ABS Report (Premium Edition) – Nov. 16, 2020

Expect the S&P 500 and equities to turn very BULLISH if it breaks through the 3555 resistance point. The VIX is dropping that further indicates a stronger bull trend and less likely to turn Bearish. Vaccines and GOP Senate win will make the market rise to record levels.

Stocks are up this morning because Moderna MRNA said its experimental vaccine candidate was 94.5% effective, according to interim analysis of its Phase 3 study.

Morgan Stanley MS raised its S&P 500 price target to 3,900 but predicted the index to stumble in the near-term. It comes after Goldman Sachs boosted its year-end 2021 target to 4,300 last week.

We are very bullish on equities and think the vaccine news along with a GOP win of the Senate will drive the S&P 500 past 4100. A GOP Senate loss could be negative toward the markets because the Democrats would be able to remove tax cuts and most of the Trump’s pro-business agenda.

The longer term outlook for world growth became a bit less uncertain last week after Pfizer’s encouraging news on a vaccine. However, initial exuberance over the prospect that a vaccine could be available by early 2021 was deflated by escalating virus cases in the U.S. and Europe and the return of restrictions. Hence, faith in the sustainability of the V-shaped recovery wavered and will continue to be put to the test this week. In that light, fundamentals will come back into focus. Attention will be on retail sales and production data from the U.S. and China. In Europe, Brexit talks will be front and center.

Included In This Week’s Report

  • Key Index & Sector Trends – Determine which sectors or areas are trending up or down.
  • Market Drivers – What will push up or down the markets.
  • Global Market Analysis – Get a high-level picture of the US and global economy.
  • Stocks to Watch – Key blue-chip and income stocks to watch.
  • Economic Calendar – Find out what is happening this week.

Key Drivers for the Week of Nov 16 – Nov 20

  • Vaccine hopes vie with record surge in virus cases and muddy economic outlook
  • Brexit talks front and center — “final final” deadline this week?  
  • Focus on U.S. fundamentals: retail sales, production, manufacturing, housing data due
  • Fedspeak from Daly, Clarida, Barkin, Williams, Bullard, Kaplan, Bostic, George
  • China industrial output, retail sales, fixed investment; Japan Q3 GDP, trade awaited0
  • Bank of Thailand, Bank Negara, Philippines central bank all seen on hold
  • Australia reports employment, wage prices; RBAspeak from Lowe and Kent
  • ECBspeak: Lagarde, Schnabel, Villeroy to stress monetary support still paramount
  • UK data: inflation, CBI industrial trends, confidence, retail sales, government spending
S&P 5003585.161.36%48.143593.663552.57Bull
Crude (WTI)41.8754.31%1.7341.87540.115Bull
10 Year0.9232.19%0.020.9290.872Bull
US Dollar Index92.68−0.08%−0.07592.79992.464Bear
REIT Index2089.142.62%53.342092.412036.64Strong Bull

S&P 500 Sectors

CONSUMER DISCRETIONARY 1244.771.32%16.271247.31231.19Strong Bull
CONSUMER STAPLES 692.841.37%9.34693.62683.99Strong Bull
HEALTH CARE 1305.411.30%16.81309.991293.33Strong Bull
INDUSTRIALS 723.42.15%15.2724.37712.66Bull
INFORMATION TECHNOLOGY 2129.210.86%18.072134.292108.33Bull
MATERIALS 433.221.64%7434.59428.7Bull
REAL ESTATE 232.212.28%5.17232.66228.47Strong Bull
COMMUNICATION SERVICES 213.151.28%2.7213.59210.46Bull
UTILITIES 334.80.92%3.06335.59332.95Bull
FINANCIALS 448.341.59%7450.29441.35Bull
ENERGY 254.543.81%9.34255.59245.21Bull


U.S. equities surged last week with new historic highs on the Dow and S&P 500 as hopes for a vaccine lifted optimism over the “V” recovery. Stocks have also been underpinned by robust employment data, indications of a divided Congress, and dovish commentary from Fed officials. The Dow closed the week with a 4.08% gain to 29,479, with the S&P 500 up 2.16% to 3585. The NASDAQ was -0.55% lower as some of the steam was taken out of stay-home shares. Meanwhile, virus cases and hospitalizations have surged, prompting renewed tightening in restrictions that will again be a headwind. However, it appears that at this point authorities are not leaning toward the full lockdowns seen this past spring.

Retail sales will dominate the data slate, along with industrial production, and manufacturing numbers from the Empire State and the Philly Fed reports. Housing reports also be of interest as we move into the holidays as this high-flying sector will be monitored for any signs of moderation. As-expected results on these key reports will support the view that the V-shaped recovery remains intact, despite increasing worries that the run-up in virus cases, associated restrictions and lack of additional stimulus will undermine the economy.

Consumer spending has been robust, conforming to our outlook for a V-shaped recovery even as the labor market remains below February levels. Pent up demand saw sales surge in May (18.3%) and June (8.6%) after steep declines in March (-8.2%) and April (-14.7%). Activity remained solid, though a bit more in-line with typical pre-pandemic monthly gains, from July to September. Sales are expected to advance again in October, rising 0.6% for headline retail sales (Tuesday) and 0.7% for the ex-auto figure, following September gains of 1.9% for the headline and 1.5% ex-autos. Unit vehicle sales dipped to 16.2 mln in October from a 16.3 mln pace in September, which should be offset by continued momentum for sales of clothing, furniture, electronics, and appliances. Also, Amazon Prime Day could be a factor — it was delayed from July to October 13-14, and hence should provide a significant boost for October sales as the seasonal adjustment factors are not expecting the Prime Day lift.

