14TH CLIENT SURVEY

Our view is that growth will be robust in 2020, thanks to expansionary fiscal and monetary policies and to the continuous increase in participation and employment rates and, if new geopolitical risks do not appear, a very low probability of a recession. Our clients have a slightly more pessimistic view: they see growth slowing down a bit between 2019 and 2020, they don’t completely exclude a recession, and they expect higher geopolitical uncertainty. Their gloomier view about growth is consistent with the fact that our clients see the ECB ending QE very late (in 2022?), see a significant probability that the Federal Reserve cuts the Fed Funds rate more in 2020, see the 10-year T-Note rate staying below 2% and see the 10-year Bund rate staying in negative territory. However, our clients are not concerned by occurrence of a renewed financial crisis: the risk of an equity bubble is not perceived as being very large; the BTP -Bund spread is excepted to stay under 150bp, by 54% of them, which is a major improvement compared to last year; the euro is expected to be quite stable, as well as oil prices. Overall, the main difference between our clients and us is that they see a slight weakening of growth, whereas we see a slight strengthening of growth, especially in the United-Sates. The suggested asset allocation brings no surprise: investors want to diversify in real asset (private equity, infrastructures, real estate) in riskier assets (structured products, high yield and sub-debt) and in ESG investing (especially green bonds and loans).