UK inflation/retail sales
The Bank of England caught the market on the hop this week with its unexpectedly hawkish message about the prospect for interest rates, in the months ahead.
The latest January PMI data would appear to show an economy that has hit a bit of a soft patch, yet for all of that, the tone of last week’s inflation report would suggest that they may well be more worried about the inflation outlook than they would like to admit. Mr Carney’s admission that CPI might tick back higher is a reversal of the earlier position that inflation was likely to have peaked at the end of last year, and it can only be the big increases still being seen in input costs that is probably driving that.
Headline CPI is predicted to slip back to 2.9% for January, however we could see an upside surprise given that January tends to be a month when travel fares see sizeable increases, while commodity prices are also higher than a year ago.
Retail sales are also expected to recover by 0.6% after the 1.5% decline seen in December.
EU and German Q4 GDP
This week we’ll get the preliminary indications of how well the German economy, and ergo the EU economy performed at the end of last year. The prognosis looks positive and moreover it appears that the positive momentum from 2017 has carried over into 2018 if recent economic surveys have been any guide.
Expectations are for a strong end to the year and as such an annualised number of 2.7% is expected, as the negative rate environment continues to act as a tailwind to the economic uplift.
US CPI/Retail Sales (January)
Rising wages over the last two months ought to act as a positive tailwind for both consumer spending as well as headline inflation in the latest January numbers. As far as retail sales are concerned it always pays to be cautious with respect to January numbers as consumers tend to pullback in the aftermath of Christmas spending so that they can stabilise their finances. Nonetheless US retail sales are expected to rise at a lower rate of 0.2%, down from 0.4%. On the inflation front predictions have been marked down from 2.1% in December to 1.9%.
TUI Travel Q1
It’s been a tough few years for Tui (LON:TUIT), but at its update back in August last year the company managed to post its first profit in the first nine months of a year in its history. The rebranding process that has been taking place over the past few months appears to have gone according to plan, as the Thomson name is slowly phased out. The merger of its hotels and cruise business with its tour operator appears to have helped in cost control.
Demand appears to be returning in holiday destinations like Turkey and North Africa, which have been affected by recent terror attacks, and we could see an impact on its cruise business as a result of the recent hurricane season in the Atlantic. Now that Christmas is behind us, consumers will start to turn their attention to their summer holidays so forward booking indications are likely to tell us whether the company is on course to fill its summer holiday schedule.
Kraft Heinz Q4
This time last year Kraft Heinz (NASDAQ:KHC) mounted a rather unwelcome as well as well as unsuccessful takeover bid on Anglo Dutch consumer goods giant Unilever (LON:ULVR). Since then its share price has declined quite markedly recently hitting a 52 week low. While the company has continued to remain profitable, most of this has been down to an increasing focus on costs rather than an improvement in sales which suggests that for all its efficiencies, consumers don’t appear to like its product lines that much. It also explains their interest in Unilever which has a much better cross section of products. Given the underperformance in the share price it’s hard to imagine that this week’s Q4 numbers will pull the share out of their recent slumber.
Cisco Systems Q2
Cisco (NASDAQ:CSCO) shares have been on a decent run of late though we have slipped back a little of late as a result of recent stock market volatility. The company has benefitted greatly from the increased focus on security in the wake of recent cyber-attacks. Its firewall and breach detection systems were a key revenue earner in Q1, with a rise of 8% in revenue. This is likely to continue to act as a decent tailwind to the business, as it places more emphasis on cloud and software based solutions and less on its legacy business of routers and switches.
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