The November Empire State and Philly Fed diffusion indexes will offer the most up to date view on manufacturing and are seen remaining elevated as factory activity ramps up further. However, there could be backtracking in select regional surveys in some months as big cross-currents in the rebound add noise. Conditions have improved rapidly since Q2, as producers face remarkably lean inventories and rebounding demand in many industries above pre-pandemic levels. The Empire State index (Monday) is expected to rebound to 14.0 in November after falling -6.5 points 10.5 in October. The index posted an all-time low of -78.2 in April. The Philly Fed index (Thursday) is projected to erode to 20.0 in November after surging a robust 17.3 points to 32.3 in October, the highest since February. It tumbled to a 40-year low of -56.6 in April. Broadly, we’ve continued to see divergent oscillations in the various confidence metrics since June, but around levels that are in expansion territory despite huge fluctuations on the pandemic, on-and-off stimulus, vaccines, and the elections. The indexes remain well above readings from prior recessions.

The Fed’s industrial production measure has tracked the rebound in factory activity that is reflected in the diffusion indexes. We anticipate that industrial production (Tuesday) will jump 1.7% in October following the disappointing -0.6% decline posted in September. Of course, the fall in September production was accompanied by big upward revisions that partly capped the damage, leaving a four-month string of solid gains through August before the September pull-back. Hence, an as-anticipated October increase would temper worries that the September drop signaled the end of the line for the factory rebound. Notably, the ISM manufacturing index is consistent with ongoing expansion in this sector and supports our industrial production projection — the ISM surged 3.9 points to a lofty 2-year high of 59.3 in October from 55.4 in September and a prior 2-year high of 56.0 in August. The index has handily recovered from an 11-year low of 41.5 in April.

The housing sector has been the star of the pandemic economy, as low rates and altered household preferences (detached housing) have driven sales, prices and construction sharply higher from depressed spring levels. On that theme, housing starts (Wednesday) are seen accelerating to a 1.460 mln pace in October, after picking-up to a 1.415 mln pace in September from 1.388 mln in August. Starts remain below the 13-year high of 1.617 mln in January, however, suggesting there is still room to run. Meanwhile, we expect existing home sales (Thursday) to dip -0.6% in October to 6.500 mln — but the mild projected slippage is from a 14-year high of 6.540 mln in September, leaving a still very robust sales clip.

Finally, Initial jobless claims (Thursday) for the week of November 14 should remain elevated, though we assume a -9k decline in the weekly pace to 700k, after a drop to 709k from 757k. Initial claims should average 684k in November, after averages of 786k in October and 855k in September. The 797k October BLS survey week reading undershot recent BLS survey week readings of 866k in September and 1,104k in August. Consequently, we assume a 750k November payroll rise after gains of 638k in October, 672k in September, and 1,494k in August as the economy continues to recover jobs. Trade prices for October are due Tuesday, with mild gains projected.

There’s another heavy Fedspeak slate, with many giving their views on the economy. On Monday, Fed VC Clarida discusses the economic outlook and Daly speaks on building a more inclusive economy. Tuesday sees four presidents, Bostic, Daly, Kashkari, and Rosengren, speaking on racism and the economy. Barkin also discusses the economy on a webinar. At mid-week, Williams in in a webinar discussion, Bullard provides his views on the economy, Kaplan moderates a panel discussion, and Bostic is at a Fed education event. Friday sees Kaplan and George speaking on energy and the economy. Barkin and Bostic discuss mobility and growth.   

The corporate earnings calendar tapers off this week following the packed slates of the past few weeks. While earnings news has been mixed, the more positive guidance seen in recent reports has been encouraging. On Monday, BHP, JD.com, KE Holdings, Baidu, Palo Alto Networks, Tyson Foods, and GDS Holdings report. Tuesday brings Walmart, Home Depot, Sea Limited, Warner Music Group, Autohome, Aramark, and Kohl’s. Wednesday has NVIDIA, Lowe’s, Target, TJX, Copart, and ZTO Express. Thursday has Intiot, NetEase, Workday, and Ross Stores . Friday has Foot Locker.

Canada’s calendar comes back to life this week after the sedate schedule last week. September retail sales (Friday) are expected to rise 0.2% after the 0.4% gain in August. The ex-autos sales aggregate is poised for a 0.3% increase after the 0.5% expansion in August. Consumers have returned to more normal spending amounts after the big pop that followed the reopening of the economy. Of course, the spending pattern has been transformed by the pandemic, leaving ample scope for a surprise in the retail sales report.

CPI (Wednesday) is projected to remain tame, expanding at a 0.4% (y/y, nsa) pace in October after the 0.5% gain in September. The month comparable CPI is expected to rise 0.1% after the -0.1% drop (m/m, nsa) in September. Gasoline prices fell about 1% compared to September, but a strong seasonal uptrend in prices during the month should more than offset. Yet, similar to retail sales, the shift in consumption preferences and the resulting supply bottlenecks leave ample room for a surprise with the CPI report. Manufacturing shipment values (Monday) are seen rebounding 1.5% in September after the -2.0% tumble in August. Housing starts (Tuesday) are pegged at a 215.0k unit pace in October from the 209.0k clip in September. Wholesale shipments (Tuesday) are due Monday, expected to rise 0.5% in September after the 0.3% gain in August. October existing home sales are expected on Monday. BoC Governor Macklem speaks (Tuesday) and Senior Deputy Governor Wilkins joins a panel (Wednesday). The base-case policy outlook remains for no change in rates until 2023.


The focus of the market will remain on Covid developments this week, as cases continue to spike in the U.S. and Europe, with death rates and hospitalizations rising as well, painting a more worrisome picture and impacting perceptions of the economic recovery going forward. This week’s regional calendar will feature key data from China, including October retail sales, industrial production, and fixed investment. Japan will reveal preliminary Q3 GDP, the October trade report, and October national CPI. Elsewhere, growth, trade, prices, and employment are due. There are several central bank meetings this week, including Thailand’s BoT, Indonesia’s Bank Negara, and the Philippines, though none are expected to change policy.

