At its most recent meeting, the ECB talked of cutting rates and re-launching the quantitative asset purchase programme, and this has pushed bond yields into negative territory.

At its most recent meeting, the ECB talked of cutting rates and re-launching the quantitative asset purchase programme, and this has pushed bond yields into negative territory. The tiering system, which is a way of softening the impact of negative interest rates on banks’ surplus deposits, will relieve pressure on the income statements of the major European banks.  With the results publication season in full swing, the markets did not appear to be surprised by these measures, focussing as they undoubtedly were on the announcement of results and potential financial transactions (Osram, Grandvision, Cobham, Coface, etc.). Reactions to profit warnings varied somewhat.

In the automotive sector, investor forecasts were bleak, although the challenges faced by all cyclical sectors should not be overlooked. Consequently, the publications were rather welcomed (Faurecia, Plastic Omnium, etc.). The pattern of the markets is not changing much in the second half-year.

Although weakened, global growth is holding out. The manufacturing sector is paying the price of the trade war. Businesses are still able to create value or offer generous dividends. Equities remain one of the few real assets to which investors can still more or less add value, despite a monetary policy that has become too accommodating. In fact, Super Mario will have, right to the very end, pursued one single policy: saving the euro (and that is no small feat), and also enabling poorer States to obtain funding at very low cost (and that is financial pigheadedness). His actions will not make it possible to really revitalise the economy, much less promote a resurgence of wage inflation. He will be handing over to Christine Lagarde a monetary area that has been saved, for sure, but one that is close to Japanisation: with an ageing population, weak growth and real long-term rates that are persistently negative. He has never been anything but confident that his policy is correct. It was a great strength at the time of the eurozone crisis in 2011, but it has now become a weakness because, as the great German philosopher Nietzsche wrote, “It is not doubt that drives you mad, but certainty…”.

Igor de Maack, Fund manager and spokesperson at DNCA. This article was finalised in July 26th, 2019.

This promotional document is a simplified presentation and does not constitute a subscription offer or an investment recommendation. No part of this document may be reproduced, published or distributed without prior approval from the investment management company.

DNCA Investments is a trademark held by DNCA Finance

DNCA Finance

DNCA Finance

DNCA Finance is an asset management company founded in 2000 by three wealth management specialists on behalf of private and institutional clients.

Over the years, founders have built a skilled and experienced management team to develop a range of simple, understandable and performing funds around 5 areas of expertise : European equities (“long only” and “absolute return”), Diversified management, Convertibles bonds, Eurozone bonds and ISR.

We offer a comprehensive range of products composed of 31 mutual funds French and Luxembourg domiciled (FCP and SICAV) organized in four areas of expertise: Fixed Income, Absolute Return, Diversified, Equities.

View all posts


Funds of the day

L’agenda de l’AM

février

04fevToute la journéeLes Rencontres Climat et Finance Durable - 4ème éditionLes Salons de l'Hôtel des Arts & Métiers L'organisateur: Option Finance

04fev18 h 30 min21 h 00 minConférence CGP : "Comment faire de son cerveau un allié ?"Accompagner & Faire prendre de bonnes décisions d'investissement à nos clientsIMSI L'organisateur: Pascal PINEAU / Métisse Finance

06fevToute la journéeFinance Summit 2020WHAT WILL IT TAKE TO MAKE EUROPE’S FINANCIAL SECTOR MORE RESILIENT AND SUSTAINABLE?Cercle de l'Union Interalliée L'organisateur: AGEFI

mars

03marToute la journée4ème édition des Rencontres Private EquityMaison des Arts & Métiers L'organisateur: Option Finance

05mar8 h 00 min10 h 00 minRendez-vous de l'économie politique : Quels choix énergétiques face au changement climatiqueSofitel Arc de Triomphe L'organisateur: La Financière de la Cité

05mar9 h 00 min10 h 30 minSave the date : petit-déjeuner thématique organisé par Euronext Funds360 et LidixLa Place Fintech L'organisateur: Euronext Funds360

avril

Pas d'évènement

X