Key Events This Very Busy Week: Earnings Deluge, Central Banks, GDP And Much More While the FOMC enters its quiet period ahead of next week's taper announcement, it's still set to be a bumper week ahead for markets. Amid silence from FOMC speakers, we get decisions from the ECB and the Bank of Japan (both Thursday). As DB's Jim Reid notes, inflation will obviously remain in the spotlight too as we get the October flash estimate for the Euro Area (Friday) with some regional numbers like German (Thursday) before. In addition, the Q3 earnings season will ramp up further, with 165 companies in the S&P 500 reporting, including Facebook (today), Microsoft, and Alphabet (both tomorrow), and Apple and Amazon (Thursday). Elsewhere, the UK government will be announcing their latest budget and spending review (Wednesday), Covid will remain in the headlines in light of the growing number of cases in many countries, and we’ll get the first look at Q3 GDP growth in the US (Thursday) and the Euro Area (Friday). Starting with those central bank meetings, we’re about to enter a couple of important weeks with the ECB and BoJ meeting this week, before the Fed and the BoE follow the week after. Market anticipation is much higher for the latter two though. So by comparison, the ECB and the BoJ are likely to be somewhat quieter, and DB's European economists write in their preview that this Governing Council meeting is likely to be a staging ground ahead of wide-ranging policy decisions in December, and will therefore be about tone and expectations management. One thing to keep an eye on in particular will be what is said about the recent surge in natural gas prices, as well as if ECB President Lagarde challenges the market pricing on liftoff as inconsistent with their inflation forecasts and new rates guidance. 5yr5yr Euro inflation swaps hit 2% for the first time on Friday so if the market is to be believed the ECB has achieved long-term success in hitting its mandate. With regards to the meeting, there’ll be more action in December where economists’ baseline is that there’ll be confirmation that PEPP purchases will end in March 2022. Speaking of inflation, it will remain heavily in focus for markets over the week ahead, with recent days having seen investor expectations of future inflation rise to fresh multi-year highs. This week one of the main highlights will be the flash Euro Area CPI reading for October, which is out on Friday. Last month, CPI rose to 3.4%, which is the highest inflation has been since 2008, and this time economists are expecting a further increase in the measure to 3.8%. However, their latest forecast update expects that we’ll see the peak of 3.9% in November, before inflation starts to head back down again (it won't be the first time economists have been dead wrong about inflation being transitory). The other main data highlight will come from the Q3 GDP figures, with releases for both the US and the Euro Area. For the US on Thursday the Atlanta Fed tracker has now hit a low of only +0.53%. DB is at 2.3% with consensus at 2.8%. On to the main event this week, earnings season really ramps up in the next five days with the highlights including some of the megacap tech firms, and a total of 165 companies in the S&P 500 will be reporting. Among the firms to watch out for include Facebook today; tomorrow, we’ll hear from Microsoft, Alphabet, Visa, Eli Lilly, Novartis, Texas Instruments, UPS, General Electric, UBS and Twitter. On Wednesday, releases will include Thermo Fisher Scientific, Coca-Cola, McDonald’s, Boeing, General Motors, Santander and Ford. Thursday then sees reports from Apple, Amazon, Mastercard, Comcast, Merck, Royal Dutch Shell, Linde, Volkswagen, Starbucks, Sanofi, Caterpillar, Lloyds Banking Group and Samsung. Finally on Friday, we’ll hear from ExxonMobil, Chevron, AbbVie, Charter Communications, Daimler, BNP Paribas, Aon and NatWest Group. In the UK, the main highlight next week will be the government’s Autumn Budget on Wednesday, with the Office for Budget Responsibility also set to release their latest Economic and Fiscal Outlook alongside that. In addition to the budget, the government will also be outlining the latest Spending Review, which will cover public spending priorities over the next 3 years. DB's UK economists expect that 2021-22 