Travel stocks rally, China PPI shrugged off for now

European markets opened mixed but broadly remain calm as they have for the whole week. Everyone’s waiting for signals on inflation – investors seem to be largely shrugging one from China today. Having led the way higher yesterday, the FTSE 100 is weaker today, whilst European indices are just in the green as they chop sideways ahead of tomorrow’s ECB and US CPI double-header. The Tiggerish outgoing chief economist of the Bank of England, Andy Haldane, said this morning that the UK economy is going gang-busters and inflation pressures are strong.

 

It was a mixed bag over the US in yesterday’s session as the Dow slipped a modest 30pts, the S&P 500 stayed flat as it struggles to make a new all-time high, and the Nasdaq rose 0.3%. The S&P 500 rose by less than 1pt to 4,227.26, a whisker below the record 4,238.04 reached on May 7th. 10yr Treasury yields slipped to 1.513%, the lowest level in a month. Remember payrolls data last week showed strong but not too strong job creation – enough to keep tapering talk at bay, or at least so the market seems to think. Yesterday’s huge JOLTS jobs openings report highlighted that the US economy is booming but a shortage of the right labour in the right places could a) force up wages and b) restrain growth (stagflation?). But, in the words of Mario Draghi, this is a ‘high class’ problem to have.

 

China’s producer price index, a key leading indicator of global inflation, rose at its fastest pace in 13 years as base effects from last year’s pandemic and a boom in commodity prices fed into higher prices paid by businesses. PPI in China rose at 9% in May, the highest it’s been since 2008, and a signal that inflationary pressures are not going away soon. It’s not a major surprise – expectations were for 8.5%: we know inflation is here right now. The question remains about the degree to which this is a transitory force or a lasting shift. There is another question: can companies pass these on to the consumer? If so, it runs the risk of stagflation; if not it could means slowing earnings growth. Does this favour the value trade still? We’ve seen a big rotation already, but growth and inflation this year ought to continue to be supportive. Cathie Wood of Ark thinks otherwise. “The rotation back to growth is probably close at hand,” she said at an Ark Invest webinar on Tuesday.  

 

Travel stocks popped up a touch on news the EU parliament has approved vaccine passports to ease travel this summer. We saw the likes of TUI, IAG, EasyJet and Ryanair all jump as the news broke on the wires. WH Smith also ticked higher, dependent as it is now on travel sales. SSP, the operator of food and beverage outlets in travel locations worldwide, should also be pleased. It reported a £300m loss this morning as revenues declined by almost 80%. Management say they don’t think sales will return to pre-Covid levels until 2024. Shares dropped at the open on the big loss but turned higher as the EU travel news broke. Meanwhile, the US eased travel restrictions for 61 countries, but not the UK. Nevertheless, there is a real sense that vaccines are working to open up the US, EU and UK to travel this summer, albeit not quite how it once was.

Oil pushed to fresh highs ahead of the EIA inventory report later and tomorrow’s OPEC monthly report. WTI drove on beyond $70 to mark an almost-three-year high overnight amid encouraging signs of demand recovery. Meanwhile fears of Iranian supply hitting the market later this year subsided after the US secretary of state Anthony Blinken said hundreds of sanctions would remain on the regime in Tehran, even if the two countries reach a nuclear deal. Whilst vaccines and the reopening of economies have left the market in deficit, helping to drive prices up 35% this year, the persistence of cases in some parts of the world combined with ongoing travel restrictions in Europe/US means there are still doubts about how quickly demand will recover this year.  Nevertheless, prices hit their highest since Oct 2018 after the API reported a draw of 2.1m barrels last week. 

Thursday sees the release of the latest OPEC monthly oil market report.  Last month’s report saw the cartel reiterate its belief in a strong recovery in world oil demand in the second half of 2021. This month’s report is not expected to show much change from the previous version, which said demand will rise by 5.95m bpd this year, up 6.6% from 2020 levels. Ahead of this, traders will look to today’s inventory report from the Energy Information Administration (EIA). Last week’s EIA inventory report showed stockpiles declined by 5.1m barrels, a larger-than-expected draw that helped to support the bullish view on oil prices as demand in the US recovers. Analysts expect a draw of 3.3m barrels to be posted today.

Elsewhere, Bitcoin trades at $34k after touching $31k yesterday. A SEC official expressed concern about the US financial regulator’s push to enforce stricter rules around cryptos. GBPUSD continues to hold below 1.42, but a breakout of the triangle to the upside needs to be monitored with MACD (1hr) crossover still supportive of a nudge up to 1.42 – failure at 1.4180 could beget a drop to the 1.4120 area.

Biden tax plan weighs on stocks, Bitcoin tumbles

European equity indices opened a tad lower on Friday morning after stocks fell on Wall Street on reports Joe Biden is planning to slap much higher capital gains taxes on the wealthy. This was always part of the equation when we looked at the implications of a Biden presidency, but markets have been pepped up on a mix of fiscal stimulus, the Fed’s extraordinarily accommodative stance, a strong cyclical impulse from the vaccine-led reopening and a bounce back in earnings. The major averages fell in lockstep, dropping by almost 1% , though the Russell 2000 ended the session flat as the selling was led chiefly by the longer-term growth names like Tesla and Amazon. The Dow Jones finished the day at 33,815, a decline of more than 300 pts. The S&P 500 closed down 0.92% at 4,134 and the Nasdaq Composite notched a similar decline to finish at 13,818. The FTSE 100 opened lower and is heading for a decline of more than 1% for the week. As of send time the CAC 40 had inched into the green. I would not describe risk as being offered as such; it’s been a pretty choppy week and I would be equally unsurprised if stocks turned around this afternoon and ended the week higher as I would if Wall Street led a sharp decline into the weekend.

The Biden administration is looking to raise the top marginal income tax rate to 39.6% from 37%, whilst also doubling capital gains tax to 39.6% for people earning more than $1 million. Tax the rich, hand it out to the poor. Sounds like furlough, but on a permanent basis. The big problem (one of many) in all this is the Senate – it would require support of all the Democrats in the upper chamber and this is far from assured. Stocks would probably be a lot lower if investors were really worried, and I think markets can overcome this move, even if it manages to pass through the Senate, which I don’t think it will. Nevertheless, coming off record highs and a good run up through the start of the year, the macro picture not really changing, rising Covid cases globally, strong earnings and other supportive factors largely priced in and the extent to which investors are ‘all in’ equities, we could be set for a downwards move in equities over the coming weeks. Beware seasonal factors (I dare not say ‘sell in May’…)

The economic picture continues to improve in the US. Initial claims for unemployment insurance fell to 547,000 last week, down from 576,000 the prior week and below the roughly 600,000 estimated. The number of continuing claims also fell.

