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Stronger In a Range


Weaker In A Range


Ending The Week On A Soft Note


Bearish Risk Growing


Stronger, But Still Vulnerable


SP500 PE Ratio vs. CPI Inflation

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Q1 GDP: -1.5% q/q, -6.1% y/y; Prev (Q4): +1.3% q/q, -7.3% y/y;

Q1 BUSINESS INV -11.9% Q/Q, -18.1%Y/Y; Q4 +5.9% QQ, -7.4%YY

Q1 CONSUMER SPENDING -3.9% Q/Q, -10.4% Y/Y; Q4 -1.7% QQ, -9.2%YY

Q1 GOVT SPENDING +2.6% Q/Q, +4.8% Y/Y; Q4 +6.7% QQ, +0.3%YY

  • The UK economy contracted by 1.5% in Q1, slightly stronger than expected (BBG: -1.6%), as the country remained in lockdown throughout the quarter.
  • Nevertheless, the decline was less pronounced than in Q2 2020, where the country was under lockdown as well.
  • Annual GDP improved to -6.1% in Q1, after falling by 7.3% in Q4 2020.
  • However, GDP remains 8.7% below the level seen before the pandemic in Q4 2019.
  • Household consumption dropped by 3.9% in Q1, falling by more than markets expected (BBG: -1.8%) and shaving off 2.26pp of GDP growth and showing the largest decline since Q2 2020.
  • Gov. consumption rose by 2.6%, following a sharp uptick in Q4 2020 and in contrast to markets looking for a small decline.
  • Business investment fell by 11.9%, more than anticipated (BBG: -2.0%), after a 5.9% increase in the previous quarter.
  • Net trade contributed positively to Q1 growth for the first time in two months, adding 2.04pp from GDP growth, with exports falling by 7.5% and imports dropping by 13.9%.