Super Tuesday
- Primaries were held in 15 States
- After the Supreme Court ruling, Donald Trump is likely to dominate.
- The results point to a rematch of Biden vs. Trump.
- Despite a solid economy, falling inflation and strong labour market, Joe Biden is trailing
- In the meantime, a government shutdown has been avoided, or rather delayed, for a few weeks, with ample support from both parties to avoid a crisis
China’s ambitious growth targets
- At the National People’s Congress, premier Li Qiang announces a target of “about 5%”
- The property slowdown and low investor confidence are powerful headwinds
- The government will issue special bonds to fund specific sectors
- Stabilising the economy while containing leverage are conflicting goals
- Poor internal demand will result in exporting deflation, raising international tensions
After inflation come payrolls
Non-farm payrolls on Friday – February’s print is usually impacted by numerous seasonal factors– Will the number play in favor of the Fed’s “No rush to cut” mantra?
- Non-farm payrolls in February expected at +200k (vs. +353k prior)
- February is known for sharp swings from seasonal layoffs to hiring – bad weather impacted hours worked in January
- Last month’s numbers and Thursday’s PCE* (Personal Consumption Expenditure) core deflator print (+2.8% yoy) still suggest both economic resilience and stickiness in inflation in the US
FED’s mood: cautious and patient
Capitol Hill semiannual monetary policy testimony – Powell is expected to double down on the message there’s no rush to cut interest rates – Recent interview “…danger of moving too soon is that the job’s not quite done...”
- Cautious approach validated in recent weeks by data showing inflation picked up in February, it remains above the 2% target
- Patient about potential interest-rate cuts, at least through the next meeting on March 19-20, with the first cut likely later this year
European Central Bank preview
- No cuts expected on Thursday, focus will be concentrated around wording
- More confidence on the inflation front is required before any action
- Given last Friday’s CPI* prints (3.1% yoy), and the fact that doves are currently in minority within the governing council, an April move seems highly unlikely.
- June is the base case for first cut– The big question is: will the European Central Bank be willing to anticipate the Fed?
End of the road for the iCar…
- Around the world, car manufacturers feel the strain of falling sales
- Poor endurance and lack of infrastructure are the main culprits
- Competition from manufacturer like China’s BYD is proving stronger than expected
- After ten years, Apple throws in the towel on the electric car projec
- Resources and funds will be diverted to Artificial Intelligence
A look at Pharma
- Pipeline disappointment has led to volatility. Safe haven plays, such as Swiss pharma, have lost some of their status
- Negative news from clinical trials have caused Roche to underperform the large cap pharmaceutical sector
- Prospects for 2024-27 are uninspiring: this could weigh on growth
- Investors are at best cautiously optimistic
- With14 blockbusters and 12 new candidates, Novartis has a well diversified portfolio
- Missed out on GLP-1 (obesity) , SGLT-2 (diabetes)
- But has advanced candidates in the earlier treatment of some types of cancer
- Novartis appears better positioned than Roche
- Contract Development and Manufacturing Organisations (CDMOs) are currently better positioned
Disclaimer
The information, products, data, services and instruments contained or described in this publication are for information purposes only and constitute neither an advertisement or recommendation nor an offer or solicitation to buy or sell any product.
The financial products described in this publication are not suitable for all investors. The information contained in this publication does not represent any financial, legal, tax and/or other recommendations. Any investment or other decision should not be made solely on the basis of this document. Before making any investment decision, it is recommended that you seek a thorough examination of your situation and the advice of a qualified specialist.
Although the information contained in this document has been compiled by PKB on the basis of or with reference to sources, materials and systems believed to be reliable and accurate, PKB does not guarantee its currency, accuracy or completeness.
PKB accepts no liability, to the fullest extent permitted by applicable laws and/or regulations, for loss or damage of any kind arising directly or indirectly from the content, accuracy, completeness or otherwise of the content or any third party content referred to in this publication.
The analyses and forecasts contained in this publication are based on assumptions, estimates and hypothetical models which may prove to be incorrect and therefore lead to substantially different results.