INVESTMENT STRATEGY – PRIVATE BANKING, 4TH QUARTER 2014
At a glance
- The "low for longer" economic scenario is gaining traction, acknowledging continued deleveraging efforts, adverse demographic trends and lack of productivity growth.
- Rate hikes are looming in the US and could be faster than consensus believes – but the terminal rate will likely undershoot expectations in this slower structural growth context.
- The Eurozone and Japan remain on very fragile ground: the European Central Bank (ECB) is finally in full operation mode while the Bank of Japan (BoJ), on pause for now, should step up its interventions in 2015.
- Fundamentals have improved in a number of emerging countries, allowing their central banks to join the accommodative camp – with the notable exceptions of Russia and Brazil.
- As the major central banks part their ways, the risk and positioning of portfolios should increasingly be tailored to their reference currency.
- Equities are expensive but still boast relative appeal, with a preference for European markets on the back of ECB determination and euro depreciation.