This level of earnings above expectation has not been reached since 2009

02 May 2017

This week was very busy with obviously the first round result of the French presidential election, but not only.

Markets cheered results in line with polls that show little chance to see Marine Le Pen elected. Market reaction was quite dramatic at the open:

  • +4% Euro area equities
  • +7% Euro area banks
  • -20bps on OAT/Bund spread

Markets do not seem to price any risk of a Front National victory. 

Many economic data came out last week.

Eurozone inflation erased the seasonal effect coming from Easter with a 4 year high print on core inflation (1.2%) while headline reached 1.9%. This figure did offset the ECB speech on the day before which was rather dovish, with Mario Draghi insisting on inflation being low and taking a long time to reach a level “below, but close to 2%”.

US data publications were heavy with Q1 GDP report. The figure was expected on the low side, as usual for first quarters, which proved to be right with 0.7% (vs 1% expected). This figure is to be relativised due to the effect of inventories (-0.9%) and Employment cost index above expectations (+0.8%, highest since 2008). The Fed having said that one should look above transitory GDP factors, we think the combo GDP + Employment cost index is dollar and yield positive.

Last week we had as well the announcement of the tax reform from the Trump administration. If enforced as such, it would be the biggest ever and would cost 20% GDP over the next 10 years… which would of course balloon US debt. There is no chance the reform gets passed as such, which is why markets didn’t react after the announcement. After the healthcare bill debacle, markets will now wait to see bills actually voted, which could take some time.

In the meantime, earnings season continues and is robust in the Eurozone: 75% positive surprises on revenue, highest score over the last 10 years.

It is hard to put a lot of Eurozone risk back in portfolios after the elections, given markets moved dramatically in the open. The risk we added was more on the Japanese side, and especially Yen. The latter rose a lot versus USD this year, japanese equities are down YTD, and micro data is robust. In short, we think this area could outperform. We preferred to sell JPY rather than buying Nikkei, but it is actually very much the same trade.

We also sold a bit of US duration and bought some US breakevens. 

More about:

  • La Française Allocation Share Class R
  • La Française Allocation Share Class I
  • La Française Allocation Share Class S

The information and material provided do not, by any means, represent advice, offers, solicitations or recommendations for investing in specific investments. All statements reflect the opinions of their authors at their publication date and do not constitute a contractual commitment on behalf of the management company. These assessments are subject to change without notice, within the prospectus’ limitations, which is the only legally binding document. La Française Group declines liability in any form for any direct or indirect damage resulting from the use of this publication or the information that it contains. This publication may not be reproduced in full or in part, disseminated or distributed to any third party without the prior written consent of La Française Group.  
 
La Française Allocation is a French UCITS in regards to the 2009/65/CE Directive. The Fund received AMF authorization on July 15th 2003 and was launched on July 31st 2003. The strategy changed as of July 19th 2012. Management company : La Française Asset Management – Paris – approved by the “Autorité des Marchés Financiers” under N GP97076 on July 1st, 1997.

For more information regarding the French regulatory authority - Autorité des Marchés Financiers (AMF) – please visit www.amf-france.org.www.amf-france.org.

Les sites du groupe
Mis favoritos

Las marcas se guardan con ayuda de las cookies, su supresión en su navegador borrará sus preferencias.

El grupo La Française permite el acceso a los conocimientos técnicos de varias empresas de gestión de todo el mundo. Con el fin de obtener la información más adecuada, hemos desarrollado una interfaz con la totalidad de la oferta de acuerdo a su perfil y a su país de residencia.
Indique su perfil
1
País
2
Idioma
3
Perfil
País de residencia
Idioma
Tipología de perfil
<p class="new-disclaimer__legal-notice">Antes de consultar el contenido de esta página web, rogamos lea atentamente las informaciones « <a href="es/avisos-legales/" target="_blank">avisos legales</a> » y « <a href="es/informacion-reglementaria/" target="_blank">noticias legales</a> » para su protección y en su propio interés. Estas informaciones explican ciertas restricciones legales y reglamentarias aplicables a todos los inversores, particulares o profesionales, sujetos a la legislación local. He leído y acepto las modalidades de utilización de esta página web desde el mismo momento en el que me conecto, como no profesional o como profesional. En el marco de aplicación de la Directiva europea relativa a los Mercados de Instrumentos Financieros (« MIF »), rogamos indique a qué categoría de inversor pertenece:</p>
<p class="new-disclaimer__legal-notice">Antes de consultar el contenido de esta página web, rogamos lea atentamente las informaciones « <a href="es/avisos-legales/" target="_blank">avisos legales</a> » y « <a href="es/informacion-reglementaria/" target="_blank">noticias legales</a> » para su protección y en su propio interés. Estas informaciones explican ciertas restricciones legales y reglamentarias aplicables a todos los inversores, particulares o profesionales, sujetos a la legislación local. He leído y acepto las modalidades de utilización de esta página web desde el mismo momento en el que me conecto, como no profesional o como profesional. En el marco de aplicación de la Directiva europea relativa a los Mercados de Instrumentos Financieros (« MIF »), rogamos indique a qué categoría de inversor pertenece:</p>