1. US payrolls report – 04/10
Having cut rates as expected in September the US labour market continues to hold up fairly well. Last month the headline number was a little bit weaker than expected, however wages growth has continued to expand at a rate in excess of 3%. Weekly jobless claims are still near multi year lows and while consumer confidence appears to have slowed there is no evidence that the US economy is showing sharp signs of slowing. Expectations are for payrolls to come in at 140k, a 10k improvement on August and wages are expected to remain steady at 3.2%.
2. Global Manufacturing PMI’s (Sep) – 01/10
For most of 2019 there has been significant divergence in recent PMI numbers with manufacturing underperforming while the services sector has managed to hold up reasonably well. There had been some evidence of a bit of a pickup in August, particularly on the manufacturing front, albeit from very weak levels. This improvement looks like it may have been a flash in the pain after last week’s flash numbers saw German manufacturing activity hit their worst levels in over 10 years, at 41.1. French manufacturing also softened in September increasing concerns that whatever the ECB does is unlikely to help a European economy that continues to suffer from the multiple problems of China, US trade tension and the ongoing uncertainty surrounding Brexit.
3. Global Services PMI’s (Sep) – 03/10
For all the problems in manufacturing the services sector has largely been a beacon of stability, holding up at fairly robust levels of activity, despite the problems in the manufacturing sector. The overriding concern about this divergence has been that at some point the weakness in manufacturing could well start to drag on economic activity elsewhere.Last week’s flash PMI numbers would appear to suggest that these fears are being realised with much weaker than expected readings from both Germany and France. If these weaker numbers are confirmed then the euro could come under further pressure in the coming days.
4. UK PMI’s and final GDP
The slowdown in economic activity across Europe and the rest of the world more generally is a worrying development for UK business, Brexit concerns notwithstanding. This week’s final Q2 GDP numbers should confirm the contraction seen in the second part of H1, however it is this week’s PMIs from September that should determine how strong any rebound in Q3 is likely to be. Manufacturing and services did show an improvement in August, with the big question being is whether this can translate into the end of the quarter.
5. RBA rate meeting – 01/10
The RBA started this year’s rate cutting cycle from central banks back in May when they cut rates from 1.5% to 1.25%. Since then they have cut again bringing the cash rate down to 1%, and the odds are we could see another cut to a new record low of 0.75% this week. Unemployment ticked higher in the latest labour market report and the slowdown in China appears to be affecting the wider economy. While Philip Lowe expressed pessimism that further rate cuts were likely to be effective, concerns about a slowdown are unlikely to stop the RBA from acting further either this week, or in November.
6. Tesco (LON:TSCO) H1 – 02/10
Tesco (LON:TSCO) share price has had a fairly decent year so far, though its share price has pretty much gone sideways since May, as the supermarket sector continues to be squeezed from the bottom up by Aldi and Lidl. The company has sought to bolster its balance sheet by spinning off its mortgage business to Lloyds Banking Group (LON:LLOY) for £3.8bn, and this has helped it outperform its rivals of Sainsbury, Morrison and Asda. Tesco said it would use the proceeds to reinvest in its remaining businesses and remain competitive, in terms of its costs.
In a recent Kantar survey the company also saw some bright spots from sales of free-from products, which saw an 11% rise, and its own value lines, which helped overall sales post a modest 1.4% decline. Volume sales in the most recent Kantar survey showed a rise of 0.9% a year ago.
7. Ted Baker (LON:TED) – H1 20 - 03/10
Ted Baker’s share price has not had a good year thus far, down over 30% year to date, and down over 60% since the end of 2017. The reasons for this decline have been several, from the departure of founder Ray Kelvin over allegations of improper behaviour to concerns about the impact the global economic slowdown in China, the US and Japan was having on its sales targets and margins. The collapse of House of Fraser didn’t help either, however there comes a time when investors start to ask how much bad news is priced in already. In June the company warned on profits again, sending the shares to six year lows, however the company has signed some positive longer term deals in the last few months which in the long term ought to be revenue accretive. In April Ted Baker announced a joint venture with Shanghai LongShang Trading company, which is expected to enhance the Ted Baker brand into mainland China, Hong Kong and Macau and open up retail concessions as well as an online presence into what is likely to be one its biggest markets for years to come. In August the company announced a 5 year partnership with Sojitz Infinity, which is also expected to offer similar positive benefits.
8. Ford Motor Company (NYSE:F) Q3 Sales – 02/10
Ford Motor (NYSE:F) company share price has had a couple of attempts to get above $10.50 this year, failing on both occasions as concerns over trade hit its profits. In July the company announced a $1.2bn charge in respect of global restructuring costs, as it looks to close plants in Europe, while also deepening ties with VW into what will be driverless car technology start up called Argo AI. Trade concerns have hit Ford quite hard, not only in Europe, and China, but in Mexico as well, with President Trump calling on the company to re-shore its manufacturing activity. Sales have been struggling in recent quarters due to a variety of factors, including a host of product recalls, including on its popular Explorer model, in its core US markets.
9. PepsiCo (NASDAQ:PEP) Q3 19 – 03/10
A year ago Pepsico (NASDAQ:PEP) was in the process of future proofing its business away from sugary drinks and into baked fruit and vegetables, with the purchase of Baked Foods as well as the $3.2bn purchase of Sodastream in an attempt to fend off Coca Cola as it attempts to become more environmentally conscious. With governments cracking down on sugar and waste the idea of producing concentrates and carbonation packs is a natural progression.
In the summer the company reported that these efforts appeared to be paying off, with the company seeing revenues rise 4.5% in Q2 to $16.5bn, led by its Frito-Lay North America division which sells Doritos and Cheetos. Expectations for Q3 are for EPS to come in at $1.50c a share.
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