Head of Macroeconomic Research
Summary: Our 'Macro Chartmania' series collects Macrobond data and focuses on a single chart chosen for its relevance.
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At the start of the crisis, some analysts pointed out once again the risk that Italy, hit hard by the health crisis and the recession that immediately followed, might face the risk of existing the euro area. A few months later, this risk has never seemed more unlikely. According to the latest Sentix survey of 1000 investors released last month, the probability that Italy leaves the Eurozone within one year is basically close to zero. Only 1.7% of institutional investors expect this doomsday scenario to happen – the lowest level since March 2018. Historically, institutional investors have always been more optimistic about Italy’s future within the Eurozone than private investors. It has proved right once again since 5.8% of private investors believe Italexit is a credible scenario. It reached an annual peak at 15.4% in the midst of the crisis and since then it has considerably receded to get almost back to pre-covid level. The massive and fast ECB measures coupled with the coordinated EU response via the Next Generation deal have shifted perception in the space of a few months regarding the risk of EU dismantlement. Not only does Europe appear to be in good position for a major economic rebound next year, but above all the EU seems to be finally built on a solid foundation of political will. Doomsday preppers that repeat the old mantra that Italy will exit the euro area at each crisis forget that Italexit is all about cost-benefit trade-off. There are evidences that the introduction of the euro generated negative spillovers in the Italian industrial sector but, at the same time, the monetary union strengthened the country’s financial resilience in a world of uncertainty and more frequent crisis. Not to forget the cost of belonging to the Eurozone is undeniably lower than the cost of exit. Said differently, private investors should not pay so much attention to doomsday preppers regarding the future of Italy. All indicate that the country will remain a key member of the monetary union in the coming years.
AI: The good, the bad, and the bubble
While a deep recession may not be iminent thanks to central bank policy, interest rates will have to stay high for longer, and this will be accompanied by volatility risk from the unwinding of bubbles, especially within AI.
Steen Jakobsen,
Chief Investment Officer
The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
Peter Garnry,
Head of Equity Strategy
As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Redmond Wong,
Market Strategist
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
Charu Chanana,
Market Strategist
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
Mads Eberhardt,
Cryptocurrency Analyst
Stocks related to artificial intelligence (AI) have appeared on investors' radars. Expectations are high, but it may be necessary to consider how to get exposure to AI in a diversified way.
Hans Oudshoorn,
Trainer Academy
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
John J. Hardy,
Head of FX Strategy
While commodities, broadly speaking, have faced some tough months, a partial reversal during June could signal that the asset class is getting back on its feet with energy holding up and precious metals with upside potential.
Ole S. Hansen,
Head of Commodity Strategy
As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Althea Spinozzi,
Senior Fixed Income Strategist
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