FOMC PREVIEW - FED LEAVES MMT ISLAND THIS SUMMER - Pictet Perspectives
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FLASH NOTE
PICTET WEALTH MANAGEMENT
ASSET ALLOCATION & MACRO RESEARCH
11 June 2021
FOMC PREVIEW – FED LEAVES MMT ISLAND THIS SUMMER
WE EXPECT A QE TAPER SIGNAL IN COMING MONTHS - PERHAPS AT JACKSON HOLE
SUMMARY
Author › The next Federal Reserve meeting will conclude on 16 June. During the post-meeting
press conference, we predict that Chairman Jerome Powell will indicate that QE
THOMAS COSTERG
tcosterg@pictet.com tapering has been discussed, but it’s still too early to slow bond purchases (currently
USD120bn/month).
› He will likely point to a growing debate about the true labour-market slack, and he
could hint that a solid economic rebound could reduce it in coming months; but at
this stage Powell is likely to indicate a patient stance. Very generous federal
unemployment benefits complicate the reading of labour-market data.
› We think that the QE tapering signal will come at the Jackson Hole conference in late
August, although the risk is that it comes earlier rather than later. The main risk
hinges on wage data, which have shown upside surprise lately. If the trend persisted,
that could render the Fed suddenly much less dovish as it would go against its
central case of merely-transitory inflationary pressures.
› A reduction in bond purchases will mark a departure from the Fed’s de-facto current
MMT-style policy (MMT: Modern Monetary Theory), by which the lines between
fiscal and monetary policies have been blurred: indeed, the Fed has been indirectly
monetising a large share of the federal budget deficit.
› Tapering would also mean a Fed becoming more uneasy with the rising inflation risk
coming from such MMT-style policy, as well as with the potential financial
imbalances that such policy generates, given current extremely loose financial
conditions, which lessen market discipline and the right allocation of credit risk.
› Perhaps a sign that the debate is shifting at the Fed towards a less ‘MMT naïve’ view,
the Fed’s forecast for future interest rates (dot plot) could indicate one rate hike in
2023, versus none in the March forecast. But money markets’ pricing is already
indicating several rate hikes by late 2023, so it would be just the Fed catching up to
current market expectations.
1 OF 11FLASH NOTE PICTET WEALTH MANAGEMENT
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FOMC PREVIEW – FED LEAVES MMT ISLAND THIS SUMMER
WE EXPECT A QE TAPER SIGNAL IN COMING MONTHS - PERHAPS AT JACKSON HOLE
Leaving the MMT island
This summer, the Federal Reserve (Fed) is likely to depart from its ultra-accommodative,
Modern Monetary Theory (MMT) -style policy, which has consisted of the promise of
zero interest rates coupled with elevated buying of government debt (currently USD
120bn/month).
Indeed, the Fed will likely indicate in coming weeks that it intends to reduce its asset
purchases, even though the effective reduction of these purchases is still several months
away. The question now is when exactly the first signal will be sent. We think it will be
an August Jackson Hole story, but the risk is that it could come earlier.
To be sure, the big Jackson Hole monetary-policy conference looks like the perfect spot
for such signal-sending. First of all, the conference will be conducted in-person, and de
facto a major symbol in terms of return to sanitary normalcy (a key implicit criteria for
reducing asset purchases). It will come as New York City has also planned a grand
concert in Central Park in August to celebrate the reopening. So there should be a
widespread feeling of liberty and optimism by then.
Secondly, it could come on the heels of an acceleration in job growth over the summer
(including a crucial employment report for July, to be released early August), as many US
states are curtailing supplementary unemployment benefits, de facto pushing more
potential workers in the labour force. Another important data point that could achieve to
convince the more dovish wing of the FOMC is Q2 GDP, to be released late July and
which could show very solid momentum (likely in the vicinity of 10% q-o-q SAAR) – this
will mark a return to the pre-Covid19 GDP level; another very important macroeconomic
milestone.
To be sure, the Federal Reserve has never really espoused MMT as a guiding theory for
its monetary policy, but Chairman Jerome Powell has such pushed the limits of monetary
accommodation further than his predecessor Janet Yellen (now Treasury Secretary),
further blurring the already-vague limits between fiscal and monetary policies. In
practice the current implicit Fed strategy is much broader than the official strategy of
‘average inflation targeting’, set last summer.
