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UK: GDP hit from November less bad than in spring

UK real GDP contracted by 2.6% mom in November as the return of lockdowns to contain the spread of the SAR-CoV-2 virus curtailed economic activity. It follows a gain of 0.6% in October. Albeit from a much lower base - after only a partial recovery during the summer from the initial pandemic shock - the initial hit from the winter wave of the pandemic appears to be much less bad than expected. If economic output remained at the November level in December, real GDP would have increased by 0.3% qoq in Q4 – largely due to the big carry over from the rapid monthly gains through Q3. Although output…

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Stock markets have had a good start

The stock markets have had a good start to the year. The majority of the global markets have already experienced a clearly positive development - even if the volatility remains high. We remain clearly overweight in equity with a cyclical bias, even though our vigilance is steadily increasing and our next step will rather be to reduce our the equity quota.

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German economy 2020: a year (never) to forget

The Covid-19 pandemic wreaked havoc on the German economy in 2020 and thus crushed our early 2020 expectations of a return from near-stagnation to trend growth following the Trump-led trade wars in 2019. According to a first estimate of Germany’s statistical office Destatis, German real GDP contracted by 5.0% (or 5.3% calendar-adjusted) in 2020 – the first contraction after ten years of growth.

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Political crisis in Italy: a cause for concern?

Italian prime minister Giuseppe Conte has lost a small coalition partner which had – so far – granted him a majority in parliament. The political crisis in the midst of the second wave of the pandemic shines a spotlight on Europe‘s long-standing top political risk: if new elections were to sweep anti-EU populists to power in Rome (or in Paris in 2022), the Eurozone could be in for some turbulence.

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Berenberg continues to expand in Continental Europe and hires two Senior Bankers for its Investment Banking division

Hamburg. Berenberg strengthens its Investment Banking Division in Continental Europe with two experienced senior bankers: Dominik Bär as Head of DACH Investment Banking and Andreas Franzen as Head of ECM Execution & Structuring in Continental Europe. Bär most recently worked for the American investment bank Lazard as Managing Director while Franzen joins from Deutsche Bank, where he was working in the Equity Capital Market division as a Director.

 

 

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Mixed performance picture in 2020

2020 was a challenging year for financial markets. At the beginning of the year, optimism prevailed. After the US and China signed a trade deal, markets were pricing in a global economic recovery. Many stock indices reached all-time highs in February before the spread of Covid-19 led to a sharp sell-off. A global recession loomed on the horizon. Extremely pessimistic investor sentiment and the courageous intervention of monetary and fiscal policy led to a stock market recovery from the end of March onwards, which until September was mainly driven by Covid-19 beneficiaries, namely the large…

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The Berenberg Capital Markets Outlook │Wealth and Asset Management

Compact outlook on capital markets, economics, stocks, bonds, commodities and currencies

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Signal turns green for the global economy in 2021

Hamburg / Frankfurt. The capital market experts at Berenberg are optimistic about the new year. Above all, the return of the USA to a calmer foreign and trade policy under President Biden and an emerging abatement of the Corona pandemic in the coming spring should ensure that the global economy can pick up in the course of 2021 after a still dark winter. Rising corporate profits, loose monetary and fiscal policy, negative real interest rates and high liquidity holdings should support the equity markets in particular. However, exaggerations could occur, so that consistently calm waters on the…

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Horizon Q1 2021

The past year of Covid-19, restrictions and recession should be followed by a year of vaccines, re-opening and economic recovery.

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COVID-19 in Europe: weekly update and slidepack

After a major fall in November the number of daily new infections is edging up again in Europe. Worryingly, they are rising from a still-high level.

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European PMIs: resilient December - setback in January?

The major European economies fared better than expected in the first two weeks of December according to the latest PMI surveys published today. The surprisingly strong improvement in the composite PMIs for the Eurozone reflects the easing of the tough virus restrictions across some major economies such as France as well as strong manufacturing activity. Lengthening delivery times caused partly by transport bottlenecks also played a role, artificially raising the results for manufacturing, especially in Germany and the UK.

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German politics after Merkel: stability or trouble ahead?

