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.

Neil Staines

Thanks Matt. I think there are a few things that we are looking forward to on the calendar next week.

Firstly, after the ECB this week, the big focus next week turns to the FOMC and specifically with the recent rhetoric turning a little more hawkish - Powell talking about the inflexion point, talking about the recovery suddenly gathering speed - and I think the emphasis starts to swing back towards the growth picture in the US. I think this is an important point; possible adjustment to the narrative around growth, whether or not there's any expectation that we are approaching a period where we may be defining something as 'substantial further progress', although I think that will have to be communicated very carefully. I think, though, we are likely in a position where we are no longer not even thinking about thinking about raising rates, but H2 is going to be very strong and therefore we are going to need to start to consider how we communicate a normalisation of rates. To describe it: it is no longer full foot to the floor in the US, but certainly with an eye to the road ahead. That's where we see the Fed.

Secondly, on Thursday and Friday of next week we see Q1 GDP figures from both the US and the Eurozone, and I think this is going to be very specific, particularly bearing in mind our expectations that there is greater differentiation in the recovery from this particular covid crisis. Expectations are around 6% annualised level for US Q1 GDP growth and in the Eurozone, as was suggested at the ECB meeting this week, we're still expecting a negative print in Q1. Now, both of those are before we're expecting an acceleration back into positive territory in the Eurozone in Q2 and a further, faster acceleration of US growth into Q2. But I still think this very much fits with the differentiation theme that we've been looking at over a number of weeks now.

Lastly, on Friday, in some respects, the final piece of the puzzle, if you will: we'll be looking at the China PMI data for April. After China has attained its pre-covid activity levels, the focus comes back to, where is the sustained or equilibrium level of growth in China at the moment? What is the baseline growth level? Now, the interesting point, particularly for areas such as the Eurozone, which are very dependent on export demand led growth, is that I think this has important connotations for growth expectations - or sustainable growth expectations - for a number of other global export economies going forward. So these are the three areas I think that will drive sentiment and and positioning next week.

Matt Jones

Thank you, Neil. There's certainly a lot for investors to be thinking about thinking about this week. Last week, as we turned our attention to matters outside of financial markets, you mentioned that you were going to be venturing to a restaurant for the first time as part of the lockdown easing. How did that go?

Neil Staines

Yes, I did manage to to dine out for the first time in a very long period last week. And whilst my food may have gotten colder a little quicker, sat outside, than I would have liked, it was a very pleasant experience all in.

There are two events that I think are quite interesting over the course of this weekend. The League Cup final in the U.K., between Spurs and Manchester City, and that will take place in front of 8,000 fans, which is something of an anomaly over recent times. And, of course, the Oscars. You know anything about the Oscars, Matt?

Matt Jones

I think the only fact that I know about the Oscars is that this is going to be the third year in a row where there's no host, which for me, I think you lose some of the some of the magic. But no, I can't claim to be an expert on the Oscars.

Neil Staines

No, me neither. Although I did enjoy the film "The Trial of the Chicago 7". I do think there's a joke in there somewhere about the backers of films in the Oscars desperately wanting people to watch their projects and those in the League Cup final where, after the debacle of the Super League, the owners of Manchester City may rather that this was taking place behind closed doors after recent events.

Matt Jones

Thank you, Neil. And 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.
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