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WHAT YOU NEED TO KNOW!

WHEN THE LONGER-TERM S&P 500 RALLY STALLS

It has been my studied opinion that periods of strong annual stock gains of over 20%, then followed by short-term flat performance, have historically led to weaker returns in the following 3 to 6 months.

The US equity markets are increasingly exhibiting range bound behaviour. If breakouts to higher levels do not develop from these levels then markets can historically be counted on to find support at lower levels, from which to attempt to launch an upward trend. Markets want to grow if earnings grow.

However, when Overbought, or Overvalued or have Mispriced Risk, then the "Stall" can be counted on to develop into a "Spin"!

CHART: Market Desk Research

RESEARCH - MARKET DRIVERS

1- TIME TO INVEST IN THE US & EU DEFENSE SECTORS?

• EU is planning massive defense budget increases of $3.1T over 10 years.
• Goldman's index of European defense shares topped a record high: Saab +11%,Hensoldt +13%, RENK +13%, Leonardo +5.7%, BAE Systems +7%.
• Taiwan is considering multi-billion Dollar weapons purchase from US, according to Reuters sources. "Arms purchase could be between USD $7-10B" as RTX and LMT spike.
• US Defense Department under Secretary Hegseth has announced redirecting budget towards goal of

"War Fighting".

2- INVESTING IN CHINA TECH & AI

• Goldman Sachs is out with a major China - AI Report.
• The report suggests that widespread AI adoption could boost Chinese EPS by 2.5%/year over the next decade and raises their target price for the overall equity market.
• "Improving growth prospects and perhaps a confidence boost could also raise the fair value of China equity by 15-20%, and potentially usher in over US$200bn of portfolio inflows. These prompt us to raise our MSCI China/ CSI300 target to 16%/19% implied 12m upside."
• We highlight some of the highlights & chart porn.

DEVELOPMENTS TO WATCH - POLICY DRIVERS

1- TRUMP'S SIX QUESTIONS FOR EUROPE

• President Trump is clearly taking aim at Europe! It has become increasingly clear that President Donald Trump is coming after the EU as part of a crafted strategy to setup a "Deal"!
• This week we witnessed:
• JD Vance's EU Speech sets EU leadership on its heals.
• Russia / US talks held in Saudi Arabia w/o Ukraine and EU??
• Trump Tariffs on the docket for the EU and their Auto Industry.
• Now Trump sends the EU Six Questions he wants their leadership to answer.
• The Gauntlet is being thrown down - HARD!!!

2- A US SOVEREIGN WEALTH FUND

• President Donald Trump has signed an executive order establishing a U.S. Sovereign Wealth Fund (SWF), a groundbreaking move that could reshape the nation’s economic future.
• The fund, designed to invest in infrastructure, advanced technology, manufacturing and other strategic industries, marks a significant departure from past U.S. policy. If managed wisely, it is certain to drive long-term:

1. Economic growth
2. Enhance national security and
3. Strengthen America’s global leadership.

• With the executive order now in place, the Treasury and Commerce Departments have 90 days to present a detailed plan for how the fund will be structured, financed, and managed. Several potential funding sources have been discussed, including: Monetizing Federal Assets, Spectrum Auctions,Tariffs and Direct investment Partnerships with the private sector.

GLOBAL ECONOMIC REPORTING - 

ECONOMIC DRIVERS

INFLATION MONITOR

• REGIONAL BANK REPORTS - Uptick in Prices Paid
• GOLDMAN INFLATION MONITOR REPORT - The core CPI increased 0.23% month-on-month. The year-on-year rate is now at 3.25%.
• SERVICE SECTOR INPUT COSTS - Cost pressures intensified to the highest since last September.
• Service sector input cost inflation edged up to a four-month high.
• Manufacturing saw the steepest increase in costs, with raw material prices showing the largest monthly gain since October 2022.
• INFLATION EXPECTATIONS - After exploding higher (to 4.3%) in the preliminary February data, UMich's final print for the medium-term (5-10Y) expectation shot up to 3.5% - its highest since April 1995.

RESEARCH - Market Drivers

1- INVESTING IN THE US & EU DEFENSE SECTOR

Since publishing our 2020 Thesis paper "Global Conflict" we have felt that longer term holding in global defense contractors would perform well.

