Good morning,

Risk was on as we closed out the month/quarter/financial year yesterday, with markets moving slightly higher and safe haven assets getting pushed slightly lower.  The S&P500 didn’t crack the 4,000 marker, but over the course of 12 months did manage to grow 43%! Obviously this number is skewed significantly higher because of the crash we saw in March 2020, but if you take that out then the market still managed to put on 20% in value from pre-pandemic levels.  By comparison the FTSE100 only managed a 23% return on the financial year, but is actually 10% lower than it was pre-pandemic – so some work to do here.

UK spending might give the market a shot in the arm when we retail opens later this month:  The Telegraph is reporting that UK households managed to save almost £60bn between October and December and that we squirreled away £200bn since the Pandemic began and the end of the year.  There isn’t data available for the yet, but on that trend, we should be nearer to £260bn in total savings by the April 12th.  The article rightly points out that it will take a while for the money to flow into all corners of the economy, as with just retail open and not hospitality, purchases will likely be on goods rather than services.  UK domestic tourism spending is expected to be £62bn this year and though that’s a near 80% increase on last year, it’s still well below where we were in 2019, as we’ll have lost March, April and half of May by the time hotels reopen.

In the US:  Biden launched his rebuilding plan last night and it was pretty much as expected by the market.  Some analysis says that though he’s planning to spend $2.3trillion over eight years, his proposed tax hikes will take 15 years to generate that much revenue.  Joe Biden had said that nobody should complain about a 28% tax rate given the amount of investment going on, but Goldman Sachs think he’ll only be able to get 24-25% through in the final bill, which if correct would almost double the amount of time it would take for tax revenues to pay back the additional expenditure.  Nancy Pelosi thinks this can get through the House and the Senate before the 4th July.

Janet Yellen is taking her knowledge of capital markets and central banking to review whether there needs to be more rules in place to make the financial system less susceptible to the sort of chaos we saw last year.  Her point is pretty simple:  “We are digging out of a deep hole now, but we should be mindful that the hole could easily have been deeper… The fact that extreme policy interventions were still required to support market functioning should serve as a clear reminder:  We have to more to address vulnerabilities in the financial system.”  This is a step away from the previous administration’s approach to less regulation in financial markets, but identifying problems is one thing, resolving them is another, particularly with the amount of money Wall Street has to throw at lobbyists.

Johnson and Johnson have had to bin 15 million would be vaccine doses, after an ingredients mix up at their Baltimore manufacturing facility.  This apparently won’t delay their timeline of delivering 100 million jabs by the end of May, but obviously isn’t ideal.

We read a great FT story on AstraZeneca CEO Pascal Soriot earlier in the week, that’s worth a read if you have a few minutes.  The current state of play with AZ is that its use has been halted in numerous countries for those under 60 and is awaiting further data review.

With the disruption in vaccine production and rollouts, Donald Trump has spotted an opportunity and backed an early stage vaccine start up. The company is confident they can get to market quickly because of the broad availability of the ingredients required to manufacture the drug and the simple logistics of distribution, because it can be stored at room temperature.  They’re keeping the recipe and technologies involved a close guarded secret, as something this simple yet effective could be a game changer, but they have got a trademark application on the name Dettolight – we’re not sure it will catch on, but Trump has hailed it as “really, really great.  Highly effective.  The most effective the world has ever seen. Believe me, nobody does science like me.”

Another story worth a read is that of Deliveroo, which went public yesterday and had a shocker of a first day.  The share price closed 26% lower than its opening price, taking £2bn off the companies market cap.  The concern is that this now puts a very dark cloud over London as a listing venue for tech companies, but it does look like this wasn’t the fault of the exchange or the regulation, but of the company and its advisors.  This FT article goes into depth and is worth a couple of minutes.  N.B.  This won’t influence my regular use of their service!

Today’s data is relatively plentiful, though with the new month so close to the long weekend, we wonder how busy the market may actually be. If you are at your desk you’ve got manufacturing PMI numbers from just about everywhere, as well as industrial production and employment numbers from the US – the latter ahead of tomorrow’s potentially very interesting Non-Farm Payrolls numbers.

Have a great long weekend

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