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Good Morning: The Long & the Short of it and The Bigger Picture - 11 February 2019 - ADM ISI

Ostwald, Marc
08:29 (43 minutes ago)

to Marc

- UK data deluge, including Q4 GDP, dominates start of week; France Business
Sentiment and Norway CPI to be digested; modest run of earnings; rest of
week data and earnings heavy, plenty of Fed and ECB speakers

- Q4 GDP: well flagged slowdown vs Q3 pace; strength seen in govt spending,
reasonable boost from private consumption, business investment to drag,
net exports seen neutral

- Week Ahead: busy week for US, UK & China data, German & Japan Q4 also in



China returns to the fray following the Lunar New Year holidays, but it will be the UK which steals the show in statistical terms via way of a deluge of activity data. Indeed outside of that UK onslaught, a busy looking data calendar is rather thin upon closer inspection, with Norwegian CPI and the BoF's Industry Sentiment (well below forecasts, but BoF looking for a respectable 0.4% q/q for Q1 GDP) the only other items to be digested, and as much as the corporate earnings schedule remains busy, today's run is anything but overwhelming. As such politics may well rule the roost, with Brexit, EU tensions (above all France/Italy), US / China / EU trade negotiations and the only other item that can challenge Brexit in the world of 'morons have taken over politics', i.e. the looming prospect of yet another US government shutdown on Friday.

** U.K - Q4 GDP plus, plus, plus (sic? Ed.) **
As previously noted on all too numerous occasions, incoming UK data are clearly subordinated to the Brexit 'cliff edge'. Be that as it may, they are expected to offer a supporting rationale for the Bow's decision to cut its 2019 GDP forecast to a lowly 1.2% y/y. The week kicks off with a whole array of activity data including Q4 and monthly Dec GDP, with the former dropping to 0.3% q/q vs. Q3 0.6%, and Dec seen flat m/m after 0.2% in November. In the detail on Q4, Private Consumption (0.3% q/q) and Govt Spending (0.5% q/q) are expected to offset a drag from Fixed Capital Formation and Business Investment, and Net Exports seen neutral. In terms of the monthly data, the Trade Balance is seen little changed at £-11.95 Bln, while Industrial Production (0.1% m/m) and Manufacturing Output (0.2% m/m) are forecast to claw back most of their November drops, with Construction Output just about expanding (0.1%) after a better than expected November (0.6%), though the pivotal (in GDP terms) Dec Index of Services is seen unchanged m/m after November's 0.3%.