In practice, the Fed’s monetary policy in recent months looked a lot like MMT, especially
as buying 120bn of assets each month is increasingly at odds with the vigour of the
growth recovery – and looked rather like partial monetisation of the very high budget
deficit (further amplified by a new 1.9 trillion stimulus package voted in March).
The Federal Reserve’s summer pivot towards a tapering signal could be mostly explained
by two factors. One is that there is and likely will be growing internal discomfort with
the rising inflation risk amid the celerity of the recovery and the various bottlenecks.
The other factor is, while not said in these terms, a growing debate regarding the
ongoing looseness of financial conditions, which are lessening the market discipline
and that could be a source of turbulence down the line if left unchecked. In other words,
both from a consumer inflation and market discipline point of the view, the risk-reward
ratio of continued QE (and MMT) has become less compelling.
Another important factor, even though we would still say it’s secondary, is the current
extreme level of bank liquidity, which is causing hardship for money market funds as
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FOMC PREVIEW – FED LEAVES MMT ISLAND THIS SUMMER
WE EXPECT A QE TAPER SIGNAL IN COMING MONTHS - PERHAPS AT JACKSON HOLE
well as commercial banks, which are drowning in deposits. The symptom is record high
usage of the Fed’s reverse repo operation, which could continue to rise in coming weeks
given (1) the Treasury’s further reducing its bank account at the Fed, leading to even
higher commercial bank reserves (2) QE continuing at the high pace of 120bn per month,
and therefore an increase of bank reserves of the same amount.
Regarding inflation, the Fed usually looks at inflation risks through the prism of the
degree of labour market tightness, in pure Keynesian tradition. The Fed tends to be most
concerned about second-round effects from wages to inflation (which transforms
temporary inflation into persistent inflation); additionally, it looks at the behaviour of
household expectations for inflation. Commodity-driven inflation, which we have
witnessed in the first few months of 2021, is never really a top concern, in isolation.
We believe that the debate about the true nature of labour market slack will heat up at
the Fed over the summer. Eventually, we predict Chair Jerome Powell will end up
nuancing its current view centred around the somewhat-simplistic and crude look at the
employment gap since February 2020 (-7.6 million as of May). Indeed, despite this big
headline gap, this hides massive bottlenecks in the labour market due to both structural
forces linked to skills mismatches (post-pandemic jobs have moved towards green
energies and IT for instance; and there is lower structural immigration) as well as
government intervention (high unemployment benefits). To be sure, there are also some
residual impact from the pandemic (eg, lingering fear of contamination in the workplace,
issues with childcare).
But the bottom line is that the true slack is much lower than the Fed probably estimates.
We see the debate about labour-market slack evolving towards two crucial metrics (1) the
difference between job openings and unemployed people, which has shrunk
dramatically, especially as job openings have surged (there were 9.3 million job openings
in April, almost matching the level of unemployment in May). (2) wage growth,
especially for low-wage workers, which is showing signs of taking off, and that is being
broad-based beyond hospitality and leisure. (3) additionally, household inflation
expectations could also take on more importance.
MMT will not be entirely abandoned when the discussion about QE tapering happens.
We think that QE tapering will be a very slow process, and the Fed will keep an eye on
the Treasury’s debt issuance and supply-demand dynamics in the debt market as it
reduces its bond purchases. The Fed will aim for as smooth a process as possible. In fact,
we think that the effective start of tapering could be several months after the signal, and
once started, it could be to the very modest tune of a 10bn cut per month (initially -5bn on
Treasuries and -5bn on mortgage-backed securities).
We also believe that Powell will insist that the first rate hike still hinges on a full
labour-market recovery, which is still in the distant future. Powell remains anxious
about the structural drags on the US economy, such as slow population growth and
modest productivity, and these structural impediments could continue to prolong his
patience on rate hikes.
Still, we predict there will be two crucial arbiters for rate hikes in the coming years:
(1) whether there is a new wage and inflation paradigm afters years of disinflation (2),
how Biden’s fiscal push evolves (and US fiscal policy in general), and how much gets
concrete.
