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UBP dans la presse 24.05.2022

“I am not holding my breath for a soft landing”

“I am not holding my breath for a soft landing”

Finews (19.05.2022) - Financial markets are not about to return to the normality of past years, says Norman Villamin, CIO Wealth Management, to finews.ch.


The interest rate trend reversal, rising inflation due to high energy and food prices, and, not least, the war in Ukraine have triggered a new phase on money and financial markets. “Inflation expectations for the US and Europe are still too optimistic,” warns Norman Villamin, CIO Wealth Management and Head of Asset Allocation at Union Bancaire Privée (UBP) in an interview with finews.ch.

“Price increases will be sharper and, above all, longer-lasting than expected.”

ECB under pressure

According to Norman Villamin, at the moment in the EU it’s mainly energy and food that are being affected by inflation, but it will spread to rents and other areas. “I expect knock-on effects such as rising wages, a trend which is currently faster in the US, but Europe will catch up soon.”

That puts pressure on central banks. After two rate hikes by the US Federal Reserve, it is now widely assumed that the European Central Bank (ECB) will raise key rates sooner than planned. “I’m pricing in a first rate hike by the ECB as early as July,” Villamin says.

False hope

That is apparently causing consternation among UBP's wealthy clientele as well. “Clients keep wondering when things will get back to normal,” reports the investment expert. But every time they ask him, he has to dampen such hopes:

“The normality of the past ten years will not return. We will see higher volatility and uncertainty in the financial markets.”

As a result, he says, the trade-off between inflation, growth and interest rates has stopped working. Central banks have little to no room for manoeuvre, Villamin points out. “I am not very optimistic that central banks will achieve a soft landing with interest rate hikes. The past has shown that it hardly ever works.”

Tougher tasks for managers

“Historically, we've had recessions about every ten years over the past thirty years,” the UBP investment chief further cautions. These recessions were very deep due to severe shocks such as the financial crisis and the Covid pandemic. In the future, there could be more frequent downturns, but they would not be quite so severe, Villamin expects.

That poses new challenges for companies and their managers, the CIO emphasises. “It's going to come down to strong management being able to find growth opportunities even in volatile times.” In recent years, he says, that has tended to be an easy task. Accordingly, company valuations are also likely to become much more differentiated in the future.


Norman Villamin Norman Villamin
CIO Wealth Management
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