Spring Scholarship?

The favorable economic environment continued in the first quarter of 2017. The global stock market index thus closes the period up by 4.4% in Euros.

The ECB has announced the reduction of the envelope devoted to its purchases of securities, from 80 to 60 billion monthly euros until the end of the year. This appears to be a first step towards the standardization of the exceptional monetary easing policy. However, the central bank must remain vigilant: the negative rates have kept a euro low against the Dollar and the announcement of a possible increase in rates would bring the euro back significantly, which would be damaging for European exports.

The FED, for its part, raised its principal rate for the first time in the year by a quarter of a point. The day-to-day interbank rate is now between 0.75% and 1%. It still projects two additional increases in 2017 followed by two others in 2018. This announcement did not curb the rise of U.S. equities markets, with the Dow Jones reaching historic peaks in recent months.

After a 2016 year lower than expected, the world economy appears to be improving in the first quarter. The published results of the companies were good with a continuation of the improvement of the business figures, margins and results. Results publications for the first quarter 2017 are expected to grow by more than 10%.

Attention is now being paid to the ever-awaited economic and fiscal reforms in the United States and the French presidential election.

Indeed, after Donald Trump’s failures regarding the repeal of Obamacare, the Immigration Act and the US-Mexico Wall project which is proving to be difficult to achieve, the tax reform project is becoming a key issue. This reform is made up of two main axes: the simplification and the massive reduction of taxes, which should benefit predominantly from the middle classes and the establishment of a system of “border adjustment tax”. This reform focused on the relocation of companies in the United States, risks isolating the United States and repressing global trading maps if it is completed.

In France, new concerns about the presidential elections are emerging. The possibility of a victory of a candidate of extremes worries the markets. In this context, we prefer to reduce our exposure to French actions pending the lifting of the uncertainty of the presidential election but also the equally unpredictable legislative elections.

Aymeric DIDAY
Director of management under mandate

Finished writing at 12h on 11/04/2017