GLOBAL CONFLICT

Download pdf

US

Under the new Secretary of Defense the US DOD is working to execute the priorities of achieving peace through strength by rebuilding the military, restoring the warrior ethos and re-establishing deterrence.  

Three areas related to the Pentagon's finances:

FIRST: Hegseth said to tackle excess spending and address the issue of fraud, waste and abuse within DOD, the department would be relying on the recently established Department of Government Efficiency.

• "[DOGE is] here, and they're going to be incorporated into what we're doing at DOD to find fraud, waste and abuse in the largest discretionary budget in the federal government," Hegseth said. 
• He added that DOGE would be given access to systems — with proper safeguards and classifications — to first find redundancies and identify previous priorities not core to the department's current mission and then get rid of them.  
• "With DOGE, we are focusing as much as we can on headquarters and fat and top-line stuff that allows us to reinvest elsewhere," Hegseth said.  

SECONDLY: He then pivoted to the topic of reorienting the defense budget inherited from the previous administration.

• Hegseth said, beginning immediately, the Pentagon will pull 8% — or roughly $50 billion — from nonlethal programs in the current budget and refocus that money on President Donald J. Trump's "America First" priorities for national defense. 
• "That's not a cut; it's refocusing and reinvesting existing funds into building the force that protects you, the American people," Hegseth said. 
• He also said there are certain areas where funds will not be refocused:
• Border protection
• Fighting transnational criminal organizations
• Nuclear modernization,
• Submarine programs
• Missile defense
• Drone technology
• Cybersecurity
• Core readiness and training
• The defense industrial base. 

THIRDLY: The secretary then turned to his third topic - the re-evaluation of the Defense Department's probationary workforce.  

• Hegseth pushed back on recent reports that DOD would do across-the-board cuts of all probationary employees.  
• He said leaders are re-evaluating probationary employees "carefully and smartly," and future manning decisions would be based, in part, on quality of performance. 
• "We're starting [cuts] with the poor performers among our probationary employees because it's common sense that you want the best and brightest," Hegseth said.  
• "So, when you look at headcount, we're going to be thoughtful, but we're also going to be aggressive up and down the chain to find the places where we can ensure the best and brightest are promoted based on merit," he continued. 
• Hegseth added DOD will implement a hiring freeze to take time to identify better hiring practices as they relate to finding the most "hard charging" employees that are central to the department's core warfighting mission.  

TAIWAN

Taiwan is considering multi-billion Dollar weapons purchase from US, according to Reuters sources.

"Arms purchase could be between USD $7-10B"

US Defense contractors Lockheed Martin Corporation (LMT) and RTX Corporation (RTX) rose on the news.

EU PLANNING MASSIVE DEFENSE INCREASES OF $3.1T OVER 10 YEARS

it is being reported that European officials are working on a major new package to ramp up defense spending and some EU leaders are planning to meet on Monday in Paris to start drawing up their response. The moves come as the US pushes for a quick end to the war in Ukraine and after Vice President JD Vance attacked longstanding European allies at a security conference Friday.

“The goalposts are shifting, and the EU is realizing they can rely less and less on the US for protecting their borders. In lockstep, we’re going to have to see European countries spend more on defense,” said Aneeka Gupta, head of macro research at Wisdomtree UK Ltd. “That does warrant a bit more caution on bonds.”

The developments have cemented the view that debt sales will need to increase as European nations shoulder the cost of a lasting peace deal between Ukraine and Russia. Upgrading defense and protecting Ukraine may cost Europe’s major powers an additional $3.1 trillion over 10 years, according to Bloomberg Economics estimates.

In response to what some view as a massive new debt burden, which of course to others is just fiscal stimulus, Europe’s Stoxx 600 index rose 0.4% led by strong gains in defense names with Rheinmetall hitting a fresh record high, as officials in the region work on a major new package to ramp up defense spending and support Ukraine, pushing Goldman's index of European defense shares topped a record high:

• Saab +11%
• Hensoldt +13%
• RENK +13%
• Leonardo +5.7%
• BAE Systems +7%.

