1) US Non-Farm Payrolls (Mar) – 02/04 – on the basis of recent reports the slowdown seen in the US jobs market at the end of last year appears to have largely been driven by uncertainty over the Presidential handover and the expiry at the end of last year of various emergency programs, which were brought in as a result of the pandemic. Since that negative -227k December print we’ve seen job gains of 166k and 379k in January and February as a new $900bn stimulus package was passed at the beginning of January. Consumer spending, which also saw a slowdown at the end of last year is also seeing evidence of a rebound, which augurs well for this coming weeks March payrolls report, as does the recent signing into law of another $1.9trn stimulus package a couple of weeks ago. The vaccination program is continuing apace across the US along with a slowdown in the rise in virus cases, hospitalisations and deaths is also helping in terms of the US recovery, with the March payrolls report expected to see another 600k jobs added, and the third consecutive month of gains. Weekly jobless claims are also trending lower dropping below 700k a week, while the unemployment rate is expected to fall further, from 6.2% to 6%. This is also very welcome but does need to be treated with an element of caution. While we’ve come down from the April peaks of 14.7%, it does come with the caveat of a sharply lower participation rate, which has also fallen quite sharply over the same period. This time last year the participation rate was at 63.4% and is now down at 61.4%. This is important in the context of how many people have dropped out of the work force and given up looking for a new role. This number reflects the number of people who have more or less given up looking for a new role, and as such understates the actual number of people who are probably out of work, which means the headline unemployment rate probably overstates the extent of the recovery in the labour market. A more accurate measure is the underemployment rate which has remained stubbornly high at 11.1%, for the last two months. While this is still below the April peak of 22.8%, it's still well above the low which we saw at the end of 2019, when it was at 6.7%.
2) France/Germany/Italy/Spain Manufacturing PMI (Mar) – 01/04 – one of the main bright spots amidst the gloom of the economic rebound in Europe has been the manufacturing sector and its resilience in the face of restrictions which have, for the most part been in place in some form or other since October last year. With no prospect of an imminent easing, political leaders across Europe’s big four economies will be hoping this resilience continues at a time when the services sector across the continent continues to struggle with the continued closures in their respective sectors. In France this resilience is expected to be sustained after last week's flash numbers saw a rise from February’s 56.1 to 58.8, while Germany also surged, rising to 66.6, from 60.7. Italy and Spain are also expected to maintain their resilience at or around 56.9 and 52.9.
3) UK Final Q4 GDP – 31/03 – this week we’ll get the final numbers for UK Q4 GDP which is expected to confirm the economy grew by 1% in the last quarter of 2020, thus avoiding the prospect of a double dip recession. When these numbers initially came out all of the headlines focussed on the fact that the UK economy saw its worst annual contraction since 1709 at -9.9%. While this is obviously an awful number it also suggests we’ll see a strong bounce back if and when it comes. Services did most of the heavy lifting in Q4 with an expansion of 0.6%, while government spending rose 6.4%. Private consumption was much more subdued contracting 0.2%, compared to a 19.5% expansion in Q3, but that shouldn’t be too much of a surprise given the various restrictions that had been in place across the country over the period of Q4. All in all, these numbers shouldn’t offer too much in the way of surprises given that the markets main focus is now on the upcoming reopening of shops in less than two weeks, and the fact that the Q1 contraction is now likely to be a shallower one that the -4% that was being predicted at the beginning of the year. The sharp rise in UK gilt yields in the last few weeks is reflective of rising market optimism of a strong economic rebound heading into year end, along with the Bank of England revising its growth forecasts upwards for this year, at its recent meeting. The central bank's biggest problem is now having to temper market optimism over any economic rebound, as it is pushing longer term rates sharply higher.
4) UK Manufacturing PMI (Mar) – 01/04 – like its European counterparts the UK manufacturing sector has also managed to perform well, despite the various lockdown restrictions that have been in place since November. Since the initial shock of the first lockdown in March and April of last year, UK manufacturing has been able to sustain a fairly decent rebound closing in on a three year high at the end of last year of 57.5, which was probably helped by a pull forward effect as the Brexit transition period came to an end. Since then, we’ve moderated slightly but as we get set for an economic reopening the sector has picked up further after last week’s flash number showed a rise to 57.9, a decent increase from 55.1 in February.
