Our last circle of strategists are focused

A rebound as violent, over a short period, never the awards in the world did in recorded! After the threat of bankruptcy widespread late last year, which would have seriously predicted the rally since March But uncertainties can still recover the financial drama. Thus the banks: they say the truth on what happens to them Similarly, real estate: it is through him that the world came into crisis. At the time that it is, it seems not easy to decrypt. Not to mention the dollar bubble bond of the social crisis threats... One certainty: the world that emerges will be complex. Hence the importance of multiplying the eyes crossed expert. Our last circle of strategists are focused. Co-hosted by Jean-Michel Starck, General Manager of HSBC Private Wealth Managers, it consisted of Guillaume Rabault, Deputy Director General of Halbis Capital Management France, Pascale Auclair, Associate Executive Director at the French investment investments management, Nicolas Sobczak, Chief Financial Officer of the pension reserve fund, and Christian de Boissieu, Member of the Council of economic analysis.

First of all, you inspire the half wonder that us just to live

GUILLAUME RABAULT. It had to be that the indicators of industrial production slump stops at any given time! At the beginning of the year, forecasters had to change their graphics scales to integrate the new catastrophic data. The situation was not sustainable. The industry cannot lose 5 quarterly without there, at one time or another, a form of rebound.

Since a few weeks, a stabilization is underway. To illustrate my point, I would use the metaphor of the elevator. The elevator was in free fall, down less quickly now and should stabilize soon, which is already a good news for the occupants. The disaster is averted. The most advanced indicators show that production will probably become positive over the next months, simply because warehouses are empty and there is always a request stream, even low. Must be put on production.

This is what we have begun to see from the end of March. Since the credit market is better, the spreads are tight, indices shares have rebounded strongly. There is also a return to the riskier currencies, including the emerging currency and raw materials to soar. Finally, there is a surge in long-term interest rates. All these movements reflect the effect of stabilization of the elevator on investors.

So, what is it we reserve for the next few months

GUILLAUME RABAULT. It seems to me that it should not be enthusiastic. Behind this technical bounce mechanism, I see no return to strong growth. For cause, there is the need to repair balance sheets in the sector of households, but also the tightening of financing conditions. For many reasons, the recovery of the application should not be violent. At one point, investors will consider whether the extent of the rebound of risky assets is well proportionate to the resumption.

NICOLAS SOBCZAK. We all agree on the fact that there was a rebound in activity in the second half under the effect of the restocking and fiscal stimulation. Is a fundamental topic of the health of the banking system. Finally, the "stress tests" do not proved so stressful, instead. This gave a bit of comfort in the United States. I believe, however, that questions remain, including the balance of European banks and the pressure that will exercise the market to go question their balance.

Toxic assets have the air of having been well quota, although it must remain a bit somewhere. But there is also the second wave of the banking crisis, one related to loan portfolio. The macroeconomic slowdown will weigh lastingly on this part of the assets of the banks. It should degrade their profitability and force them to important provisions. The issue is whether banks have enough margin and ability to generate profits to offset future losses related to the defects that will happen. And this in a context where the regulators want to strengthen safeguards.

At one time or another, the market will have to wonder about the health of some institutions. I intended no country in particular, but well there the problem of coordination of regulatory authorities. Non-cooperative behaviour to put in place, each of the national authorities ensure that everything is in it and that the problem is elsewhere. It might be that Europe is similar to what was done in the United States operations.

And for the next month, how do you evolve events

NICOLAS SOBCZAK. For the time being, it would be a bet to believe that these problems are behind us. Although risky asset markets bounce, uncertainty remains high and, as always, must be paid for the risk we take. With a near 30 implied stock market volatility index, developments will be quite difficult and bumped. Another wave of decline would be dangerous.

PASCALE AUCLAIR. We all left behind us what might be termed a "worst scenario", depressive and deflationary, that animated discussions in January and February. But the violence of the shock of the fall of economic and financial 2008 was in it the seeds of the rebound we see currently.

The question today is whether or not, the standardization of risk premiums observed since this rosy Outlook for the equity, credit, raw materials and currency is excessive from the economic perspective which draws in the medium term. Gold remains a major unknown: what will lead this rebound phase, we believe in one or two quarters.

And beyond

PASCALE AUCLAIR. Beyond, the question whether what growth profile is waiting for us. On this point, I share the concerns expressed by Nicolas and Guillaume, that future growth will likely be below potential levels observed in the previous decades because it will be reduced by the weight of the debt, by the violent adjustment of investment and the historical deterioration of employment, with its impact on consumption.

We certainly leave recession end of 2009 to address a phase of recovery where growth will remain below potential, the return to sustained and sustainable growth is largely deferred. In this context, we question on just calibration of the risky asset classes risk premiums. The actions, to integrate a historic fall of the results of the business. In Europe, there are more than 40 of adjustments of profits on 2008 and 2009, which seems to already substantial. On the private obligations, it seems to us that the market has sinned by excess pessimism earlier this year, anticipating an explosion of default rates. If the fundamentals continue to deteriorate, we consider that by being extremely selective, the credit market still offers opportunities for investment in terms of current output, faced with

CHRISTIAN DE BOISSIEU. Firstly, I am one of those who consider that the banking crisis is far from over. How much is left to digest I am still skeptical in view of the recent estimates of the IMF, the accuracy of the figures has matched that the vagueness of the methodology of the calculation. I'm talking about banks in General. Intuitively, I would say that there are still 50 to digest, or perhaps even nine months, but it is difficult to say precisely what is digesting toxic assets.