Likewise, UK retail sales numbers were very positive in March as consumers opened their wallets ahead of the reopening of non-essential shops. Sales rose by 5.4% from February, well ahead of the 1.5% expected. Clothes, gardening goodies and specialist food items from bakers and butchers were in vogue.

Even Europe is showing immense resilience in the face of lockdowns – France’s Services PMI came in at 50.4 against 46.7 forecast, whilst the manufacturing survey surged to 59.12. The composite PMI rose to 51.7 from 50 previously, with the outperformance in services meaning it easily beat the 49.4 expected. Germany’s composite PMI came in at 56, still in expansion territory, but short of the 57 expected and down from the 57.3 in March.

The dollar is offered in early trade, with EURUSD jumping to 1.2050, Yesterday’s ECB presser high of 1.2070 is the main target for bulls. GBPUSD also tried to sustain a rally to 1.39 but hit resistance at 1.3890 and reversed a touch.

The euro remains steady following yesterday’s ECB meeting, which left markets on an even keel as the central bank managed to maintain its dovish stance and fend off chatter about wrapping up its emergency bond buying programme. Christine Lagarde played down any taper talk, saying this was ‘premature’ and that the recovery still has a long way to go. The yield on 10-year German bunds moved lower.

Bitcoin prices have tumbled. Spot trades under $48k this morning, meaning it’s down 25% from last week’s all-time high. The low tested several times in Feb at $44k is the big support. Basically, it seems to have been bid up on a lot of speculation (even more than usual) ahead of the Coinbase IPO and all this froth has evaporated like a lot of hot air. There has also been a cluster of regulatory reports and rumours that point to a clampdown and tighter regulation. JPMorgan analysts led by the closely-followed Nikalous Panigirtzoglou say the rollover in prices has been led by a steep liquidation in speculative futures positions. “Momentum signals will naturally decay from here for several months, given their still elevated level,” he says.

Shares in Coinbase are in for a hit should cryptos go further south. Also, Cathie Wood’s ARK Innovation ETF is still loading up on COIN – watch this one ,too. The Coinbase listing – the ultimate poacher-turned-gamekeeper moment – might have been the high watermark for Bitcoin.

I refer to two points we highlighted when Coinbase registered to go public:

1. Earnings are inextricably tied to crypto prices. This may be obvious, but it is interesting to see in black and white. “Our total revenue is substantially dependent on the prices of crypto assets and volume of transactions conducted on our platform. If such price or volume declines, our business, operating results, and financial condition would be adversely affected.”

2. More than anything it’s highly dependent on Bitcoin. A majority of Coinbase’s net revenue is from transactions in just two crypto assets: Bitcoin and Ethereum. For the year ended December 31, 2020, Bitcoin, Ethereum, and other crypto assets represented 70%, 13%, and 13% of assets on the platform respectively. “If demand for these crypto assets declines and is not replaced by new demand for crypto assets, our business, operating results, and financial condition could be adversely affected” says the filing.

Caveat emptor and all that.

ECB preview: Keep it simple

The European Central Bank (ECB) convenes today for its latest policy meeting. After last month’s word puke from Lagarde (“Financing conditions are defined by a holistic and multifaceted set of indicators, spanning the entire transmission chain of monetary policy from risk-free interest rates and sovereign yields to corporate bond yields and bank credit conditions.”), we have spent several weeks trying to accurately assess where the ECB is really at in terms of responding to the changing economic outlook with regards the recovery from the pandemic, rising bond yields and higher inflation expectations. There is greater clarity now – it looks like the ECB is happy to let inflation run higher and only let bond yields move up if due to better growth: it’s now all about real yields. At the last meeting the ECB said it would pick up the pace of asset purchases, front-loading the PEPP scheme, but it could still use less than the full envelope of €1.85tn if favourable financial conditions can be maintained without spending it all. The outcome of the March meeting was very much that the PEPP programme is more likely to end by March 2022 than be extended, albeit policy will remain very accommodative well beyond that point. The question about tapering PEPP should wait until June, and ending the programme may need to be discussed in September, but for now the ECB should be looking to keep it simple.

This ought to be a quiet one for the ECB, but the propensity for miscommunication is strong. Since the March 11th meeting, the selloff in sovereign debt and rally in yields cooled, before picking up some steam again. While German 10-year bunds are north of where they were at the time of the March meeting and close to the February highs, real rates remain at historic lows. This is what matters to the ECB more than nominal rates. Moreover, the economic data has not materially changed since the last meeting and there signs the largest economies are adapting to lockdown restrictions better than before and are more resilient. The latest Zew survey about the German economy shows investor sentiment at its highest in over a year. The head of the French central bank recently noted that economic activity is declining less than feared in April. Vaccinations, slow to start, are picking up pace and the EU should be on course to catch up the UK and US before too long.

So we look rather to the risk that a hawkishness creeps in. The ECB will need to be careful about getting itself tied in knots about when and how it will exit PEPP just yet, and whether a PEPP taper coincides with raising traditional asset purchases, and just what the reaction function is given it’s spent several weeks trying to clarify this since the last meeting. Now is not the time for such debates, however markets will look towards hawks becoming louder as inflation starts to pick up. Hawks are going to get more vocal if inflation starts runs higher over the next few months – the mandate is clear on this one. Lagarde will need to not sound overly confident about the recovery (why should she anyway?), or else risk letting markets latch on a timeframe for winding down PEPP.

And we should note that chatter about when is the right time to exit emergency mode is coming just as the ECB is looking at a potential change to the inflation mandate. Not content with a more symmetric target a la the Fed, it also wants to introduce inequality and climate change mandates…This only makes guessing the future path of monetary policy and the ECB’s reaction function even more muddy, which in turn may lead to some form of spike in yields and widening of spreads, which exactly what the ECB is seeking to avoid. Another reason to keep it simple tomorrow.

Tighter financial conditions ahead?

The ECB will also have to wrestle with the expectation of tightening financial conditions in the Euro area later this year. Banks and Eurozone banks expect to tighten access to credit in the second quarter, having already tightened in the first quarter. “This reflects banks’ uncertainty regarding the severity of the economic impact of the third wave of the pandemic and the progress in the vaccination campaign,” the ECB said, adding that loan demand is also faltering as companies postpone investments.