5) Next PLC (LON:NXT) FY 21 – 01/04 – high street retailers have had a challenging twelve months, undergoing another blow a week before Christmas as a whole host of new areas in England went into tier 3 restrictions, on top of the November lockdown. This was then compounded by the 6th January lockdown which is still ongoing. On the plus side on-line shopping appears to have held up well with sales numbers showing a 31.4% rise in November. Next has always been strong in this area, and the business saw a strong recovery from the March lockdown a year ago which saw sales clobbered by 52%. In that period, Next upscaled its picking capacity of the warehouse operations in order to improve the on-line business, as well as delivery times, which had been suffering due to the extra workload. In October Next said full price sales were better than expected in Q3, and that full year profit before tax is expected to come in at £365m, an increase of £65m on the previous estimate. Risks to this forecast were several, with lockdowns throughout the country in Q4 a clear risk. The company set out three scenarios in the event of such a scenario for Q4 with a two-week lockdown suggesting a 20% decline in sales. Given that we’ve been locked down for over two months, never mind two weeks this estimate is likely to be conservative. In January, Next said that full price sales dipped by 1.1% for the nine weeks until 26 December, however when estimates were for an 8% decline, it’s still a decent result. As a result, Next downgraded its profit forecasts from £365m to £342m. The retailer was much more positive about the outlook for the upcoming fiscal year, even assuming the total closure of retail stores through February and March, as online sales pick up the slack, with estimates for full year profits before tax to come in at £670m.
6) A.G.Barr PLC (LON:BAG) FY 21 – 30/03 – at AG Barr’s last trading update at the end of January the IRN-BRU maker said it expected that full year revenue would be £227m, down from the £255.7m a year ago, but an upgrade to its previous estimates announced in its July update. It can certainly be said that the company has had a better second half of the year then its H1 update, when it was reported that profits before tax fell by 62% to £5.1m from £13.5m. Most of this was as a result of a £11.5m hit in the form of an exceptional charge for reengineering the business to adapt to Covid-19. Revenues also declined during H1 by 7.6% to £113.2m, however an improvement in its operating margins appears to have helped the business to a much better performance in H2, with an expectation that profits before tax will still come in ahead of expectations. This expectation may not have initially been predicated on the prospect of a full hospitality lockdown since that January update was issued, however management haven’t seen fit to change it. Management said that the dividend suspension was expected to be reviewed again with the prospect of a resumption some time in 2021. Investors will be looking for guidance on that, and whether any resumption timetable is pushed back.
7) BioNTech SE (NASDAQ:BNTX) Q4 20 – 30/03 – a rare European success story when it comes to innovation this small German company, has reshaped the landscape when it comes to messenger RNA gene therapy, and its uses in combating a global pandemic. Founded by by a husband-and-wife team, Ugur Sahin and Ozlem Tureci , based in Mainz, Germany, the company specialised in cancer therapy treatments, and then the pandemic hit. In January 2020 Dr Sahin, read an article in the medical journal the Lancet about a new respiratory virus coming out of China, and realised it had the potential due to potential pathogenic qualities to turn into a global pandemic. Within weeks, on the 17th March, he had secured a deal with Pfizer (NYSE:PFE) to help the company with clinical trials on a vaccine candidate, the announcement of which sent the share price soaring. The first stage of trials began in April, while most of Europe was still in lockdown. Phase three trials began in late July, and were expanded all over the world beyond just the US and Germany, to South America, as well as Turkey. The rest, as they say, is history with BioNtech along with Pfizer looking to boost production of its vaccine candidate exponentially in the coming weeks. The company plans to produce up to 750m doses at its new vaccine production site in Marburg, which opened up in February, with 250m of them expected to be delivered in the first half of 2021. In total the company plans to be able to deliver 2bn doses with the help of various partners, in a move that is likely to see its revenues soar. Of course, this will also mean rising costs, but when you look at where its revenues were at the end of 2019 of €109m, and the projections for 2021, they are chalk and cheese, with estimates for its next full fiscal year put at €6.47bn in revenues.
8) Walgreens Boots Alliance Inc (NASDAQ:WBA) Q2 21 – 31/03 – having reported better than expected numbers in Q1 with an increase in revenues of 5.7% to $36.31bn, and profits that also beat expectations at $1.22c a share, hopes are high that the owner of Boots in the UK, and Walgreens in the US will be able to post a similarly strong set of numbers for Q2. While higher prescription sales in the US helped their Q1 numbers it’s likely that the speedy rollout of the vaccine supplies in the US will help their Q2 figures. Walgreens, along with other US pharmacies has been at the forefront of the US vaccine rollout plan due to their scale, which has enabled the US government to make jabs available to a lot more people and on a much quicker basis. This of course means more footfall through its stores and as is the case with other retail providers of vaccines, this has meant that anyone looking to get vaccinated at a Walgreens store has had to open an account. This in turn allows the company to target various ads after they have your user data. Profits are expected to come in at $1.12c a share, but could come in higher given the increased footfall through its stores.