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Berenberg Green Energy Junior Debt Fund is financing a 50 MWp solar park for Amarenco in Spain

Light and shadow

April lived up to its reputation as a seasonally strong month for equity markets. The good performance was supported by the progress in Covid-19 vaccinations, the expansive fiscal policy, good economic data and positively surprising corporate profits. However, the summer brings both light and shade. We have therefore recently reduced our equity exposure to a slight overweight and continue to focus on more cyclical segments, such as commodities, alongside quality companies with sustainable growth.

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Passive investments change market structure and market behaviour

The importance of passive investments continues to grow. They enable investors to invest quickly, cost-effectively, and supposedly without disadvantage in different asset classes, regions, or segments, even if underlying securities are not very liquid.

However, their growing importance is leaving its mark on the behaviour of the overall market and individual securities. Passive investments are one of the drivers of the continuously changing market structure. With a focus on equities, we highlight the key implications of passive investing that investors need to be aware of. However, many…

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The Berenberg Capital Markets Outlook │Wealth and Asset Management May

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

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Berenberg Green Energy Junior Debt Funds to finance a 30 MW wind farm for project developer Energiequelle in Finland

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Stock market does not usually run away in May and June

In line with typical April seasonality, risk assets gained over the last few weeks while the US dollar depreciated. Continued encouraging economic data and a positive start to the Q1 reporting season helped. However, there are now increasing warning signs that suggest limited upside potential for equities in the coming weeks: tax debates, optimistic investor sentiment, insider selling, ambitious valuations, deteriorating seasonality and a muted equity reaction to positive surprises. We expect more volatile markets into the summer and are reducing our equity exposure accordingly from a moderate…

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UK: rising confidence & surging retail ahead of summer spending spree

Spring has sprung for the UK economy: Led by a rapid recovery in domestic demand, the UK is building serious recovery momentum heading into the summer. Household confidence continued to rise in April, underpinned by rapid vaccine progress and easing virus restrictions, while monthly retail sales surged above their pre-pandemic level in March.


Huge excess savings, record household net wealth and stable employment income set the stage for a robust recovery in household spending


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European PMIs herald solid rebound

Supported by an aggressive monetary stimulus, an adequate fiscal response and strong global demand, Europe is on track for a solid rebound from the Covid-19 recession. Although the current wave of the pandemic forced parts of the Eurozone to extend or tighten their lockdowns in April, even the badly battered services sector returned to modest growth in the Eurozone in April judging by the results of the monthly survey of purchasing managers.


Eurozone manufacturing continues to go from strength to strength. It is held back in some sectors only by a shortage of critical imports as the surge…

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ECB flash: no news is good news

The Eurozone remains on track for a solid rebound from the Covid-19 recession from May onwards, supported by an aggressive monetary policy and an adequate fiscal stimulus. The outlook has not changed materially since early March. Robust foreign demand seems to be roughly offsetting the temporary drag from a delayed easing of restrictions as parts of the Eurozone grapple with a new wave of the pandemic. The European Central Bank (ECB) thus made no relevant changes to its monetary policy statement today, leaving its very accommodative policy stance unchanged and providing no additional guidance…

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Sentiment Data in FX Strategies

2020 has seen an increased decoupling between financial markets and economic fundamentals, with countries associated monetary and fiscal policy reactions to the outbreak of Covid-19 being central to this.

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A brief history of FX

The world has flattened, and many currency managers have struggled to achieve satisfying results. Why is this the case?

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UK: inflation jumps on oil price effect and building recovery

Inflation normalising

After the COVID-19 shock, a VAT cut in the hospitality sector and an ultra-low oil price temporarily pushed inflation towards zero last year, the latest data show a fading of one-off factors and a broadening recovery in inflation commensurate with the emerging economic upswing.

• The yoy rate of headline inflation (CPI) rose to 0.7% in March from 0.4% in February – slightly below our and the consensus projection of 0.8%. Core inflation increased to 1.1% from 0.9% - Chart 1.

• After several months of declines, goods prices moved sideways in March (up from a 0.5% yoy…

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ECB preview: a time to prepare, not act

The European Central Bank (ECB) can take it easy this Thursday. The economy and inflation are roughly on track, financing conditions are favourable and markets are calm. The ECB Council need not take any policy-relevant decision or change its guidance in any way. Although the ECB may tweak the precise wording of its statement here and there, we do not expect the ECB to send any a new signal. Instead, the council can take its time to discuss the more strategic decisions it will need to take lateron.


Real economy

The ECB’s March staff projections for Eurozone GDP growth of 4.0% for 2021 and…

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Germany: Laschet versus Baerbock - what is at stake? (copy 1)

The parties have made their choice. “Continuity” candidate Armin Laschet will run for the CDU/CSU to succeed Angela Merkel as German chancellor after the 26 September election. The Greens already nominated Annalena Baerbock as their candidate yesterday without any fuss. The noisy conflict between Laschet (CDU) and his challenger Markus Söder (CSU) has drawn attention away from the key question: will German policies shift significantly after 16 years of Merkel at the helm – or will the changes remain gradual?


