1. UK wages/unemployment (Apr) – 11/06
The Brexit extension in March didn’t have quite the effect of boosting consumer spending in April as originally anticipated, however the numbers were still largely better than expected, largely as a result of the timing of Easter, and some decent weather.
Unemployment levels has continued to drift lower, despite reports of job losses in retail and manufacturing in recent weeks. Inflation does appear to be starting to drift higher, largely as a result of higher fuel prices and this may crimp consumer spending. Nonetheless this week’s wages numbers for April are expected to see wage growth come in at 3.3%, and unemployment remain steady at 3.8%.
2. G20 finance ministers and central bankers meeting – 08-09/06
G20 finance ministers are set to meet in Fukuoka this weekend with the main topic of discussion likely to centre around trade, as well as how to tax big multinational corporations like Google (NASDAQ:GOOGL) and Facebook (NASDAQ:FB). These discussions are likely to set the tone for further discussions at the main G20 summit at the end of this month. It could also give the opportunity for US Treasury Secretary Steve Mnuchin to try and reopen a dialogue with his Chinese counterpart Liu Kun.
3. China Trade (May) – 13/06
The most recent set of China trade data for April were a little bit of a mixed bag after some improvement in the March numbers, which saw exports rebound quite strongly. This appeared to be a bit of a false dawn, however, as April showed exports decline 2.7%, with the rebound in exports probably due to some front running of increases in tariffs.
As an arbiter of internal demand imports also surprised to the upside rising 10.3% and posting their first positive number on four months. The trade numbers are likely to be skewed in the coming months by front running ahead of rises in tariffs, particularly since China announced that it would wait until the 1st June before putting its own tariffs on $60bn worth of US goods.
4. China Retail Sales/Industrial Production (May) – 14/06
The manufacturing sector has been a serial underperformer most of this year, and it is unlikely that the May numbers will be any different.
In March industrial production saw a strong rebound in March to 8.5%, however this appears to have been a flash in the pan, after April fell back to 5.4%. Retail sales also slowed in April after a big March rebound, coming in at 7.2%, and the lowest levels in 16 years. There was no sugar coating the April numbers, they were dreadful, and investors will be hoping that they are a one-off, and we see a rebound in May. If we don’t, and in the absence of a dialling back in trade tensions, we could expect further downside in global markets.
5. Swiss National Bank rate decision – 13/06
The Swiss National Bank has been on hold for several months now with the headline rate deep in negative territory at -0.75%. Despite this the Swiss franc has been one of the main beneficiaries of the selloff in equity markets, rising across the board, with the exception of the Japanese yen. Swiss policymakers are unlikely to be happy with this state of affairs, however there is little they can do about it, which means that the most likely outcome is for a dovish statement in what they hope will limit the deflationary effects of a strengthening currency.
6. US Retail Sales (May) – 14/06
For an economy that is growing at 3% annualised GDP, and wage growth at well above 3%, the US consumer doesn’t appear to be in any rush to go on a spending spree if recent US retail sales numbers are any guide.
In April and February retail sales declined 0.2%, and while March saw a strong gain of 1.6%, this figure comes across as a significant outlier, when looked at over a longer period. The big question is whether May will be any different? Based on the numbers it should be, unemployment at multi year lows, personal incomes are rising, which would suggest that May could see a stronger number.
7. Crest Nicholson Holdings plc (LON:CRST) – 11/06 H1 19
A sluggish London and south east housing market, saw pre-tax profits slide by 15% at the end of the last fiscal year. Higher costs have eaten into margins along with lower sale prices, with the company struggling to offset the rise in build costs. To combat this the company closed its London office, shifting its focus towards the Midlands and Chilterns.
Management warned in January that they expected the first six months of this year to difficult, given the approaching Brexit deadline. Sales are still expected to remain robust, however attention should be directed towards average selling prices in terms of whether or not it will come above the £393k that we saw at the end of last year.
8. Tesco (LON:TSCO) Q1 20 sales and revenue - 13/06
Last year was a good year for Tesco with a 34% jump in profits. Since then Tesco’s share price has slid to three month lows. They will do well to be able to reproduce that kind of performance in the weeks and months ahead.
This week’s Q1 sales numbers are likely to be a reminder that the tough retail environment is likely to remain a drag on profit margins over the next few months. This appears to have been borne out by the latest Kantar data which showed that the UK’s number one supermarket share dropped to 27.3% at the end of last month from 27.7% a year ago.
Once again this has been due to the discounters Aldi and Lidl eating into its market share. This competitive environment has seen Tesco pull back from a number of its non-core operations, as it strives to keep a lid on its costs. The decision to pull out of the mortgage market and offload its mortgage book is just one such example of focussing on its core competencies.
9. Majestic Wine (LON:WINEW) FY19 – 13/06
Oenophiles will be keeping a close eye and hopefully raising a glass to this week’s full year trading update for Majestic Wines, the UK’s leading wine specialist.
The shares have had a disappointing last 12 months, giving shareholders a permanent hangover after management found itself on the receiving end of Brexit uncertainty when it posted its half year update at the end of last year. The merger with Naked Wines in 2015 appears to have not offered the synergies expected after the company swung to a loss in the first half of the year, as a tough retail market cut into its margins.
Additional costs in terms of stockpiling cost the company £8m while the second half of this year is unlikely to offer much in the way of comfort. Consensus expectations are for revenues to improve by 6.6% to £507.3M (NYSE:MMM), and gross profits to rise to £137.7m, with margins expected to decline slightly from a year ago.
10. Broadcom (NASDAQ:AVGO) Q2 2019 – 13/06
Semiconductors have taken an absolute caning in the last few weeks over concern about the impact of tariffs on its global business. In March the company saw revenues rise 8.7% year on year and 6.3% on the quarter. While this was below market expectations it wasn’t by much and was offset by the company guiding higher on revenues and operating margins.
Management projected an increase to $24.5bn on revenues and 51% on the latter. This seems optimistic given recent events and could well see a modest downgrade to forecasts. One advantage Broadcom has its diverse business model with franchises in storage, as well as wired and wireless infrastructure, as well as software with its recent acquisition of CA Technologies.
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