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FOMC PREVIEW – FED LEAVES MMT ISLAND THIS SUMMER
WE EXPECT A QE TAPER SIGNAL IN COMING MONTHS - PERHAPS AT JACKSON HOLE
June meeting: Likely inconclusive answer to the slack debate
Now, turning attention to the June Fed meeting, we do not think the discussion on the
labour market will have come to a conclusion and we therefore expect the Federal
Reserve, and Chairman Powell during the press conference, to signal no specific change
of tack. He will likely signal that QE tapering was discussed, but that the discussion will
continue at coming meetings amid ongoing doubts about what’s really cyclical and
what’s structural or due to bottlenecks. There is not going to be, in our view, a specific
reaction to the high CPI inflation print for June (5.0% y-o-y), as Powell will repeat that
such bottleneck-driven inflation was to be expected as part of the reopening, and that it
remains a transitory phenomenon.
Of interest will be the Fed’s projections for interest rates (the ‘dot plot’). We predict that
the median Fed dot will move up from zero interest rates expected in 2023 (the last year
of the forecast window) to at least one rate hike. This move up should reflect the rapid
recovery in the US economy as well as the ongoing debate discussed above regarding
inflation risks. Both the 2021 growth and inflation forecasts are likely to be revised up.
CHART 1: THE FED’S JUNE DOT PLOT COULD INDICATE A RATE HIKE BY 2023, CATCHING UP WITH MARKETS
7
6
3M LIBOR USD
5
Fed's terminal rate
4 estimate (2.5%)
Eurodollar curve as
3 of 11 June 2021
2
Fed funds rate
1
Fed's dot plot (March)
0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
Source: Pictet WM-AA&MR, Bloomberg (11 June 2021).
In conclusion, Chairman Powell’s thinking could temporarily move away from the
influence of MMT this summer. He could more closely sound like his predecessor Janet
Yellen, who was more vigilant about possible inflation risks and more pre-emptive in
policy making. Yellen herself (now Treasury Secretary) recently said that she saw rate
rises from the Federal Reserve not only as likely, but also that it would be “good news”
for US society (she probably meant that higher rates meant the US would avoid a Japan-
style scenario with engrained disinflation).
In a context of high private and public debt, and even more so post pandemic, the
question is whether true monetary tightening can indeed happen in the US without
creating much deeper dysfunction in markets and the economy. In the longer run, we
believe that the Fed may not be able to wander far from the very sticky MMT world and
entrenched low interest rate, at least not without deeper reforms to markets and
institutions, and radical change in policy-making, as well as deeper debt cleaning. Our
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FOMC PREVIEW – FED LEAVES MMT ISLAND THIS SUMMER
WE EXPECT A QE TAPER SIGNAL IN COMING MONTHS - PERHAPS AT JACKSON HOLE
Fed scenario is still no rate increase before at least mid-2024, whatever the Fed’s dot plot
may indicate. Even when the Fed hikes rates, we still expect these hikes to remain modest
if not symbolical. The very conclusion is that inflation-adjusted Fed interest rates could
stay negative for several years.
CHART 2: IN 2022 THE BUDGET DEFICIT COULD NARROW SHARPLY WHILE THE FED BUYS LESS BONDS
3'500 USD bn
2'500
1'500
Fed's UST purchases (over 981
12 months)
500
F'cast
-500
Budget balance (over 12
-1'500 months) F'cast
-2'500
-3'500
-4'500 -3582
04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22
Source: Pictet WM-AA&MR, Factset (as of 11 June).
The Fed-watcher’s corner: “some time” no more
For more technicals-oriented readers, here’s what we expect more concretely at the June
meeting :
- Dot plot: Median 2023 rate forecast likely to show a rate hike (versus none in March’s
dot plot) as we expect 2 to 4 dots to shift up from no hike (9/18 dots showed no hike in
March)
- Projections for inflation: 2021’s PCE inflation rate will be revised up substantially, but
the crucial forecast will be 2022, which we expect to be a few decimals below 2%, echoing
the Fed’s view that current high inflation is temporary. We see 2021 GDP (6.5% in March)
either unchanged or slightly revised up.
- In the statement, we expect an unchanged view of the risk after an upgrade in April
(from “considerable risks” to “risks … remain”). The statement will note recent higher
inflation prints with some qualifying words that some technical factors were at play in
recent high inflation readings.