The ECB’s job is to make sure it doesn’t get dragged into a conversation about tapering PEPP and keep the markets happy until June when it will have much more data at its disposal and news on vaccinations will hopefully be much better. For this meeting, keep it simple is the order of the day.

EURUSD: Rejection of the 100-day SMA sets up today’s retest of the 1.20 round number support. Ultimately the ECB may not be the main driver of the pair right now and more exposed to broader risk sentiment and Treasury yields impacting the USD momentum.

Wochenausblick: EZB äußert sich angesichts schwieriger Impfstofflage

Die Zinsankündigungen der Europäischen Zentralbank und der Bank of Canada sind die großen Themen dieser Woche. Werden wir größere Veränderungen der Geldpolitik erleben? Die Einzelhandelsumsätze im Vereinigten Königreich, das aus dem Lockdown zurückkommt, sind ebenfalls ein Schwerpunktthema. Andernorts, an der Wall Street, ist die Berichtssaison voll in Gang.

Impfstoffverteilung setzt die EZB vor der Pressekonferenz unter Druck

Ein neuer Monat, eine neue EZB-Pressekonferenz.

Es ist unwahrscheinlich, dass die Europäische Zentralbank in diesem Monat größere geldpolitische Änderungen vornehmen wird.

Stattdessen werden wir voraussichtlich erfahren, wie die Bank für Stabilität sorgen möchte. Das große Problem bei der wirtschaftlichen Erholung ist immer noch die Verteilung von Impfstoffen in der gesamten EU. Zumindest sieht es nach dem Sitzungsprotokoll vom 11. März so aus, als sei dies eine Hauptsorge der EZB-Oberen.

Aus dem Protokoll geht hervor, dass die EZB-Ratsmitglieder von einem Zusammenhang zwischen kurzfristigem Wirtschaftswachstum und Pandemieentwicklung ausgehen.

„Es wurde auf das geringe Impftempo im Vergleich zu anderen Teilen der Welt hingewiesen“, heißt es im Protokoll. „Es wurde die Frage aufgeworfen, wie realistisch die Annahme war, die Eindämmungsmaßnahmen könnten bereits im zweiten Quartal reduziert werden. Die Konjunkturschwäche könnte sich bis ins zweite Quartal und darüber hinaus fortsetzen.“

Es wird angenommen, dass die anhaltend hohen Corona-Infektionsraten in ganz Europa, die Ausbreitung von Mutationen und die andauernden Lockdowns die Erholung des Blocks beeinträchtigen. Das BIP-Wachstum könnte auch im nächsten Quartal niedriger ausfallen als bisher prognostiziert.

Demnach werden die Leitzinsen wahrscheinlich nicht erhöht werden. Hohe Priorität wird auch darauf gelegt, die Kreditkosten für Banken in der gesamten EU niedrig zu halten. Der jüngste Anstieg von Anleiherenditen beeinflusst die geldpolitischen Entscheidungsträger.

Klaas Knot, EZB-Ratsmitglied und niederländischer Zentralbankpräsident, erklärte dazu, er wolle keinen Anstieg der Renditen von Staatsanleihen, da dies die wirtschaftlichen Bedingungen in der gesamten EU verschlechtern könnte. Da der Block sich vor kurzem vorgenommen hat, sein Anleihekaufprogramm auszuweiten, wird die Zentralbank dies unbedingt vermeiden wollen.

Steht die Bank of Canada mit ihrer Zinsankündigung vor einer Kurskorrektur?

Auch die Bank of Canada trifft in dieser Woche eine Zinsentscheidung. Mit großen Änderungen in der kanadischen Zinspolitik ist nicht zu rechnen, wohl aber mit einigen Anpassungen.

Der BOC-Leitzins ist bis 2023 bei 0,25 % eingefroren, dann soll die wirtschaftliche Flaute bewältigt sein. Bis dahin wird sich der Leitzins kaum ändern.

Stattdessen prüft die kanadische Zentralbank Änderungen ihrer geldpolitischen Rahmenbedingungen. Diese umfassen ein durchschnittliches Inflationsziel, ein duales Mandat, das auf Beschäftigung und Inflation gleichzeitig abzielt, ein nominales BIP-Ziel und ein Ziel für das Preisniveau.

Damit reagiert man darauf, dass Verbraucher und Banken trotz der historisch niedrigen Zinssätze anscheinend ruhig bleiben.

„Insgesamt machen sich die Kanadier keine größeren Sorgen über Inflation, und die Pandemie hat die Ansichten der Verbraucher über die Inflation nicht dramatisch verändert“, erklärte die BOC im Rahmen ihrer jüngsten vierteljährlichen Umfrage zu den Verbrauchererwartungen, die am 12. April veröffentlicht wurde.

„Die Kanadier nehmen zur Kenntnis, dass die Inflation andere unterschiedlich trifft“, sagte Gouverneur Macklem. „Das hat Einfluss auf unsere Forschungsvorhaben. Gemeinsam mit Statistics Canada arbeiten wir an Messungen der Inflation, die mehr auf bestimmte Gruppen ausgerichtet sind. Das hat sich direkt aus Gesprächen mit den Kanadiern ergeben.“

Wir können sicher sagen, dass die Bank über das Auslaufen ihres quantitativen Lockerungsprogramms nachdenkt. Vielleicht werden wir mit der neuesten Zinserklärung diesbezüglich eine konkretere Strategie sehen.

UK-Einzelhandelsumsätze dürften im März stark zulegen

Im Vereinigten Königreich sind jetzt auch Geschäfte außerhalb des Grundbedarfs geöffnet, sodass wir bei den April-Statistiken wahrscheinlich mit einem kleinen Boom rechnen dürfen. Die Einzelhandelsumsätze für den Monat März werden diese Woche veröffentlicht, und die Indikatoren deuten darauf hin, dass der Einzelhandel trotz der schwierigen Bedingungen weiterhin stark ist.

Den jüngsten Berichten des British Retail Consortium und dem monatlichen KMPG-Verkaufsmonitor können wir Steigerungen im Zweijahresvergleich entnehmen. Dieser Bericht wird vor den Statistiken zum Monatsvergleich veröffentlicht, die diese Woche herauskommen, aber einen Indikator für den Zustand des britischen Einzelhandels liefern.

Dazu muss man wissen, dass das IRC wegen der Störungen durch die Pandemie 2020 jetzt die Umsatzdaten von 2019 zum Vergleich mit 2021 heranzieht.

Die Einzelhandelsumsätze im Vereinigten Königreich stiegen flächenbereinigt im Vergleich zum März 2019 um 8,4 %. Damals waren sie im Vergleich zum Vorjahr um 1,1 % gesunken.

