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Raphaël Gallardo

Investment & Client Solutions Strategist

American vertigo

26.12.2017 - Raphaël Gallardo

Read market analysis by Raphaël Gallardo, Multi-asset strategist at Investment and Client Solutions investment division

• Global growth acceleration should continue into 2018 thanks to the passing of the US fiscal reform.

• The main risk to this bullish scenario is a spike in US long term bond yields due to the rebound in inflation,
a more hawkish Fed and a ballooning fiscal deficit.

• Tensions on US rates could be compounded by the formulation of their QE exit strategies by the ECB and BoJ around mid-year.

• The subsequent rebound in the dollar (Fed hikes, higher LT rates) would be amplified by a potential global shortage of Eurodollars (Fed’s quantitative tightening, HQLA demand, offshore fund repatriation by US corporates, rising T-bill issuance).

• Higher rates and dollar exchange rate would reveal the overvaluation of US assets (equity, real estate, HY credit) and would question the dynamic of wealth effect at the core of household consumption growth.

• The recession in the Chinese construction sector is underway. The dollar spike and falling Chinese demand will weigh on commodity prices and commodity-exporting emerging markets, even more so if they are  importers of foreign capital (Latin America, South Africa).

• Euro area growth appears the most resilient in this environment, notably because the euro would depreciate in case of a risk-off episode, unlike the yen.

• But European and Japanese banks are the most exposed to the potential shortage of Eurodollars and bursting of housing bubbles in case of a shock on G10 long term interest rates (Canada, Australia, New Zealand, Sweden, Norway, UK).

• Still favor equities (euro area, Japan, Switzerland, emerging Asia) and credit (euro area only) versus sovereign bonds, cyclical commodities (metals) and cash. Preference for USD versus EUR, CHF, AUD.


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Raphael Gallardo graduated from the Ecole Nationale Supérieure des Mines de Paris, civil engineering course.

Raphael Gallardo began his career as a financial Engineer at Paribas in 1997, before joining the Economic Research division of BNP Paribas in 1999 and the Asset Management in 2005. In 2007, he became a Chief Economist at Axa IM.

He joined Natixis Asset Management in 2013 as an Investment & Client Solutions Strategist.