- We expect no change in the QE guidance (“substantial further progress” towards the
Fed’s goals of full employment and price stability for QE to be stopped/reduced)
- We do not expect a change in the reverse-repo rate or interest-rate on excess reserves
despite the current abundance of liquidity in money markets. The Fed did not tweak in
April. It would probably make sense to tweak the rate on the reverse-repo operation but
the Fed would (1) create communication challenges with some confusion about
tightening intentions (2) lead to renewed debates as to whether the Fed is giving a ‘free
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FOMC PREVIEW – FED LEAVES MMT ISLAND THIS SUMMER
WE EXPECT A QE TAPER SIGNAL IN COMING MONTHS - PERHAPS AT JACKSON HOLE
lunch’ to commercial banks and to money markets (as a reminder, the Fed is also one of
several important US bank supervisors) (3) a higher reverse-repo rate would lead to
even more money landing at the Fed, creating even more headaches. The path of least
resistance is to do nothing, even if it makes limited sense overall.
- During the press conference, we expect Powell’s codewords to evolve. We think
“some time” (before QE starts) will no longer be evoked, but Powell will try to nuance
this potential hawkish signal by highlighting his “patience”. We would therefore
expect a substitution of “some time” with “patience” – also a nod to the fact that the
Fed’s focus will shift from QE taper to the rate hike itself, and that the Fed intends to
segregate the two time horizons.
CHART 3: THE FEDERAL RESERVE SHOULD REPEAT THAT CURRENT HIGH INFLATION IS TEMPORARY
Inflation, % y-o-y 7
3.5
6
3.0
5
2.6
4
2.5
Trimmed mean CPI 3
2.0
2
1.5
1
Fed funds rate (RHS)
1.0 0
Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 Jan-21
Source: Pictet WM-AA&MR, Factset (as of 11 June).
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FOMC PREVIEW – FED LEAVES MMT ISLAND THIS SUMMER
WE EXPECT A QE TAPER SIGNAL IN COMING MONTHS - PERHAPS AT JACKSON HOLE
REAL GDP AND PRIVATE CONSUMPTION GROWTH, % Y-O-Y UNEMPLOYMENT RATE, %
30 11
Real GDP, % y-o-y Unemployment rate, %
25 Real personal consumption
- (monthly), % y-o-y
Recession Periods United States 24.0 10
20 9
15
8
10
7
5
6
5.8
0 0.4
5
-5
4
-10
07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 3
07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Source: Pictet WM – AA&MR, Factset Source: Pictet WM – AA&MR, Factset
AVERAGE HOURLY EARNINGS (WAGE GROWTH), % Y-O-Y CORE INFLATION (PCE AND CPI), % Y-O-Y
4.5 4
Avg. hourly earnings, production workers, % y-o-y Core PCE inflation, % y-o-y 3.8
4 Avg. hourly earnings, all workers, % y-o-y Core CPI inflation, % y-o-y
3.5
3.5
3 3.1
3
2.5
2.5
2.4
2 2.0 2
1.5 1.5
1
1
0.5
0.5
0
07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Source: Pictet WM – AA&MR, Factset Source: Pictet WM – AA&MR, Factset
ISM BUSINESS SURVEYS HIGH-YIELD CORPORATE BOND SPREAD, BASIS POINTS
70 2,000
ISM manufacturing US high yield corp. bond spread (OAS, ICE BofAML index)
65 ISM non-manufacturing 1,800
64.0
60 61.2 1,600
55 1,400
50 1,200
1,000
45
800
40
600
35
400
30 323
07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 200
07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 06/21
Source: Pictet WM – AA&MR, Factset Source: Pictet WM – AA&MR, Factset (last close)
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FOMC PREVIEW – FED LEAVES MMT ISLAND THIS SUMMER
WE EXPECT A QE TAPER SIGNAL IN COMING MONTHS - PERHAPS AT JACKSON HOLE
CONF. BOARD LEADING INDEX, % Y-O-Y VS GDP GROWTH, % Y-O-Y US YIELD CURVE SPREAD (10-YEAR YIELD MINUS 2-YEAR YIELD)
15 3
Conf. Board leading index, y-o-y UST yield curve (10Y-2Y)
-
4 Recession Periods United States
Real GDP, % y-o-y -(RHS)
10 Recession Periods United States 2.5
2
5 2
0.4 0
0 1.5
-2 1.31
-5 1
-4
-10 -6 0.5
-15 -8 0
-20 -10 -0.5
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20
Source: PWM - AA&MR, Factset Source: PWM - AA&MR, Factset (last close)
EMPLOYMENT GROWTH, IN THOUSANDS US INVESTMENT (EQUIPMENT) VS EMPLOYMENT GROWTH, % Y-O-Y
1,000 6 30
Monthly payroll growth ('000s) Investment growth (equipment) % y-o-y (RHS) 8.9
800 Payroll growth, 3-month mov. avg. ('000s) Employment growth, % y-o-y (LHS)
559 4 20
600
541
400 2 11.3 10
200
0 0 0
-200
-2 -10
-400
-600 -4 -20
-800
-6 -30
-1,000 98 00 02 04 06 08 10 12 14 16 18 20
07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Source: PWM - AA&MR, Factset Source: PWM - AA&MR, Factset
EXISTING HOME SALES, MILLION UNITS (ANNUALISED) DEBT RATIOS (HOUSEHOLD, CORPORATE, GOVERNMENT), % OF GDP
140
Existing home sales, mn Household debt, % of GDP (BIS)
132
6.5 Government debt, % of GDP (BIS)
120 Corporate debt, % of GDP (BIS)
6
5.9
100
5.5
85
5 80 80
4.5 60
4
40
3.5
20
07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20
Source: PWM - AA&MR, Factset Source: PWM - AA&MR, Factset
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London, 5 Stratton Street, W1J 8LA.