In China, October industrial output (Monday) is forecast to dip to a 6.8% y/y pace from 6.9%. It’s been steadily recovering from the -1.1% y/y collapse in March, and is 1.2% higher year-to-date. October retail sales (Monday) should accelerate further to a 4.0% y/y clip from 3.3%. This would be a third month in expansion after five straight months in contraction, with a low of -15.8% seen in March. October fixed investment (Monday) is penciled in nearly doubling to a 1.5% y/y rate from 0.8% previously. It’s bounced from -24.5% in February. Japan has the preliminary Q3 GDP report (Monday), expected to result in a 21.0% q/q rebound after the -28.1% Q2 plunge. Revised September industrial production is due (Monday) as well. The October trade report (Wednesday) is expected to see the surplus narrow to JPY 200.0 bln from JPY 687.8 bln in September as the contraction in exports and imports in expected to slow further from the respective -4.9 y/y and -17.2% y/y rates. October national CPI (Friday) is estimated falling into deflation at -0.5% y/y from unchanged. Inflation has been on a softening trend again since late 2018. And we see a decline to -0.6% y/y from -0.3% on a core basis.

Hong Kong’s October unemployment (Tuesday) likely rose again to a record 6.7% from 6.4%. It’s been tracking higher since holding at a 2.8% clip from April 2088 to June 2019. October CPI (Friday) is penciled in eroding to a -2.4% y/y pace from -2.2%. It’s been steadily slipping since March’s 2.3%, and was at 0.7% y/y in June. South Korea’s October PPI is due Friday. Taiwan October export orders (Friday) are forecast to slow to a 9.0% y/y rate of expansion from 9.9%. Q3 current account figures are due Friday as well. Singapore’s revised Q3 GDP is due this week. October non-oil exports (Tuesday) are seen slowing to 5.5% y/y from 5.9% previously. Thailand Q3 GDP (Monday) is forecast to have dripped to a -10.0% y/y contraction rate from the prior -1.2% drop. The BoT (Wednesday) should keep its overnight repo rate steady at 0.50%. Indonesia October trade (Monday) should see the surplus narrow to $2.2 bln from $2.4 bln. Bank Indonesia (Thursday) is also seen on hold, with its 7-day reverse repo rate expected unchanged at 4.00%. The Philippines central bank (Thursday) also should hold fire with rates not likely to move from the current 2.25% level.

Australia’s employment report (Thursday) is expected to show a -20.0k drop in October after the -29.1k decline in September. The unemployment rate is seen rising to 7.0% from 6.9%. The Q3 wage price index is due out Wednesday, and is projected to expand 0.2% (q/q, sa) after the identical 0.2% rise in Q2. RBA Governor Lowe delivers a speech (Monday) and participates in a panel (Wednesday) this week. Assistant Governor Kent delivers remarks as well (Tuesday). The minutes to the RBA’s October meeting will be released on Tuesday. At the meeting, the RBA increased stimulus to ensure recovery. As expected, the bank announced a package of measures designed to secure a rapid recovery from the crisis now that lockdowns have lifted. The RBA cut its key interest rate to 0.1% from 0.25%, as was widely anticipated. It also announced that it will buy AUD 100 bln of government bonds with maturities of around 5-10 years over the next six month. Furthermore, the bank announced that the rate paid to commercial banks for their deposits at the central bank will be cut to zero. The focus is on lowering refinancing costs. On negative rates, the Governor said he sees no appetite to go there.

New Zealand’s docket has Q3 PPI (Wednesday). Last week, the RBNZ topped up stimulus with a new Funding for Lending Program to start in December, aimed at reducing banks’ funding costs and lowering interest rates. The bank’s economic projections were less pessimistic on growth and inflation and cut back the projections for peak unemployment. The cash rate was left unchanged at a record low 0.25% and the Large Scale Asset Purchase program remained at NZD 100 bln. The statement reiterated the commitment to use additional tools if necessary, but markets have started to price out expectations that the bank will move towards a negative rate regime next year, on the back of the less pessimistic outlook. The balance of risks remains tilted to the downside, but it seems that in the central scenario further rate action won’t materialize.


Eurozone: Vaccine news overshadowed Brexit talks last week, but with little else on the calendar the issue of the rapidly approaching end to the transition period clearly is becoming increasingly important. Both sides had previously pinpointed October 15 as the deadline for a deal – to allow sufficient time to get an agreement through parliaments. However, that deadline is once again set to come and go, with talks resuming in Brussels on Monday. Bloomberg reported that the EU suggested it is prepared to continue the deliberations into December if necessary. The key areas of disagreement remain level playing field rules, fishing rights and the governance of any deal.

Fishing is the area where the EU will likely be able to make the most concessions to give Johnson something to sell as a victory to the Brexiteers at home. On level playing field rules and governance, the U.K.’s Internal Market Bill, which violates the Withdrawal Agreement, will only have hardened the EU’s resolve to insist on strict and enforceable guidelines for the future. Ultimately we still expect a deal to come off, but it is likely to be a narrow one that will be disruptive for both sides and add to the problems virus developments are creating. A no deal scenario meanwhile is still a possibility.

The data calendar is very quiet. The final reading for Eurozone CPI (Wednesday) is widely expected to confirm the -0.3% y/y preliminary release, with some risk of a slight upward revision. Eurozone consumer sentiment meanwhile is likely to decline once again against the background of rising Covid-19 numbers and increasingly tight restrictions.