In den drei Monaten bis März sank der Ladenumsatz bei Non-Food-Artikeln im Zweijahresvergleich insgesamt um 44,4 % und flächenbereinigt um 44,0 %. Dies ist schlimmer als der durchschnittliche Gesamtrückgang von 3,1 % für 2019.

Im März war der flächenbereinigte Zweijahresvergleich ohne Berücksichtigung vorübergehend geschlossener Geschäfte weiterhin rückläufig. Dies ist wahrscheinlich zu erwarten. Bis letzte Woche waren im Vereinigten Königreich alle nicht lebensnotwendigen Geschäfte geschlossen, die Einkaufsstraßen waren also so gut wie tot.

Im März, dem letzten Monat des Lockdowns 3.0, sind die Online-Umsätze weiter schnell gewachsen. Laut BRC wurden in diesem Monat fast 60 % aller Umsätze online gemacht. Laut IMRG, das die 2021er-Zahlen weiterhin mit denen für 2020 vergleicht, stiegen die Online-Verkäufe im März verglichen mit dem Vorjahreszeitraum um 71,7 %.

Wenn die Daten diese Woche veröffentlicht werden, können wir weitere Monatsvergleiche anstellen.

Die Wall-Street-Berichtssaison geht weiter

Nach dem Auftakt durch die großen Banken in der vergangenen Woche ist die Berichtsaison an der Wall Street nun in vollem Gange. Die großen Unternehmen ziehen ihre Kreise und legen ihre Berichte vor.

Wir werden dann klarer sehen, welche Unternehmen weiterhin zu den Gewinnern der Pandemie gehören und welche sich angesichts der schwierigen Bedingungen durchbeißen müssen.

Zu den großen Namen, die in dieser Woche berichten, gehören Coca-Cola, Johnson and Johnson, Intel, Netflix, SAP und einige mehr. Unten finden Sie eine Übersicht der Großunternehmen, die in dieser Woche ihre Ergebnisse melden.

Top Wirtschafts-Daten

Date Time (GMT+1) Currency Event
Tue 20-Apr 11.45pm NZD CPI q/q
Wed 21-Apr 2.30am AUD Retail Sales m/m
7.00am GBP CPI y/y
1.30pm CAD CPI m/m
  3.00pm CAD BOC Monetary Policy Report
3.00pm CAD BOC Rate Statement
3.00pm CAD Overnight Rate
3.30pm USD Crude Oil Inventories
4.00pm CAD BOC Press Conference
Thu 22-Apr 12.45pm EUR Main Referencing Rate
12.45pm EUR Monetary Policy Statement
1.30pm EUR ECB Press Conference
1.30pm USD Unemployment Claims
3.30pm USD US Natural Gas Inventories
Fri 23-Apr 7.00am GBP Retail Sales y/y
8.15am EUR French Flash Services PMI
8.15am EUR French Flash Manufacturing PMI
8.30am EUR German Flash Manufacturing PMI
8.30am EUR German Flash Services PMI
9.00am EUR Flash Manufacturing PMI
  9.00am EUR Flash Services PMI
9.30am GBP Flash Manufacturing PMI
9.30am GBP Flash Services PMI

 

Top Geschäftsberichte

Date Company Event
Mon 19-Apr Coca-Cola Q1 2021 Earnings
IBM Q1 2021 Earnings
Prologis Q1 2021 Earnings
United Airlines Q1 2021 Earnings
Tue 20-Apr Johnson & Johnson Q1 2021 Earnings
Proctor & Gamble Q3 2021 Earnings
Netflix Q1 2021 Earnings
Philip Morris Q1 2021 Earnings
Lockheed Martin Q1 2021 Earnings
Wed 21-Apr ASML Q1 2021 Earnings
NextEra Energy Q1 2021 Earnings
Anthem Inc. Q1 2021 Earnings
Canadian Pacific Railway Co. Q1 2021 Earnings
Ericsson Q1 2021 Earnings
Thu 22-Apr Intel Corp. Q1 2021 Earnings
AT&T Q1 2021 Earnings
Union Pacific Q1 2021 Earnings
Snap Inc. Q1 2021 Earnings
Blackstone Q1 2021 Earnings
LG Chem Q1 2021 Earnings
Volvo AB Q1 2021 Earnings
Fri 23-Apr Industrial & Commercial Bank of China Q1 2021 Earnings
Agricultural Bank of China Q1 2021 Earnings
Honeywell Q1 2021 Earnings
Bank of China Q1 2021 Earnings
PetroChina Q1 2021 Earnings
American Express Q1 2021 Earnings
Daimler Q1 2021 Earnings

Let’s just call it the weekend

Britain’s economy contracted less than expected in January, but nevertheless showed the dire impact of lockdown on economic activity. The European Central Bank said it would speed up the pace of bond buying to lean against the rise in yields but didn’t provide an awful of clarity overall. Wall Street rose to a fresh record and Bitcoin made a new all-time high as investors looked to the imminent arrival of stimulus cheques. European stocks move a little lower in early trade on Friday despite a new record high on Wall Street for the S&P 500. However, the main bourses are on track for a roughly 4% gain this week, while the FTSE 100 is up a little over 1%.

A 30-year bond auction in the US went off without too much trouble in the end. Nevertheless, US 10-year yields have popped back to 1.6% a level that has elicited some concern of late. Meanwhile, Britain’s chancellor, Rishi Sunak, warned that “the public finances are much more sensitive to changes in interest rates and inflation than they were previously”. Quite. The more you are in hock the more ‘sensitive’ you are to rates. But equally, if you have a central bank that will hoover up at auction, you don’t need to worry about the market rate…but that is a debate for another day. It seems the UK government is intent on making sure the public finances get ‘fixed’, whatever that means. (it means higher taxes for you and me, is what it means, so we can afford to pay people not to work).

“Financing conditions are defined by a holistic and multifaceted set of indicators, spanning the entire transmission chain of monetary policy from risk-free interest rates and sovereign yields to corporate bond yields and bank credit conditions.” Holistic and multifaceted…woooweee!! That sounds so clever. The ECB, well, did what the ECB does. Little clarity and a lot of complexity – flexibility – around its reaction function. Christine Lagarde spent a long time trying to explain what the ECB is trying do by saying it will increase the pace of bond purchases; partly because it’s a bit unclear about what it wants to achieve and partly because Lagarde is not a master of the press conference like Draghi. The ECB will speed up asset purchases, but it could still use less than the full envelope of €1.85tn if favourable financial conditions can be maintained without spending it all. Which sounds like it has no clue: flexibility is good, but it must be a little more in control of things than this.

