Please find the latest edition of Weekly Digest attached.
US Equities closed little changed last week, after the University of Michigan consumer sentiment survey delivered a positive surprise, showing optimism rising in spite of political and viral uncertainties. More important was the news that the US FDA approved the Pfizer vaccine, with comments over the weekend suggesting that vaccinations will begin this week and that 80% of the US population could be immunised by the summer. Overshadowed by Brexit and the prospect of tighter lockdowns, Continental European markets fell by 1.0% and the UK’s FTSE 100 fell by 0.8%.
The weekend saw violence break out following a pro-Trump march in Washington and the Supreme Court refused to hear the Texas legal appeal. In other weekend news, Germany announced a new lockdown which begins on Wednesday, with non-essential stores to be closed until the 10th January.
The Chinese Politburo meeting conclusions from Friday were published. They indicated that the right macro-economic policy setting is now neutral (the virus has been overcome), that demand-side reform is now priority (domestic consumption), that self-reliance is key (technology separation) and that anti-monopoly policy is a focus – a shot across the bows of internet behemoths.
COVID trends are showing little improvement on the surface as global new infections are running at over 700,000 per day for the past week. Under the surface the news is better, however, as recoveries have accelerated to over 500,000 per day. The result of this is that the growth in “active new cases” has decelerated to below 150,000 per day. Mortality rates have remained stable, or slightly down, at around 10,000 per day, which is an encouraging sign. It is too early to celebrate, but with a vaccine now being rolled out, the time when the daily number of new infections exceeds the daily number of recoveries cannot be far away.
Turning to the week ahead, the FT reports that a post-Brexit support package for industries damaged by Brexit is in the works, alongside an extended loan-support plan for small- and medium-sized enterprises. A $900 billion US fiscal package is to be presented to US Congress today, perhaps split into two tranches. The US Electoral College will vote today. If no bad-faith electors have succumbed to President Trump’s pressure, the Presidency will then be confirmed as passing to Joe Biden. The EU is expected to propose its Digital Markets Act tomorrow.
This week sees Global PMI data released alongside retail sales and industrial production for the US, the UK, China and Europe. The US and UK central banks have monetary policy meetings scheduled for Wednesday and Thursday, respectively. In terms of corporate activity this week, core holdings Shaftesbury (central London property) and Nike have results. Last Thursday, Disney announced a huge increase in its Disney+ customer numbers aspiration from a 2024 target of 60-90m (now 86.8m) to 230-260m. The shares popped as a result.