There are a number of ECB speakers, however, including Lagarde, Schnabel and Villeroy and we expect officials to continue to stress that substantial monetary and especially fiscal support will remain paramount to get economies back on track, even if vaccination programs can start this year. Lagarde made it pretty clear at in the current situation the ECB is focused less on inflation – which remains negative anyway – but on supporting fiscal policies by keeping asset purchases going and keeping rates low. A strengthening of the PEPP program then that will allow asset purchases to continue through 2021 at the current pace is likely to be announced at the December meeting at the latest. TLTROs – the ECB’s version of a loan for lending program – also remains a key weapon for the ECB.

U.K.: last week’s Covid vaccine rally was widely taken as a positive for the UK, and found expression in driving a rally in the pound. The UK government has already pre-ordered 40 million doses of the Pfizer candidate vaccine, alongside large pre-orders in for other leading candidates, and the argument is that this puts the UK in a front position to reap the benefits of a vaccination program. There is also the logic that as the UK saw the biggest peak to trough drop in its GDP this year out of the G20 economies, it will benefit the most in the route out of the Covid crisis.

Brexit remains front and centre. The coming week was being touted as the ‘final final’ deadline for a future relationship deal to be reached to allow time for the ratification process ahead of the UK’s departure from the common market and customs union on January 1, but it has become clear that negotiations could be pushed further out still. France’s EU minister said on Friday that a “fixed, scientific deadline” has never been set, but if this happens after the end of November “we will be in trouble.” There is even the possibility for a ‘technical’ delay, though the political mood in the UK is against this, with Boris Johnson set on following through on a fundamental manifesto promise after building up a notorious reputation for U-turning on policy decisions this year.

Another consideration is political developments on Downing Street, with the government’s director of communications Lee Cain and prime minister advisor Dominic Cummings having left their positions. The take on this is that this weakens the influence of the ideologically Brexit ‘Vote Leave’ campaign, meaning there could be a softer and more pragmatic attitude to Brexit, although it is not yet clear what shape the new administration set-up will take.

There has still not been a breakthrough in negotiations between the EU and UK. Evidently, given the pound’s performance, the prevailing market expectation remains that there will be a last minute climbdown and the two sides will strike a deal, which is what we anticipate. Both sides will have to make concessions if a deal is to be achieved. There is an axiom that all things Brexit go down to the wire, and fitting this neither side has been willing, as yet, to make the first move in the concession game. Too much is at stake for both sides — surely — for there to be a failure in statesmanship. Given the emergence of pro-EU Biden as president elect in the U.S., news that Dominic Cummings is out of Johnson’s administration, and the backdrop of the Covid crisis, the scene is set for a deal to be made.

It should be emphasized that the UK government has the option of exiting the common market in close alignment to EU rules, possibly much more so than has generally been expected, before diverging in an evolving process over time. The promise of future divergence would serve to mollify the powerful faction of Brexit ideologues in Johnson’s government. UK media, meanwhile, have been increasingly highlighting the likely disruptive impacts to cross border trade that are likely to be seen when the UK leaves the single market and customs union in just seven weeks time.

The UK data calendar this week features October inflation numbers (Wednesday), the November CBI industrial trends (Thursday), and the October reports for consumer confidence, retail sales and government spending (all due on Friday). Headline CPI inflation has a consensus forecast for a 0.6% y/y rate, which would mark a fractional lift from September’s 0.6%. The core CPI figure is expected at 1.3% y/y, unchanged from the month prior. The BoE acknowledged in its November Monetary Policy Report that CPI remains well below the 2% target due to the temporary impact of a sales tax reduction, lower energy prices and spare capacity. The bank is forecasting CPI to remain near 0.5% over the winter before rising sharply as the impact of the sales tax cut and energy price declines dissipate. The BoE’s central projection is for CPI to hit the 2% target at the two-year horizon, on the proviso that a free trade deal is made with the EU and that Covid restrictions are loosened in 2021. As for retail sales, a 0.3% m/m increase is expected, while consumer confidence is seen falling to a -34 reading from -31 in the month prior.

Switzerland: The Swiss data calendar is quiet this week. EUR-CHF has rallied from sub-1.0700 levels to levels above 1.0800. Risk-on positioning weighed on the Swiss franc with investors factoring in a sea change in optimism about a vaccine solution to Covid-19.

AlphaBetaStock’s team is constantly looking for opportunities to invest in income or growth stocks. Our current list of stocks we are watching and their current trend is listed below. Please note, that a bullish trend does not necessarily mean buy nor does a bear trend mean sell because the financial advisor or investor’s strategy may overrule it. Actually, in some cases, we purchase stocks that are dipping or in a short term bear trend.

Name Symbol Strategy Trend
3M Company MMM Dividend BULL
Altria Group, Inc. MO Dividend BULL
Amazon AMZN Growth BULL
Anheuser-Busch InBev SA/NV BUD Dividend BULL
Brookfield Infrastructure Partners L.P. BIP Dividend BULL
Defiance 5G Next Gen Connectivity ETF FIVG Growth BULL
DuPont de Nemours, Inc. DD Dividend BULL
eBay Inc. EBAY Growth BULL
Emerson Electric Co. EMR Dividend BULL
Enterprise Bancorp, Inc. EBTC Dividend BULL
Genuine Parts Company GPC Dividend BULL
Johnson & Johnson JNJ Dividend BULL
PayPal Holdings, Inc. PYPL Growth BULL
Peloton Interactive, Inc. PTON Growth BULL
Quidel Corporation QDEL Growth BULL
The Procter & Gamble Company PG Dividend BULL
Veritone, Inc. VERI Growth BULL
Apple APPL Growth BULL

Economic Data & Calendar

We have plenty of economic releases in the middle-week of November.  We expect solid October increases for retail sales as consumer activity continues to ramp up, alongside an industrial production bounce after a September pull-back. The October housing data should show gains for housing starts and permits but a moderation for existing home sales, as the summer upswing to 12-14 year highs for most measures is trimmed. We expect small October trade price gains, and a September climb for business inventories. We expect divergent swings in the Empire State and Philly Fed indexes around elevated levels, and a solid October rise in the leading economic index.

