Central Bank Frenzy
Central banks have been very active over the past days and will continue to be so until the end of the week.
- SNB: Rates were cut by 50bp (0.50%) in a partially surprise move in an attempt to help stem gains in CHF and emphasizing the central bank’s commitment to tackle deflation risks amid growing uncertainty. The market is pricing next move of 25bp in March.
- ECB: No surprises here. ECB cut rates by 25bp (3.00%) with more action expected over the coming months. President Lagarde insisted on the continued progress in defeating inflation, that there is no pre-determined path and data dependency remains key.
Over the next days we will have the Federal Reserve (tonight), the Bank of England and Bank of Japan (both tomorrow).
US: And the winner takes it all
Investors have pumped almost $140bn into US equity funds since last month’s election as traders bet Donald Trump’s administration will unleash sweeping tax cuts and reforms.
- Record fund inflows: The rush of buying made November the busiest month for inflows on records stretching to 2000
- Record high US indexes: The flood of new money has helped to drive the major US stock indices to a series of record highs
- Record high Market Cap: Total U.S. stock market cap hits $60 trillion, almost double that of complete Asian and European stock markets combined
- Top of the top: Magnificent 7 stocks are up 60% year-to-date and set to finish positive for its 8th year out of the last 9
Germany: Game over?
Germany’s struggles require urgent change. A potential new chancellor faces a giant task: Pushing for reforms in Germany while playing a decisive role in uniting Europe.
- Growth lacks: Germany is stuck in its second year of recession
- Export champion 1: The China illusion is over
- Export champion 2: US exports critical in 2025 as Trump 2.0 poses an incremental threat to Germany’s export-driven model
- Rising costs: The Ukraine war is entering its third winter
- Europe on board: The economical impact on whole Europe and Switzerland could be significant
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