EMERGENCY MEETING CALLED IN PARIS - 02-17-25

If Europe is indeed going to divert spending from butter to guns, then buy European arms-makers. That’s certainly the judgment at present, as they’ve outperformed the Magnificent Seven since Election Day. It’s an ill wind, but it’s made European arms one of the hottest sectors on earth:

Higher defense spending cuts both ways. It more-or-less forces increased government borrowing. That in turn could mean higher bond yields and less spending on everything else.  It does, however, seem a good bet that the spending commitments will benefit stocks at the expense of bonds. Likely monetary easing and US tariffs could counteract this, but European equities have performed far less well compared to bonds than their US counterparts.

The effect of the Vance shock can be overstated. Europe’s defense spending has been increasing markedly since Trump 1.0, as this chart by Mark Wall of Deutsche Bank AG demonstrates.

The EU may still be short of its 2% target, but the Trump foghorn diplomacy has had quite an impact, even during the Biden interlude.  Weapons expenditure has trebled since 2018, a shift that can also presumably be attributed to Vladimir Putin:

Previous periods when European nations upped their spending on arms didn’t end well. That is the risk that the US seems to ready to accept. For now, the message is to buy stocks, particularly in defense, and sell bonds. 

$3T UKRAINE RECONSTRUCTION BILL

Whatever the US president decides is his goal for Ukraine, one thing is clear: Europe isn’t ready to shoulder its huge share of the burden. According to Bloomberg Economics (02-12-25) "Trump’s Ukraine Plans Mean a $3 Trillion Bill for European Allies."

The repercussions are already spreading:

• Europe is now under pressure to nominate its own envoy for Ukraine peace talks.
• Leaders are discussing a common defense policy (and starting at least a decade late).
• The US appears to have made the crucial concessions that Ukraine doesn’t regain its borders and stays out of NATO. 
• Europe is now bracing for the possibility of paying a potential bill to put Ukraine back together that could come to $3 trillion.
• Postwar reconstruction proved to be a boon eight decades, but they won’t have a Marshall Plan to help this time. 

Given all this, it’s startling to see that European stocks have beaten the S&P 500 by almost 10% since Christmas?

Why? - For the Keynesian's this is called Fiscal Deficit Spending Stimulus.

2- INVESTING IN CHINA TECH & AI

GOLDMAN SACHS IS OUT WITH A MAJOR CHINA - AI REPORT

First comes the stock squeeze, then the bullish crowd with their economic projections.

CHART RIGHT: ."How do you think the Chinese economy will develop over the next 12 months?"

Here are some of the highlights & chart porn:

AI CHANGES THE CHINA GAME

Goldman Sachs says that widespread AI adoption could boost Chinese EPS by 2.5%/year over the next decade and raises their target price for the overall equity market.

"Improving growth prospects and perhaps a confidence boost could also raise the fair value of China equity by 15-20%, and potentially usher in over US$200bn of portfolio inflows. These prompt us to raise our MSCI China/ CSI300 target to16%/19% implied 12m upside."

A DEEPSEEK USAGE TRIGGER

There has been a strong pickup in AI usage in China sparked by the launch of DeepSeek - similar to what we saw after the ChatGPT launch.

HERE COMES THE ADOPTION



AI adoption rates have been rising in China, led by the TMT sectors.

AI BETTER THAN 5 YEAR CENTRAL PLANNING

Goldman Sachs: 

"We expect 0.8pp annual labor productivity gain from AI adoption in China (vs. 1.5pp in the US) if AI is fully adopted over 10 years."

LAUNCH AS AN EQUITY TRIGGER

The AI theme in the US has of course helped produce one of the strongest equity bull runs in the US stock market. Time for a catch-up?

HUGE CATCH-UP POTENTIAL

US Tech equities' market cap has more than doubled in the past 2 years.

50% DISCOUNT

Goldman Sachs:

"We recommend adding exposure to iPhone (edge AI) upgrade cycles through Taiwan Apple Suppliers (GSSZAPPL), driven by form factor changes and generative AI functions, while the stocks trade at 50% valuation discounts vs.

 Apple Inc."

RED RETAIL ARMY

Retail risk appetite has recently improved, but still below stretched, exuberant levels.

