SUMMARY OF THE MACROECONOMIC INFORMATION
The macroeconomic scenario
Significant improvements in the US, Europe still weak
Improve in the US data on the labor market, consumption and investment, the latter spirits from falling fuel prices. The growth in the euro area remains extremely low due to the high levels of unemployment and rising oil deflationary risks. This reduces the expected resumption of pearl business cycle in the short term.
The stock market
Extremely volatile markets
The volatility protagonist returns on European indices, especially for the “peripheral” as Italy. The indices are affected by the fears of recession due to the drop in oil prices and the addition of a political risk in Greece. Price lists, however, may be supported by a probable quantitative easing (QE) by the ECB.
The bond market
The intervention of the ECB
The economic situation has increased the risk aversion of investors, producing a compression rates on core government bonds at the end of 2014. The peripheral bonds were affected only marginally views the action of the ECB in January. The improvement in economic growth and the rise in US interest rates in mid-2015 should move up market rates in Germany.
Currencies
Issues unchanged for the 2015 Fed and US cycle per dollar, euro and yen to fall on the ECB and BoJ
The dollar consolidated its upward trend, thanks to the restrictive expectations on US monetary policy, reaffirmed at the meeting of December 17 last year and given the positive macro data USA. The euro will remain weak in 2015 after the opening words of Dragons on the possible launch of QE in January. Early elections won by Abe, the downgrade of the ratings and the action still pro-cyclical BoJ will support the structural depreciation of the yen. Pound in consolidation in anticipation of moves by the BoE in 2615.
The raw materials
World cycle weak, strong dollar and the collapse of oil will exacerbate the weakness of commodity
The aversion to risk dictated by the sharp reversal in oil (WTE and Brent down by more than 40% since the summer), the uncertainty in Europe and the global economic cycle is not flourishing, operators away from the basic resources, in a market characterized by high volatility and alternates risk appetite.
MACROECONOMICS
USA: significant improvements in the labor market, consumption and investments
In the United States are very positive data coming from surveys of Ft driven by an expansion of consumption and investment. Very important factor is the structural decline in crude oil prices that has contributed to a growth in domestic demand in the early part of the 40 quarter. More particularly from the side of consumption, although retail sales have shown no marked by significant increase in the last survey, the changes remain positive and are presumably provide further improvements in 2015. We expect sustained growth and above 3% in 2015.
Most encouraging signs coming from the labor market where there is a significant increase in new jobs, with the unemployment rate remains the lowest level since 2008. Also very positive data on wages that last survey showed the best growth year to date. It is therefore clear that employment growth is also reflecting on wage dynamics. In terms of monetary policy, if on the one hand particularly low inflation would leave more room for the Fed to keep interest rates at levels implemented, economic growth significantly above expectations could lead to anticipate the rise in interest rates. A framework, the US notes with decidedly positive, implying a solid structural recovery in 2015.
Area euro: low inflation and weak recovery
A framework of recovery decidedly modest one described by the final estimates of the GDP of 3th quarter that showed a contraction of GDP in different countries. Italy still fails to get out of the recession, while France is going through a phase of stagnation and even the German economy is back to slow. Trend that looks set to continue at least in the first part of the year according to the signals produced by the confidence surveys.
PMI indices for companies in the euro area recorded a further decline in December, hitting the lowest level for 16 months and weakening prospects for a recovery in 2015. The creation of new jobs was found to be close to stagnation, but also indicators of new investments were particularly weak.
The decrease of the structural crude should have a positive effect on economic activity of the Eurozone countries, data lower costs on the energy bill. The index of consumer prices Europe has indeed slowed from 0.4% to 0.3% in December, reaching the lowest level since five years. Will be crucial for the ECB to carefully evaluate the possible deflationary pressures. Inflation expectations are very low and would not surprise a value even negative for price growth in the first half of the year. The economic situation remains very weak, and the prospects of a recovery are still hampered economic policies that will be taken by the various countries and the support that the ECB should provide you with the tools of monetary policy.
SUMMARY OPERATING SUGGESTIONS
2015 already the first weeks seems to be characterized by the theme of divergence. Divergence in terms of growth rates between you different geographical areas in terms of attitude of monetary policy by the major central banks (the latter in particular is bound to affect you the dynamics of financial markets), the United States and euro area are the emblem of this difference: while the US economy has solid macroeconomic fundamentals supported further by the gradual improvement of the labor market, the economy of the euro zone is currently the weakest in the developed countries in a context of low growth, low inflation and unemployment structurally high in parallel, in terms of monetary policy the Federal Reserve should begin the process of normalization of interest rates as early as the first half of the year, while the European Central Bank could further widen the scope of instruments used within the expansive monetary policies unconventional.
