US election, FOMC, US payrolls, Bank of England, services PMIs, sainsbury, MS and ABF

1) US Employment report – 06/11 – one of the most encouraging things about the rebound in the US economy in recent months has been the slide in the unemployment rate from its peaks in April of 14.7%, to 7.9% in September. This trend is expected to continue in October with a further decline to 7.7%. Weekly jobless claims have also continued to decline and while there is a concern about a lack of fiscal stimulus the US economy has managed to absorb a lot of what the pandemic has thrown at it, in spite of the challenges being presented by infection levels that have never really shown any signs of falling back. Sadly, the unemployment numbers only tell part of the story, with labour force participation 2% lower than was the case at the beginning of the year. This week's payrolls report is expected to see another 700k jobs added to the 661k in September, however the gains seen in the past 6 months still remain some way short of the 21.5m jobs we saw lost in March and April, with just over half of those jobs coming back, as of the September report.

2) US election – 03/11 – in the next few days we will get to find out who the next President of the United States is likely to be, Donald Trump, or Joe Biden, however what is likely to be more important is who manages to control the Senate. Currently it is under the control of the Republicans, and majority leader Mitch McConnell. If the Democrats manage to win control, and maintain control of the House of Representatives their grip on the policy levers of the US economy would be complete, and as such they should find it much easier to push through the fresh fiscal stimulus measures needed to help the US economy if Joe Biden wins the final vote. Currently the Republicans hold the Senate by a majority of 53-47, which means if they hold onto it, they will be able to block anything Joe Biden does as US President if he is elected.

3) Global Manufacturing PMIs (Oct) 02/11 – the manufacturing sector has been much more resilient to the effects of the pandemic than the services sector, over the past few months. The most recent flash PMI numbers from the likes of Germany and France showed that economic activity remained robust despite rising infection rates across Europe. Part of this is likely to be down to inventory restocking, however if we see further lockdown restrictions being implemented there will be a drag on economic activity as we head into year end. In China manufacturing activity has already returned to levels last seen at the beginning of the year, and this looks set to continue. Pockets of weakness are still expected to be found in southern Europe, as well as Japan, however it is in the services sector that we are seeing the real problems.

4) Global Services PMIs (Oct) – 04/11 – these aren't expected to make for comfortable reading. The most recent flash PMI numbers from France and Germany pointed to contractions in their latest October numbers. This weakness is likely to be replicated in the latest Spain and Italy numbers as well and it is here that the biggest worries for EU leaders are set to increase. These slipped into contraction territory in August and are likely to show a contraction for the third month in succession. In Italy the services sector was only able to eke out a single month of positive output, in July. Spain was only slightly better with a similarly positive month in July, however since then the slide in economic activity has been much worse than Italy, with a 42.4 reading in September. With the EU still arguing about their own fiscal stimulus pandemic plan, and unlikely to agree on the grants so badly needed by both Italy and Spain, the next few months are likely to be even more painful for the most fragile economies in the euro area. As far as services activity goes the outliers are expected to be China, the US and the UK, which are all expected to be positive, though the UK numbers are likely to start slipping back sharply in November as tighter restrictions here weigh on the economic output.

5) Bank of England rate meeting – 05/11 – the slowdown in economic activity that we will eventually start to see in the face of tighter restrictions is likely to weigh on the UK economy in Q4 is likely to be weighing on the minds of UK policymakers, as we head towards the end of the year. There has been much speculation about the prospect of negative rates, however it is becoming clear that while Bank of England officials don't want to be seen to be ruling them out completely, it is also becoming obvious that they are likely to be enormously damaging to the UK financial sector. Some Bank of England officials are performing extraordinary contortions in trying to convince markets that they will make a difference to the point that they risk embarrassing themselves. The groupthink is almost extraordinary and it would be astonishing if the bank were to signal, they were going to cut rates into negative territory at this stage. We are likely to see the Bank of England revise its estimates of inflation and GDP for this year and next year.

6) Fed meeting – 05/11 – at its last meeting the Federal Reserve was somewhat a hostage to events whether it be a second wave or political gridlock over a second stimulus package. In recent comments a number of Fed officials have continued to be vocal about the prospect of more aggressive policy action without success as US politicians have procrastinated over a deal that is now unlikely to come before the end of Q1 next year. This week's US election does remove one obstacle to further policy action and by the time the meeting this week concludes we should have a better idea of the US political landscape, or not. Depending on the outcome of this week's election the US central bank will still be at the forefront of not only the US policy response, but also the global policy response in the weeks and months ahead. They will also need to act as a bridge to further fiscal measures whatever the outcome of this week's election.

7) Marks and Spencer H1 20 – 04/11 – when M&S last reported in August, the Q1 numbers were slightly better than expected. Total food sales for example saw a rise of 2.5%, and with the deal with Ocado now up and running this week's numbers are set to be closely scrutinised for a further improvement in company performance. Clothing and home have continued to be a drag; however, M&S haven't been unique in this, however you do have to ask if their on-line experience was better these numbers might be better. In the 8 weeks up until August in which stores were open total sales fell 29.9%, with store sales down 47.9% and on-line sales up 39.2%. Management also announced that they were looking to reduce headcount by 7,000 over the next three months, so there are likely to be costs involved, though some of these are likely to be offset by new positions in online roles. The shares have fallen over 10% since the update so you have to think the bar is low for an upside surprise, and the beginning of a possible move back to levels last seen in the middle of August.