STILL 1 SIGMA CHEAP

12-month forward P/E for MSCI China, past 10 years.

DEVELOPMENTS TO WATCH - Policy Drivers

1- TRUMP'S SIX QUESTIONS FOR EUROPE

TRUMP IS TAKING AIM AT EUROPE!

It has become increasingly clear that President Donald Trump is coming after the EU as part of a crafted strategy to setup a "Deal"!

This week:

1. JD Vance's EU Speech sets EU leadership on its heals.
2. Russia / US talks held in Saudi Arabia w/o Ukraine and EU??
3. Trump Tariffs on the docket for the EU and their Auto Industry.
4. Now Trump sends the EU these Six Questions?

The Gauntlet is being thrown down hard!!!

Reuters reports the US has sent the following questions for Europe to answer:

1. What do you view as a Europe-backed security guarantee or assurance that would serve as a sufficient deterrent to Russia while also ensuring this conflict ends with an enduring peace settlement?
2. Which European and/or third countries do you believe could or would participate in such an arrangement? Are there any countries you believe would be indispensable? .Would your country be willing to deploy its troops to Ukraine as part of a peace settlement?
3. If third country military forces were to be deployed to Ukraine as part of a peace arrangement, what would you consider to be the necessary size of such a European-led force? .How and where would these forces be deployed and for how long?
4. What actions do US allies and partners need to be prepared to take if Russia attacks these forces?
5. What, if any, US support requirements would your government consider necessary for its participation in these security arrangements. Specifically, which short-term and long-term resources do you think will be required from the US?
6. What additional capabilities, equipment and maintenance sustainment options is your government prepared to provide to Ukraine to improve its negotiating hand and increase pressure on Russia? What more is your government prepared to do to increase its sanctions on Russia, including more strictly enforcing sanctions and better targeting third countries enabling Russia globally?

Take a moment to consider the fiscal, financial, and real economy impact involved from the above, especially point 6 given Europe still transships its goods to Russia via central Asia and refuses to use secondary sanctions against third parties “enabling Russia globally”. Then consider the additional costs of Europe and the UK backing Ukraine retaking its pre-war territory, which means hot war with Russia without the US.  

To say this would be a structural break for Europe is an understatement.

2- A US SOVEREIGN WEALTH FUND

A Historic Opportunity for America’s Future

President Donald Trump has signed an executive order establishing a U.S. Sovereign Wealth Fund (SWF), a groundbreaking move that could reshape the nation’s economic future. The fund, designed to invest in infrastructure, advanced technology, manufacturing, and other strategic industries, marks a significant departure from past U.S. policy. If managed wisely, it is certain to drive long-term:

1. Economic growth
2. Enhance national security and
3. Strengthen America’s global leadership.

This is a moment of great significance — one that my colleague Richard Duncan has been advocating for over a decade.

• In Richard's latest book, The Money Revolution: How to Finance the Next American Century, he laid out the case for a large-scale government-backed investment program focused on future industries and technological innovation.
• Before that, in The Corruption of Capitalism (2009) and through numerous Macro Watch videos and blog posts, he has consistently argued that the United States must take a proactive approach to economic growth by investing in the industries of tomorrow rather than relying solely on financial speculation and short-term stimulus measures.
• He in fact was asked to present to a Congressional Committee his beliefs on the subject and his writings.

With the executive order now in place, the Treasury and Commerce Departments have 90 days to present a detailed plan for how the fund will be structured, financed and managed. Several potential funding sources have been discussed, including:

• Monetizing Federal Assets
• Spectrum Auctions
• Tariffs
• Direct investment Partnerships with the private sector.

The key will be ensuring that this fund is structured for long-term growth, free from political interference and guided by sound investment principles.

The establishment of a U.S. Sovereign Wealth Fund represents a major step toward securing America’s economic future. It will allow the country to make strategic investments that enhance productivity, create jobs, and drive innovation.

Most importantly, it will ensure that the benefits of economic growth are reinvested in America’s long-term prosperity rather than siphoned away through short-term speculation and debt-driven consumption.

