of the week ahead

Transcript

Matt Jones

Welcome to "The Long & Short of the Week Ahead", a production of Eurizon SLJ Capital that takes a look at the macro-economic themes of the week ahead and has been recorded for professional investors.

My name is Matt Jones, Head of Distribution for Eurizon SLJ Capital, and I'm joined by Neil Staines, Senior Portfolio Manager.

Welcome back, Neil. Great to have you here with us again.

So as we look into the week ahead and we certainly at the end of this week experiencing perhaps a little bit more market turmoil with new COVID variants on the rise, perhaps you could give us your thoughts on on the outlook for the week ahead.

Neil Staines

Absolutely, yeah, thanks. I mean, you know, sadly, news over recent days of a new variant has brought COVID back to the forefront of markets. And while there's little known about the the new African variant, it's clearly of significant importance to the global economy, the travel and connectivity, and potentially even on trade. For now, however, it's likely that the surge in Europe is actually the dominant theme, and markets will be keen to gauge the likely economic and indeed policy implications of the current wave. This is, in our view, another area of differentiation across markets and regions.

And then on the data front, we'll be watching for a number of releases. We get the ISM data out of the US, which we expect to continue to highlight the very impressive rebound in domestic demand that we've seen over the latest few weeks since the November FOMC. We get China PMI data for November. Closely watched for signs or pockets of growth stabilisation in China. That'll be very interesting. We also get the updated economic outlook from the OECD, which is likely to emphasise the market focus on the global economic evolution, but also on economic differentiation, which I think is obviously a key theme that we've heard. And lastly, next week brings an OPEC ministers meeting. Now following on from the US led concerted strategic reserve release where India, the US, Japan, the UK and even China released some of their strategic reserve in order to try to weigh on the oil price. The debate around the OPEC table about maintaining the pace of planned output hikes or reassessing that in light of this new official supply will be a fascinating watch and potentially very important for market sentiment.

But really, there is no question that the highlight of next week, not to count Cyber Monday sales, the highlight of next week is the US employment report. The report will be a key focus for further signs of the emergence from the Q3 COVID wave that clearly slowed the economic momentum, especially in the service sector. It will be closely watched for the recovery of the labour market and thus implications for consumer demand and economic growth. And perhaps most acutely for from a financial market perspective, the pace of the labour market recovery will be seen as a gauge of progress towards full employment and thus the Fed's reaction function. And that's really where the emphasis of markets focus will will come. Is there an increased prospect of a taper acceleration and even bringing rate hikes closer? Now, last week's claims data got to the lowest level since 1969, just 199,000. So, you know, there are signs of a clear re-acceleration or improvement post the disappointing Q3 data that is likely related to to the COVID wave. In fact, more explicitly, we have heard a number of Fed speakers of late linking the employment progress as a major factor in in favour of a faster taper going forward and earlier rate hikes thereafter. There'll also be some focus on the average hourly earnings and any indication of inflation feeding into wage gains. But really, the payroll will be the big event for next week.

Matt Jones

Thank you, Neil. A fascinating week ahead and all eyes on the end of next week. In the meantime, we have the weekend, perhaps not a lot really going on when it comes to sport. Think we've been spoilt a little bit of late, but in lieu of some sporting action - what are you going to be up to?

Neil Staines

Yeah, absolutely. Thanks. I mean, you're right, it's a very frugal weekend this weekend. No international rugby, Formula One gets a week off after Lewis narrowed the gap to just eight points at the past two Grand Prix so I think fascinating there. We do have some football to mention. Certainly a bit of a continuation of the baptism of fire, if you will, for the new Manchester United manager as they face Chelsea this weekend and also Manchester City vs. West Ham, one of the big games of the weekend. Obviously, there are a couple of other fixtures that hit top of the table against bottom of the table, so perhaps some upsets on the cards there. But overall, really, you know, we're sandwiched in between Black Friday and Cyber Monday. So if we're not glued to the sporting screens this weekend, then perhaps we're glued to those for potential bargains. And if you're feeling like getting in the festive mood, I'm sure there are plenty of ice skating and Christmas markets around and why not try the Christmas lights of Kew Gardens.

Matt Jones

Fantastic. Some great ideas that I look forward to catching up on Monday and hearing all about it. But in the meantime, thank you for joining us once again and we look forward. Catch up with you again next time.

Neil Staines

It's been a pleasure. Thanks, Matt.

Matt Jones

Thank you for joining us for "The Long and Short of the Week Ahead". Further insights are available on our website eurizonsljcapital.com/insights. We look forward to you joining us again next week for more insights into macro-economic events and "The Long and Short of the Week Ahead".

Disclosure

None of the contents of this document should be understood as constituting research on investment matters, or as a recommendations, advice or suggestions, implicit or explicit, with respect to an investment strategy involving the financial instruments discussed, or the issuers of the financial instruments, nor as a solicitation or offer, nor as consulting on investment matters, of a legal, fiscal, or other nature. All the companies of the Intesa Sanpaolo Group, its administrators, representatives, or employees, decline any responsibility (fault-based or otherwise) deriving from indirect damages potentially caused by the use of this communication or its contents, or in any case deriving in relation to this document, nor may they be consequently held liable for any of the above. The information provided and the opinions contained in this document are based on sources considered reliable and in good faith. However no declaration or guarantee is offered by Eurizon SLJ Capital Limited, explicitly or implicitly, on the accuracy, exhaustiveness and correctness of the information, and there is no guarantee that results, or any other future events, will be compatible with the opinions, forecasts, or estimates contained herein.

Views accurate as at the time of publication. Opinions expressed by the authors are their own and do not necessarily reflect those of Eurizon SLJ Capital Limited, Eurizon Capital SGR or the Intesa Sanpaolo Group.
The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

ESLJ-261121-PO1

Subscribe to our insights

If you are interested in our content, please sign up below and we will deliver Eurizon SLJ insights right to your inbox.



    I consent to my data being collected and stored for the purposes of providing me information regarding my enquiry and related services. If you have any questions about your data please contact us at research@eurizonslj.com

    Envelopes on a wood background

    Our Research

    Our written research products aim to provide unique and orthogonal insights on key global economic and policy issues in a timely fashion.

    Aerial view of forest during  colourful autumn season.