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President Trump has discussed ways to challenge the results of the midterm elections if the GOP loses control over Congress, according to journalist and ardent Trump foe, Carl Bernstein. 

The Washington Examiner reports Bernstein’s Sunday comments on CNN, in which he said that Trump has talked about “a disruption campaign if the results are close but have the Democrats taking control of the House or Senate.” 

“I talked to people … in touch with the White House on Friday who believe that, if the congressional midterms are very close and the Democrats were to win by five or seven seats, that Trump is already talking about how to throw legal challenges into the courts, sow confusion, declare a victory actually, and say that the election’s been illegitimate,” said Bernstein, adding “That is really under discussion in the White House.”

Bernstein and Trump locked horns in August after the veteran journalist co-wrote a CNN article claiming Trump had foreknowledge of the infamous Trump Tower meeting, and that former Trump attorney Michael Cohen would attest to that in the Russia investigation.

The article specifically states that Cohen’s attorney and Clinton pal, Lanny Davis, “declined to comment” on the report. Weeks later, however, Davis admitted he was CNN’s source and backpedaled on the claims of Trump’s foreknowledge. Thus, CNN – and Bernstein, were seemingly caught in a lie. 

In an attempt to save face, Bernstein claimed that there were multiple sources for the report. Not buying it, President Trump gave Bernstein the nicknames “Sloppy” and “Degenerate Fool” – while Don Jr. called him a “leftist hack” peddling “literal fake news.” 

CNN is being torn apart from within based on their being caught in a major lie and refusing to admit the mistake. Sloppy @carlbernstein, a man who lives in the past and thinks like a degenerate fool, making up story after story, is being laughed at all over the country! Fake News

— Donald J. Trump (@realDonaldTrump) August 29, 2018

Comical to watch @CNN covering for leftist hack @carlbernstein. He & Obama staffer @jimsciutto obviously got story wrong. CNN “stands by” it anyway, defending literal fake news. 3 “reporters” were fired for false CNN hit on @Scaramucci & this is FAR worse! https://t.co/KdgpXfGhgT

— Donald Trump Jr. (@DonaldJTrumpJr) August 27, 2018

Many wondered what Trump meant when he called Bernstein a “degenerate fool.” To that end, a 1989 Wahington Post exposé on Bernstein offers some clues – after Bernstein’s angry, cheated-on ex-wife published a novel which “portrays a Bernstein-like character as an emotionally empty, self-absorbed, narcissistic man capable of having sex with venetian blinds.“

And when ABC Washington offered Bernstein a job as the Washington bureau chief in the 80s, the “power seemed to go to his head,” and he was “drinking more heavily,” reported the Post.

“I gotta tell you, at ABC, he was just a terrible screw-up. It’s awful to say it. It was awful to watch it.” About this time, people noticed that Bernstein was drinking more heavily. His life had gone beyond chaotic. While Nora was pregnant with their second child, Bernstein had his now-notorious affair with Margaret Jay, wife of the British ambassador. –Wahington Post

Bernstein’s latest accusation that Trump won’t accept the results of an election sound familiar…

‘Carl Bernstein: Trump preparing to call midterm elections ‘illegitimate’ if Democrats take power.’ From @dcexaminer: https://t.co/ambyMbIkYx That’s the kind of stuff that was said before ’16 vote, and indeed, some later called results illegitimate. pic.twitter.com/lG3lLA26F9

— Byron York (@ByronYork) October 21, 2018

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With US stocks struggling to post their third day of gains in the last two weeks, more professional investors are apparently buying into the view that the Shocktober market rout represented an “inflection point” for US stocks. And the latest long-time bull to throw in the towel is none other than Wharton Business School professor Jeremy Siegel, who said during an interview with CNBC on Monday that price action in US stocks would be “muted” next year, as P/E ratios decline, tax cuts become baked in yoy comparisons, and rising interest rates, amplify debt servicing costs.

Siegel is doubling down after warning on Sept. 25 that US stocks were on the verge of a “correction. Two weeks later, the Dow registered its worst drop since the February volpocalypse. While he doesn’t expect stocks to enter bear market territory, he expects returns to be “flattish” as tensions and uncertainty emanating from the US midterm elections and the US-China trade war also weigh on equities.

“There are challenges that we face now,” including rising interest rates, the midterm elections and U.S.-China trade tensions, the Wharton School finance professor said in a CNBC “Squawk Box” interview on Monday. “I’m looking flattish” for the coming year, he added.

