A massive week ahead: COVID-19’s global rise continues at record pace, Australia’s September quarter inflation report, the Queensland election, China’s new five-year plan, America’s earnings deluge, the last week of the November 3 election campaign, US third-quarter GDP, and central bank meetings in Japan and Europe.
First up, in Australia, the September quarter consumer price inflation is out Wednesday and the AMP’s chief economist, Dr. Shane Oliver forecast a rise of 1.5% quarter on quarter after the fall of 0.3% in the three months to March.
The big rise will be because the price falls in the March quarter in the cost of child care especially and lower oil prices, have been reversed. Dr. Oliver says that will take inflation to an annual 0.6% to the end of June and for 2019-20, the lowest annual rate on record. The annual fall of 1.9% in the March quarter will be the reason for the ultra low rate.
Underlying inflation is expected to remain weak though at 0.2% quarter on quarter and 1.1% year on year a long way under the 2% to 3% inflation target over time (which has been pushed aside for the next couple of years).
“The RBA will of course look through the predictable volatility in headline inflation and remain focussed on the weakness in underlying inflation,” Dr. Oliver wrote at the weekend.
Elsewhere there’s private credit growth for September on Frida) and Dr Oliver says it “ s likely to have remained soft in September including for housing with the rapid paydown of existing home loans offsetting a rise in new loans.”
Preliminary trade data for September will be will be released later today, the ANZ Bank reports its 2019-20 annual results on Thursday and the Queensland state election happens on Saturday .
Elsewhere in the corporates there’s a couple of major quarterly reports due this week from Fortescue Metals and Newcrest and Coca Cola Amatil is tipped to unveil a major deal today with it receiving a reported $10 billion takeover offer from Coca-Cola European Partners.
In China this week a meeting that holds considerable interest for the Australian economy for the next few years.
Starting today, China’s leadership will decide on the shape of the country’s 2021-2025 economic plan.
President Xi Jinping and members of the Central Committee will meet from today (October 26) to Friday (October 29) behind closed doors to lay out China’s 14th five-year plan.
Reuters reported at the weekend that the meeting will endorse a lower growth target compared with 2016-2020.
Government think tanks and economists have recommended an average GDP growth targets “around 5%”. That will be down from the 6.1% in 2019 (the last ’normal year’ which was down from 6.6% in 2018.
The plan is expected to be unveiled at the annual parliament meeting early next year (usually March). Parts will no doubt be leaked between now and then to soften up markets and state-owned business.
Other analysts expect a heavy shift to green and renewable policies, especially in energy production, electric vehicles of all types, batteries, solar, and wind farms.
Saturday sees the release of the official surveys of Chinese manufacturing and service sectors’ activity by the National Bureau of Statistics.
In the US, the issues will be COVID as daily infection rates hit a record 85,000 or more on Friday, the final week of the November 3 elections (at all levels of the government in the US, not just the Presidency and Congress) September quarter GDP (Thursday) and the peak week for September quarter earnings with early Friday morning (Australian time – see separate story) the big day with Apple, Amazon, Alphabet, Twitter, and Facebook all due to report after Wall Street trading ends.
The first estimate of third-quarter GDP is expected to show an annualised 32% rebound as the economy rebounded after the -31.4% annualised slide seen in the June quarter.
Other US data includes new home sales (tonight), pending home sales (Thursday), a further rise in home prices and durable goods orders but flat consumer confidence (all tomorrow) and weak wages growth and core private final consumption inflation of around 1.7%yoy (both Friday).
Elsewhere, the European Central Bank on Thursday is expected to leave monetary policy on hold but indicate a strong easing bias in the face of the threat to the recovery posed by rising COVID cases.
Dr. Oliver says the ECB is expected to increase its quantitative easing program in December.
Figures on Friday are expected to show a 9.5% quarter on quarter rebound in September quarter GDP after the -11.8%qoq decline in the June quarter,.
There’s an expected rise in eurozone unemployment to 8.3% and core CPI inflation for October is likely to have remained very weak at just 0.2%yoy.
Meanwhile, the Bank of Japan meets on Thursday and is expected to leave monetary policy unchanged but with a strong easing bias as it could downgrade its already weak growth forecasts.
There’s also September industrial production data which Dr Oliver says is expected to show a further recovery, but underlying jobs data is likely to be weak (both due out on Friday).
Besides the US and eurozone, third-quarter GDP estimates will come from Hong Kong, Taiwan and South Korea.
Central banks also meet in Canada and Brazil.
Finally, the UK has a Brexit exit deal deadline of October 31. At the moment there’s no sign of any agreement as governments on both sides of the Channel grapple with soaring COVID rates.
Will that see the deadline extended to the end of the year or into 2021 this week?