Week of November 16

We enter the week on the tail of restrained inflation reports for October, with flat headline and core CPI readings and a restrained 0.1% PPI core price rise, though we did see a firm 0.3% headline PPI increase. We still expect upside surprises in some components of the various inflation metrics into early 2021 due to supply bottlenecks in some industries. Yet, it’s clear that prices face big headwinds from the aggregate demand shock, and inflation should stay below the Fed’s 2% objective over the foreseeable future even with some high profile supply constraints.

This week’s data will provide some important gauges of the degree to which the steep rebound in sales and output continued into October, with release of October retail sales and industrial production.  We’ll also see several of the October housing reports, which will document to what degree we may be seeing some pause in that sector after breathtaking Q3 gains.  The October employment report provided solid evidence that these measures will track a continued bounce, particularly in the construction-related housing reports like housing starts and construction spending, though vehicle sales moderated in October, and home sales activity looks poised for some cooling.  We expect the push-back in Amazon Price Day to October 13-14 to provide a lift for household spending during the month, while a rebound in utility output provides a hefty boost to the industrial production metric.

Empire State/Philly Fed Index: 14.0/20.0

The Empire State index is assumed to rise to 14.0 in November from 10.5 in October, after plunging to an all-time low of -78.2 in April, versus a bottom from the last recession of -33.7 in March of 2009. The Philly Fed index is seen falling to 20.0 in November from a particularly lofty 32.3, versus a 40-year low of -56.6 in April. The Philly Fed index posted a bottom in the last recession of -40.9 in November of 2008. These diffusion indexes should remain elevated as factory activity continues to ramp up, though with backtracking in some regional surveys in some months as big cross-currents in the rebound add noise. Conditions have improved rapidly since Q2, as producers face remarkably lean inventories and rebounding demand in many industries above pre-pandemic levels.

Retail/Ex-Auto Sales: 0.6%/0.7%

We expect October increases of 0.6% for headline retail sales and 0.7% for the ex-auto figure, following September gains of 1.9% for the headline and 1.5% ex-autos. We saw a -0.5% drop for the CPI gasoline index, though rising sales volume should allow a flat figure for service station sales. Unit vehicle sales dipped to 16.2 mln in October from a 16.3 mln pace in September, which should be offset by a continued rebound for sales of clothing, furniture, electronics, and appliances. Amazon Prime Day was pushed back from July to October 13-14, and this should provide a significant boost for October sales. Real consumer spending is expected to grow at a 9.0% rate in Q4 after a 40.7% surge in Q3.

Import/Export Price Index: 0.2%/0.3%

Import prices are estimated to rise 0.2% in October, alongside a 0.3% export price rise, after September gains of 0.3% imports and 0.6% for exports. We expect an October drag from petroleum prices, alongside support from a decline in the value of the dollar since Q2. Ex-petroleum import prices are expected to grow 0.3%, while ex-agriculture export prices grow 0.3%. Oil prices rose between April and August, as major OPEC+ production cuts and reduced drilling activity brought balance back to the petroleum sector, though prices have moderated since August. The rebound in global production has been associated with bottlenecks and shortages in some industries that have raised some prices, though weakness in aggregate demand has limited upside inflation pressure.

Industrial Production: 1.7%

Industrial production is projected to rise 1.7% in October, following the -0.6% September headline decrease. We saw September declines of -0.3% for manufacturing and -5.6% for utilities, but a 1.7% increase for mining. In October, we expect a 1.3% gain for manufacturing, a 1.0% rise for mining, and a 6.0% rebound in utilities. We expect a vehicle assembly rate climb to an 11.6 mln clip in October from 10.5 mln in September, versus a 0.1 mln trough pace in April. We saw a 3.7 mln prior trough in January of 2009 that marked the start of the auto bankruptcies. Capacity utilization should rise to 72.8% from 71.5% in September. Industrial production expanded at a 39.8% clip in Q3, and we expect a 9.7% growth pace in Q4.

Business Inventories: 0.6%

Business inventories are estimated to rise 0.6% in September after a 0.3% August increase. Our forecast incorporates a flat figure for factory inventories, alongside gains of 1.6% for retailers and 0.4% for wholesalers. Sales should rise 0.8% in September, after a 0.6% gain in August. As-expected readings would result in the I/S ratio remaining at August’s 6-year low of 1.32, versus an all-time high of 1.67 in April and a 1.47 peak from the last recession in both March of 2009 and December of 2008. Inventories in the Q3 GDP report showed a -$1.0 bln liquidation rate after a record -$287.0 bln pace in Q2, leaving a fourth consecutive quarterly decline. We expect a $7 bln accumulation rate in Q4, though the rates for both Q3 and Q4 look poised for a $6 bln upward revision. Inventories were already unwinding pre-COVID-19 as earlier tariff front running reversed course before the big Q2 hit, leaving room for the start of a protracted inventory rebound in Q4 of 2020.

Housing Starts: 1.460 mln

Housing starts should rise to a 1.460 mln pace in October, after rising to a 1.415 mln pace in September from 1.388 mln in August, versus a 13-year high of 1.617 mln in January. Permits are expected to climb to a new 14-year high of 1.570 mln in October, extending the increase to a 13-year high of 1.545 mln in September, versus a prior 1.536 mln 14-year high in January. All the housing measures have rebounded sharply in Q3, with 14-year highs for September new and existing home sales, a 12-year high for the MBA purchase index in September, and an all-time high for August pending home sales. Before the pandemic, permits had been following a solid growth path that began in Q2 of 2019, fueled by low mortgage rates, and this strength has resumed with the end to shutdowns, alongside an emerging migration of families to the suburbs. We expect a 1.483 mln average for starts in Q4, following a 1.430 mln pace in Q3 and a 1.079 mln pace in Q2. We expect a 1.583 mln average for permits in Q4 that outpaces the 13-year high 1.501 mln average in Q3, and a 1.490 mln prior high in Q4 of 2019.

