The Weekly Update

Last week we had a quiet start with a lot of Asia out due to the Chinese New Year. We started the week with warnings from Ignazio Visco, the Bank of Italy’s Governor, warning of the downside risks to the central bank’s forecast for economic growth after the nation slipped into a recession in the last quarter of 2018. The recession, Italy’s third in a decade comes as the bank’s latest growth projection of 0.6% GDP growth for 2019 and 1% for 2020 start to look optimistic, in spite of being in-line with national and international forecasters. Visco acknowledged ‘The prospects for the Italian economy are less favourable today than they were a year ago’ adding there are ‘significant risks on the downside’.

We also heard a cautionary note from Dallas Federal Reserve Bank President Robert Kaplan, saying he believes the U.S. central bank will hold off on rate increases until at least the summer. "It's very important for the Fed to get out of the way" and let uncertainties around the economy resolve themselves before weighing any more changes in monetary policy, Mr. Kaplan said at a Friday appearance at the Texas Lyceum, in Austin.

President Trump called for bipartisanship in his State of the Union address — on his terms. He urged immigration compromise while casting his fight against illegal migration as a moral struggle — not a national emergency. He gave Dems no new incentives to break the wall funding impasse. He'll hold talks with North Korea's Kim Jong-Un in Vietnam February 27-28. Financial markets shrugged.

Senior U.S. and Chinese officials were poised to start another round of trade talks in Beijing this week to push for a deal to protect American intellectual property and avert a March 2 increase in U.S. tariffs on Chinese goods, two people familiar with the plans said on Tuesday. In December the US delayed a threatened tariff increase to 25% on $200bn of Chinese goods until March 1 to allow time for negotiations to take place.

Both the EC and the Bank of England slashed their growth forecast for this year, blaming a plethora of ongoing concerns, from trade frictions and a slowdown in China to political instability and the ‘fog of Brexit’. The EC now believes that the EU economy will grow by just 1.3% the year, down from the 1.9% it forecast only 3 months ago, whilst the BoE believes the UK will fair slightly worse at 1.2% growth, down from the 1.7% predicted in November.

And finally, Donald Tusk, the European council president, has said there is a ‘special place in hell’ for politicians who promoted Brexit ‘without even a sketch of a plan’, while he reiterated the EU’s refusal to renegotiate the withdrawal treaty.

This week focus will be on inflation with CPI and PPI in the US alongside retail sales, IP and capacity utilisation. Little is scheduled for release in Europe, however, UK, RPI, CPI and PPI will be of interest given the economic weakness of Q4 and Thursday we get German GDP and EU Industrial Production.

Please read this important information before proceeding. It contains legal and regulatory notices relevant to the information on this site.

This website provides information about Stratton Street Capital LLP ("Stratton Street"). Stratton Street is authorised and regulated by the UK's Financial Conduct Authority. The content of this website has been prepared by Stratton Street from its records and is believed to be accurate but we do not accept any liability or responsibility in respect of the information of any views expressed herein. The information, material and content provided in the pages of this website may be changed at any time by us. Information on this website may be out of date and may not be updated or removed.

The website is provided for the main purpose of providing generic information on Stratton Street and on our investment philosophy for the use of financial professionals in the United Kingdom that qualify as Professional Clients or Eligible Counterparties under the rules of the United Kingdom Financial Conduct Authority (the "FCA"). The information in this website is not intended for the use of and should not be relied on by any person who would qualify as a Retail Client. Products and services referred to on this website are offered only at times when, and in jurisdictions where, they may be lawfully offered. The information on this website is not directed to any person in the United States. The provision of the information on this website does not constitute an offer to purchase securities to any person in the United States (other than a professional fiduciary acting for the account of a non-U.S person) or to any U.S. person as such term is defined under the Securities Act of 1933, as amended.

The website is not intended to offer investors the opportunity to invest in any Alternative Investment Fund ("AIF") product. The AIFs managed by Stratton Street are not being marketed in the European Economic Area ("EEA") and any eligible potential investor from the EEA who wishes to obtain information on the AIFs will only be provided with materials upon receipt by Stratton Street of an appropriate reverse solicitation request in accordance with the requirements of the EU Alternative Investment Fund Managers Directive ("AIFMD") and national law in their home jurisdiction. By proceeding you confirm that you are not accessing this website in the context of a potential investment by an EEA investor in the AIFs managed by Stratton Street and that you have read, understood and agree to these terms.

No information contained in this website should be deemed to constitute the provision of financial, investment or other professional advice in any way. The website should not be relied upon as including sufficient information to support any investment decision. If you are in doubt as to the appropriate course of action we recommend that you consult your own independent financial adviser, stockbroker, solicitor, accountant or other professional adviser. Past performance is not necessarily a guide to the future. The value of investments and the income from them may go down as well as up. An application for any investment or service referred to on this site may only be made on the basis of the offer document, key features, prospectus or other applicable terms relating to the specific investment or service.

Where we provide hypertext links to other locations on the Internet, we do so for information purposes only. We are not responsible for the content of any other websites or pages linked to or linking to this website. We have not verified the content of any such websites. Such websites may contain products and services that are not authorised in your jurisdiction. Following links to any other websites or pages shall be at your own risk and we shall not be responsible or liable for any damages or in other way in connection with linking.

By using this site, you should be aware that we may disclose any information that we hold about you to any regulatory authority to which we are subject, or to any person legally empowered to require such information.

This website uses cookies to improve user experience, by clicking the "I Accept" button below means you consent to the use of cookies on our website.