U.S. citizens will directly benefit from such a fund because the government will retain an equity stake in the investments it makes. This means that Americans will collectively own a share of these investments, and as the companies funded by the SWF grow and become extraordinarily profitable, Americans will share in those profits. Beyond financial returns, the country will also reap the rewards of the groundbreaking technological advancements these investments will generate, shaping the future in ways that improve lives and strengthen the nation’s economic position.

For those who have been following Richard's Macro Watch, you know that this is precisely the type of policy shift he has long advocated. Now, as the details of this fund take shape, it is critical that we get it right. He will continue to provide updates and analysis on how this initiative unfolds and what it means for investors, policymakers and the future of the U.S. economy.

You might consider subscribing to Richard's services using a special MATASII subscriber promo code "FLOWS".

GLOBAL ECONOMIC INDICATORS: Economic Drivers

What This Week's Key Global Economic Releases Tell Us

US ECONOMIC DRIVERS

INFLATION MONITOR

1- REGIONAL BANK REPORTS - Uptick in Prices Paid

PHILLY FED: THURSDAY

The Philly Fed headline fell to 18.1 in February, from 44.3 and shy of the expected 20.0.

• Within the report, employment and new orders dropped to 5.3 (prev. 11.9) and 21.9 (prev. 42.9), respectively, while the inflationary gauge of prices paid rose to 40.5 from 31.9.
• Capex index plunged to 14.0 (prev. 39.0), while the forward-looking 6m index also sharply declined to 27.8 from 46.3.
• Overall, and as the report notes, responses suggest regional manufacturing activity continued to expand in February.
• The indicators for current activity, new orders, and shipments remained elevated.
• On balance, the firms indicated an increase in employment, and the price indices remained above their long-run averages.
• The survey’s broad indicators for future activity suggest expectations for growth over the next six months.

NY FED - TUESDAY

The February NY Fed Manufacturing Index rose to 5.7 from -12.6, above the -1.0 forecast.

• Summarising the report, new orders and shipments grew moderately. Delivery times were slightly longer, and supply availability was slightly lower. Inventories continued to expand modestly. Employment levels moved lower.
• Input prices increased at the fastest pace in nearly two years, and selling price increases also ticked up noticeably.
• On the prices, Pantheon highlights the rise in both prices paid and prices received, "might be a sign that the tariff-linked surge in demand for durable goods since late last year is starting to put some upward pressure on prices, although neither index has yet strayed far from its typical pre-Covid range, and most other leading indicators of core goods prices remain relatively benign".
• Regarding the outlook, firms expect conditions to improve over the next six months, optimism about the outlook dropped significantly. Within the outlook, prices paid only saw a slight move higher while prices received saw a slight move lower.

2- GOLDMAN INFLATION MONITOR REPORT

The core CPI increased 0.23% month-on-month. The year-on-year rate is now at 3.25%. Anything over 3% is a problem!

INFLATION IS STILL INCREASING PRICES FROM AN ALREADY 21% INCREASE SINCE 2021. Disinflation has stalled without any deflation leaving more inflation!

3- SERVICE SECTOR INPUT COSTS



Cost pressures meanwhile intensified to the highest since last September.

Service sector input cost inflation edged up to a four-month high, with companies citing tariff related price hikes from suppliers alongside rising food prices and upward wage pressures.

But it was manufacturing which saw the steepest increase in costs, with raw material prices showing the largest monthly gain since October 2022. The increase was overwhelmingly blamed by purchasing managers on tariffs and related supplier-driven price hikes.

• In January, energy prices increased to 129% of the pre-pandemic level.
• Industrial metals prices remained at 140%.

4- INFLATION EXPECTATIONS

After exploding higher (to 4.3%) in the preliminary February data, UMich's final print for inflation expectations (1Y) was the same but the medium-term (5-10Y) expectation shot up to 3.5% - its highest since April 1995.

In the flash data, UMich noted that the partisan divide over inflation expectations (1Y) was an extreme record (Democrats +5.1%, but Republicans 0.0%) and the final data confirmed that...

But for the 5-10Y inflation expectation, the partisan divide grew even more with Democrats convinced long-term inflation will be at 4.2% while Republicans see it closer to 1.5%...

