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WEEK AHEAD:NOVEMBER 7

Short Description

Midterm Elections & US GDP

Video Script

Number one:

US inflation for October

On Thursday, US CPI figures for October will be released. The US Federal Reserve still has a job to do, and the battle to keep inflation under control is ongoing. Even though the headline inflation rate is expected to go down, the market will pay more attention to the core inflation rate. American data remains perplexing. Non-farm payrolls fell as GDP rose. Manufacturing, services, and business confidence were all below normal in October. Annual inflation was above 8% in October but the recent Fed meeting showed a ‘soft pivot’ away from large rate hikes and a weakwe November print would confirm the dovish shift.

Number two:

GDP from the United Kingdom

According to research by Goldman Sachs, the UK is likely to go through a recession that is worse than first thought. However, interest rates and inflation are likely to be lower than first expected. The investment bank downgraded its outlook for Britain, saying that the country's economy will fall by 1% instead of 0.4% as it had said before. This week will include the GDP figures for the British economy for the third quarter of 2022, which is expected to decline on a yearly basis to 2.8%.

Number three:

US Midterm Election

The 2022 US midterm elections are on Tuesday this week. The result will impact Biden's next two years in office, and could have big implications for markets. In the last two years, Democrats have controlled the House and Senate and Presidency, giving them complete control over the direction of the Federal Government. It's a close election that could go either way. Surveys show that the Republicans may win the House, but the Democrats may keep the Senate. The Biden administration is being criticized for higher inflation, and if the Republicans win the House, a lot may change in how the US economy is managed.

Number four:

Third quarter earnings continue

October was a great month for the stock market. Indices had their best single-month gains in decades but manay suspect it was just a bear market rally. Since expectations had fallen so low, analysts now see  US companies doing better than expected. This week, another round of big companies including AstraZeneca, Walt Disney, Allianz, and Commerzbank report quarterly earnings.

Number five:

Will stocks continue to rally in November?

November is seasonally one of the best months of the year for equities, following the typically weaker months of September and October. In 94 Novembers since 1929, the S&P 500 has ended the month with gains in more than 60% of those cases, with an average gain of 0.8%.

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