Profitability Reports of our clients from April 2018
Thursday, 10 of May 2018
World Macro Panorama,
GLOBAL MACRO PANORAMA
EURO ZONE: Quarterly GDP growth in 1Q18 showed a slowdown growing 0.4% (0.7% previous quarter), the ECB attributes this moderation to temporary factors (winter season, Easter and strikes), private consumption continues to decline, sufficient arguments to maintain the stable monetary policy as well as the current asset purchase program.
Temporary exemption from US steel and aluminum tariffs effective until June 2018. President Trump seeks to press agreements to reduce his trade deficit.
EEUU: The economy grew 2.3% in the first quarter above expectations (2%), according to the preliminary figure, although with a slight moderation compared to the previous quarter (2.9%).
Lower growth in consumption 1.1% (previous 4.0%), Lower government spending with a variation of 1.2% today vs. 3.0% in the previous quarter, while private investment accelerated its growth rate with a variation of 7.3% compared to 4.7% previous, as a consequence of fiscal stimuli.
The unemployment rate reached its lowest level in 18 years while consumer confidence rose to a decade high, despite this the Fed kept the interest rate unchanged, it is expected that for the June meeting, it will increase the types to the range of 1.75% - 2%.
The treasures to 10 years exceeded the level of 3%, leading to the strengthening of the dollar. The demand for US bonds is based on doubts about the continuity of the expansive cycle acting as a refuge asset, as well as the return of flows from higher risk assets.
UK: The brexit must be approved by the parliament, given the fear of the economic agreements that could be reached, especially the permanence in the customs union, which would limit new agreements with other countries.
Regarding monetary policy, no changes are expected in the rates by the BOE for the May meeting as a consequence of the lower rate of growth and decrease in inflation.
JAPAN: The Bank of Japan (BoJ) maintained its monetary policy unchanged, inflation continues to show weakness far from the 2% target for 2019.
CHINA: A round of negotiations with the United States was concluded in which there were no commercial agreements.
The US government requires China to reduce the deficit by 200 billion dollars by 2020, also warned about additional tariffs on technology and intellectual property.
Financial Markets (at May 04 2018)
Fedreal Reserve kept its interest rate unchanged, as the market discounted it. The decision was based on the fact that inflation has not yet achieved the 2% target, despite the underlying CPI accelerating to 1.9% year-on-year, which reinforces the probability of an increase in the June meeting.
Regarding the economic outlook, in the statement the FED highlighted that the fixed investment of companies continued to grow at the same time as the labor market has strengthened, the good performance of economic data warns a bullish movement on prices, however FED shows its intention to tighten monetary conditions to the extent that the data continue to advance.
Thus, while in the United States the macroeconomic data disturbs investors by suggesting a faster than expected advance in the economy and thus inflationary pressures, in the Euro Zone the lower rate of progress in the indicators is a source of concern. The preliminary reading of the CPI for April fell back to 1.2% year-on-year; as well as the rhythm of growth for the first quarter, which stood at 2.5% (previous 2.7%).
The composite PMI continued in an expansive zone, although it declined for the third consecutive month to a level of 55.1, while retail sales increased at a slower pace with a monthly variation of 0.1% (after 0.3%, estimated 0.5%). As for the unemployment figure, it was in line with the estimates, standing at 8.5% in March.
Macroeconomic publications, added to the uncertainty caused by the state of the commercial relations, distracted the attention of investors regarding the business results that continue to be favorable in the United States and to a lesser extent in Europe. At the end of the month, more than half of US companies had published results of which 68% exceeded market expectations, in Europe 47% of companies already presented their earnings for the first quarter of 2018 without exceeding estimates.
The main European stock indexes ended the month of April in positive territory. The FTSE100 led the gains advancing 6.8%, followed by the CAC40 which added 6.8%, while the DAX and the Eurostoxx showed gains of around 4.4%. The Ibex for its part managed to overcome the barrier of 10,000 points reaching a valuation of 3.9% in the month of April.
Wall Street also closed bullish. Gains of 0.27% in the S & P500, 0.25% in the Dow Jones as the Nasdaq motivated by the recovery of technology companies heavily penalized in the previous month.
The Asian market also showed significant progress, despite the commercial uncertainty and volatility in the region's currencies.
The reference oil Brent reached the level of 75usd / barrel with a monthly variation of 6.97% as a consequence of the geopolitical tensions in the Middle East. For its part, the EUR / USD ended the month around 1,207 with an appreciation of the dollar in response to the prospects for an increase in interest rates in the United States.