ECB, surplus profits and ‘Freedom Day’ from Reuters

(Reuters) – 1 / ECB DAY

Two weeks after presenting a close-up review of the long-awaited strategy, the ECB will have questions at Thursday’s meeting on what the new policy target for 2% inflation could mean.

If the ECB is committed to raising inflation to 2% (before but close to 2% before), is it sure that bond purchases will continue for a long time to come? The pigeons are already arguing that the ECB needs to highlight its maneuvering range to be credible.

Also, hawks already have a need to reduce stimuli as the economy progresses. Perhaps worried about coronaviruses reviving growth, ECB chief Christine Lagarde will find common ground at Thursday’s meeting. A quiet summer can happen for most, not the ECB.

Reuters survey chart on eurozone economic outlook: https://fingfx.thomsonreuters.com/gfx/polling/yxmvjzxdjvr/ECB%20final%20July%202021.PNG

2 / EXTERIOR

Many developed economies are reducing emergency stimuli but China has just added more money to its banking system and there is an external possibility that the benchmark lending rate (LPR) set by Chinese banks could fall on Tuesday.

The two-way economy is seeing headwinds, growth and exports are peaking, consumer spending. A secure regulatory environment for large companies and solutions with the United States are weighing on investor sentiment.

After the recent cuts in bank reserve requirements and seeing the economy lose some sort of loss in the second quarter, markets are expected to ease the money, despite tight fiscal policy.

Graph: China’s GDP and rates – https://fingfx.thomsonreuters.com/gfx/mkt/yzdpxlzzgpx/Pasted%20image%201626342515440.png

3 / FIRST FAANG

The U.S. second-quarter earnings season began with stronger numbers than banks expected, now it’s the turn of technology and consumer giants, including Netflix (NASDAQ 🙂 to include heavyweight transmission.

Dear home trade last year, this year Netflix’s shares have risen by only 2%, as investors have switched to shares that are beneficial as the economy reopens. The lower production of TV shows and films at COVID-19 has hurt subscriber growth.

U.S. economic growth has peaked, however, as technology stocks have driven markets for the past several decades, so shares of Netflix have also gathered late.

In the coming days, quarterly results such as Johnson & Johnson (NYSE :), Coca-Cola (NYSE :), Twitter and Intel (NASDAQ 🙂 will also be seen.

Graph: “FAANG” stocks in 2021 – https://graphics.reuters.com/USA-STOCKS/NETFLIX/rlgpdrywxpo/chart.png

4 / IS IT GOOD?

Meanwhile, the European earnings season has begun in earnest and corporate profits are expected to more than double in Q2.

According to Refinitiv I / B / E / S data, the profits of the 600 largest European companies listed are up 110% between April and June.

However, investors fear that this is as good as it will get and that volatility could continue after peaking – profit growth rates of between 34% and 28% are expected for the last two quarters of 2021.

It is also to deal with COVID-19. In Europe, as on Wall Street, courses have moved closer to the record, but the risk of a renewed blockade could easily fall from that perch.

Chart: European earnings – https://fingfx.thomsonreuters.com/gfx/mkt/jznpnyaqbvl/Pasted%20image%201626250481323.png

5 / FREEDOM OR RISK

The British media calls it “Freedom Day”, saying Germany is “a very high-risk experiment”. So who’s right on July 19, the day Britain stops coercing activities and wearing a mandatory mask related to COVID-19?

Thanks to the British vaccination campaign, this year’s book has become the best-performing G10 currency, boosting shares in the UK hospitality and retail business and boosting hopes of a quick economic rebound.

The rise of the Delta variant and the anticipation of the UK COVID case reaching 100,000 by the end of August are sparking unrest. Bonds are being rushed to safety as European travel shares fell 8% on the last trip.

Notes from the Purchasing Managers ’Index on Friday may reflect the impact of rising activity on infections. Going back on plans to reopen things like Israel and the Netherlands and keeping Germany honest until vaccines go up, there is still a long way to go to see how long the British have the freedom to block.

Graph: COVID cases in the UK – https://fingfx.thomsonreuters.com/gfx/mkt/oakpedkoqvr/Pasted%20image%201626295027784.png