The new iPhone 8 will be the only business story of interest globally this week, but there’s also the impact of the two hurricanes approaching the US, not to mention some important economic data for the US and Australian economies this week.
Harvey’s impact on energy markets is just subsiding, ahead lie the emerging picture of the impact in the country’s insurance sector, and big global re-insurers. Now Irma approaches with an even greater potential for mayhem and destruction in Florida after its path through the Caribbean islands and Cuba.
And beyond her is a third storm called Jose behind Irma and a dangerous Category 4 hurricane (Katia, a third storm has already come ashore on the eastern Mexican Gulf coast).
The potential damage bill from Harvey and Irma could easily top $US100 billion and a $US200 billion estimate isn’t out of the question – they are sums that will strain the global insurances and reinsurance markets, as well as the US government with its debt ceiling only lifted to a deadline of December 15.
One way or another these two storms (Harvey and Irma) will impact the US economy for the next year or more. The rebuilding cost will be huge as will the strain on labour and resources in the construction sector. It’s this that the Fed will be watching closely.
Meanwhile the storms will overshadow the launch of the new Apple phone and other products (updated computers and watch are the tips) early Wednesday, our time.
The company is rumoured to be unveiling a new iPhone 8, as well as possibly new versions of the Apple Watch and Apple TV ahead of the all-important global holiday shopping season.
The Wall Street Journal has reported there have been production problems that could restrict supplies of the new phone.
But other wiser analysts note there have been reports of production problems around the launch of new phones from Apple for the past few years and wonder if it is all a marketing ploy to build up demand immediately after the launch.
Apple’s shares have soared this year to new all-time highs at $US161.15 last month and had eased to $US158.63 on Friday, with Warren Buffett and Berkshire Hathaway a big beneficiary as Apple’s newest biggest shareholder.
Berkshire though is at or near the top of analyst lists for damage from Irma and Harvey.
Berkshire’s huge insurance business straddles car, property and casualty and re-insurance. The voting shares closed at $US263,600 on Friday, down 3.2% since the all time peak on September 1 of $US272,399.
Elsewhere in the US, small business confidence and job openings are both out tomorrow and retail sales and industrial production (both on Friday). \
CPI inflation (on Thursday) is expected to rise to 1.8% year on year (from 1.7%) and core inflation is expected to fall to 1.6% year on year (from 1.7% in July). The data will not help the Fed in deciding on its next rate rise.
Chinese economic activity data for August due Thursday is expected to show a slight rise in both retail sales growth to 10.5% year on year and growth in industrial production to 6.7% year on year, but stable growth in fixed asset investment at 8.3% yoy.
Money supply and credit data for August will also be released, along with car sales and property investment. Property prices are next week.
In Australia, tomorrow’s August NAB survey is expected to show continuing solid levels for business confidence and activity (currently at decade highs), the Westpac consumer confidence index (Wednesday) will remain soft and the August employment data on Thursday to show jobs up 10,000 but with unemployment rising to 5.7%, according to the AMP’s Chief Economist, Dr Shane Oliver.
In Britain, The Bank of England is widely expected to leave its key interest rate unchanged at its record low of 0.25% on Thursday. The meeting will take place on September 14.
The Financial Times says “while some members of the Monetary Policy Committee may agitate to start tightening given strength in the labour market and the prospect of rising consumer-price inflation, other factors may intercede, including underwhelming growth and the looming Brexit process.”