The European bond market, both core and peripheral, in December was supported by the deterioration of the macroeconomic environment and the growing expectations of further extraordinary measures by the ECB. The inflation rate in the euro area and the drop in oil prices are creating pressure on the ECB’s monetary policy. Dragons at the meeting in December, said that the decision on the introduction of further monetary stimulus will not require a unanimous vote. Political developments in Greece could increase market volatility and penalize securities of peripheral countries in the euro area.
The performance of the equity markets continues to be affected by growing risk aversion among investors due to continued signs of slowdown in the recovery of several world economies and the uncertainties related to both the situation of Greece, that the continuous price drop crude that undermines the financial stability of the major exporting countries. In the medium term the main equity markets should benefit from possible further monetary policy measures undertaken by the Central Banks. However, the global economic outlook remains weak and because of the increase in volatility tied to geopolitical unrest that are affecting different areas of the world, we bring our vision to neutral with respect to this asset class in the short-term perspective and suggest a cautious approach in ‘equity investment in the first half of the year using instruments with non-directional strategies.
STOCK MARKET
Bags still highly volatile
After recording new highs for the year, volatility protagonist returns on European indices, especially for the “peripheral” as Italy. The indices were affected by the critical situation in Russia, which has seen a collapse of the ruble, and the resulting recession fears also due to the decline in oil prices. Moreover, the sharp decline in commodities again re fears of deflation and a new downturn. In addition, the instability of the Greek situation could reopen fears of a domino effect on spreads of peripheral, although the situation is much more manageable than in previous years. These critical create instability on the lists but may be supported by probable quantitative monetary policy by the ECB. The US is to store lists i1 third consecutive year of double-digit gains, and one of the important factors is represented by an intense policy of share buyback and dividend distribution adopted by the US companies. The US market can still count on a solid economic growth and on expectations of further improvements in corporate balance sheets. An important support seems to come from the front yet of monetary policy; at the last meeting in December, the Fed has declared “patient” about the rise in interest rates, excluding the first intervention can take place before the next spring. This situation confirms what was already expected by the market, eliminating the risk of a more aggressive stance by the Fed itself. The home directories are confirmed more volatile in absolute Eurozone affected by the weak economy and the sharp fluctuations in banking. For Piazza Affari the key factors of 2015 are further reforms to stimulate growth and a concrete implementation of the spending review. Recession, deflation and high debt confirmed significant risks. Any policy quantitative monetary push would have a very significant impact.
STOCK MARKET OPERATING SUGGESTIONS
In the medium period prospects of gradual improvement in global growth and the level of returns on asset classes principalities bonds continue to support the stock investment. In terms of geographical Europe, despite the critical issues at the macro level, still continues to present good valuations and should benefit both from the weakness of the euro is the expansive monetary policy of the ECB. European companies internationally active start to show the first signs of stabilization of the company results, helped by an increase in overall expenditure on consumption, induced by the decrease in the price of oil. In the choice of investment themes we confirm our preference for European companies with geographical exposure to the US market, which will benefit from the recovery cycle and the weakening of the euro against the dollar, and the companies with higher remuneration to of shareholders by way of dividends or share buybacks. In the short term, however, the level of volatility could also increase considerably in the light of both geopolitical events is of market sensitivity to news of micro and macro-economic nature. For this reason, the equity segment is necessary diversify exposure through the introduction and maintenance of long/short strategies and market neutral.
BOND MARKET
Government securities: quantitative intervention of the ECB in January.
At the meeting in early December were expected actions or at least precise instructions from the ECB President Draghi on the launch of the new purchase program aimed at expanding the balance sheet of but it did not happen. Consequently, after the series of purchases in November brought the Italian ten-year lows, there has been an increase in volatility, in part due to new political factors that have fueled tensions as the downgrade of Italian debt and the elections in Greece.
The announcement in January of the stimulus program has further compressed the core rate (such as German), at least in the short term, as well as helping to further reduce the spreads.
Corporate bonds: ECB and oil the key factors beginning in 2015
In recent weeks the portfolio choices were primarily guided by the orientation of monetary policies and the dynamics of oil prices. Even in the corporate sector accentuation of rhetoric accommodative ECB and openings on the opening of the stimulus program have provided a big boost to the bullish market.