Watch a clip from the interview below:

But true to his permabull reputation, Siegel said he still favors stocks over the next three to four years, believing that they will continue to outperform other asset classes. Furthermore, the dramatic selloff in emerging markets this year has created an “unbelievable” buying opportunity for investors willing to tolerate a little bit of risk.

“The sell off in emerging markets has presented unbelievable value” in the near term, Siegel said, though he admitted that his “fingers are bloodied” from trying to catch the falling knife.

Still “looking international may offer you more value in the near term than the US until we see some of these resolutions.”

Siegel is also skeptical of the Federal Reserve’s ability to engineer a “soft landing” for the economy and the market, adding that “when you look at charts [of market performance during Fed tightening]…there are not many soft landings.”

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Authored by Tsvetana Paraskova via Oilprice.com,

Oil prices at $80 a barrel are too high and unhealthy for the world today, Bob Dudley, the chief executive of UK supermajor BP, said on the sidelines of an event on Friday.

“There’s a healthy price for oil and energy and I believe that balances producing countries and consuming countries,” Quartz quoted Dudley as saying on the sidelines of the conference One Young World in The Hague. 

“In my mind, it’s somewhere between $50 and $65 a barrel. The world can live with this,” Dudley noted.

Emerging and developing economies like India, South Africa, or Turkey are seeing their highest-ever prices of gasoline because their currencies have rapidly depreciated against the U.S. dollar and because oil prices in dollars are high, BP’s chief executive said.

Currently, oil prices are “artificially high” due to Venezuela “defying gravity” and to the U.S. sanctions on Iran, according to Dudley, who said that once those geopolitical events subside, fundamentals will return to rule the market and prices should return back to $60-$65 a barrel.

BP won’t be joining any EU special purpose vehicle designed to keep trade with Iran flowing, Dudley stressed, noting that “I think it’s full of risk.”

The concerns of BP’s chief executive that $80 oil is unhealthy for the world are shared by major international organizations such as the International Energy Agency (IEA) and the International Monetary Fund (IMF).

Expensive energy is back and it is threatening global economic growth, the IEA said in its Oil Market Report last week.

Also last week, the IMF slightly downgraded its projection for global growth for this year and next—at 3.7 percent, growth is now expected 0.2 percentage point lower than IMF’s forecast from April this year. The key reasons for the downgrade included trade disputes, geopolitical tensions, and a weaker outlook for emerging economies due to higher oil import bills, among other factors, according to the IMF.

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Just six months after Netflix added $1.9 billion in Ba3/BB- rated junk bonds (upsized from an initial offering of $1.5 billion) to its balance sheet to fund its ravenous cash burn global expansion, moments ago – and just one week after reporting a whopping 7 million new subscribers in Q3 and projecting a record 9.4 million subs in Q4 – the video streaming company announced it intends to offer another $2.0 billion of junk bonds in the form of US-dollar and euro denominated senior unsecured notes in two series.

Terms of the deal were not announced and will be determined by negotiations between Netflix and the initial purchasers according to the press release, which also notes that Netflix will use the net proceeds from this offering “for general corporate purposes, which may include content acquisitions, production and development, capital expenditures, investments, working capital and potential acquisitions and strategic transactions.” Translation: Netflix will continue spending millions to acquire subs and keep its recent trend of record subscriber growth.

The new junk bond issue, which will likely end up being upsized to $2.5 billion, will push Netflix’ total debt load above the current $8.4 billion to at least $10.5 billion and likely more. According to S&P, Netflix’ adjusted leverage will rise to 4.8x by year end: a number that is dangerously high for a “growth company.”

As a reminder, this total debt number excludes the roughly $18 billion in off-balance sheet content obligations carried by Netflix.

And while $2 billion may sound like a lot, at the company’s latest record cash burn rate of $860MM per quarter…

… it will fund the company’s relentless cash burn for at most two quarter before Netflix is forced to raise capital once again: just last week, the company said that it expects to burn about $3 billion in cash this year as it continues to prioritize original series and movies.

With its stock valued at $145 billion, Netflix often touts its “thick” equity cushion as reason to support its debt. It’s historically borrowed to invest in original content and plans to continue to do so, the company told shareholders last week.

Meanwhile, as long as yield-starved junk bond issuers are happy to reward cash burning companies with even more debt – and they will as a result of the ongoing decline in primary junk bond issuance – expect this trend to continue.

