Democrats are likely to lose control of the House and the upper house is on a knife edge. That (or rather the divided government it will create) is bad news for investors, according to Unhedged’s Rob Armstrong. FT columnist Janan Ganesh blames voters. Would you like to know more? This Thursday, FT reporters Edward Luce, Rana Foroohar and James Politi will be joined by veteran commentator Norm Ornstein in an exclusive subscriber event assessing the US interim results. Join for free today and you can submit questions in advance for our panel. You can also subscribe to the Swamp Notes newsletter, which does a great job exploring the intersection of money and power in American politics and is currently free to read. Across the Atlantic, the COP27 gathering in Sharm el-Sheikh, Egypt, is putting the spotlight on climate change news in the coming days (and weeks). More than 100 world leaders will attend, including Rishi Sunak after finding time in his calendar, but not King Charles. Again, you can get more information from the FT. From Monday, FT Live will host a series of face-to-face, virtual and hybrid discussions with leading sustainability thinkers and senior FT journalists. Each will complement the topics set out in the Presidency’s program that day. Register your interest here.
Financial data
Inflation is the main topic of economic news this week with consumer price index and producer price index updates from the US, China, Germany and Japan. Whatever the US number, Fed Chairman Jay Powell made it clear in comments last week that his team will do whatever it takes to squeeze inflation out of the economy. Consensus is for a 0.7 percent increase in the monthly US rate to create an annual rate of 8.1 percent. The Bank of England’s gloomy forecast last Thursday that the UK is entering its worst recession since the second world war sets the tone for this week’s big economic news in the UK: the first estimate of third-quarter GDP on Friday. This is expected to contract by around 0.2% quarter-on-quarter.
Companies
With strong UK sales falling and talk of a prolonged recession, UK retail is not in a good place. But this week, it may offer some respite — and we’re not just talking about the return of free coffee at Waitrose. Marks and Spencer will on Wednesday present its first results under new management following the departure of former chief executive and lifetime shareholder Steve Rowe in the summer. His replacement, Stuart Machin, has already cleared his stable of accelerating the overhaul of the store and doubling down on cost-cutting efforts, so the focus is likely to be on current trading. Rival Next last week held firm on its full-year guidance after sales stalled in the early fall. Investors in M&S – which has not had a dividend since November 2019 – will be hoping Machin does the same. WHSmith’s profits are expected to rebound as the global travel industry recovers from Covid lockdowns. Travel revenue, much of which comes from airport stores, was already well ahead of pre-pandemic levels when it was last updated in early September. Meanwhile, there was little sign of a slowdown in quarterly results from airport duty-free group Dufry last week. The main limitation is capacity limits at major airports, notably London Heathrow. No doubt there will be further discussion of this on Monday when Ryanair reports its first half figures. Low-cost airlines such as Ryanair have to adapt to the end of low-cost air travel, the response to which has been to try to take business from the more expensive carriers. News of the season’s tech gains is likely to continue the gloomy mood. Lyft, in a report Monday, last week announced significant job cuts, the second round of layoffs in recent months. Lyft isn’t alone among tech companies needing to tighten their respective belts, but it doesn’t look good for the ride hailing service, a smaller rival to Uber, which is also selling its ride-hailing businesses. Otherwise, we have lots of pharmacist updates. BioNTech, which reports on Monday, is among several Covid-19 vaccine makers that have begun raising the price of their vaccines amid concerns about a drop in demand in 2023. Airfinity, a health data analytics group, predicts that sales of Covid vaccines will drop by about a fifth to $47bn next year. There are also concerns for AstraZeneca, which reports third-quarter figures on Thursday after a nasal version of its Covid vaccine failed in trials. Better news is expected from German drugs and chemicals group Bayer, whose figures were released on Tuesday. Read the full calendar for the week here.
