IMF meetings, Wall St bank results, US retail data

The US presidential race continues this week, with Donald Trump insisting he has made a full recovery from Covid-19. However, some experts have argued that the US president could be still contagious even if he doesn’t show any symptoms.

Mr Trump’s physician said over the weekend that the president was no longer a transmission risk for coronavirus, but stopped short of saying Mr Trump had tested negative.

The president has been trying to convince Americans he is Covid-free and fit to campaign again as he seeks to narrow a large polling gap with Democratic challenger Joe Biden less than a month from the election.

Although Mr Trump’s Covid-19 status remains unclear after his hospitalisation a week ago, he plans to resume big rallies in swing states from Monday with an event near Orlando, Florida.

His campaign said he would also deliver remarks at rallies in Pennsylvania on Tuesday and Iowa on Wednesday.

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In the UK, prime minister Boris Johnson is set to announce in the House of Commons a new set of rules for local lockdowns with areas graded in three tiers: medium, high and very high risk.

Those living under the toughest tier 3 restrictions — in areas including Liverpool City Region — will see the closure of bars, restaurants and cafés serving alcohol. The government is also considering banning residents from travelling outside the region without good reason.

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On the earnings front, the spotlight will be on US banks as they kick off third-quarter reporting season and Apple is expected to announce its 5G-equipped iPhone on Tuesday.

US retail sales will be the main data point to watch this week, while China has consumer price index figures out on Thursday.

IMF and World Bank meetings

The IMF and the World Bank annual meetings kick off on Monday in a virtual setting with panellists including central bankers, chief executives and government officials.

On the same day Christine Lagarde, the president of the European Central Bank, will discuss with IMF’s Alfred Kammer the challenges that policymakers face in the era of Covid-19 and what a post-pandemic world could look like.

The IMF is set to release its World Economic Outlook on Tuesday, which is expected to dissect the economic impact of lockdowns and revise its growth projections for 2021 that were outlined in June.

Kristalina Georgieva, the head of the IMF who will speak in a panel on Tuesday, has said last week that the upgrades would not be large and the figures would still show 2020 as the worst year for the global economy since comparable records began in 1980.

Former Bank of England governor Mark Carney will also take part in Ms Georgieva’s panel together with Larry Fink, BlackRock’s chief executive, and Vera Daves de Sousa, Angola’s finance minister.

Economists will watch out for systemic issues that could threaten markets in the financial stability report on Tuesday, which will assess the health of financial services.

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EU summit

The European Council summit is due to start on Thursday, when the main focus will be on the progress made on a trade deal with the UK. Boris Johnson has said the gathering will be the deadline for a breakthrough in negotiations.

EU chief negotiator Michel Barnier and UK counterpart David Frost have continued to tinker around the edges of the deal while a high-level political channel has been opened between the UK prime minister and European Commission president Ursula von der Leyen — a move that reflects the fact that the Frost-Barnier track is widely seen to have reached its useful limits as the deadline approaches.

The council could also use the summit to iron out some of the divergences among member countries on the application of the rule of law criteria to access EU funds and discuss the seven-year budget covering 2021-27.

Elsewhere . . . 

  • The US Senate will hold the final hearing on the Supreme Court nominee Amy Coney Barrett on Thursday

  • New Zealand will go to the polls on Saturday for the country’s general election, postponed from September due to a Covid-19 outbreak

  • Bolivians will also cast their vote next Sunday after multiple delays. The second round, if required, will be on November 29

  • Hong Kong’s chief executive Carrie Lam will give her annual policy address on Wednesday. Washington has criticised the decision to postpone the elections for the city’s legislature

Companies news and earnings

Apple is set to announce the biggest leap forward for the iPhone since 2014 at a virtual event on Tuesday.

The widespread expectation among analysts and investors is that the newest series of handsets, presumably called the iPhone 12 and coming in four models, will be 5G-equipped, triggering a wave of upgrades among the nearly 1bn iPhone users worldwide.

