US Briefing - Friday 19.02
Headlines
  • US President Biden To Debut At G7 With Vaccines, Economy And China In Focus
  • Biden Privately Tells Governors: Minimum Wage Hike Likely Isn’t Happening
  • Yellen Defends Biden’s Relief Package, “Economy Is Digging Out Of A Deep Hole”
  • US To Maintain China Tariffs For Now, Evaluate If Appropriate Going Forward
  • New US Covid Cases Hold Below 80K; Hospitalizations Lowest Since November
  • Eurozone Business Activity Dips Again In February Despite Manufacturing Upturn
  • UK Retail Sales Slump As Third Lockdown Takes High Street 'To The Edge Abyss'
  • China May Ban Rare Earth Refining Technology Exports On Security Concerns
  • UK Deficit Swells; Chancellor Delays Business Rates Review Until Autumn
  • Oil Drops As Investors Gauge Chill Impact On US Refineries, OPEC+ Output Rise
  • Dollar Drift Helps Cable Rise Above $1.40 For First Time In Nearly Three Years
  • European Equity Markets Mostly Higher; FTSE 100 Lags On Sterling Strength
  • US Equity Futures Slightly Higher After Three Days Of Losses On Wall Street
Commentary
Big Tech-Led Equity Inflows Fuelling 'Mother-Of-All Asset Bubbles'

A record rush to big technology stocks saw equity funds bagging $27.8 billion inflows last week with the ongoing ultra-easy monetary policy creating the “mother-of-all asset bubbles”, BofA said on Friday.

 

Global market capitalisation has risen $50 trillion, or $6.2 billion per hour, since last March, almost ten times faster than the pace seen in the immediate aftermath of the 2008 global financial crisis, the U.S. investment bank said.

 

Big tech attracted a record $19 billion inflows in the last six weeks. Bond funds took in $12.6 billion in the week to Wednesday, BofA’s flow data showed. (RTRS - Continue Reading)

Eurozone Muddling Through But Beware Of Inflationary Pressure

Another month of weak PMIs confirms that the eurozone economy is set to contract once more in 1Q.

 

Lockdowns have extended well into February - for some countries into March already – and the service sector is still suffering significantly. A decline in the services PMI from 45.4 to 44.7 indicates that the situation actually worsened slightly in February.

 

Manufacturing output continues to be the positive counterweight to services with an acceleration of growth in February, the PMI increased from 54.6 to a whopping 57.5.

 

Growth in new business is strengthening with gains widespread among eurozone countries. With spending on services still very restricted, demand for goods remains high for now, not least because of quickly recovering demand from abroad.(ING Think - Continue Reading)

Prolonged UK Lockdown Hit January Sales Harder Than Expected

Nearly all sectors felt the effect of tighter restrictions as retail sales fell sharply in January, according to the Office for National Statistics.

 

Headline retails sales slumped by 8.2% month-on-month in January, this compared to forecasts of a 3.0% drop and well down on December’s 0.3% rise. Annually, sales fell by 5.9% versus 2.9% last month and -0.8% predicted.

 

Sales excluding auto fuel saw a similar plunge. On the month, sales sank 8.8% versus an expected fall of 2.1%, following a 0.4% rise previously. Annual sales printed down 3.8%, reversing the 6.4% December rise.

 

The ONS said, “Retail sales volumes were 5.5% lower than before the pandemic in February 2020 indicating that the impact of restrictions on the retail sector was not as large as that seen in April 2020 during the first full month of retail restrictions when sales fell by 22.2% when compared with levels before the pandemic.” (LiveSquawk - Continue Reading)

DBRS Morningstar: Italy - Draghi Reassures For Now

Italy’s government instability finally draws to a close for now with the formation of a new government supported by a wide majority.

 

This provides welcome stability for the government to manage the health crisis, accelerate the roll-out of the vaccine, place Italy on a recovery path and initiate important reforms.

 

DBRS Morningstar views this development with cautious optimism in relation to Italy’s sovereign ratings (BBB (high), Negative Trend). (DBRS - Continue Reading)

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