Macro Analysis / Global

The week that was … the week to come

Every Friday, Brian Jacobsen provides perspective on key events and topics of the current week and his thoughts about what the week ahead may hold. Here’s his report for the week of October 10–16, 2020.

The week that was

  • Earnings season kicked off with reports from big banks. After setting aside a lot of provisions for loan losses in the second quarter, banks are signaling that things might not turn out as badly as many feared back in the depths of the coronavirus crisis. Consumer delinquencies remain low, and the economy is rebounding.
  • Treasury Secretary Mnuchin said he doesn’t expect to overcome the impasse on stimulus until after the general election. He and House Speaker Pelosi are “only” $400 billion apart, but Senate Republicans might not go along with the deal.



  • Due to a rise in coronavirus cases, Germany is imposing limits on private gatherings and implementing curfews for bars and restaurants. France is imposing a 9 p.m.‒6 a.m. curfew in major cities for four weeks. I’m not sure if the leaders in France think the virus is only nocturnal or whether it’s because most people there maintain a more vibrant nightlife than I do. In London, there will be prohibitions on people from one household mixing with people from another household.
  • September’s U.S. retail sales beat expectations, increasing 1.9% month over month. Clothing, sporting goods, department stores, motor vehicles, food services, and gasoline sales were all strong. Electronics and appliances posted declines.
  • While most people were looking for an increase, U.S. industrial production in September fell 0.6% month over month. Manufacturing output fell 0.3%.



  • North Korea celebrated its 75th birthday by reporting that it has a ballistic missile capable of carrying a nuclear warhead to the U.S. My mom celebrated her birthday, and we had cake. Everyone celebrates birthdays differently, I guess.
  • K. Prime Minister Boris Johnson set an October 15 deadline to come to a Brexit agreement with European Union (EU) negotiators. Rather than walking away from negotiations on October 15, he said he’s willing to reengage in talks if the EU comes back with a “fundamental change of approach.” The EU responded by saying it would send negotiators to London to “intensify” talks. Until December 31, the U.K. is in a transition period. After that date, unless there’s an agreement, the U.K. will leave the EU’s single market without a trade agreement. Prime Minister Johnson has been pushing for a “Canada-style” deal, but he said the U.K. should prepare for an “Australia-style” deal. The difference is that Canada has a comprehensive trade deal with the EU while Australia operates mostly under World Trade Organization rules.
  • The U.S. Senate Judiciary Committee held hearings on Judge Amy Coney Barrett’s nomination to the Supreme Court. It’s expected that the Senate will vote on her confirmation by October 26.


The week to come

  • Third-quarter earnings season continues. At the beginning of earnings season, the consensus was looking for year-over-year growth in S&P 500 Index earnings of -20.5% with sales declining 3.55% year over year. Based on results reported thus far from 10% of the companies within the S&P 500 Index, the growth rate of earnings is down 18% year over year, and sales are on pace to fall 3.2%.
  • The week starts Sunday evening with China reporting its third-quarter gross domestic product numbers. In the second quarter, China’s economy grew 3.2% year over year. Economists are looking for 5.1% year-over-year growth for the third quarter. China’s industrial production and retail sales numbers are also to be released Sunday night. In August, the country’s industrial production grew 5.6% year over year.
  • In the U.S., there’s a lot of housing data coming out. On Monday, there’s the National Association of Home Builders Confidence Survey for October. On Tuesday, we’ll learn September’s housing-starts data. On Thursday, existing home sales numbers for September will be released. Housing has been recovering aggressively, and the expectation is that the trend will probably continue.
  • Friday is a big day with the release of preliminary Purchasing Managers’ Index From the eurozone to the U.K., manufacturing and services indexes have been comfortably within expansion territory. With renewed restrictions on activity due to the rise in coronavirus cases, it’s likely we’ll see a slowing of the economic improvement.

Thanks for reading, stay informed!

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