8) Associated British Foods FY 20 – 03/11 – the problems of the retail sector have not bypassed the Primark brand. For so long the pile it high, and sell it cheap model of Primark saw it eat the respective lunches of Next and Marks and Spencer. It's not in such a strong position now due to its lack of an online operation which meant that while other shops could see their goods on-line Primark could not and was only able to do so when the shops reopened. Despite this disadvantage overall sales have been strong since the reopening even if the share price performance doesn't reflect that. The closure of its stores at the beginning of the year has meant the company will have to carry over £150m worth of stock into next year, but said it still expected full year operating profit to be at the top end of previous forecasts when it updated shareholders in September. The grocery part of the business has managed to outperform driven by increased demand for flour and yeast, as well as tea. The company could also announce a dividend with estimates of around 25p a share, well down from last year's 46p.

9) Sainsbury H1 21 – 05/11 – supermarkets have been one area of the retail sector that has managed to ride out the worst of the hit to the retail sector. Designated as essential business they have stayed open albeit they have had to absorb much higher costs which has held back their share price performance. When the supermarket reported in July these costs increased by £500m, even as total sales jumped by 8.5%, with grocery sales leading those gains. While the sum of £500m is a high number it does need to be remembered that most retailers are getting business rates relief, on their store footprint. Clothing sales not surprisingly saw a big fall of 26.7%, while the Argos business also outperformed. CEO Simon Roberts was at pains to say that in terms of guidance they expected underlying profit to be unchanged for the full year. Sainsbury's was also in the news in September when it was reported that Daniel Kretinsky, a Czech billionaire, who already has a stake in Royal Mail, had taken a 3% stake in the business, making him the fourth largest shareholder. It isn't immediately clear what plans Mr Kretinsky has for Sainsbury with his decision to make this investment, however it probably won't be too long before he makes his presence felt.

10) Uber Q3 20 – 05/11 – even without the pandemic Uber had already been haemorrhaging cash, before the economic lockdowns hit its cash flow even more. The ride hailing part of the business makes up the lion's share of overall revenue, while its delivery or "eats" business is the small relation. In Q2 the company posted a net loss of $1.8bn as taxi bookings declined 73%, while delivery bookings saw a 113% rise. The company also exited 12 markets in Q2 including Austria, Czech Republic, Egypt, India and South Korea. Revenues in Q2 were slightly better than expected and the economic re-openings seen in Q3 should see an improved performance for the technology company as it stives to improve its delivery option. Despite Uber's problems the shares have recovered well from their March lows near $14 to be trading back above $30. This seems rather counterintuitive when you consider the company is no nearer to turning a profit than when it came out of the blocks just over a year ago.

11) Peloton Q1 21 – 05/11 – when Peloton posted its end of year numbers at the beginning of September, its Q4 numbers blasted through expectations as sales surged 172%, as a result of the slow reopening of gyms and exercise spaces. Revenues came in at $607.1m considerably above the $582.5m expected, and well above last year's $223.3m, posting profits of $89.1m, compared to a $47.4m loss, a year ago. The big question as we head into the winter months is whether the company can continue at its current rate. While the economic re-openings in its most recent are likely to see a slowdown in the rate of growth, further tightening of restrictions as we head towards year end could well hope to maintain momentum. Management expressed optimism about the outlook for 2021 projecting annual sales of between $3.5bn and $3.65bn, which would be almost double from a year ago. Peloton's biggest problem with respect to its business model is the upfront cost of its $2,000 bike, which is likely to limit its growth potential. With Apple getting in on the fitness market it has a more compelling offering with a Fitness Plus subscription which connects to the Apple Watch and tailors' workouts where you can do virtual workouts online.

12) AMC Entertainment Q3 20 – 02/11 – the problems being suffered by the cinema sector were already well documented even before the arrival of the pandemic. The challenges being faced by the competitive streaming markets were already making it hard to compete, and the closure of cinemas as a result of the economic lockdowns merely compounded those problems. While attention has been focussed on the survival of Cineworld here in the UK AMC Entertainments problems are no less serious, with the company seeing revenues plunge to $18.9m in its Q2 numbers, from $1.5bn in the same period a year ago. The owner of the Odeon chain and IMAX cinemas posted a net loss of $561m in Q2, with the company warning as recently as three weeks ago that it could run out of cash by the end of this year. The second postponement of the latest James Bond film "No Time to Die" for next month has once again thrown the future of the entire industry into doubt, as the absence of big new blockbuster releases serves to keep customers away. At a time like this the movie studios and the cinemas need to be working together, given their symbiotic relationship. AMC has agreed a deal with Universal to shorten the theatrical window to 17 days, with Universal giving the theatre a proportion of the revenue when selling directly to consumers is a start, but it's not a silver bullet. Unless movie studios step up, cinemas as we know them will cease to exist as the business model dies.