The biennial event of an American election of national importance is upon us with the legislatures of the United States. All 435 House seats and 35 of the 100 Senate seats are on the ballot Tuesday. Joe Biden is so worried that he went on the campaign trail last week, ratcheting up the rhetoric.
Democrats are likely to lose control of the House, and the upper chamber is up for grabs. 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.
Do you want to know more? This Thursday, FT reporters Edward Luce, Rana Foroohar and James Politi will be joined by veteran commentator Norm Ornstein for an exclusive subscriber event assessing the US mid-term results. Sign up for free today and you can submit questions in advance to our panel.
You can also subscribe to the Swamp Notes newsletter, which does excellent work investigating the intersection of money and power in American politics, and is currently free to read.
On the other side of the Atlantic, the COP27 meeting in Sharm el-Sheikh, Egypt, is providing a spotlight on climate change news over the coming days (and weeks). More than 100 world leaders will attend, including Rishi Sunak after finding time in his diary, 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 the FT’s leading sustainability thinkers and senior journalists. Each will complement the topics raised in the presidential program that day. Register your interest here.
Economic data
Inflation is the main topic of economic news this week with updates to the consumer price index and producer price index for the US, China, Germany and Japan. Whatever the US figure, Fed Chairman Jay Powell made it abundantly clear in his comments last week that his team will do whatever it takes to get inflation out of the economy. The consensus is for a 0.7% increase in the monthly US figure to create an annual figure of 8.1%.
The Bank of England’s gloomy projections last Thursday that Britain is entering its longest recession since World War II set the tone for this week’s big UK economic news: the first GDP estimate of the third quarter on Friday. This is expected to show a contraction of about 0.2 percent quarter-on-quarter.
companies
With low street sales in the UK and talk of a prolonged recession, British retail is not in a good place. But this week, it could provide some respite, and we’re not just talking about the return of free coffee at Waitrose.
Marks and Spencer will present its first results under new management on Wednesday following the retirement of former chief executive Steve Rowe in the summer. His replacement, Stuart Machin, has already outlined his stall in terms of accelerating the review of the store estate and redoubled cost-cutting efforts, so the focus is likely to be on trading current Rival Last week stuck to its guidance for the full year after sales were flat in the early fall. Investors in M&S, which has not had a dividend since November 2019, expect Machin to do the same.
WHSmith’s profits are set for a rebound as the global travel industry recovers from the Covid lockdowns. Travel revenue, much of which comes from airport shops, was already well ahead of pre-pandemic levels in its last update in early September. Meanwhile, there was little sign of a slowdown in Dufry Airport duty-free group’s quarterly results last week.
The key constraint is capacity limits at major airports, particularly London Heathrow. This will no doubt be discussed more on Monday when Ryanair reports its first half numbers. Low-cost airlines such as Ryanair have had to adapt to the end of low-cost air travel, to which the response has been to try to take business from the more expensive carriers.
The end of the season tech earnings news is likely to continue the gloomy mood. Lyft, reporting Monday, last week announced significant job cuts, its 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 business .
Elsewhere, we have plenty of updates from drugmakers. BioNTech, reporting on Monday, is among several makers of Covid-19 vaccines that have begun raising the price of their shots amid concerns that demand will fall by 2023. Airfinity, a data analytics group of health, predicts that sales of Covid vaccines will fall by about a fifth. to $47 billion next year. There are also concerns about AstraZeneca, which reports third-quarter figures on Thursday, after the nasal version of its Covid vaccine failed in trials. Better news is expected from German drugs and chemicals group Bayer, whose figures are due on Tuesday.
Read the full week’s schedule here.