The only question is what the coupon on the latest batch of NFLX bonds will be: as a reminder, the April $1.9BN issue carried a coupon of 5.875%. With rates rising notably since then, Netflix may have no choice but to offer a coupon approaching 7% to keep funding its relentless cash burn global expansion.

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Taking the 10% (yes 10%) surge in Chinese stocks in the last two days as a sign of anything other than pure market manipulation is a mistake.

This is the biggest 2-day spike in Chinese stocks since March 2016 as The National Team stepped in ‘just one more time’ (and that did not end well).

How many more times do the incessant gamblers double-down that this rebound is different and just a little bit more stimulus, monetary – of course, will reverse the almost decade-long trend of slowing growth in the red ponzi (as debt spirals out of control)?

Furthermore, while US markets are rebounding from overnight lows, former fund manager and FX trader Richard Breslow notes that his first thoughts upon reading the news from China and Italy was that it was an awfully tepid response in asset prices outside of their domestic markets.

Upon further reflection, it feels like traders are simply disengaged. It isn’t a good sign. No sign of stoked animal spirits to be seen. Cover up the prices on your screens showing Chinese equities up over 4% and you wouldn’t know anything had happened other than a typical Monday without a lot of economic releases scheduled.

Via Bloomberg,

To make matters worse, there are a number of central bank meetings later this week and consensus seems to be these will be mostly non-events. Even in places like Turkey and Russia. The ECB is widely predicted to be as non-committal as President Draghi can get away with. Analysts think the greater risk is he errs on the dovish side. I wonder. But if that’s consensus, how much hawkishness will the Scandinavian central banks allow themselves? Even though they need to set the table for rate hikes just over the horizon.

The European flash PMIs are likely to be mediocre. The U.S. midterms are but two weeks away and no one seems to have a good handle on what effect the various potential outcomes will have. The Middle East remains a mess. The Buenos Aires G-20 is too far away to move markets. And I get the distinct impression that traders are getting fed up with all the noise regarding Brexit, which produces spiky but largely untradable moves that resolve nothing.

I know there was some political news out of Australia, but would you have expected to be taken seriously had you predicted that Chinese equities would soar and commodities stabilize yet the Aussie wouldn’t be able to catch a bid? And with everything going on, 10-year Treasury yields are virtually unchanged without even managing a three-basis point range. German bunds were just as bad.

It’s as if investors have decided that there are existential risks out there which make traditional reaction functions to economic news irrelevant. Even stocks flying around isn’t getting a rise out of other assets. All of which means that handicapping where markets are likely to end the year may be far more of a mug’s game than we ever realized.

What started at the beginning of the quarter as traders energetically chasing asset prices and performance has quickly moved toward disgust at getting chopped to pieces. Investors may have decided to take their ball and go home until some of the dust settles. Judging from the various hedge-fund tracking indexes, portfolio managers may have decided that digging themselves further into a hole isn’t a great strategy for saving their year and impressing present and potential limited partners.

This also means correlation matrices may struggle to predict coincident movements. Sometimes, markets just refuse to oblige by making sense and trending on command. Investors need to accept that they need to trade, or not trade, what the market will bear.

It appears the market is already realizing what a farce the ramp was…

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The Saudi hit team that murdered and dismembered journalist Jamal Khashoggi attempted to create a decoy in order to later provide “evidence” that Khashoggi departed the Istanbul consulate safely. 

Early Monday CNN released footage and a still frame of a Saudi intelligence operative dressed up in Khashoggi’s clothes leaving the consulate by the back door, also sporting what appears to be a fake beard and glasses. 

CNN reports: 

One member of the 15-man team suspected in the death of Jamal Khashoggi dressed up in his clothes and was captured on surveillance cameras around Istanbul on the day the journalist was killed, a senior Turkish official has told CNN.

The Saudi operative has been identified as Mustafa al-Madani, according to Tukish investigators, and was part of the Saudi hit squad that murdered Khashoggi inside the consulate on October 2. 

Madani while posing as Khashoggi, and even wearing the deceased journalist’s clothes, was later seen at the Blue Mosque, a well-known historic site and tourist attraction in the heart of the city. 

Khashoggi had entered the consulate in order to obtain papers for his upcoming wedding but was murdered only moments later in what’s been described as a gruesome scene which last seven minutes. 

CNN has released a video that allegedly shows a #Saudi operative disguised as Jamal #Khashoggi, attempting to make it look like the journalist had walked out of the building. Via @trtworld pic.twitter.com/wlhzfM91BE

— Ali Özkök – علي أزكوك (@Ozkok_) October 22, 2018

The video of the body “double” is but the latest bizarre twist in an increasingly strange story which shows an immense amount of planning and preparation went into the killing. 