The investment grade (bonds lower risk) closes 2014 with a performance high. The outlook in 2015 will depend on the real economy and European developments on the front of unconventional instruments of the ECB. The main risk factors are an evolution of the European cycle recessive, renewed concerns about the solvency of sovereign issuers as well as an unexpected increase in default rates that could lead to a resumption of risk aversion. At the start of the QE (quantitative monetary policy), the securities of most credit quality could be a short-best performance. The high yield, high sensitive dynamic equity markets, are exposed to greater volatility in terms of sectors, weak growth in the euro area and the dynamics of oil prices are two key factors to be considered in the allocation sectoral portfolios.
BOND MARKET OPERATING SUGGESTIONS
In the euro area the prices of government bonds continue to be supported by both the expansionary monetary policy of the ECB is the weakness of the economic scenario. In recent weeks the increase in volatility, due to the uncertainty of the political situation in Greece, caused a flight to quality towards the core sector. The sharp drop in oil prices up to a minimum of more than five years and the consequent drop in inflation expectations expressed by the rate of break-even implicit in the securities indexed favored the fall in yields on maturities mostly medium and long curves up to new lows. In the United States continues the debate on the exit strategy of the Fed, accentuated by positive statistical data disseminated in the country. Over the past months the divergence between the US economic recovery and weak growth in other core countries helped make less urgent the beginning of the cycle of restrictive monetary policy of the Central Bank.
Corporate bond sector: the European corporate market recorded in 2014 performed well and continues to show less volatility than the stock market. The scenario of economic weakness that lies ahead for 2015 and monetary policy oriented so accommodating are beneficial for corporate securities. From a valuation perspective, however, the yield on corporate bonds is very compressed and, therefore, investors should be aware that 2015 will reasonably replicate the returns that the fund has secured last year. The high valuations achieved mainly by securities rated best merit a profit taking especially on short and medium maturities.
Flexible strategies: the expected divergence in terms of monetary policy by the major central banks and the likely increase in volatility due to geopolitical events also promote the use of flexible strategies within the section of the bond portfolios. The flexibility of this type of investment is to be understood in terms of capital allocation between the different segments of the fixed income and in terms of management of interest rate risk.
CURRENCIES
USD: the dollar maintains its strength thanks to the choices of the Fed, albeit cautious, confirms its change of pace in a restrictive monetary policy. Confirms therefore in 2015 a scenario characterized by the improvement in the US economy, followed by an upward adjustment of interest rates, as anticipated by the Fed and, therefore, a further strengthening of the dollar.
EUR: end of 2014 with the single currency weak, in a context where currency fluctuations have made it particularly volatile emerging market. After the ECB meeting in January, confirms a scenario in which the single currency will depreciate further after the announcement of the purchase of government bonds in the eurozone, with the ECB.
GBP: do not change the considerations made at the end of 2014, foreign exchange operators strengthen their idea of a possible modification of the current expansionary policy of the Bank of England at the turn of the two semesters of 2015, thus consolidating the prospect of a pound yet decided consolidation in the first half of the year.
JPY: The Bank of Japan has confirmed an ultra-loose monetary policy in December and has improved the growth forecast for 2015. The yen will continue its path of devaluation in the first part of 2015 and, from the point of view of economic policy the reappointment of Abe after the victory in the runoff election early December is a guarantee of the continuation of the so-called “Abenornics”.
RAW MATERIALS
Energy: we believe that the levels already achieved by the oil can be consolidated, favoring a weak first half of 2015. The geopolitical turmoil still in place do not seem to be an obstacle to the drop in prices, confirming the negative influence of the OPEC decision. With this scenario of absolute drop in prices, the outlook remains neutral in the short but pessimism could be much broader.
Precious metals: the basic framework remains critical on the precious, because of the lack of a reaction from gold and silver to market tensions, generated by risk aversion and the decline of oil. We continue to have a strong lack of interest of investors to the safe-haven par excellence: a negative outlook.
Industrial metals: metals do not recover the final of 2014, with that sentiment will remain negative for the first part of 2015. The framework Chinese still critical influence negatively the fund. The strength of the dollar and the weakness of the major emerging economies also rowing against. Given this scenario, our outlook remains neutral but with strong bearish risks.
Agricultural products: agricultural make the sign still a marginal recovery in the final year. We remain of the view that the prices of grain, dropped a lot in the past few months, they can continue their trend of recovery; however, does not change the climate of expectation and caution on sector for the first half of 2015. We reaffirm our outlook neutral in the short.