touted “phase one” trade deal between the US and China. But with the US Presidential election looming and China walking a fine line between economic stimulus and financial stability, odds are high that negotiators will soon come to some form of agreement.

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Pension funds

11/2019

Pension Tensions

by Pascal Blackburne & Luc Synaeghel

The US Federal Reserve just cut rates for the third time in as many months. Meanwhile, M. Draghi’s last moves at the helm of the European Central Bank were to restart quantitative easing and push the cost of money deeper into negative territory. The opportunity to revert to a normal monetary environment has been missed – a blessing in the short run, perhaps, but a longer-term curse.

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Hong Kong Umbrella Movement

10/2019

Brexit D-Day is Approaching

by Pascal Blackburne & Luc Synaeghel

October is upon us and still there is no clarity on Brexit. Various scenarios are possible, with the worst standing to seriously hurt the European economy – at a time when German woes are deepening, fiscal stimulus is but a hope, and no progress is visible on the US-China trade front.

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