Also, I believe that Governments did not always find the correct answer. The Geithner plan do me not totally clear and, above all, not well funded. It has 90 of private, funding would come from the overnight buy toxic assets.

When we look at plans for support for the banks, the announcement of Ms Merkel, it is interesting. Need to see the implementation. This concerns especially the Landesbanken (banks in the Länder). Regional local banks, which are often public banks, have accumulated many toxic assets. There is an interesting idea which consists, on the part of the German Federal State, to buy up toxic assets of these banks in the historic price, i.e. the price at which they are entered into their balance sheets, and to define the fundamental value of these assets redeemed by committees of experts. The difference must be repaid by the banks over 20 years. Of course, this scheme cannot be insolvent banks. But it is a fairly good balance between the interests of banks and taxpayers. It is a more shrewd as the Geithner plan plan.

It gives us what scenarios for the end of the year and the beginning of 2010

CHRISTIAN DE BOISSIEU. 2009 is a year of recession, it is acquired. The debate is whether what is the extent of the recession, in the more developed countries and the extent of the slowdown in emerging countries knowing that we are all in the same boat and that all the theories of decoupling have proved wrong.

The Government hypothesis 3 for the France me appears to be a good working hypothesis, and 6 for the Germany in 2009. The United States are in some way. For various reasons, they will have a recession less important than many European countries or the Japan (6 this year).

In this context, the central debate is the speed of the rise in unemployment, including youth unemployment. The social dimension of the crisis has become the central problem. 2009 And 2010 graduates will have great difficulty in finding a first real job. A fortiori, the graduates will have even more difficulties.

Another central issue is the intergenerational dimension, in the sense that the crisis reflected in the rise of the unemployment of young people, the rapid construction of public debt... On the public debt, I disagree with those who say that it be solved by a resumption of inflation on goods and services. My hypothesis is as follows. As long as globalisation is and countries resist the temptation of protectionism, competition is high, limiting the possibility of price increases. We live in a world where there was a lot of cash before the crisis and there was even more with the management of the current crisis. The debate is whether where are these liquidity. I believe that the next two years, liquidity will remain abundant, globalization will remain there, and I see no risk of wage inflation.

However, inflation reside may be elsewhere

CHRISTIAN DE BOISSIEU. I do too much to an inflationary shock scenario, in the usual sense, in the two or three years. Inflation will continue to stay in the prices of some assets, in turn: I think that we will continue to bubble to the other. For me, the current bubble is located in the bonds and obligations of the US Treasury and a few other States that are well noted in the market. The balloon is no longer on the real estate or shares. This bubble on a compartment of the bond market will inevitably burst one day.

The United States worried they

CHRISTIAN DE BOISSIEU. What concerns me much for the next two years, it is the question of the dollar. The US budget deficit will be 14 this year; on the fiscal year 2008, it was around 3. You know many countries who can afford an increase in the ratio of deficit to 10 points from one year to another I know that one, one that enjoys the privileges of the dollar and that can finance its deficits in its currency. US households have begun to save a little (5). Even if the US external deficit is reduced for a few months, my hypothesis is that he is going to regroove. If the IMF or the g-20, we address the issues of international imbalances and the dollar, the Americans would send is out of the room to avoid the debate...

Therefore, I am afraid a new fall in the dollar, quite significantly, by the end of 2010. The pound sterling will remain low. The Chinese will do everything to ensure that their currency is still clinging to the dollar.

GUILLAUME RABAULT. I believe that the economic logic supports a further depreciation of the dollar. This motto supports the largest monetary creation made in the world, while the euro, managed by people who live on the idea that the monetary creation is a bad thing, is likely to appreciate in the matter.

NICOLAS SOBCZAK. What was significant, in terms of allocation of assets in recent months, is that, in a crisis phase, having the dollar in a portfolio was not a bad thing, because it was a little protective.

CHRISTIAN DE BOISSIEU. It is probably because there were not many other values shelters. Gold has not played this role.

PASCALE AUCLAIR. If the dollar was able to retain its status of refuge in times of crisis, it is because it lacks a real monetary substitute. Then, the intervention of the Federal Government has contributed to the support of the dollar.

According to you, is the American real estate market to restabilize

GUILLAUME RABAULT. There is not hope a reboot on the estate, which, in the United States, still dominated in terms of transactions of mechanisms of banks. Real estate markets are still much of bad quarters before them, particularly in Europe.

PASCALE AUCLAIR. In Europe, on the large recent operations in commercial real estate, price declines are of the order of 30 to 35. There, found interest manifested, but it is a thrill, is not an inversion of cycles for the moment.

CHRISTIAN DE BOISSIEU. On Europe, I am cautious about real estate as asset class. Everything will depend on the economic scenario of the coming months. On the residential has not seen much down in Paris. At school, we will see if people have need of cash. A wave of decrease is very possible. I'd take a few precautions before advising investors to return to the real estate.