Macroeconomics: The Day Ahead – 30 October 2020
Good Morning: The Long & the Short of it and The Bigger Picture
Written by Marc Ostwald, ADMISI’s Global Strategist & Chief Economist
- Very busy day for statistics as October draws to a close, likely to be be overrun by month end, pandemic and politics; oil majors dominate busy day for US corporate earnings; modest schedule of events
- French GDP and Consumer Spending underline sharp loss of momentum at end of Q3, challenges ahead as lockdown measures imply weak Q4; likely to repeat across all EU
- US Personal Income & PCE: pre-empted by Q3 GDP, also implies better than expected outturn for PCE
As another tempestuous month ends and as the US presidential elections looms on Tuesday, today’s busy run of major data in Asia, Europe and the US is likely to be so much roadkill. Markets continue to grapple with dissonant influences, on the one hand the alarmingly rapid escalation in infection rates and an array of political & economic uncertainties, on the other better than expected earnings reports (though the ‘big tech’ results yesterday proved to be “not good enough”, above all the Apple iPhone sales), the promise of ultra-accommodative monetary policy for years to come (though this is equally a huge burden for investors seeking returns on low risk investments), and the hope that a vaccine and the evolution of treatments will allow the world to return to more ‘normal’ levels of personal and economic activity. But volatility looks likely to sustain higher levels near-term, with markets pinning their hopes above all on a non-contested outcome to the US elections, given that there is more than enough uncertainty in the world to contend with, without having a long protracted run of recounts and legal battles. There are the better than expected South Korea and Japan Industrial Production to digest, and the unsurprising sharp drop in the UK Lloyds Business Barometer (-18 vs. Sept -11). Ahead lie the deluge of provisional Q3 GDP readings from Europe, Hong Kong and Taiwan, Eurozone CPI and US Personal Income & PCE, Chicago PMI and final Michigan Sentiment. The events schedule is very light, though there will doubtless be the usual run of ECB speakers offering their post council meeting thoughts. Otherwise it will be another very busy day for corporate earnings, including US oil majors Chevron and Exxon Mobil, as well as the likes of Altria, Charter Communications, Colgate-Palmolive, Goodyear and Honeywell.
As previously noted, in terms of the week’s data, the advance Q3 GDP readings will likely tell us what is already been evident, the US economy did recover robustly in Q3, but to sustain that in to Q4 and into 2021 will require the elusive fiscal package. By contrast the bounce in Europe has proved to be rather short-lived and the ballooning infection rates, and the thus far seemingly ineffective measures to rein those in, will only serve to stall recovery momentum in Q4. The French GDP and Consumer Spending data serve to underline the point about a sharp loss of momentum into the end of Q3, with Consumer Spending much weaker than expected at -5.1% m/m, which takes most of the shine off the much better than expected 18.2% q/q (forecast 15.0% q/q) rebound in Q3 GDP. US Personal Income and PCE were largely pre-empted by the advance Q3 GDP report yesterday, which suggests that PCE should beat forecasts of a solid 1.0% m/m rise.
To view the full report and to sign up for daily market commentary please email firstname.lastname@example.org
The information within this publication has been compiled for general purposes only. Although every attempt has been made to ensure the accuracy of the information, ADM Investor Services International Limited (ADMISI) assumes no responsibility for any errors or omissions and will not update it. The views in this publication reflect solely those of the authors and not necessarily those of ADMISI or its affiliated institutions. This publication and information herein should not be considered investment advice nor an offer to sell or an invitation to invest in any products mentioned by ADMISI.
© 2020 ADM Investor Services International Limited.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.