Three stages to choose a successor: German Chancellor Angela Merkel has shaped European politics like few other leaders in the past 15 years. She will leave office at the end of her fourth and final term next autumn. The three-stage process to replace her has just started.

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European update: growth, fiscal deal, ECB, Brexit

Ahead of another but now almost final Brexit deal deadline tonight, let us lean back and take a look at the bigger European picture. Although the economic situation looks set to worsen near-term due to a renewed rise in Sars-CoV-2 infections, the medium-term outlook remains unusually bright.

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ECB flash: no big surprises, more of the same for longer

The ECB has delivered on its promise to recalibrate its instruments. The just announced policy package is broadly in line with our and market expectations. Without easing the policy stance further, the ECB plans to extend it beyond mid-2021 to maintain the current favourable financial conditions.

 

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2021 with further potential

We remain constructive about equities into the new year. We are therefore starting 2021 with a significant overweight position in equities and a more cyclical bias. Nevertheless, we are becoming increasingly vigilant as much has already been priced in and investors have become more optimistic.

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ECB: extending a helping hand for longer

More support for longer. The European Central Bank (ECB) today delivered roughly what markets and we had expected. This may have been the ECB’s last big push to fight the Covid-19 recession, but it remains to be seen whether it is its last big push to fight low inflation. In response to a yet again sizeable downgrade in inflation projections and a first 2023 inflation estimate of just 1.4%, the ECB vowed to maintain very favourable financial market conditions well into 2022.

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VIX below 20 would further boost demand for shares

After the strong rally in November, many equity regions have barely moved in December - which is perfectly normal after such a strong run. Especially as many investors now want to wait for the central bank meetings in the next two weeks. Movement has recently been seen above all in British stocks.

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ECB preview: extend and enhance

Baring a major surprise, the ECB will announce a significant policy package next Thursday. Instead of easing its policy stance much further, the ECB Governing Council looks set to extend its current set of measures until at least the end of 2021 to maintain favourable financial market conditions. The ECB will probably also counteract a potential further tightening in bank credit standards and slightly enhance the transmission of its policy stance.

 

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COVID-19 in Europe: weekly update and slidepack

Further progress in Europe and first positive signs from the US: The second wave of the pandemic has receded for the fourth consecutive week in Europe. In the US, the recorded number of infections has also started to fall. However, the US per-capita rate of new infections is twice that of Europe. Despite the progress, daily new infections on both sides of the Atlantic remain well above their respective peaks in March and April.

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Cancelling ECB-held debt? The worst idea of the year

In response to the Covid-19 mega recession, debt ratios are surging across the advanced world. At the same time, central banks are gobbling up most of the increase in public debt through their asset purchases. Perhaps unsurprisingly, a few pundits and mid-level officials in Southern Europe have started to ponder a seemingly attractive idea: to reduce the debt burden of Eurozone member states, the European Central Bank (ECB) should simply cancel all or much of the public debt it has bought.

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Rapid rebound in 2021: but what could go wrong?

Trade tensions contained, the pandemic is brought under control, Brexit will be sorted one way or the other. The economic outlook for 2021 is unusually positive for advanced economies and many emerging markets. After a still dark winter, spring and summer should be bright once seasonal factors help to contain the spread of the Sars-CoV-2 virus in the Northern hemisphere.

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On our research portal

Every week we present a different chart on current develop­ments toge­ther with our in-depth analysis and offer you our assess­ments.

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The Berenberg Capital Markets Outlook│Wealth and Asset Management

Compact outlook on capital markets, economics, stocks, bonds, commodities and currencies. New every month.

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On our research portal

Every week we provide you with a fore­cast of the economic develope­ment in the most impor­tant economies.

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COVID-19 in Europe: weekly update and slidepack

Further progress in infections: The second wave of the pandemic is receding gradually in major parts of Europe. The number of daily new infections has fallen sharply in Belgium, France, the Netherlands and Spain. Recorded cases have also started to roll over in Italy and the UK. Despite the progress, daily new infections remain at high levels, well above the peak during the first wave. In the US, the pandemic is still getting worse. While the daily number of recorded new cases is no longer rising exponentially in the US, it is now well beyond the European peak from early November on a…

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