However, it also increasingly appears to resemble a botched operation straight from a Hollywood spy thriller as the more information the Turks leak, the more outlandish and almost unbelievable the plot becomes. 

Blurry image of Madani posing as Khashoggi near the Blue Mosque in central Istanbul on the day of the journalist’s disappearance and murder. 

CNN reports further details as follows:

In the apparent cover-up that followed Khashoggi’s death, Madani, 57, who is of similar height, age and build to Khashoggi, 59, was used as a decoy for the journalist, according to the Turkish official.

A senior Turkish official told CNN that the video showed that Madani was brought to Istanbul to act as a body double.

This further proves that the current official Saudi narrative of an unintentional and accidental killing during an “interrogation gone wrong” is false given such pre-planned attempts to throw subsequent investigations off track. 

A Turkish official told CNN, “You don’t need a body double for a rendition or an interrogation,” and said of the ongoing investigation: “Our assessment has not changed since October 6. This was a premeditated murder and the body was moved out of the consulate.”

Meanwhile, Turkish state media has reported a suspicious car belonging to the Saudi consulate has been found abandoned.

developing…

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One leg of the overnight ramp in US stocks has just broken as Italy’s refusal to budge with Brussels has sent Italian bond (prices) and stocks tumbling, erasing earlier gains and dragging US stocks down…

Italian bond risk is now higher than Friday’s close…

And Italian stocks are lower…

Led by Italian banks plunging…

The Euro is tumbling…

And that has sparked derisking in the overnight exuberance of US equities…

As one veteran European FX trader told us “this is far from over.”

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In what is shaping up as another extremely busy week, events in the coming days include the ECB meeting, the advance Q3 GDP release in the US, preliminary October PMIs in Europe and the US and the release of the Fed’s Beige Book. In addition, WTO officers will meet to discuss reforms for the trade body, Saudi Arabia will hold its troubled “Davos in the Desert” conference, and a  steady stream of central bank speakers are scheduled. Last but not least, this will be the peak weak for US corporate earnings with roughly a third of S&P members reporting.

Going down the list, the ECB will meet on Thursday, and although policy rates are expected to be left unchanged, the meeting is likely to be closely watched for more color on how the ECB will reinvest maturing QE proceeds post the likely end of QE in December this year according to Deutsche Bank’s Craig Nicol. This will be amidst an uncertain growth and inflation outlook for the Euro-area given Italy’s populist 2019 budget, continued fraught Brexit negotiations and the implementation of additional US tariffs on China since the last ECB meeting. It’s hard to imagine the ECB will lower the pressure on Italy and following Friday’s credit rating downgrade, its likely to be a busy back end of the week for Italy.

In this context, late on Friday Moody’s decided to leave Italy’s rating at stable after a 1-notch downgrade to Baa3. “If there’s one thing the outlook isn’t for Italy at the moment it’s stable but rating agencies are unlikely to want to create a vicious circle” DB’s Jim Reid writes this morning. With S&P opining on Friday it’s possible we’ll see a similar response for a similar reason. Italy rallied strongly on Friday (10yr BTPs -20bps, 24.6bps tighter to Bunds) before Moody’s decision which came after the US close.

Away from this we will also be getting a first look of Q3 GDP for the US on Friday, where the current consensus is of annualized growth at +3.3% qoq, slowing from +4.2% qoq in Q2. The Q3 GDP price index is expected to come at +2.3% as against +3.0% in Q2.

Meanwhile it’s a fairly quiet week for other data next week, with the highlight being the release of the flash October PMIs in Europe and the US on Wednesday. For the Eurozone, the composite is expected to stay more or less stable at 54.2 with both the manufacturing and services components expected to come down to 53.0 (from 53.2 last month) and 54.5 (from 54.7) respectively. In the US, the services print is expected to jump to 54.0 from 53.5 while the manufacturing reading is expected to come down marginally to 55.5 from 55.6.

Looking at key US events, we get the September Chicago Fed National activity index on Monday. On Tuesday there’s the October Richmond Fed manufacturing index. On Wednesday, we have the Fed’s beige book, August FHFA house price index and September new home sales. On Thursday, there are preliminary September wholesale inventories, durable goods orders and capital goods orders along with the September advance goods trade balance, retail inventories and pending home sales, as well as the October Kansas City Fed manufacturing index. Finally on Friday we have the final University of Michigan October survey results.