The sensitivity to rates is extraordinary. Cue the headline: “European bonds rally after ECB pledges to step up asset purchases”. Get this – the yield on 10-year bunds slipped 0.02 percentage points – a whole two basis points! That is quite a reaction, I mean talk about bond vigilantes…I joke of course…

Gold failed at the $1,740 area and has retraced the last few days’ gains as yields climbed again.

Gold failed at the $1,740 area and has retraced the last few days’ gains as yields climbed again.

Wochenausblick: EZB spricht, US-Verbraucherpreisindex und BoC-Stellungnahme

Wir haben eine volle Woche für die europäische Wirtschaft vor uns, mit der Pressekonferenz der EZB und Aussagen zum Zins. Kommen Änderungen der Wirtschaftspolitik, um die steigenden Rendite aufzuhalten? In den USA werden die Zahlen des Verbraucherpreisindex’ veröffentlicht. Sie werden einen Einblick in die Wirkung der Inflation geben. Die Bank of Canada wird auch ihre Tagesgeldsatzerklärung abgeben, und ein starker wirtschaftlicher Ausblick für Kanada könnte eine Änderung der Anleihekaufpolitik bedeuten.

Wird die EZB ihr Anleihenkaufprogramm anpassen, um die steigenden Renditen anzugehen?

Die Anleiherenditen haben in den letzten Wochen viele geldpolitische Gespräche geprägt, und wir werden in der dieswöchigen Erklärung und Pressekonferenz der EZB auf die Reaktion der Europäischen Zentralbank auf steilere Kurven achten.

Wir haben bereits gesehen, dass Vorstandsmitglied Fabio Panetta sich dafür einsetzt, weiterhin Anleihen zu kaufen und die finanzielle Unterstützung aufrechtzuerhalten, während die Pandemie anhält.

„Der Anstieg der mit dem nominalen BIP gewichteten Renditekurve, den wir jetzt sehen, ist nicht willkommen und muss widerstanden werden. Wir sollten nicht zögern das Einkaufsvolumen zu erhöhen und das Pandemic emergency purchase programme (PEPP) in vollem Umfang oder wenn nötig auch darüber hinaus auszunutzen,“ sagte Panetta am Dienstag, den 2. März.

„Die Unterstützung der Politik wird dafür weit über das Ende der Pandemie hinaus erforderlich bleiben,“ fügte er hinzu. „Die Risiken zu geringer Stützung überwiegen die Risiken von zu geringer Stützung bei weitem. Mit dem längeren Niedrighalten der nominalen Rendite können wir einen starken Anker bieten, um versorgende Finanzierungskonditionen zu erhalten.“

Trotz dessen haben wir eine Verlangsamung des Anleihenkaufprogramms der EZB am Montag den 1. März gesehen. Zu dem Zeitpunkt hatte die Bank 12 Milliarde Euro in Anleihenkäufen getätigt, gegenüber 17,5 Milliarden Euro in der Vorwoche. Der Rückgang ist auf viel höhere Rücknahmen zurückzuführen, berichtet Bloomberg. Vielleicht ein Zeichen für eine anstehende Politikanpassung?

Das könnte den Wünschen Panettas zuwiderlaufen: „Wir müssen die Glaubwürdigkeit unserer Strategie festigen, indem wir demonstrieren, dass eine unangemessenes Anziehen nicht toleriert wird.“

„Wir haben Möglichkeiten darauf zu reagieren,“ sagte Jens Weidmann, Chef der deutschen Bundesbank, CNBC. „Das PEPP kommt mit einer gewissen Flexibilität und diese Flexibilität können wir nutzen, um auf eine solche Situation zu reagieren.“

Das Notfall-Anleihenkaufprogramm der EU wird bisher bis März 2022 weiter fortgeführt, mit einem Gesamtvolumen von 1,85 Billionen Euro. Weidmann gab an, dass die EZB die Einkäufe im Kontext steigender Renditen wieder ankurbeln könnte.

„Das ist ein Element, das auf dem Tisch ist, die Flexibilität, die wir in der Umsetzung des PEPP zu nutzen,“ sagte Weidmann. „Aber nochmals, der erste Schritt ist die Analyse der zugrundeliegenden Ursachen und die Einschätzung, welche Wirkung wir auf unser schlussendliches Ziel haben, der Preisstabilität.“

Die Renditen und die Reaktion der EZB werden bei der nächsten Ankündigung am 11. März im Mittelpunkt stehen.

US-Verbraucherpreisindex, Renditen und Inflation

Wir werden mit der Veröffentlichung des Verbraucherpreisindex-Reports des US-Arbeitsministeriums weiter sehen, ob die Inflation in den USA wirklich Zähne zeigt.

Steigende Renditen von US-Anleihen sind quasi schon seit einigen Wochen Gesprächsmittelpunkt, da sie die globale Finanzwelt beeinflussen. Die Renditen der 10-jährigen US-Schatzanweisung überschritten am 17. Februar 1,3% und sind seitdem auf fast 1,6% gestiegen.

Renditen neigen dazu, zusammen mit Inflationserwartungen zu steigen, da Anleihen-Anleger weniger auf Anlagen mit niedrigen oder negativen Renditen aus sind. Höhere Renditen könnten außerdem mehr Schuldendienste für große Firmen bedeuten. Das wirkt sich negativ auf die Aktienmärkte aus, da Händler die Investitionsumgebung neu einschätzen.

Davor zeigte der Verbraucherpreisindex für Januar eine Schrumpfung, bei der die Inflation auf 0,3% zurückging. Im Vergleich zum Vorjahr blieb der VPI konstant bei 1,4%. Der Kern-Verbraucherpreisindex, der volatile Lebensmittel- und Energiepreise ausschließt, sank auf 1,4% im Januar von 1,6% im Dezember und sank damit tiefer, als die vom Markt erwarteten 1,5%.

Der Preisdruck war vermutlich im Februar stärker.

Die höhere Rendite und die Inflationsrate werden im Kontext weiterer Konjunkturpakete im Fokus bleiben. Das 1,9-Billionen-Dollar-Paket von Joe Biden wird sehr wahrscheinlich bald verabschiedet, was hoffentlich zu mehr Ausgaben und Konsum in der gesamten US-Wirtschaft führen wird. Mit mehr einfach erhältlichem Bargeld, könnte die Inflation weiter steigen.

Es gibt einiges aus den US-VPI-Veröffentlichungen dieses Monats herauszulesen.

