Monday 24 February 2014

London 

An interview for Times TV India in the morning. It’s recorded at the Stock Exchange building at Paternoster Square, next to St Paul’s, but the interviewer is in the Reuters offices at Canary Wharf and it will be shown in India. ‘The world is flat’ to quote the title of Thomas Friedman’s 2005 book. On Paternoster Square, there is a statue of a shepherd herding his sheep. It makes me think of markets being herded by central bank communications. 

Recent news on India has been mixed, but with a positive bias. Growth remains weak (which in India means a rate of about 4.8%), the budget deficit for fiscal 2014 is expected to fall to 4.6% from 4.8%, admittedly via ad-hoc measures, and core inflation has stabilised at 8%. On the other hand, the current account deficit has narrowed a lot and should reach 2.5% of GDP this year and the outlook for the Indian rupee is now stable. Equities, which are inexpensive, are expected to remain range-bound until the general elections in the middle of April. 

Tuesday 25 February 2014 

London 

From 7AM till 9AM, I’m a guest host on Squawkbox CNBC. I like the programme a lot because of the numerous interviews and the clear picture it gives on what’s happening in markets. A political analyst comments on the most recent developments in Ukraine. Uncertainty remains very high on when, how and where Ukraine will get funding, as well as on what terms. How will Russia react? What will happen to gas prices? Based on how ‘hot’ some tech companies have become, Geoff Cutmore, CNBC anchor, draws parallels with the end of the 1990s. We all know how that ended. Another striking development: the weakening of the RMB. It seems China wants to create volatility to dispel the impression that the RMB is a one-way bet.

Wednesday 26 February 2014 

London / Brussels 

As usual, while I get dressed in my hotel room, I watch CNBC. The weakening of the Chinese currency is being discussed again. While the move is significant in terms of signals, the depreciation is small. One can presume that the PBOC’s objective is to kill the impression of a one-way bet, rather than to boost exports.

An interesting meeting in the morning with the global chief economist of a large investment bank. I’m relieved to hear his view that the recent turmoil in emerging markets is not a repetition of the 1997-1998 crisis. The key issue is China and how it can succeed in re-balancing the economy with a bigger role for household spending and social housing investment and a smaller one for the build-up of private sector debt. We have a good discussion on the ECB. It has to act and it will, but the question remains when and to what extent. 

Back to Brussels in the afternoon. With the CIO of our team in Turkey I discuss the recent developments in the country. 

Thursday 27 February 2014 

Brussels 

I hold a big institutional client presentation in Leuven, near Brussels, on the investment environment. In a nutshell: 2014 will be more difficult than 2013, but easier than 2015, so now is the time to seize opportunities. Near the end of the year, the focus will be on the timing and speed of Fed policy tightening. Historically, the initial phase of a tightening cycle has not kept the equity market from rising. In a post-QE environment, old rules may no longer apply. To be continued. 

Friday 28 February 2014 

Brussels 

I do a web-based video chat for L' Echo, a Belgian financial newspaper. The list of topics and questions is long: eurozone deflation worries (no deflation, but disinflation may continue so eventually the ECB will have to act), why is gold up since mid-December? (Chinese investors sensed an opportunity after the large decline; investors may anticipate that the next battle for the Fed will be to fight inflation), when will emerging markets make a comeback? (we need to look to China for a signal), etc. 

Saturday 1 March 2014 

In the afternoon, while my wife is in a shop, I wait for her in the car and check the news on Twitter. I learn about the developments in Ukraine. It changes the atmosphere for the rest of the weekend. 

Sunday 2 March 2014 

Late in the evening, I check the news websites to see how Asian markets are opening. The reaction to the news from Ukraine is all in all subdued. Let’s see what tomorrow brings in Europe. 

 

William De Vijlder

Vice – Chairman of BNP Paribas Investment Partners