borrowing is expected to be revised down by £60bn, and they expect day-to-day spending will follow the path set out at the Spring Budget. They’re also expecting Chancellor Sunak will outline new fiscal rules. Finally, the pandemic is gaining increasing attention from investors again, with a number of countries having moved to toughen up restrictions in light of rising cases. This week, something to look out for will be the US FDA’s advisory committee meeting tomorrow, where they’ll be discussing Pfizer’s request for an emergency use authorization for its vaccine on 5-11 year olds. The CDC’s advisory committee is then holding a meeting on November 2 and 3 the following week, and the White House have said that if it’s authorised then the vaccine would be made available at over 25,000 paediatricians’ offices and other primary care sites, as well as in pharmacies, and school and community-based clinics. The full day by day calendar is at the end as usual. Courtesy of Deutsche Bank, here is a day-by-day calendar of events Monday October 25 Data: Germany October Ifo business climate indicator, US September Chicago Fed national activity index, October Dallas Fed manufacturing activity Central Banks: BoE’s Tenreyro speaks Earnings: Facebook, HSBC Tuesday October 26 Data: US August FHFA house price index, September new home sales, October Conference Board consumer confidence, Richmond Fed manufacturing index Central Banks: ECB’s Villeroy speaks Earnings: Microsoft, Alphabet, Visa, Eli Lilly, Novartis, Texas Instruments, UPS, General Electric, UBS, Twitter Other: FDA Advisory Committee meeting to discuss emergency use authorization of Pfizer vaccine to 5-11 year olds Wednesday October 27 Data: Germany November GfK consumer confidence, France October consumer confidence, Euro Area September M3 money supply, US preliminary September wholesale inventories, durable goods orders, core capital goods orders Central Banks: Monetary policy decisions from the Bank of Canada and Central Bank of Brazil Earnings: Thermo Fisher Scientific, Coca-Cola, McDonald’s, Boeing, General Motors, Santander, Ford Politics: UK government announces Autumn Budget and Spending Review Thursday October 28 Data: Japan September retail sales, Germany October unemployment change, preliminary October CPI, Italy October consumer confidence, Euro Area final October consumer confidence, US weekly initial jobless claims, advance Q3 GDP, September pending home sales, October Kansas City Fed manufacturing activity Central Banks: Monetary policy decisions from the ECB and Bank of Japan Earnings: Apple, Amazon, Mastercard, Comcast, Merck, Royal Dutch Shell, Linde, Volkswagen, Starbucks, Sanofi, Caterpillar, Lloyds Banking Group, Samsung Friday October 29 Data: Japan September jobless rate, preliminary September industrial production, preliminary Q3 GDP from Euro Area, Germany, France and Italy, preliminary October CPI from Euro Area, France and Italy, UK September mortgage approvals, Canada August GDP, US September personal spending, personal income, October MNI Chicago PMI, final October University of Michigan consumer sentiment index Earnings: ExxonMobil, Chevron, AbbVie, Charter Communications, Daimler, BNP Paribas, Aon, NatWest Group Focusing on just the US, Goldman writes that the key economic data releases this week are the durable goods report on Wednesday, the Q3 GDP release on Thursday, and the core PCE report on Friday. There are no speaking engagements from Fed officials this week, reflecting the FOMC blackout period. Monday, October 25 10:30 AM Dallas Fed manufacturing index, October (consensus 6.2, last 4.6) Tuesday, October 26 09:00 AM FHFA house price index, August (consensus +1.5%, last +1.4%) 09:00 AM S&P/Case-Shiller 20-city home price index, August (GS +1.4%, consensus +1.5%, last +1.55%); We estimate the S&P/Case-Shiller 20-city home price index rose by 1.4% in August, following a 1.55% increase in July. 10:00 AM New home sales, September (GS +3.0%, consensus +2.2%, last +1.5%): We estimate that new home sales increased by 3.0% in September, reflecting an increase in mortgage applications. 10:00 AM Conference Board consumer confidence, October (GS 107.0, consensus 108.5, last 109.3): We estimate that the Conference Board consumer confidence index decreased by 2.3pt to 107.0 in October. Our forecast reflects weak signals from other consumer confidence measures. 