Banque Syz & Co. S.A.: Latest Research Report - December Market Outlook
Syz & Co, Point of View: Whereas the month of November ended with Dubai’s misfortunes, the good figures for the US labor market marked the beginning of December.
The financial markets have thus been through all the different moods. They initially saw a return of risk
aversion, with the ingredients for a new financial crisis (a real-estate bubble and excessive indebtedness) being in evidence once again. Then they put the situation into perspective, convincing themselves that Dubai was an epiphenomenon and therefore did not entail a systemic
risk. Finally, they received a pleasant surprise with the US employment report, which gives reason to hope for an imminent improvement on the job market. It is in fact the missing link needed to complete the recovery chain. Suddenly, the economic outlook in the United States has improved, the key factor being an interest-rate hike by the end of next year. The correlations that have been in place for several months (equities rising, the dollar falling, gold price rising) have thus been reversed. The stock markets’ reaction to the US job market data has been accompanied by a rebound of the greenback and – symmetrically – by a correction of the gold price. The next few weeks will tell us
whether the US labor market is actually in the process of recovering. If that is the case, the statistics published will probably have been a turning point.
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Content:
Economy
United States
The labor market close to a reversal
Europe
First steps of the ECB’s exit strategy
Japan
Under pressure, the BoJ intervenes
Emerging economies
Impressive soundness of the Indian economy
Markets
Equities
Dubai under the spotlights
Bonds
The situation grows more complicated
Exchange rates
Green light for the greenback
Asset allocation
Allocation grid
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Pictet & Co: Almost another spectacular month for equities. The first half of November saw this year’s bull market back in full strength, only for it be abruptly halted when Dubai World stunned markets by asking its lenders to freeze its debt obligations. The incipient panic has since faded, but the episode has reminded investors that the dangers of excessive debt, which brought the global financial system to its knees last year, still lurk
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