While sentiment fell for both Democrats and Independents, it was unchanged for Republicans, reflecting continued disagreements on the consequences of new economic policies. Confidence for Democrats is at its lowest since June 2008.

From what we can tell, all this data shows is that leftists media fear mongering propaganda works... on Democrats.

GLOBAL ECONOMIC DRIVERS

WHAT DOES YOUR SCAN OF THE DATA BELOW TELL YOU? - THE MEDIA AVOIDS BAD NEWS!

We present the data in a way you can quickly see what is happening.

THIS WEEK WE SAW

Exp. =Expectations, Prev. =Previous

UNITED STATES

• US NY Fed Manufacturing (Feb) 5.7 vs. Exp. -1.0 (Prev. -12.6)
• US NY Fed Manufacturing (Feb) New Orders 11.4 (prev. -8.6)
• US NY Fed Manufacturing (Feb) Prices Paid 40.2 (prev. 29.1)
• US Philly Fed Business Index (Feb) 18.1 vs. Exp. 20.0 (Prev. 44.3)
• US Leading Index Change MM (Jan) -0.3% vs. Exp. -0.1% (Prev. -0.1%, Rev. 0.1%)
• US Initial Jobless Claims w/e 219.0k vs. Exp. 215.0k (Prev. 213.0k, Rev. 214k)
• US Continued Jobless Claims w/e 1.869M vs. Exp. 1.871M (Prev. 1.85M, Rev. 1.845M)
• US Building Permits (Jan) 1.483M vs. Exp. 1.46M (Prev. 1.482M)
• US Housing Starts (Jan) 1.366M vs. Exp. 1.39M (Prev. 1.499M, Rev. 1.515M)



CHINA

• Chinese House Prices MM (Jan) 0.0% (Prev. 0.0%)
• Chinese House Prices YY (Jan) -5.0% (Prev. -5.3%)

JAPAN

• Japanese GDP QQ (Q4) 0.7% vs. Exp. 0.3% (Prev. 0.3%, Rev. 0.4%)
• Japanese GDP QQ Annualised (Q4) 2.8% vs. Exp. 1.0% (Prev. 1.2%, Rev. 1.7%)
• Japanese Trade Balance (JPY)(Jan) -2758.8B vs. Exp. -2100.5B (Prev. 130.9B, Rev. 132.5B)
• Japanese Exports YY (Jan) 7.2% vs. Exp. 7.9% (Prev. 2.8%)
• Japanese Imports YY (Jan) 16.7% vs. Exp. 9.7% (Prev. 1.8%, Rev. 1.7%)
• Japanese Machinery Orders MM * (Dec) -1.2% vs. Exp. 0.1% (Prev. 3.4%)
• Japanese Machinery Orders YY * (Dec) 4.3% vs. Exp. 6.9% (Prev. 10.3%)
• Japanese National CPI YY (Jan) 4.0% vs. Exp. 3.9% (Prev. 3.6%)
• Japanese National CPI Ex. Fresh Food YY (Jan) 3.2% vs. Exp. 3.1% (Prev. 3.0%)
• Japanese National CPI Ex. Fresh Food & Energy YY (Jan) 2.5% vs. Exp. 2.5% (Prev. 2.4%)

AUSTRALIA

• Australian Wage Price Index QQ (Q4) 0.7% vs. Exp. 0.8% (Prev. 0.8%)
• Australian Wage Price Index YY (Q4) 3.2% vs. Exp. 3.2% (Prev. 3.5%)
• Australian Employment (Jan) 44.0k vs. Exp. 20.0k (Prev. 56.3k)
• Australian Full Time Employment (Jan) 54.1k (Prev. -23.7k)
• Australian Unemployment Rate (Jan) 4.1% vs. Exp. 4.1% (Prev. 4.0%)

ITALY

• Italian CPI (EU Norm) Final YY (Jan) 1.7% vs. Exp. 1.7% (Prev. 1.7%); Final MM (Jan) -0.8% vs. Exp. -0.7% (Prev. -0.7%)