BoC Zinsbekanntgabe – keine großen Änderungen erwartet

Die Bank of Canada wird diese Woche ihre jüngste Zinspolitik bestimmen. Könnte wir eine Zurücknahme der wirtschaftliche Stützung erleben? Vorläufige Berichte zum BIP suggerieren, dass der Ausblick für die kanadische Wirtschaft relativ gesund ist, sodass eine Zurücknahme der Anleihenrückkäufe am Horizont stehen könnte.

In einer Pressemitteilung vom Januar erklärte die kanadische Zentralbank, sie werde den aktuellen Leitzins halten, bis das Inflationsziel erreicht ist, während sie ihr quantitatives Lockerungsprogramm fortsetzt und jede Woche Anleihen im Wert von 4 Milliarden CAD kauft.

Allerdings zeigen die jüngsten kanadischen BIP-Zahlen eine widerstandsfähige Wirtschaft. Die kanadische Wirtschaft wuchs auf das Jahr gerechnet im vierten Quartal um 9,6%, wie Zahlen von Statistics Canada am Dienstag den 2. März zeigten, was über den von Analysten erwarteten 7,5% lag.

Zinssätze werden wahrscheinlich bis 2023 um die Null bleiben. Die Hypothekenzinsen haben sich jedoch aufgrund der steileren Renditekurven allmählich erhöht, aber der Leitzins wird noch einige Jahre lang niedrig bleiben, sagt BoC-Gouverneur Tiff Macklem.

Obwohl einige Beobachter der Ansicht sind, dass die stärkeren wirtschaftlichen Aussichten möglicherweise auf eine Kürzung der Anleihekäufe hindeuten, hat die BoC den Kauf von Provinzanleihen im Rahmen einer Gesamtstrategie beschleunigt, um steigenden Renditen entgegenzuwirken und den Provinzen mehr Liquidität zur Verfügung zu stellen, um ihre Wirtschaft in Zeiten der anhaltenden Covid-19-Pandemie zu stärken.

Die Zentralbank kaufte letzte Woche Anleihen im Wert von 436,5 Millionen CAD über das Provincial Bond Purchase Program – der größte Kauf seit Beginn der Anstrengungen im Mai.

Wie alle Volkswirtschaften, ist es allerdings unwahrscheinlich, dass Kanada weltbewegende Änderung während der am 10. März erwarteten Zinsentscheidung macht.

 

Top Wirtschafts-Daten der Woche

Date  Time (GMT  Currency  Event 
Wed 10 Mar  1.30pm  USD  CPI m/m 
  1.30pm  USD  Core CPI m/m 
  3.00pm  CAD  BoC Rate Statement 
  3.30pm  CAD  Overnight Rate 
  3.30pm  USD  US Crude Oil Inventories 
       
Thu 11 Mar  12.45pm  EUR  Main Refinancing Rate 
  12.45pm  EUR  Monetary Policy Statement 
  1.30pm  EUR  ECB Press Conference 
       
Fri 12 Mar  1.30pm  CAD  Employment Change 
  1.30pm  CAD  Unemployment Rate 

 

Top Geschäftsberichte diese Woche

Date  Company  Event 
Tue 09 Mar  Deutsche Post  Q4 2020 Earnings 
  Continental  Q4 2020 Earnings 
     
Wed 10 Mar  Oracle  Q3 2021 Earnings 
  Adidas  Q4 2020 Earnings 
  LUKOIL  Q4 2020 Earnings 
  Legal & General  Q4 2020 Earnings 
  Campbell Soup  Q2 2021 Earnings 
  Prada  Q4 2020 Earnings 
     
Thur 11 Mar  Rolls Royce  Q4 2020 Earnings 

Sunak says no MMT (magic money tree), risk retreats into the weekend again

No magic money tree: Rishi Sunak, the UK Chancellor, has told Conservative MPs that he wants to wean the country of stimulus and restore the public finances. Apparently, the chancellor will use the March Budget to start reducing the deficit and raise taxes, with a focus on corporation tax at first. The government must be confident about vaccines to allow the focus to turn to tax hikes. Compare this with his US counterpart Janet Yellen’s calls to act ‘big’, and it looks as though the Tories are falling into the old austerity-mantra trap. Or are they? We should note, cynically, that it is never about doing what’s right for the country, only about getting re-elected. So, keeping the lid on spending, being ‘responsible stewards’ of the public finances and showing they are not spendthrifts like the other lot, is all terribly important. Only it may not be the right course of action for the people of this country. It’s going to take a long time to repair the damage of the government’s actions to destroy the economy. Perhaps some MMT’ers should start making their case a little more vocally? It would be an interesting debate to have in Britain, one that so far has only really focused on the US. 

 

PMIs this morning show confidence is holding up just but remains susceptible to further extensions to lockdowns. UK retail sales in December were weaker than forecast and consumer confidence has slipped. Retail sales rose just 0.3% last month from November, when sales dropped 3.8%. This compared with an expected rise of 1.2% and indicated that restrictions are not just physical. The GfK consumer confidence index eased down 2pts to –28 as people worry about their finances and those of the wider economy (quick Rishi, all that borrowing needs to be repaid quickly!). Sterling retreated in early trade, with GBPUSD easing back from the 1.37 level having traded through 1.3740 in yesterday’s session.

 

European stocks head into the weekend on a down note markets continue to search for direction amid the uncertainty of the pandemic recovery. Stocks on Wall Street were flat for the session, although the Nasdaq rose 0.55%, building on Wednesday’s record high, as investors bet on big tech delivering bumper earnings in the wake of the Netflix bounce. Apple shares rallied over 3% ahead of next week’s earnings, with quarterly revenues seen exceeding $100bn for the first time on renewed iPhone demand and other devices delivering strong gains. It’s similar to last Friday with risk coming off into the weekend – not a great sign of confidence, and whilst remaining constructive on the big picture thanks to stimulus and vaccines, it’s very possible there is some kind of corrective move lower in major indices over the next few weeks.

 

Jobless claims in the US continued to show the need for targeted stimulus. Initial claims totalled 900,000 last week, slightly lower than expected and down from 926,000 in the prior week. Continuing claims fell 127,000 to 5.05 million. 

 

The ECB left everything on hold as expected. There was a change to the statement around recalibrating PEPP that ruffled some feathers but really was nothing to note – Lagarde and co have been saying this since the last meeting and only affords the ECB the kind of optionality we fully expect it to maintain.  But it did help push EURUSD higher and this morning it’s trading at week highs north of 1.21750.