Authorised and regulated by the Commission de Surveillance du Secteur Financier. Deemed authorised by the Prudential Regulation Authority. Subject to regulation by the
Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to
operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.
Distributors: Bank Pictet & Cie (Asia) Ltd (“BPCAL”) in Singapore, 10 Marina Blvd #22-01 Tower 2, Marina Bay, Financial Centre, Singapore 018983 and Pictet & Cie (Europe)
S.A., Hong Kong branch (“Pictet HK branch”) in Hong Kong. The registered address of Pictet HK branch is 9/F, Chater House, 8 Connaught Road Central, Hong Kong.
The information, tools and material presented in this document are provided for information purposes only and are not to be used or considered as an offer, an invitation to offer
or solicitation to buy, sell or subscribe for any securities, commodities, derivatives, (in respect of Singapore only) futures, or other financial instruments (collectively referred to
as “Investments”) or to enter into any legal relations, or as advice or recommendation with respect to any Investments. This document is intended for general circulation and is
not directed at any particular person. This document does not have regard to the specific investment objectives, financial situation and/or the particular needs of any recipient
of this document. Investors should seek independent financial advice regarding the appropriateness of investing in any Investments or adopting any strategies discussed in
this document, taking into account the specific investment objectives, financial situation or particular needs of the investor, before making a commitment to invest.
BPCAL/Pictet HK branch has not taken any steps to ensure that the Investments referred to in this document are suitable for any particular investor, and accepts no fiduciary
duties to any investor in this regard. Furthermore, BPCAL/Pictet HK branch makes no representations and gives no advice concerning the appropriate accounting treatment or
possible tax consequences of any Investment. Any investor interested in buying or making any Investment should conduct its own investigation and analysis of the Investment
and consult its own professional adviser(s) about any Investment, including the risks involved with transactions on such Investment.
This document is not to be relied upon in substitution for the exercise of independent judgment. The value and income of any Investment mentioned in this document may fall
as well as rise. The market value may be affected by, among other things, changes in economic, financial, political factors, time to maturity, market conditions and volatility,
and the credit quality of any issuer or reference issuer. Furthermore, foreign currency rates of exchange may have a positive or adverse effect on the value, price or income of
any Investment mentioned in this document. Accordingly, investors must be willing and able to, and effectively assume all risks and may receive back less than originally
invested.
Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, expressed or implied, is made by BPCAL/Pictet
HK branch regarding future performance.
This document does not constitute the investment policy of BPCAL/Pictet HK branch, or an investment recommendation, and merely contains the different assumptions, views
and analytical methods of the analysts who prepared them. Furthermore, the information, opinions and estimates expressed herein reflect a judgment at its original date of
publication and are subject to change without notice and without any obligation on BPCAL/Pictet HK branch to update any of them. BPCAL/Pictet HK branch may have issued or
distributed other reports or documents that are inconsistent with, and reach different conclusions from, the information presented in this document.
While the information and opinions presented herein are believed to be from sources considered to be reliable, BPCAL/Pictet HK branch is not able to and does not make any
representation or warranty as to their accuracy or completeness. Accordingly, BPCAL/Pictet HK branch accepts no liability for any loss arising from the use of or reliance on this
document, which is presented for information purposes only. BPCAL/Pictet HK branch reserves the right to act upon or use any of the information in this document at any time,
including before its publication herein.
