09 Feb 2019
“Fiscal stimulus would be very welcome among risk assets, but there’s a high degree of scepticism about whether or not it will actually come through. We now have a history of a lot of discussions on fiscal stimulus and then only modest follow-through, or programmes have taken much longer to implement than people would like.
“Fiscal stimulus needs to be targeted. It needs to come towards parts of the consumption sectors that people feel are weak, particularly in Europe. It can’t be these long-range 5-10 year infrastructure projects that take a long time to get cash flowing through the system.
“I would say the market and risk assets will be encouraged by talk of fiscal stimulus, but there has to be a concrete plan and a time line for it to really affect the way people think about earnings and influence equity returns.”
Financial advisers remain the most trusted source of advice, beating friends and family, financial services websites and social media.
Across Europe human advice is highly valued. FAs are seen as the most trusted source of information.
.png)
Source: BlackRock Investor Pulse, May 2019
German manufacturing purchasing managers indices (PMI) - The German IHS Markit PMI for manufacturing rose only marginally to 43.6 in August, from 43.2 in July, doing little to allay fears of a recession. The German economy contracted by 0.1% in the second quarter and forward-looking indicators such as new orders bode continue to suggest weakness.1
Eurozone manufacturing and services PMI - The IHS Markit PMI index for the Eurozone beat expectations in August, rising to 51.8, from 51.5 in July. Economists polled by Reuters had expected a decline to 51.2. Continued growth in the services sector continued to support the aggregate indices.1
US manufacturing PMI – US manufacturing dipped by the most in 10 years, as the trade war took its toll. The US manufacturing PMI was 49.9 in August and fell below the neutral 50 threshold for the first time since September 2009. Any reading below 50 signals a contraction.2
President Donald Trump said the US and China will "very shortly" resume trade talks, though China was less enthusiastic about restarting negotiations following a sharp hike in tariffs on billions of dollars of Chinese imports in retaliation for fresh duties from Beijing.3
The UK posted a smaller-than-expected budget surplus in July, giving Prime Minister Boris Johnson less room for spending promises and tax cuts.4
1 Uptick in Eurozone economic activity fails to dispel German gloom, Financial Times, August 2019
2 Manufacturing sector contracts for the first time in nearly a decade, CNBC, August 2019
3 Trump says US and China to resume trade talks, BBC, August 2019
4 Government finances weaker than expected in July, BBC, August 2019
Eurozone inflation (August, flash), unemployment rate (July): Consumer prices in the Eurozone are expected to rise 1.1% year on year, with core inflation up 0.9%. Inflation has consistently been below the ECB’s target of 2%. Unemployment is expected to hold steady at 7.5%.5
Eurozone Markit Manufacturing PMI (August) - Manufacturing PMIs are due for Spain, Italy, France and Germany. Only France is expected to be in positive territory as countries are caught in the cross-fire of the US/China trade war.6
UK PMI – construction, manufacturing – both are expected to be weak and at levels indicating contraction.6
British Retail Consortium retail sales - like for like retail sales. Retail sales showed a surprising bounce last month underpinned by strong internet sales, but forecasts are for a gloomier picture this month.7
5 IG Index, the Week Ahead, August 2019
6 FX Street, Economic Calendar, August 2019
7 UK retail sales unexpectedly jump in July, Financial Times, August 2019
The opinions expressed are as of August 2019 and are subject to change at any time due to changes in market or economic conditions. The above descriptions are meant to be illustrative only.
Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. You may not get back the amount originally invested.
Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.
Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.
Important Information
This material is for distribution to Professional Clients (as defined by the Financial Conduct Authority or MiFID Rules) and Qualified Investors only and should not be relied upon by any other persons.
Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: +44 (0)20 7743 3000. Registered in England and Wales No. 2020394. For your protection, telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited.
Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.
This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.
©2019 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, iSHARES, BUILD ON BLACKROCK and SO WHAT DO I DO WITH MY MONEY are registered and unregistered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.