 

The statement featured the following lines that were not present before: „If favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon of the PEPP, the envelope need not be used in full. Equally, the envelope can be recalibrated if required to maintain favourable financing conditions to help counter the negative pandemic shock to the path of inflation.“  So PEPP could be smaller or larger, it all depends on financing conditions. Could go up. Could go down. This is not a new thing but a reiteration of what Governing Council members have been saying since the last meeting. You could argue it’s a slight sop to the hawks as it means they could reduce the PEPP envelope – or not use if fully – but really this is not a material change.

 

Chart: Gold retreated from the 21-day SMA and is back testing the 50-day SMA support.

 

 Gold retreated from the 21-day SMA and is back testing the 50-day SMA support

ECB says PEPP could expand, could shrink

The ECB left everything on hold as expected. There was a change to the statement around recalibrating PEPP that ruffled some feathers but really was nothing to note – Lagarde and co have been saying this since the last meeting and only affords the ECB the kind of optionality we fully expect it to maintain. 

 

The statement featured the following not present before: „If favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon of the PEPP, the envelope need not be used in full. Equally, the envelope can be recalibrated if required to maintain favourable financing conditions to help counter the negative pandemic shock to the path of inflation.“ 

 

So PEPP could be smaller or larger, it all depends on financing conditions. Could go up. Could go down. This is not a new thing but a reiteration of what Governing Council members have been saying since the last meeting. You could argue it’s a slight sop to the hawks as it means they could reduce the PEPP envelope – or not use if fully – but really this is not a material change and should not be a big surprise to the market. As ever, though, small hints from central banks can be latched on by particular market participants as a sign of something bigger to come.

 

Otherwise it’s as you were in terms of rates and PEPP and APP size, duration and reinvestments; and this should hopefully be a non-event with the Lagarde presser coming up. 

 

The euro likes it: EURUSD shot up to 1.2160 to a week high. 

No Brexit breakthrough, Ocado raises guidance, ECB set to ease again

• European stock markets rise despite a tough session on Wall Street led by a sharp decline in big tech
• Sterling lower as Brexit talks hit brick wall after Boris Johnson and Ursula von der Leyen failed to bridge the gap over dinner
• ECB set to expand and extend emergency asset purchases, US inflation also on tap

The darkest hour is just before the dawn: There was no across-the-table breakthrough on Brexit over dinner last night, after a dinner date between Boris Johnson and Ursula von der Leyen only served up disappointment with a side of ennui. The gaps remain – a Sunday deadline has been set but the chances of a deal being struck are clearly diminishing over time – the acceleration towards the deadline was supposed to create the necessary urgency to land a deal. Looking at the talks from the outside, it seems as though no-deal odds are shortening fast. But we should caution that this is to be expected – the nature of the brinkmanship being pursued by both sides means a deal always seems further away than it may be in reality and will seem furthest away just when it’s within striking distance.

GBPUSD moved lower overnight, dropping from yesterday’s peaks above 1.3470 to test support at 1.33. The lack of any significant moves betrays the fact traders think both outcomes – deal or no-deal – are still very much in the running. This week’s lows at 1.3225 are in sight if 1.330 cracks.

Sterling was also under the cosh as UK GDP figures showed growth slowed to 0.4% month-on-month in October. It was the sixth consecutive month of growth but the rate is slowing down. GDP in October was 23.4% higher than April but the economy remains 7.9% smaller than it was in February 2020, before the full impact of the coronavirus pandemic, and 8.2% smaller year-on-year. Lockdowns in November will not help the overall Q4 picture but markets are only looking ahead to a post-covid world these days, thanks to vaccines.

Wall Street suffered a bruising session, with the Dow and S&P 500 closing down despite striking record highs early in the session. The Nasdaq tumbled 2% as tech stocks took a beating on concerns about a regulatory push in the US. Facebook dropped 2% as the Federal Trade Commission and 48 states filed two antitrust lawsuits against the company centring on its acquisition of Instagram and Whatsapp and what is seen as anticompetitive conduct. New York attorney Letitia James, who is leading the coalition of states, said that ‘Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition’. It’s a shot across the bows of big tech – Google, Facebook, Apple all fell a similar level. Regulatory overhang may be a drag on valuations.

But if there were doubts about the market’s appetite for new supply and investors’ willingness to pay a premium for growth, these were certainly dashed yesterday by a remarkable IPO for DoorDash. Shares priced initially at $102 closed the day 86% higher at $189.51. Airbnb goes today and if the DoorDash trading is anything to go by, there could be fireworks again. The company has priced its initial public offering at $68, well above the $44-$50 range estimated only last week.

Revenue growth was slowing for years and it’s never turned an annual profit, but Airbnb has not done as badly as peers during the pandemic and to some extent has made the private getaway more appealing than staying in a hotel/resort. The company made a profit of $219 million in the third quarter, on $1.34 billion in revenue. However, Experiences have not done as well as hoped – there was no breakout of the figures in the filing despite launching four years ago. The outlook is much stronger for 2021 now that vaccines are coming. Having been relatively resilient during the pandemic, Airbnb could kick on and benefit from the get-and-out-travel trend in 2021. Anyone for new highs for the Renaissance Capital IPO ETF?

European markets opened tentatively higher despite the drag from Wall Street and Brexit worries – sentiment remains broadly well supported due to the vaccines. Investors still largely positive on equities and on the whole probably believe that both a Brexit deal and US stimulus package will appear. The FTSE 100 was up 0.4% and testing the 6,600 level again in the first hour of trade on Thursday.

Ocado shares dropped 3% despite raising full-year earnings guidance as revenue growth slowed. Retail revenues rose 35% in the fourth quarter, down from 52% in the preceding quarter. Whilst still very strong, investors are perhaps just booking some profits now on the news. Having previously raised its full-year EBITDA guidance from £35m to £60m, management has again raised its outlook to £70m thanks to a very strong November led by continuing shift to online and lockdowns creating a perfect storm of demand for internet supermarkets. A lot of the immediate questions asked of Ocado have been answered and remaining questions will not be answered until next year and beyond. Profitability in its core UK retail market is not in doubt and capacity increases next year worth 40% will be a positive. M&S seems to be working. Key questions for next year and beyond are whether the shift to online continues as vaccines are rolled out, and can it really justify these enormous multiples based on the promise of future profits from its international deals for much longer?