In many respects, Germany works largely by consensus. Big shifts like the 2003/2004…

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UK: stable labour market as economy emerges from lockdown

Still holding up

After the sharp drop in employment, hours and wage growth during the first wave of the pandemic in Spring 2020, the latest data continue to show that the labour UK market remained mostly stable through the now fading second (winter) wave of the pandemic. As part of a broader economic trend, the labour market estimates show that households and businesses are adapting better to pandemic-related restrictions the longer they go on.


The unemployment rate edged lower to 4.9% in February from 5.0% in March while the employment rate moved sideways (60.3%). As the key measure of…

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High noon in Germany: Söder, the Greens and the court

Söder against Baerbock in September? Germany will be in the news in the next two days and weeks. In Angela Merkel’s CDU/CSU, the fight about a joint candidate to succeed her as chancellor after the 26 September election seems to have tilted a bit in favour of Markus Söder. The dispute could be resolved today or tomorrow. Separately, the Greens will announce their own candidate for the chancellorship at 10h BST today. The odds seem to favour Annalena Baerbock. And before the end of April, Germany’s Constitutional Court is expected to rule whether or not Germany can ratify the law that would…

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COVID-19: mixed news with some positive trends

RECORDED INFECTIONS (see chart 1 below and pages 2-3 of the slide pack)

• Eurozone: After a temporary decline to 27.4 recorded daily infections per 100,000 people on 9 April, the incidence number has edged up again to 30.0 on 15 April. The temporary dip seems to have reflected less intense testing and reporting in some countries over the Easter holiday season. Germany, for example, conducted 19% fewer tests in the week of 5-11 April than it had done at the peak two weeks earlier. That the share of positive tests rose further over the same period from 9.3% to 12.0% indicates that the…

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Industrial metals – at the beginning of a new super-cycle

Industrial metals are among the big winners of the COVID-19 crisis: in 2020 they gained an average of 20% and this year they have already achieved a double-digit performance (see Fig. 1). Not despite, but rather because of the virus, the fundamental outlook is very positive in the short to medium term. Although demand fell sharply in the course of the first lockdowns, many mine operators were also affected by COVID-related closures. Extreme inventory build-ups thus did not materialise. At

the same time, political decision-makers around the globe launched fiscal stimuli of unprecedented…

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UK quick take: Haldane steps down as BoE Chief Economist

**Andy Haldane, BoE Chief Economist and influential Monetary Policy Committee member, will leave his various roles at the bank after the June MPC meeting** (BoE press release)


Sterling as well as gilt yields have dipped slightly – although not significantly – on the news, implying that the market judges a slightly more dovish tilt to the MPC once Haldane’s leaves. This assessment is broadly right, in our view.


In recent months, Haldane has sounded more optimistic about the UK’s economic prospects than the Bank of England’s official forecasts. He has also highlighted potential upside…

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UK GDP: rebound started in February, EU trade picks up

Signs of an early Spring this year for the UK economy: Monthly GDP data released today shows that a modest economic recovery started in February already. The ONS estimates that real GDP increased by 0.4% mom after declining by an upwardly revised -2.2% (from -2.9%) in January. As the whole of the UK remained under lockdown in February, with major parts of the economy such as non-essential retail, restaurants and bars, and entertainment still closed, the rebound probably reflects improving confidence underpinned by a rapid rollout of vaccines and a sustained drop in SARS-CoV-2 infections across…

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Systematic strategies have further potential to build up risk assets

The traditionally positive April seasonality seems to be showing itself again. Equity markets rose across the board, with US equities in particular making significant gains. In addition to the pause in the rise in bond yields, positive earnings revisions and economic surprises continued to be responsible for this. Latin American earnings estimates for the next 12 months have risen sharply, by more than 8 per cent in the last month alone. However, valuation levels have risen elsewhere, especially in the US, so it remains important that companies at least meet earnings expectations. Accordingly,…

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Tailwind continues for the time being

The equity markets recently reached new highs after vaccination successes in the US, the next massive US fiscal programme and continued loose monetary policy made investors increasingly optimistic as nothing more stands in the way of a global economic recovery. We keep our positive view as vaccination successes are still likely in Europe, the Q1 reporting season is expected to be positive, monetary and fiscal support is unabated and April has historically been a strong month for equities.

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German politics: the race is on

Who will succeed Angela Merkel as German chancellor after the 26 September national election? The two top parties vying to lead the next German government have both vowed to nominate their candidate between Easter and Pentecost (23 May). Whereas Merkel’s centre-right CDU/CSU is under pressure to settle the issue soon amid a major drop in public support, the Greens can take it easier. The choices which the two parties make in coming weeks could possibly make a decisive difference for what promises to be closely contested election in September. Both the CDU/CSU and the Greens have two potential…

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GlobalCapital ECM Awards: Berenberg best bank für Small Cap ECM once again

A lot of movement below the surface in equities

The constant alternation between growth concerns and reflation hopes has dominated the last few weeks and is likely to continue to characterise the coming months. Most recently, asset classes that had performed best since the beginning of the year tended to be among the biggest losers. Energy and financial stocks fell, as did oil and industrial metals, while defensive stocks and the US dollar celebrated a


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