10:00 AM Richmond Fed manufacturing index, October (consensus 5, last -3) Wednesday, October 27 08:30 AM Advance goods trade balance, September (GS -$88.0BN, consensus -$88.3BN, last -$88.2BN): We estimate that the goods trade deficit declined by $0.2BN to $88.0BN in September compared to the final August report, as shipping bottlenecks likely weighed on import volumes. 08:30 AM Wholesale inventories, September preliminary (consensus +1.0%, last +1.2%): Retail inventories, September (consensus +0.3%, last +0.1%) 8:30 AM Durable goods orders, September preliminary (GS -1.5%, consensus -1.0%, last +1.8%): Durable goods orders ex-transportation, September preliminary (GS +0.7%, consensus +0.4%, last +0.3%); Core capital goods orders, September preliminary (GS +0.7%, consensus +0.5%, last +0.6%); Core capital goods shipments, September preliminary (GS +0.7%, consensus +0.5%, last +0.8%): We estimate durable goods declined 1.5% in the preliminary September report, reflecting a pullback in commercial aircraft orders. We estimate firm gains in core capital goods orders (+0.7%) and core capital goods shipments (+0.7%), in part reflecting higher prices. Thursday, October 28 08:30 AM Initial jobless claims, week ended October 23 (GS 280k, consensus 290k, last 290k); Continuing jobless claims, week ended October 16 (consensus 2,410k, last 2,481k): We estimate initial jobless claims declined to 280k in the week ended October 23. 08:30 AM GDP, Q3 advance (GS +3.25%, consensus +2.8%, last +6.7%); Personal consumption, Q3 advance (GS +0.8%, consensus +0.8%, last +12.0%): We estimate GDP growth slowed to +3¼% annualized in the advance reading for Q3, following +6.7% in Q2. Our forecast reflects a sharp slowdown in consumption growth (to +0.8%) driven by the waning fiscal boost and a slower pace of reopening due to the Delta variant. We expect declines in business structures and equipment investment—the latter due to vehicle shortages—but expect a strong gain in the intellectual property category (+10%). We estimate a boost to GDP growth from inventories (+2.4pp qoq ar) but a drag from net trade (-0.6pp). 10:00 AM Pending home sales, September (GS -1.0%, consensus +0.5%, last +8.1%): We estimate that pending home sales declined 1.0% in September. 11:00 AM Kansas City Fed manufacturing index, October (consensus +19, last +22) Friday, October 31 08:30 AM Employment cost index, Q3 (GS +1.0%, consensus +0.9%, prior +0.7%): We estimate that the employment cost index rose 1.0% in Q3 (qoq sa), which would boost the year-on-year rate by five tenths to +3.4%. Labor shortages exerted upward pressure on wage growth in the third quarter, and the ECI measure is also running well below our composition-adjusted wage tracker (+3.7% in Q3). We also expect a pickup in ECI benefit growth after a soft sequential gain in Q2. Personal income, September (GS -0.5%, consensus -0.2%, last +0.2%); Personal spending, September (GS +0.4%, consensus +0.6%, last +0.8%); PCE price index, September (GS +0.25%, consensus +0.3%, last +0.40%); Core PCE price index, September (GS +0.13%, consensus +0.2%, last +0.32%); PCE price index (yoy), September (GS +4.36%, consensus +4.4%, last +4.26%); Core PCE price index (yoy), September (GS +3.62%, consensus +3.7%, last +3.62%): Based on details in the PPI, CPI, and import price reports, we forecast that the core PCE price index rose by 0.13% month-over-month in September, corresponding to a 3.62% increase from a year earlier. Additionally, we expect that the headline PCE price index increased by 0.25% in September, corresponding to a 4.36% increase from a year earlier. We expect a 0.5% decrease in personal income and a 0.4% increase in personal spending in September. 09:45 AM Chicago PMI, October (GS 62.0, consensus 64.0, last 64.7): We estimate that the Chicago PMI pulled back by 2.7 points to 62.0 in October. Our forecast reflects mixed global industrial data and a possible sentiment drag from China power cuts. 10:00 AM University of Michigan consumer sentiment, October final (GS 71.4, consensus 71.4, last 71.4): We expect the University of Michigan consumer sentiment index was unchanged at 71.4 in the final October reading. Source: Deutsche Bank, Goldman, Bank of America Tyler Durden Mon, 10/25/2021 - 09:26