Markets are looking ahead to a big slate of economic events and data today:

ECB: The European Central Bank is likely to announce fresh stimulus by way of expanding its Pandemic Emergency Purchase Programme (PEPP) by an additional €500bn and extend it beyond the current Jun 2021 cut-off to the end of next year. This is not likely to produce much volatility in EUR crosses as there was a strong pre-commitment at the October meeting to taking additional easing measures in December. As we said at the time, it’s all but a down deal now that France and Germany have locked down and the economy is heading for another recession. Last time Christine Lagarde said staff were working on recalibrating all instruments, which means even interest rates could be cut further in addition to expanding QE envelopes, however any tweak to rates looks unlikely at this stage.
Recent survey data has been soft and hard data for November when it comes is not going to be pretty. Q4 is shaping up badly, though Lagarde and co may now be willing to jump the shark on vaccines and prep for a rosier 2021 – which would suggest no dovish surprise from the ECB. Inflation remains very weak and has been stable at –0.3% since September.

The stronger euro exchange is another headache for the ECB – traders will be closely watching for any jawboning by Lagarde around the recent euro strength. We should also look for extension of TLTROs and upping the tiering facility to help banks. Lagarde will look to show that the ECB will stay super-loose for as long as necessary but will lean hard on the fiscal side too and not want to do too much. Moreover, the advent of vaccines will keep the ECB from over-doing it now. As ever, the announcement is at 12:45 GMT and presser follows at 13:30.

US CPI and weekly unemployment claims: After a tame reading for October, core and headline CPI are seen ticking up marginally to 0.1% over last month and +1.1% year-on-year for the headline number and +1.8% for the core reading. US inflation expectations have hit 18-month highs, but it’s not thought that we will see a material imprint on last month’s figures – expectations seem to be more about the coming Great Monetary Inflation caused by central bank printing and pro-cyclical fiscal stimulus in 2021 as vaccines allow the economy to bounce back. Nevertheless, the latest PMI surveys for November showed the quickest rise in selling prices yet recorded, with the rate of inflation hitting a record high in the service sector and a 25-month high in manufacturing. Inflation may be coming, but probably not until the pandemic is over.

Thursday running order: Ocado Q4, UK GDP, ECB and US CPI

US stock markets hit fresh record highs in the early part of the session before paring gains and turning a little softer. European markets remain broadly higher, albeit more modestly than they were in the morning session. It’s a big day tomorrow with UK growth figures, the ECB meeting and some bumper US data all on the slate. In addition, we have earnings from DS Smith and Ocado to look forward to.

Traders are likely to be greeted with some more Brexit headlines – so far no is prepared to take a decisive position and cable continues to chop around the 1.33-34 area. This only shows that traders think both outcomes – deal or no-deal – are still very much in the running. We await signals from the dinner between Boris Johnson and Ursula von der Leyen this evening.

Thursday’s running order:

UK GDP: The UK economy grew 15.5% in the third quarter as since stalled reopening of the economy saw spending and activity bounce back between July and September. Nevertheless, the economy remains 9.7% smaller than it was before the pandemic and the November lockdown will smash the Q4 recovery. October’s data due tomorrow at 7am will likely show a modest 0.4% month-on-month gain.

ECB: The European Central Bank is likely to announce fresh stimulus by way of expanding its Pandemic Emergency Purchase Programme (PEPP) by an additional €500bn and extend it beyond the current Jun 2021 cut-off to the end of next year. This is not likely to produce much volatility in EUR crosses as there was a strong pre-commitment at the October meeting to taking additional easing measures in December. As we said at the time, it’s all but a down deal now that France and Germany have locked down and the economy is heading for another recession. Last time Christine Lagarde said staff were working on recalibrating all instruments, which means even interest rates could be cut further in addition to expanding QE envelopes, however any tweak to rates looks unlikely at this stage.
Recent survey data has been soft and hard data for November when it comes is not going to be pretty. Q4 is shaping up badly, though Lagarde and co may now be willing to jump the shark on vaccines and prep for a rosier 2021 – which would suggest no dovish surprise from the ECB. Inflation remains very weak and has been stable at –0.3% since September.

The stronger euro exchange is another headache for the ECB – traders will be closely watching for any jawboning by Lagarde around the recent euro strength. We should also look for extension of TLTROs and upping the tiering facility to help banks. Lagarde will look to show that the ECB will stay super-loose for as long as necessary but will lean hard on the fiscal side too and not want to do too much. Moreover, the advent of vaccines will keep the ECB from over-doing it now. As ever, the announcement is at 12:45 GMT and presser follows at 13:30.

US CPI and weekly unemployment claims: After a tame reading for October, core and headline CPI are seen ticking up marginally to 0.1% over last month and +1.1% year-on-year for the headline number and +1.8% for the core reading. US inflation expectations have hit 18-month highs, but it’s not thought that we will see a material imprint on last month’s figures – expectations seem to be more about the coming Great Monetary Inflation caused by central bank printing and pro-cyclical fiscal stimulus in 2021 as vaccines allow the economy to bounce back. Nevertheless, the latest PMI surveys for November showed the quickest rise in selling prices yet recorded, with the rate of inflation hitting a record high in the service sector and a 25-month high in manufacturing. Inflation may be coming, but probably not until the pandemic is over. Data on tap at 13:30 GMT with unemployment weekly claims numbers (seen at +723k vs 712k last week) coming at the same time.

Ocado Q4 trading statement: Ocado has been a big winner from the pandemic and shares are +75% YTD, putting in the top three FTSE 100 performers this year (after Scottish Mortgage and Fresnillo). Two key questions are on the lips of investors: how has the M&S tie-up fared and has Ocado been able to ride the November boom in grocery spending? It’s been operating at full capacity every day – any progress on increasing capacity will be another q for investors.

The Marks and Spencer partnership has now had a full quarter to deliver some initial indications of consumer demand. I’d expect the progress to be strong given both the rising demand for online and the increased consumer spend on groceries due to lockdowns.

Last time (Nov 2nd) Ocado raised its full-year EBITDA guidance to £60m from £40m. Given the massive surge in grocery sales in November reported by Kantar, which said sales rose 13.9% year-on-year in the four weeks to Nov 29th. A total of 6m households shopped online in November, with digital platforms accounting for 13.7% of all sales – both are records and may call for another, albeit modest, upgrade to the FY earnings. Kantar notes: Ocado demonstrated the trend, growing by 38.3% in the latest 12 weeks. This period also fully covers the time since Ocado started selling M&S products, during which its share of the chilled ready meals market has tripled to just over 3%. Shares were up over 2% today to 2,319p ahead of the announcement. Look for a push to 2,400p to recapture the Nov highs around 2,580p.

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