Initial Jobless Claims: 700k

Initial jobless claims for the week of November 14 should remain elevated, though we assume a -9k decline in the weekly pace to 700k, after a drop to 709k from 757k. Claims should average 684k in November, after averages of 786k in October, 855k in September and 992k in August. The 797k October BLS survey week reading undershot recent BLS survey week readings of 866k in September and 1,104k in August. We assume a 750k November payroll rise, after gains of 638k in October, 672k in September, and 1,494k in August.

Continuing claims fell by -436k to 6,786k in the week of October 31, following a downward revision in the prior week’s reading that left a 7,222k figure. We expect a -585k decrease to the 6,350k area for the week ending on November 7, as workers continue to return to work and leave the jobless pool, alongside the inflow of newly unemployed, and the loss of benefits to some workers who were laid off early in the pandemic. Continuing claims fell by a hefty -4,991k between the September and October BLS survey weeks. We saw prior declines of -1,745k in September, -2,459k in August, -2,280k in July, and -1,610k in June.

Existing Home Sales: 6.500 mln

We expect existing home sales to fall by -0.6% in October to 6.500 mln from a 14-year high of 6.540 mln in September. Pending home sales fell -2.2% in September from an all-time high, following rapid growth since Q4 of 2018. The MBA purchase index fell -4.5% in October from a 14-year high, and is poised for a further -4.2% December decline. Both measures suggest downside risk for October sales. Existing home sales are tracked at closings, so strength for this measure may extend past the September peaks for other measures. The median sales price is expected to ease to $305,000 in October from a $311,800 all-time high in September, leaving a drop in the y/y metric to 12.5% from 14.8%. In Q3, we saw an average sales pace of 6.127 mln, after a depressed 4.313 mln in Q2, and we expect an even stronger 6.490 mln pace in Q4.

Leading Indicators: 0.7%

The leading economic index likely rose by 0.7% in October, following increases of 0.9% in September and 1.4% in August, as we continue to reverse the huge drops of -6.3% in April and -7.5% in March. We expect gains across the board, with boosts in housing permits, and initial claims leading the way for headline strength.