EU

• EU ZEW Survey Expectations (Feb) 24.2 (Prev. 18)
• EU Consumer Confid. Flash (Feb) -13.6 vs. Exp. -14.0 (Prev. -14.2)
• EU HCOB Manufacturing Flash PMI (Feb) 47.3 vs. Exp. 47 (Prev. 46.6); HCOB Services Flash PMI (Feb) 50.7 vs. Exp. 51.5 (Prev. 51.3); HCOB Composite Flash PMI (Feb) 50.2 vs. Exp. 50.5 (Prev. 50.2)

GERMANY

• German ZEW says rising optimism is probably due to hopes for a new German government capable of action; ZEW Economic Sentiment (Feb) 26.0 vs. Exp. 20.0 (Prev. 10.3); ZEW Current Conditions (Feb) -88.5 vs. Exp. -90.0 (Prev. -90.4)
• German Producer Prices MM (Jan) -0.1% vs. Exp. 0.6% (Prev. -0.1%); YY (Jan) 0.5% vs. Exp. 1.3% (Prev. 0.8%)
• German HCOB Services Flash PMI (Feb) 52.2 vs. Exp. 52.5 (Prev. 52.5); HCOB Composite Flash PMI (Feb) 51.0 vs. Exp. 50.8 (Prev. 50.5); HCOB Manufacturing Flash PMI (Feb) 46.1 vs. Exp. 45.5 (Prev. 45)

FRANCE

• French CPI (EU Norm) Final YY (Jan) 1.8% vs. Exp. 1.8% (Prev. 1.8%); CPI (EU Norm) Final MM (Jan) -0.2% vs. Exp. -0.2% (Prev. -0.1%)
• French HCOB Services Flash PMI (Feb) 44.5 vs. Exp. 48.9 (Prev. 48.2); HCOB Manufacturing Flash PMI (Feb) 45.5 vs. Exp. 45.5 (Prev. 45); HCOB Composite Flash PMI (Feb) 44.5 vs. Exp. 48 (Prev. 47.6); "Overall, there is little hope to be drawn from the slightly improved index figures, as the outlook for output is still viewed pessimistically and layoffs are commonplace".

UK

• UK Rightmove House Price MM (Feb) 0.5% (Prev. 1.7%)
• UK Rightmove House Price YY (Feb) 1.4% (Prev. 1.8%)
• UK ILO Unemployment Rate (Dec) 4.4% vs. Exp. 4.5% (Prev. 4.4%); Employment Change (Dec) 107k vs. Exp. 48k (Prev. 35k)
• UK Avg Earnings (Ex-Bonus) (Dec) 5.9% vs. Exp. 5.9% (Prev. 5.6%); Avg Wk Earnings 3M YY (Dec) 6.0% vs. Exp. 5.9% (Prev. 5.6%, Rev. 5.5%)
• UK Claimant Count Unem Chng (Jan) 22.0k (Prev. 0.7k, Rev. -15.1k)
• UK GfK Consumer Confidence (Feb) -20.0 vs. Exp. -22.0 (Prev. -22.0)
• UK Retail Sales MM (Jan) 1.7% vs. Exp. 0.3% (Prev. -0.3%, Rev. -0.6%); Ex-Fuel MM 2.1% vs. Exp. 0.9% (Prev. -0.6%, Rev. -0.9%)
• UK Retail Sales YY (Jan) 1.0% vs. Exp. 0.6% (Prev. 3.6%, Rev. 2.8%); Ex-Fuel YY 1.2% vs. Exp. 0.5% (Prev. 2.9%, Rev. 2.1%)
• UK PSNB Ex Banks GBP (Jan) -15.442B GB vs. Exp. -20.0B GB (Prev. 17.811B GB, Rev. 18.119B GB)
• UK GfK Consumer Confidence (Feb) -20.0 vs. Exp. -22.0 (Prev. -22.0)
• UK Flash Services PMI (Feb) 51.1 vs. Exp. 50.8 (Prev. 50.8); Flash Composite PMI (Feb) 50.5 vs. Exp. 50.5 (Prev. 50.6); Flash Manufacturing PMI (Feb) 46.4 vs. Exp. 48.4 (Prev. 48.3)
• UK CPI YY (Jan) 3.0% vs. Exp. 2.8% (Prev. 2.5%)
• UK Core CPI YY (Jan) 3.7% vs. Exp. 3.7% (Prev. 3.2%)

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