BPCAL/Pictet HK branch and its affiliates (or employees thereof) may or may not have long or short positions in, and buy or sell, or otherwise have interest in, any of the
Investments mentioned herein, and may or may not have relationships with the issuers of or entities connected with Investments mentioned in this document. BPCAL/Pictet HK
branch and their affiliates (or employees thereof) may act inconsistently with the information and/or opinions presented in this document.
The information used to prepare this document and/or any part of such information, may have been provided or circulated to employees and/or one or more clients of BPCAL/Pictet
HK branch before this document was received by you and such information may have been acted upon by such recipients or by BPCAL/Pictet HK branch.
This document is provided solely for the information of the intended recipient and should not be reproduced, published, circulated or disclosed in whole or in part to any other
person without the prior written consent of BPCAL/Pictet HK branch.
10 OF 11FLASH NOTE PICTET WEALTH MANAGEMENT
ASSET ALLOCATION & MACRO RESEARCH
11 June 2021
Singapore
This document is not directed to, or intended for distribution, publication to or use by, persons who are not accredited investors, expert investors or institutional investors as
defined in section 4A of the Securities and Futures Act (Cap. 289 of Singapore) (“SFA”) or any person or entity who is a citizen or resident of or located in any locality, state,
country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or would subject BPCAL and any of its affiliates or
related corporations to any prospectus or registration requirements.
BPCAL has obtained an exemption from the Monetary Authority of Singapore (“MAS”) under section 100(2) of the Financial Advisers Act (“FAA”) for the provision of financial
advisory services to High Net Worth Individuals (as defined in the MAS Guidelines on Exemption for Specialised Units Serving High Net Worth Individuals FAA-G07) (the
“Exemption”) and is exempted from the requirements of sections 25, 27, 28 and 36 of the FAA, the MAS Notice on Recommendations on Investment Products (FAA-N16), MAS
Notice on Appointment and Use of Introducers by Financial Advisers (FAA-N02), MAS Notice on Information to Clients and Product Information Disclosure (FAA-N03) and MAS
Notice on Minimum Entry and Examination Requirements for Representatives of Licensed Financial Advisers and Exempt Financial Advisers (FAA-N13).
Please contact BPCAL in Singapore in respect of any matters arising from or in connection with this document.
Hong Kong
This document is not directed to, or intended for distribution, publication to or use by, persons who are not “professional investors” within the meaning of the Securities and
Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and any rules made thereunder (the “SFO”) or any person or entity who is a citizen or resident of or located in any
locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or would subject Pictet HK branch and
any of its affiliates or related corporations to any prospectus or registration requirements.
Pictet & Cie (Europe) S.A. is incorporated in Luxembourg with limited liability. It is an authorised institution within the meaning of the Banking Ordinance and a registered
institution (CE No.: AQ515) under the SFO carrying on Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities.
Warning: The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are
in any doubt about any of the contents of this document, you should obtain independent professional advice. Please contact Pictet HK branch in Hong Kong in respect of any
matters arising from, or in connection with this document.
Distributor: Pictet Bank & Trust Limited, whose registered office is located at Building 1, Bayside Executive Park, West Bay Street & Blake Road, Nassau, New Providence, The
Bahamas.
The document is not directed to, or intended for distribution or publication to or use by persons who are not Accredited Investors (as defined in the Securities Industry Regulations,
2012) and subject to the conditions set forth in the Securities Industry Regulations, 2012 or to any person or entity who is a citizen or resident of or located in any locality, state,
country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or would subject Pictet Bank & Trust Limited to any
prospectus or registration requirements. Pictet Bank & Trust Limited is incorporated in The Bahamas with limited liability. It is a bank and trust company that is licensed in
accordance with the Banks and Trust Companies’ Regulation Act and is regulated by the Central Bank of The Bahamas. Additionally, Pictet Bank & Trust Limited is registered
with the Securities Commission of The Bahamas as a Broker Dealer II and is approved to (i) Deal in Securities 1.(a) & (c); (ii) Arrange Deals in securities; (iii) Manage Securities;
(iv) Advise on Securities.
Warning: The content of this document has not been reviewed by any regulatory authority in The Bahamas. You are therefore advised to exercise caution when processing the
information contained herein. If you are in any doubt about any of the content of this document, you should obtain independent professional advice.
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