 15 Nov 18:50 Japan GDP Q/Q SAAR – 1st prelim  Q3 21.0%  -28.1%
 15 Nov 19:00 Singapore GDP Y/Y – revised  Q3   -7.0%
 15 Nov 19:01 United Kingdom Rightmove House Prices nsa (M/M)  NOV   1.1%
 15 Nov 19:01 United Kingdom Rightmove House Prices nsa (Y/Y)  NOV   5.5%
 15 Nov 21:00 China Industrial Output Y/Y  OCT 6.8%  6.9%
 15 Nov 21:00 China Industrial Output (cumulative) Y/Y  OCT   1.2%
 15 Nov 21:00 China Retail Sales Y/Y  OCT 4.0%  3.3%
 15 Nov 21:00 China Fixed Investment (cumulative) Y/Y  OCT 1.5%  0.8%
 15 Nov 21:30 Thailand GDP Y/Y  Q3 -10.0%  -12.2%
 15 Nov 23:00 Indonesia Trade Balance USD  OCT 2.2B  2.4B
 15 Nov 23:30 Japan Industrial Production SA Revised  SEP   1.0%
 16 Nov 03:00 Philippines FX Reserves USD  OCT   100.5B
 16 Nov 04:00 Eurozone ECB’s Guindos speaks
 16 Nov 04:40 Eurozone ECB’s Centeno speaks
 16 Nov 05:00 Italy CPI – EU Harmonized (M/M) – Final  OCT   0.6%
 16 Nov 05:00 Italy CPI – EU Harmonized (Y/Y) – Final  OCT   -0.6%
 16 Nov 05:00 Italy CPI – NIC incl. tobacco (M/M) – Final  OCT   0.2%
 16 Nov 05:00 Italy CPI – NIC incl. tobacco (Y/Y) – Final  OCT   -0.3%
 16 Nov 08:00 Eurozone ECB’s Lagarde speaks at WEF event
 16 Nov 08:30 Eurozone ECB’s Mersch speaks
 16 Nov 08:30 United States Empire State Index  NOV 14.0 13.8 10.5
 16 Nov 08:30 Canada Manufacturing Shipments M/M  SEP 1.0%  -2.0%
 16 Nov 08:30 Canada Unfilled Orders (Manufacturing)  SEP    -1.7%
 16 Nov 08:30 Canada New Orders (Manufacturing)  SEP   -3.4%
 16 Nov 08:30 Canada Manufacturing Inventories  SEP   0.2%
 16 Nov 08:30 Canada Manufacturing I/S Ratio  SEP   1.65
 16 Nov 11:00 Peru Unemployment Rate  OCT   16.5%
 16 Nov 13:45 San Francisco Fed’s Daly discusses building a more inclusive economy
 16 Nov 14:00 Washington VC Clarida discusses the economic outlook
 16 Nov 19:30 Singapore Non-Oil Domestic Export Y/Y  OCT 5.5%  5.9%
 17 Nov 02:00 Norway GDP sa (Q/Q)  Q3   -5.1%
 17 Nov 02:00 Norway GDP – Non-oil sa (Q/Q)  Q3   -6.3%
 17 Nov 03:00 Italy Trade Balance – Total (Eur)  SEP   3.9B
 17 Nov 03:30 Hong Kong Unemployment Rate SA  OCT 6.7%  6.4%
 17 Nov 03:45 Spain Spain sells bills
 17 Nov 05:30 Germany Germany sells 2-yr Schatz notes
 17 Nov 06:30 European Union ESM sells 6 months bills
 17 Nov 08:15 Canada Housing Starts  OCT 215.0K  209.0K
 17 Nov 08:30 United States Retail Sales  OCT 0.7% 0.4% 1.9%
 17 Nov 08:30 United States Retail Sales ex-Auto  OCT 0.8% 0.6% 1.5%
 17 Nov 08:30 United States Export Price Index  OCT 0.3% 0.3% 0.6%
 17 Nov 08:30 United States Import Price Index  OCT 0.3% UNCH 0.3%
 17 Nov 08:30 United States Import Price Index ex-Petro  OCT 0.3%  0.7%
 17 Nov 08:30 Canada Wholesale Trade  SEP 0.5%  0.3%
 17 Nov 08:30 Canada Wholesale Inventories  SEP   UNCH
 17 Nov 08:30 Canada International Securities Transactions  SEP   C$15.5B
 17 Nov 08:55 United States Redbook 11/14    -1.2%
 17 Nov 09:15 United States Industrial Production  OCT 1.7% 1.0% -0.6%
 17 Nov 09:15 United States Capacity Utilization  OCT 72.8% 72.1% 71.5%
 17 Nov 10:00 United States Business Inventories  SEP 0.6% 0.5% 0.3%
 17 Nov 10:00 United States NAHB Housing Mkt Index  NOV 84  85
 17 Nov 11:00 Russia Industrial Production (Y/Y)  OCT   -5.0%
 17 Nov 11:00 Colombia GDP Y/Y  Q3   -14.9%
 17 Nov 15:00 Richmond Fed’s Barkin discusses the economy
 17 Nov 15:00 Atlanta Fed’s Bostic, Daly, Kashkari, Rosengren speak on racism and the economy
 17 Nov 16:00 United States Net Long-Term Security Purchases  SEP $30.0B  $27.8B
 17 Nov 16:00 United States Total Net TIC Flows  SEP $30.0B  $86.3B
 17 Nov 16:45 New Zealand PPI Input Prices  Q3   -1.0%
 17 Nov 16:45 New Zealand PPI Output Prices  Q3   -0.3%
 17 Nov 18:50 Japan Trade Balance-CC NSA  OCT 300.0B 687.8B R
 17 Nov 18:50 Japan Exports-CC y/y  OCT   -4.9%
 17 Nov 18:50 Japan Imports-CC y/y  OCT   -17.2%
 17 Nov 19:30 Australia Wage Cost Index  Q3 0.2%  0.2%
 18 Nov 02:00 United Kingdom CPI – EU Harmonized (M/M)  OCT   0.4%
 18 Nov 02:00 United Kingdom CPI – EU Harmonized (Y/Y)  OCT  0.6% 0.5%
 18 Nov 02:00 United Kingdom CPI Core (Y/Y)  OCT  1.3% 1.3%
 18 Nov 02:00 United Kingdom Retail Price Index (M/M)  OCT   0.3%
 18 Nov 02:00 United Kingdom Retail Price Index (Y/Y)  OCT   1.1%
 18 Nov 02:00 United Kingdom RPI – excl. Mortgage Interest Payments (M/M)  OCT   0.3%
 18 Nov 02:00 United Kingdom RPI – excl. Mortgage Interest Payments (Y/Y)  OCT   1.1%
 18 Nov 02:00 United Kingdom PPI Input nsa (M/M)  OCT   1.1%
 18 Nov 02:00 United Kingdom PPI Input nsa (Y/Y)  OCT   -3.7%
 18 Nov 02:00 United Kingdom PPI Output nsa (M/M)  OCT   0.1%
 18 Nov 02:00 United Kingdom PPI Output nsa (Y/Y)  OCT   -0.9%
 18 Nov 02:00 United Kingdom PPI Output ex-FBTP nsa (Y/Y)  OCT   0.3%
 18 Nov 02:30 Thailand BoT O/N Repo Rate   0.5%  0.5%
 18 Nov 03:15 Eurozone ECB’s Enria speaks at Banking Union Conference
