China’s growth and earnings of corporations in Europe and the United States, together with results from the major FAANGs, will provide markets much to digest over the coming week. Meanwhile, Turkey’s central banking is due to meet in the wake of another midnight reshuffle.

Many people are asking the question, “Is Christmas cancelled?”

1. CHARTING CHINA   

    From an Evergrande-induced property market crisis to power shortages halting production lines supplying Apple (NASDAQ:) and Tesla (NASDAQ:), https://www.reuters.com/world/china/china-sept-export-growth-unexpectedly-picks-up-imports-slow-2021-10-13 the world’s no. There are many things to be concerned about in the 2 economy.

On Monday, data showed that gross domestic product (GDP), a measure of the country’s economic output, grew by 4.9% from one year ago. This is the lowest rate since 2020’s third quarter and the worst forecast.

In September, overall industrial output fell 3.1% from the previous year, the slowest pace of decline since 2015.

However, retail sales outperformed the negative trend and grew 4.4% faster that forecasts. In August, 2.5% growth was recorded. Also, the nationwide unemployment rate dropped from 5.1% down to 4.9%.

Recent readings suggest that there is more hope for policymakers to do more to support growth and the recovery.

China’s economy is hampered by power shortage and property problems

Figure showing China slowing down in growth

https://fingfx.thomsonreuters.com/gfx/mkt/myvmngkjzpr/Pasted%20image%201634212277756.png

PROFIT STREAM 2/

Netflix (NASDAQ 🙂 reports on the third quarter for its FAANG group of large U.S. technology and growth companies, including Apple, Amazon (NASDAQ :), Netflix, Google-parent Alphabet and Facebook (NASDAQ :).

The video streaming company said “Squid Game” has become its biggest series launch ever https://www.reuters.com/lifestyle/skoreas-squid-game-is-netflixs-biggest-original-show-debut-2021-10-13, while last month “The Crown” won the best drama series Emmy award. Netflix also bought video game creator Night School Studio https://www.reuters.com/technology/netflix-rolls-out-mobile-games-users-select-european-markets-2021-09-28 in a push to diversify.

    Netflix’s stock price has climbed some 16% in 2021, broadly in line with the and in the middle compared to the other FAANG stocks. Other companies due to report results next week include Tesla, Johnson & Johnson (NYSE:), and Intel (NASDAQ:).

Netflix purchases the first videogame studio and launches mobile games

Strong earnings in America, but concerns about supply chains and cost of production are causing investors concern

Graphic: “FAANG” stocks in 2021 https://graphics.reuters.com/USA-STOCKS/FAANG/gkvlgxxqlpb/chart_eikon.jpg

3 INFLATION SPOTTING

Markets will look for signs that production bottlenecks, supply chain strains, labour shortages and surging energy prices https://www.reuters.com/business/energy/power-crunch-pressures-europes-silicon-ferro-alloy-producers-2021-10-07 are starting to undermine future profits when Europe’s earnings kick off.

    With rates hikes in the works to fend off inflation https://www.reuters.com/business/money-markets-ramp-up-global-rate-hike-bets-add-pressure-central-banks-2021-10-12 stickiness, financial and energy sectors are set to thrive as rising yields dent the appeal of so-called growth stocks.

Tasters of the third-quarter earnings season from luxury giant LVMH, tech star SAP https://www.reuters.com/technology/sap-lifts-full-year-outlook-more-customers-shift-cloud-2021-10-12 and steelmaker Outokumpu so far left no bitter after-taste. Blue chips like Unilever (NYSE) and ASML Holdings (NASDAQ:) are now in action. Barclays ABB.

    Earnings are seen jumping 46.7% year-on-year for pan-European index constituents, though the gap between positive and negative revisions has been shrinking, vindicating the narrative Europe is cruising past peak growth.   

The price pinch is the global economic storm that has swept through.

Graphic: Earnings revisions https://fingfx.thomsonreuters.com/gfx/mkt/dwvkrazzlpm/Pasted%20image%201634293481215.png

4/CHRISTMAS, CANCELLED

World leaders are hopeful that supply disruption will not be the Grinch who stole Christmas one year ago, after coronavirus lockdowns had dampened festive spirit.

Despite being more than two years away, panic buying has already begun for turkeys and other festive treats amid chaos in the supply chain.

White House officials warn Americans may face https://reut.rs/30oHs5u higher prices and empty shelves this Christmas. Los Angeles’ busy port of Long Beach is expanding its operations in order to load an estimated 500,000 cargo containers that are awaiting shipment offshore.

Britain has urged consumers to buy normally after containers carrying toys and electrical goods were diverted from its biggest port because it was full https://www.reuters.com/article/us-britain-truckers-idUSKBN2H30GQ.

Supply chain problems might be illustrated by Friday’s Flash October purchasing manager indices (PMIs), from Australia, Europe, and elsewhere. Germany business sentiment https://reut.rs/3aDm3Hm is already suffering.

– Biden enlists Target Walmart (NYSE 🙂 will fix holiday sales bottlenecks

Graphic: Long Beach Anchorage congestion (number of vessels) https://fingfx.thomsonreuters.com/gfx/mkt/gdpzywwbjvw/theme1310.PNG

5/EMERGING BONES

The excitement of emerging markets is not limited to central banking, and Turkey has more than any other country for its entertainment.

A fresh batch of policy makers will meet https://www.reuters.com/world/middle-east/revolving-door-turkeys-last-four-central-bank-chiefs-2021-10-08 on Thursday after President Tayyip Erdogan instigated another reshuffle, clearing the way for more rate cuts in the face of stubbornly high inflation and sending the lira to fresh record lows.

Central banks around the world are increasing rates, however. Hungary is expected to nudge up its benchmark https://www.reuters.com/article/hungary-cenbank-idUSL8N2QX22S on Tuesday to tackle a rise in inflation which prompted sharp rate rises elsewhere in central Europe.

Russia’s central bank will likely follow https://www.reuters.com/article/russia-cenbank-ofz/russian-central-bank-says-foreign-buyers-flock-to-secondary-ofz-market-idUSL8N2R928K on Friday as policy makers have come out in droves warning of rising price pressures and unanchored inflation expectations.

More rate reductions are possible thanks to Erdogan’s overhaul of the central bank

Graphic: Lira timeline October 15 https://fingfx.thomsonreuters.com/gfx/mkt/zgpomrnrmpd/Lira%20timeline%20October%2015.PNG

China growth slowing https://tmsnrt.rs/3va8F7l

“FAANG” stocks in 2021 https://tmsnrt.rs/3azwL1M

Earnings revisions https://tmsnrt.rs/3mTIuhr

Long Beach Anchorage congestion (number of vessels) https://tmsnrt.rs/3ACujlL

Lira timeline October 15 https://tmsnrt.rs/3lFTEqK

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