Good morning,

Today is a good news day… Starting with the government hitting its target of 15 million vaccinations, which means that from today groups five to nine are now being targeted and with any luck can largely be taken care of by the end of next month – though that will also rely on supplies increasing, so that the second doses don’t drag on proceedings too much.  We’re having to wait until next Monday to hear in no uncertain terms how we’re going to be let back out into the world, but speculation across just about every newspaper is rife and most agree that all schools will be back on March 8th.

AstraZeneca is due to start clinical trials on children this week, in the hope that an early immunisation might provide a lifetime of protection.  There is hope that, much like the polio vaccine, the jab provides a strong immune response that is carried into adult life.  The study will begin with 300 children, some as young as six years old.  It’s also hoped that they’ll learn more about how readily children transmit the virus even when they are asymptomatic.

House price data in the UK has come out and been pretty well supported in the first few weeks of the year.  The numbers show a continued increase in property values and that they’re likely being propped up by limited supply, as not everyone wants to go through the process of selling a home during lockdown.  The news is being interpreted as a good thing, with people less concerned that once Rishi ends the stamp duty holiday, things won’t fall of a cliff.

Other UK news: It’s fifty years to the day since the UK adopted decimalisation.  On this day in 1971 the country was getting used to a pound being made up of 100 pennies instead of 240 and saying good bye to farthings, shillings and crowns.  Amazingly it took 125 years of lobbying from the Decimal Association to get the change agreed to and five years of planning thereafter before the new system was introduced.

On the continent: Mario Draghi was sworn in as the Italian PM on Saturday and has already picked his cabinet.  Mr Draghi has steered away from making it purely a selection of technocrats and by bringing in politicians from all sides of the political spectrum it’s hoped the shelf life is somewhat longer than previous governments of national unity, which have only lasted one to two years.  We’ll hopefully hear from him later this week, where it’s hoped we’ll get an outline of his to-do list and some indication of how he intends to check things off it. The FT has more

Russia has said that there’s no way the Nord Stream 2 pipeline won’t be completed and turned on, despite Washington’s deliberations over whether or not to press harder with sanctions on the project.  Last week Germany’s president said that the country owes Russia the pipeline by way of reparations from the war, which has angered Ukraine amongst others.  The pipeline could send 55 billion cubic metres of natural gas to Germany per year and the concern is how dependent Germany might become on such a cheap reliable source of fuel and therefore what leverage that might give the Kremlin over Europe.  The Times has more.

In the US, we saw Trump acquitted in the impeachment trial.  The vote was largely along party lines and of the seven Republicans that did vote against him, three aren’t up for re-election until 2026 and two are retiring at the end of their term, so have very little to lose by going against their establishment. Trump’s woes don’t stop here though, as both Georgia and New York are undertaking investigations – the former over his conduct in asking the secretary of state to “find” him enough votes to win, the latter is over $280m in loans against a number of properties and whether there was anything untoward in the financing, insuring or taxing of these properties.

The end of the trial is being seen as a good thing, because it clears the way for Biden to push his stimulus plans through now. The $19trn package could be unleashed on the economy just as people start to emerge back into ‘normal’ life and bring with them some $2.5trn of savings and pent up demand, which if all spent at once could really put inflation at risk of coming back with a vengeance. The first sign of people possibly getting back into old spending habits could come with retail sales numbers this week and if there was a big overshoot in the data then there’s an outside chance that Biden might start to heed warnings that the package he’s going for might be too large given how late in the day it’s arriving.

The UK could well be facing some inflationary pressures and we’ll get the latest take on that this Wednesday with the release of the consumer price index.  The Pound has been really well supported in the last few weeks and if we see a big print on this number, then that is likely to continue.  Other data to be mindful of this week includes the German ZEW index on Wednesday, ECB and Fed meeting minutes on Thursday, and UK retail sales numbers on Friday.  Today is Presidents Day in the US and is therefore going to mean a quieter afternoon session. Markets have started the day with a risk-on feel about them, so even with the US closed we could see futures head upwards in their absence.

Be well.


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