 18 Nov 05:00 Eurozone Consumer Price Index (M/M)  OCT 0.2%  0.2% P
 18 Nov 05:00 Eurozone Consumer Price Index (Y/Y)  OCT -0.3%  -0.3% P
 18 Nov 05:00 Eurozone CPI – Core (Y/Y)  OCT 0.2%  0.2% P
 18 Nov 06:30 Chile GDP Y/Y  Q3   -14.1%
 18 Nov 07:00 United States MBA Mortgage Applications 11/13    -0.5%
 18 Nov 08:30 United States Housing Starts  OCT 1.480M 1.460M 1.415M
 18 Nov 08:30 United States Building Permits  OCT 1.570M  1.553M
 18 Nov 08:30 United States Housing Completions  OCT 1.422M  1.413M
 18 Nov 08:30 Canada CPI All Items (NSA M/M)  OCT -0.1%  -0.1%
 18 Nov 08:30 Canada CPI All Items (NSA Y/Y)  OCT 0.4%  0.5%
 18 Nov 08:30 Canada CPI-Trim (NSA Y/Y)  OCT   1.8%
 18 Nov 08:30 Canada CPI-Median (NSA Y/Y)  OCT   1.9%
 18 Nov 08:30 Canada CPI-Common (NSA Y/Y)  OCT   1.5%
 18 Nov 10:30 United States EIA Crude Oil Stocks 11/13    4.3M
 18 Nov 10:30 United States EIA Gasoline Stocks 11/13    -2.3M
 18 Nov 10:30 United States EIA Distillate Stocks 11/13    -5.4M
 18 Nov 12:00 United States Treasury Auctions 20-Yr Bonds
 18 Nov 12:15 New York Fed’s Williams in webinar discussion
 18 Nov 13:20 St Louis Fed’s Bullard discusses the economy
 18 Nov 18:00 Dallas Fed’s Kaplan moderates panel discussion
 18 Nov 19:00 Atlanta Fed’s Bostic in Fed education event
 18 Nov 19:30 Australia Employment  OCT -20.0K  -29.1K
 18 Nov 19:30 Australia Unemployment Rate  OCT 7.0%  6.9%
 19 Nov 00:00 Indonesia BI 7-Day Reverse Repo Rate   4.00%  4.00%
 19 Nov 02:00 Switzerland Trade Balance (Chf)  OCT   2.7B
 19 Nov 03:00 Philippines Overnight Borrowing Rate   2.25%  2.25%
 19 Nov 03:00 Spain Trade Balance (Eur)  SEP   -1.7M
 19 Nov 04:00 Eurozone Current Account sa (Eur)  SEP 21.0B  19.9B
 19 Nov 06:00 United Kingdom CBI Industrial Trends Monthly – Total Orders  NOV   -34
 19 Nov 06:00 United Kingdom CBI Industrial Trends Monthly – Export Orders  NOV   -46
 19 Nov 08:30 United States Philadelphia Fed Index  NOV 20.0 22.0 32.3
 19 Nov 08:30 United States Initial Claims 11/14  700K 715K 709K
 19 Nov 08:30 United States Continuing Jobless Claims 11/07  6,350K  6,786K
 19 Nov 09:45 United States Bloomberg Consumer Comfort Index 11/15    48.0
 19 Nov 10:00 Eurozone ECB’s Lagarde speaks at Women’s Forum
 19 Nov 10:00 Eurozone ECB’s Villeroy speaks
 19 Nov 10:00 United States Leading Indicators  OCT 0.6% 0.7% 0.7%
 19 Nov 10:00 United States Existing Home Sales  OCT 6.540M 6.450M 6.540M
 19 Nov 10:30 United States EIA Natural Gas Stocks 11/13    8B
 19 Nov 11:00 Eurozone ECB’s Schnabel speaks
 19 Nov 11:00 United States Treasury Announces 7-Year Notes
 19 Nov 11:00 United States Treasury Announces 2-Year Notes FRN Reopen
 19 Nov 11:00 United States Treasury Announces 5-Year Notes
 19 Nov 11:00 United States Treasury Announces 2-Year Notes
 19 Nov 13:00 United States Treasury Auctions 10-Yr TIPS Reopen
 19 Nov 14:00 Colombia Industrial Production Y/Y  SEP   -12.2%
 19 Nov 16:00 South Korea PPI Y/Y  OCT   -0.4%
 19 Nov 16:30 United States M2 – Week Ended 11/09    $56.0B
 19 Nov 18:30 Japan CPI (National) Y/Y  OCT -0.5%  UNCH
 19 Nov 18:30 Japan CPI (National) ex-Perishables Y/Y  OCT -0.6%  -0.3%
 19 Nov 19:01 United Kingdom GfK Consumer Confidence  NOV  -34 -31
 20 Nov 02:00 Germany Producer Price Index (M/M)  OCT   0.4%
 20 Nov 02:00 Germany Producer Price Index (Y/Y)  OCT -0.9%  -1.0%
 20 Nov 02:00 United Kingdom Retail Sales (M/M)  OCT  0.3% 1.5%
 20 Nov 02:00 United Kingdom Retail Sales (Y/Y)  OCT  3.9% 4.7%
 20 Nov 02:00 United Kingdom Public Sector Net Cash Requirement  OCT   30.6B
 20 Nov 02:00 United Kingdom Public Sector Net Borrowing  OCT   36.1B
 20 Nov 02:45 France Business Confidence (manufacturing)  NOV 91  93
 20 Nov 02:45 France Production Outlook  NOV   -12
 20 Nov 03:00 Taiwan Export Orders Y/Y  OCT 9.0%  9.9%
 20 Nov 03:15 Eurozone ECB’s Lagarde speaks at European Banking Congress
 20 Nov 03:20 Taiwan Current Account  Q3   $21.8B
 20 Nov 03:30 Hong Kong CPI (Composite) Y/Y  OCT -2.4%  -2.2%
 20 Nov 04:00 Italy Industrial Orders sa (M/M)  SEP   15.1%
 20 Nov 04:00 Italy Industrial Orders (Y/Y)  SEP   6.1%
 20 Nov 04:00 Italy Industrial Sales sa (M/M)  SEP   5.9%
 20 Nov 04:00 Italy Industrial Sales nsa (Y/Y)  SEP   -3.8%
 20 Nov 08:30 Dallas Fed’s Kaplan speaks on energy and the economy
 20 Nov 08:30 Canada Retail Sales M/M  SEP 0.2%  0.4%
 20 Nov 08:30 Canada Retail Sales Ex-Autos  SEP 0.3%  0.5%
 20 Nov 08:30 Canada New Home Price Index  SEP   1.2%
 20 Nov 09:00 Richmond Fed’s Barkin and Bostic discuss mobility and growth
 20 Nov 10:00 Eurozone Consumer Confidence – Flash  NOV -18.0  -15.5
 20 Nov 11:00 Russia Unemployment Rate sa  OCT   6.3%
 20 Nov 11:00 Russia Retail Sales (Y/Y)  OCT   -3.0%
 20 Nov 13:30 Kansas City Fed’s George speaks on energy and the economy

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