Weekly Digest - INVESTEC
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It is a meaningful week for macroeconomic and political news flow. Front and centre from a global perspective will be the ongoing US-China trade negotiations with talks in Beijing resuming this week with Messrs Mnuchin and Lighthizer travelling, though there is still no sign that President Trump intends to meet President Xi before the 1st March deadline, at which point higher trade tariffs kick in. Staying in the US, Friday marks the end of the three-week ceasefire in the US government funding debate; it appears that Congress is no closer to agreeing a budget.
In the UK, Brexit remains the centre of domestic news, with MPs debating and voting on a series of measures on Thursday that could potentially curtail the PM’s flexibility in negotiations with Brussels going forwards.
Later this week we have US inflation data on Wednesday, which would present the Fed with something of a dilemma were it to surprise meaningfully on the upside; the consensus is for the year-on-year rate to slow to 2.1% from 2.2%. On Thursday, it’s the turn of the Germans to release their preliminary GDP data, with the consensus looking for 0.1% growth quarter-on-quarter in Q4, having declined -0.2% in Q3. It’s not inconceivable that Germany could join Italy in a technical recession.
The US reporting season is starting to run out of momentum, though the European season now picks up the pace. This week we have Cisco on Wednesday, AstraZeneca, Nestle, and Vivendi on Thursday and on Friday, RBS.