Prospettive
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The previous quarter brought us the positive message of “cheaper, baby, cheaper!” in the context of COP 30, with renewable energies, particularly solar energy, becoming increasingly competitive with fossil fuels over the past 10 years, even without public subsidies. This dynamic is a key driver for the ongoing energy and environmental transition, with China providing a particularly illuminating example. It will be important to carefully read the environment/climate section of China's next five-year plan, which will be announced in March.

By making the imposition of new tariffs conditional on Europe's acceptance of its plan to acquire Greenland, Donald Trump is taking a further step in the use of trade as an instrument of geopolitical constraint. The announcement of 10% taxes, which are set to rise to 25% from the summer, directly targets several European economic pillars, from France to Germany, the United Kingdom and the Nordic countries. 

•    Between public pressure on Jerome Powell and threats of intervention in Iran, Donald Trump is fuelling uncertainty; however, the Fed considers its monetary policy appropriate, and no rate cut is expected at the next meeting.
•    In Japan, the Prime Minister is considering dissolving parliament and calling early elections to strengthen her majority and ease the implementation of her stimulus agenda.
•    In Europe, long-term yields have fully played their role as a safe haven, falling over the week, while gold has continued to rise.

•    The year began with Donald Trump’s shift to an interventionist and international policy.
•    Within the zone, activity data has remained positive and credit has continued to recover.
•    In this environment, we have maintained our approach with a modest positive allocation to fixed income, a neutral position on equities and a negative view on the dollar. Our constructive view on credit and emerging fixed income markets is unchanged.

•    In the United States, the latest figures confirm a slowdown in jobs creation and inflation, reinforcing expectations of further rate cuts. However, equity markets remain under pressure due to lingering doubts about AI.

•    In Europe, markets were briefly lifted by news on the Ukraine conflict.

•    In Asia, Japan stood out in a positive way. The Tankan corporate confidence survey hit its highest level in 4 years despite trade tensions with the US.

•    The Fed cut rates by 25 basis points for the third consecutive time, triggering a rise in equity markets.
•    In Europe, the probability of an agreement with Russia increased after Volodymyr Zelensky said a referendum on ceding control of some Ukrainian territory could be held, which eurozone equities higher.
•    In China, exports rebounded in November while imports remained flat, a sign that Chinese domestic demand is still soft.

•    The latest US statistics still indicate a resilient economy despite a slowing labour market, but the lack of visibility on the impact of the shutdown is likely to prompt Jerome Powell to maintain a cautious stance.
•    There are increasing signs that the Bank of Japan is preparing to raise rates when it meets on December 19. 
•    In Europe, budgetary uncertainties in France and tensions within the German coalition are fuelling political risk, yet European indices gained further ground on hopes for a peace deal in Ukraine.

•    US economic data was mixed this week, marked in particular by a slowdown in September retail sales.
•    In the UK, the government unveiled significant tax increases which will raise its budget leeway from £9.9 to 21.7bn by 2029. 
•    With markets now factoring in rate cuts at future FOMC dates, we remain cautious on the dollar. We are also sticking with a slightly positive bias on fixed income with a preference for emerging country debt and investment grade credit.

Over the past two years, the European Union has signaled a clear strategic shift, launching a series of initiatives aimed at restoring the continent’s leadership in a sustainable way.

Europe is entering a new phase of massive investment, driven by historic decisions to rearm and modernize infrastructure, announced in particular by Germany and the European Commission. This decisive turning point is part of a broader drive towards reindustrialization, technological innovation, and economic sovereignty. 
At a time when investors are revising their global outlook and seeking to diversify their portfolios, the appeal of European assets continues to grow, supported by both structural themes and attractive valuations of eurozone companies, particularly compared to their counterparts across the Atlantic. 

•    Nvidia’s excellent results failed to stem profit taking on the Nasdaq and assuage some concerns around AI.
•    Doubts over a Fed rate cut in December only amplified market worries.
•    Volodymyr Zelensky rekindled ceasefire hopes by declaring that he was prepared to work with the peace plan put forward by the US and Russia.

•    The end of the US shutdown failed to instil fresh optimism on financial markets.
•    However, European equities are so far proving more resilient.
•    We remain neutral on duration and cautious on equities, in particular in the US.