A titanic week of major earnings and economic events is poised to make for a volatile run-up to the U.S. presidential election. In many ways, we’re already seeing the results. More on that below, but first:
In the news
Catching carbon: A federal financing agency is in talks with a group of Canada’s largest oil-sands companies over a multibillion-dollar investment in carbon-capture technology.
Calling in sick? The Canadian Medical Association wants provinces to ban employers from requiring doctors’ notes.
‘A serious misrepresentation’ How one nursing company tapped into Ottawa’s Indigenous businesses program, despite not being Indigenous.
Happening this week
- Bank of Canada Governor Tiff Macklem speaks today in Toronto, Statistics Canada reports monthly gross domestic product on Thursday and S&P releases its closely followed purchasing managers’ index on Friday.
- In the U.S., a key jobs report at the end of the week will provide a measure of the country’s recent economic vigour.
- Big in Japan: Political drama is weighing on markets and complicating the work of the country’s central bank, which makes a decision on its lending rate on Thursday.
- The busiest week of third-quarter earnings season includes Ford Motor Co. after close today; Alphabet Inc. and Advanced Micro Devices Inc. tomorrow; Microsoft Corp. and Meta Platforms Inc. on Wednesday; and Apple Inc. and Amazon.com Inc. on Thursday. Exxon Mobil Corp. and Chevron Corp.S power up (or down) on Friday.
I honestly don’t know the context of this picture from a campaign rally in Las Vegas on Thursday, but I can only guess he was sharing positive sentiments.The Associated Press
In focus
The world prepares for a potential Trump presidency
The U.S. presidential election might not be until next week, but the economic effects of the vote will be front and centre over the next few days.
And if recent developments are any indication, the world is preparing for a return of Donald Trump to the White House. Many have already placed their bets.
European Union officials are reportedly racing to identify the bloc’s biggest vulnerabilities under another Trump administration, planning on how to survive a wave of trade tariffs and how to offset an end of U.S. aid to Ukraine, the Financial Times reported.
Germany, whose ailing economy comes into focus as it reports quarterly GDP on Wednesday, is calling for a strengthened trade agreement between the European Union and the United States. Britain announces its budget that same day, largely predicated on the assumption that the United States, its largest export market, doesn’t introduce major taxes on its goods.
“Whoever will enter the White House, we are at the forefront of a new era of transatlantic diplomacy to convince our U.S. partners that we need more or less a new trade agreement between the U.S. and the EU instead of introducing tariffs,” German Finance Minister Christian Lindner said.
That doesn’t really sound like a message to Democratic nominee Kamala Harris, who has criticized her Republican rival’s blanket approach to tariffs.
At the International Monetary Fund and World Bank meetings last week in Washington, D.C., British Finance Minister Rachel Reeves was asked about the mood surrounding the U.S. election. She responded by saying officials were focused on policies to relieve cost-of-living pressures for people. An important issue, to be sure, but the answer to an entirely different question.
In Canada, Macklem said inflation is under control as he cut the bank’s overnight lending rate to 3.75 per cent this week, flagging potential geopolitical shocks such as rising tariffs if Trump wins. But there’s only so much a central banker can do.
And on Wall Street this week, five members of the Magnificent Seven report earnings – testing investor sentiment over artificial intelligence but also hopes that a Trump presidency would bring profit-boosting corporate tax cuts.
Place your bets
In any event, we might already have learned enough from the S&P 500′s recent performance to predict a winner.
Research published in August by LPL Financial Holdings, one of the largest financial advisory firms in the U.S., showed the benchmark index has accurately predicted the winner of the U.S. presidential election 83 per cent of the time since 1928. “Whenever the S&P 500 was positive during the three months leading up to an election, the incumbent party remained in control of the White House,” in 12 of 15 elections, the report says.
Good news for Harris, then? Maybe. At least three former candidates would warn against reading too much into it.
Predictions markets like PredictIt and Kalshi, which were given legal clearance in a U.S. court ruling this year, are giving Trump a better chance to win.
That doesn’t mean he will, of course. It could just mean bettors think his odds are undervalued. But if we think traditional measures are more precise, I have some polls from 2016 to show you.
Who will win the presidency? Neither polls nor predictions markets indicate one candidate has a clear path. A week packed with economic market movers, emergency planning and bellwether earnings might prove more decisive.
Charted
Hungary overtakes Europe’s ‘Big Three’ as main destination for Chinese investment
Billions of dollars are being pumped into Hungary, Eric Reguly reports. Hungarian Prime Minister Viktor Orban is courting big-bang investments from China and Russia as part of an “economic neutrality” strategy, meaning money from those countries is as good as the EU’s, as far as he is concerned.
The outlook
On our radar and reading list
In the sky: First-class travellers on Japan’s airlines are getting access to limited-edition bottles of rare whisky. That’s the spirit.
On the auction block: The art market is seeing an oversupply of seven- and eight-figure abstract and impressionist works. Fewer people have that kind of Monet these days.
Morning markets
Global markets were mixed as investors prepared for a raft of key economic data releases and earnings from major U.S. companies this week. Wall Street futures surged, while TSX futures pointed lower as crude prices tumbled.
Overseas, the pan-European STOXX 600 was down 0.13 per cent in morning trading. Britain’s FTSE 100 declined 0.24 per cent, Germany’s DAX dropped 0.19 per cent and France’s CAC 40 climbed 0.17 per cent.
In Asia, Japan’s Nikkei closed 1.82 per cent higher as Japan’s ruling party lost its parliamentary majority. Hong Kong’s Hang Seng rose 0.045 per cent.
The Canadian dollar traded at 71.97 U.S. cents.
