EQUITY TECHS: E-MINI S&P: (H5) Bear Cycle Remains In Play

 The Bank of Italy’s Ita-coin indicator (nowcast for IT trend growth) remained subdued in January, falling to -0.09 (vs -0.05 prior). The indicator has been below zero for nine consecutive months.

• The manufacturing sector has dragged on Italian activity over the past two years. The January PMIs saw the manufacturing PMI print in contractionary territory for the 10th month in a row (services just about remained above the neutral 50 level).
• Flash Q4 GDP was 0.0% Q/Q, a touch below the 0.1% expected. Current Bloomberg consensus is for sequential quarterly growth to be between 0.2-0.3% through 2025. Consumption is expected to drive this recovery, in part due to a resilient labour market and solid real wage growth.
• However, the December retail sales data (released this morning) pointed to continued consumer caution. Real 3m/3m sales were -0.2% (vs 0.3% prior), and rose just 0.1% Y/Y (vs -0.2% prior). 

• The S&P Global Canadian services PMI increased to 49.0 in January from 48.2 in December, an improvement on the month but still one pointing to a decline in activity.
• The composite PMI remained in contractionary territory, rising from 49.0 to 49.5.
• The press releases details declining activity along with higher input costs but firms struggling to pass on costs:
• "Canada’s service sector experienced a second successive monthly decline in business activity during January amid a further reduction in incoming new business volumes. Market demand was reported to be subdued and, with evidence of spare capacity, service companies chose to reduce staffing levels for the first time in four months.
• Meanwhile, operating expenses continued to rise sharply, amid reports of higher prices for a wide array of inputs. Output charge inflation was relatively modest in comparison as firms struggled to pass on increased costs to clients."
• See the full press release here.  

Prime Minister Justin Trudeau has announced a Canada-US Economic Summit to take place in Toronto on Friday 7 February. In a press release, the PM's office said the summit will look to expand the work of the newly formed Council on Canada-US Relations and include leaders from trade, business, public policy, and organised labour. "Using their sectoral expertise, the leaders will explore ways to grow Canada’s economy, make it easier to build and trade within the country, diversify export markets, and rejuvenate productivity. The Summit will see increased co-ordination, co-operation, and interoperability between partners, including through issue- and sector-specific conversations." 

• It would appear that rather than being a summit for Canadian and US business and political figures to meet, it will focus on boosting domestic investment and identifying potential markets for Canadian goods other than the United States.
• After threatening the imposition of 25% tariffs on Canadian (and Mexican) imports, US President Donald Trump agreed to pause these measures on 3 Feb after commitments from Ottawa and Mexico City regarding border security and the flow of illegal narcotics. The pause is in place for 30 days and will allow for further negotiations.
• The increasingly bitter spat between the erstwhile allies has sparked a high-profile 'buy Canadian' campaign in some outlets.