The iPhone launch, which was delayed from September by coronavirus-related supply chain disruption, comes at a crucial juncture for Apple, which has been leaning on its services and accessories businesses in recent years.

Polish ecommerce company Allegro will debut on the Warsaw stock exchange on Monday for what is expected to be Poland’s biggest IPO with the group’s equity value reaching 44bn zlotys, or $11bn.

UK shareholders in Unilever will vote on Monday on whether to unify the company’s structure into a London-based entity. More than 99 per cent of Dutch investors have already voted in favour of the move.

France’s commercial court will decide on Wednesday whether Lagardère has to call an early shareholders meeting after pressures from activist investor Amber Capital and media company Vivendi. Amber has previously signed a pact with Vivendi under which they agreed to seek seats on Lagardère’s board together.

Low interest rates are expected to weigh on profits from core lending activities when US banks kick off the third-quarter earnings season. JPMorgan and Citigroup are first up on Tuesday, when JPMorgan’s profits are forecast to drop 25 per cent.

Analysts will closely watch for any strategy update from Citi after its chief executive Mike Corbat announced he would retire in 2021. Analysts expect Jane Fraser, the incoming chief, to face some hard choices.

Profits are also likely to take a hit at Goldman Sachs, Bank of America and Wells Fargo, which report on Wednesday.

Charles Scharf, chief executive of Wells Fargo, is also scheduled to speak at a panel organised by the Institute of International Finance on Friday.

Morgan Stanley reports on Thursday, followed by Bank of New York Mellon the day after.

BlackRock, the world’s largest asset manager, will update investors on its third-quarter earnings on Tuesday, while Jupiter is scheduled for Friday.

Other companies reporting this week include housebuilder Barratt Developments, food delivery service Just Eat, recruitment agency Hays, Domino’s Pizza Group, furnishing retailer Dunelm, luxury goods group LVMH, drugstore chain Walgreens Boots Alliance, Johnson & Johnson and pub-chain JD Wetherspoon.

A few fashion retailers will also file their earnings updates such as Asos, Ted Baker and French Connection.

Central banks

ECB’s Christine Lagarde will speak at the online 16th biennial global roundtable on Wednesday, which is organised by the UN Environment Programme Finance Initiative.

Haruhiko Kuroda, the governor of the Bank of Japan, will address the Institute of International Finance on Monday at its online annual membership meeting.

The Bank of England releases its credit conditions survey on Thursday.

Indonesia meets on Tuesday and is expected to keep rates steady at 4 per cent.

Analysts forecast no change on Wednesday for South Korea, which has a 0.5 per cent seven days repo rate.

Chile is set to keep its rate on hold on Thursday at 0.5 per cent, and the same is expected from Sri Lanka, which meets on Friday.

Economic data

US retail spending has rebounded to set record highs since June, after plunging during the early months of the year as the coronavirus pandemic swept through the country.

On Friday, investors will find out whether figures for September show a continued upswing. The data is an important gauge for the strength of the American consumer, whose spending accounts for about two-thirds of US economic activity.

June’s record for retail sales was followed by another in July and again in August, when $537.5bn was spent — an all-time high in data compiled by the US Census Bureau since 1992.

Economists polled by Bloomberg expect spending to rise 0.7 per cent in September from the previous month, on a seasonally adjusted basis. In August, spending rose 0.6 per cent, falling short of expectations of a 1 per cent rise.

The US also has inflation data on Tuesday, initial jobless claims on Thursday, and industrial production figures and the Michigan consumer sentiment survey for early October will be released on Friday.

China’s consumer price index data for September is out on Thursday.

While China’s economy is tipped to grow this year, in contrast to many of its peers, consumption remains subdued.

Early indicators, however, suggest the domestic tourist rush during the seven-day Golden Week national holiday, which concluded last Thursday, was better than expected.

Analysts at Bank of America expect China’s consumer inflation to ease further in September to a year-on-year rise of 1.7 per cent. In January, it was running at 5.4 per cent.

The UK releases unemployment data on Tuesday, with any bad reading only serving to reinforce the feeling that more stimulus from the Bank of England is on the way.

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