In Europe, on Monday we get Germany’s September PPI. On Tuesday there are France’s October business and manufacturing confidence indicators, the Euroarea’s September M3 money supply and the UK’s September finance loans for housing. Wednesday brings Germany’s November GfK consumer confidence and October IFO current conditions survey, Spain’s September PPI and France’s Q3 total jobseekers data. Finally on Friday, the ECB’s survey of professional forecasters is out, along with France’s October consumer confidence and September PPI. In Asia, we get China’s September new home prices this coming Sunday, Japan’s preliminary October PMI on Wednesday and September services PPI on Thursday.

Away from data, the BoE’s Carney and Haldane, and the Fed’s Kashkari and Evans will speak on Tuesday. The Fed’s Bostic, Bullard and Mester will speak on Wednesday, and the Fed’s Mester and the ECB’s Draghi and Coeure will speak on Friday.

Finally, Saudi Arabia’s “Davos in the Desert” event will start on Tuesday through to Thursday. However, the event has seen withdrawals from many key executives and attendees after the disappearance of government critic Jamal Khashoggi at the Saudi consulate in Turkey. Elsewhere, WTO officers will meet in Ottawa to discuss reforms for the trade body and the European Council President Donald Tusk and the European Commission President Jean-Claude Juncker will present conclusions from the October 18-19 summit to the EU Parliament on Wednesday.

We also have a slew of earnings due this week with Amazon, Alphabet, Intel, Microsoft, Texas Instruments, Twiiter, Verizon, AT&T, Ford, Daimler, Lockheed Martin, Harley Davidson, Boeing, UBS, Barclays, Total, United Technologies and Caterpillar all slated to report their earnings.

Key events broken by day, courtesy of RanSquawk

• Monday: It’s a very quiet start to the week. Overnight, we get August’s all industry activity index in Japan. In Europe, we get the Euro-area’s 2017 government debt to GDP ratio. In the US, we get the September Chicago Fed National activity index.
• Tuesday: Things continue to remain light on Tuesday. Overnight, we get Japan’s September supermarket sales and final September machine tool orders. In Europe, we get the Euro Area’s October consumer confidence, Germany’s September PPI, Spain’s August trade balance and in the UK the October CBI Trends total orders, selling prices and business optimism. In the US, we get the October Richmond Fed manufacturing index. Away from data, BOE Governor Carney and Chief Economist Haldane, and the Fed’s Kashkari and Evans will be speaking at different times. Besides, Caterpillar, Verizon, Texas Instruments, Lockheed Martin, United Technologies and Harley Davidson will release their earnings.
• Wednesday: Data picks momentum from Wednesday as we get preliminary October PMIs across the globe. We get Japan’s October manufacturing PMI overnight followed by the release of composite, manufacturing and services PMIs for France, Germany and the Euro Area in the morning and then we get US composite, manufacturing and services PMI in the afternoon. Besides, we will also be getting France’s October business confidence, manufacturing confidence, production outlook indicator and business survey overall demand along with September’s M3 money supply for the Euro Area and September finance loans for housing in the UK. In the US, we get latest weekly MBA mortgage applications, August’s FHFA house price index, September’s new home sales and the Fed’s latest Beige Book. Away from data, the Fed’s Bostic, Bullard and Mester will be speaking at different times. The European Council President Donald Tusk and the European Commission President Jean-Claude Juncker will present conclusions from the October 18-19 summit to the EU Parliament. Besides, Barclays, Microsoft, AT&T, Boeing and Ford will report their earnings.
• Thursday: The key highlight of the day is the outcome of the ECB’s monetary policy meeting. Overnight we get Japan’s September services PPI. In Europe, we get Spain’s September PPI, Germany’s October IFO business climate, expectations and current assessment index along with France’s 3Q total jobseekers data. In the US, we get preliminary September wholesale inventories, durable goods orders and capital goods orders along with October’s Kansas City Fed manufacturing activity index, latest weekly initial jobless claims and continuing claims, and September’s pending home sales, advance goods trade balance and retail inventories. Away from data, UBS, Daimler, Twitter, Alphabet, Amazon and Intel will release their earnings.
• Friday: The key highlight of the day is the advance Q3 GDP release for the US and the outcome of S&P’s sovereign ratings review for Italy. Overnight we get October CPI for Tokyo in Japan. In Europe, we get the ECB’s survey of professional forecasters along with France’s September PPI and October consumer confidence. In the US, we get the final University of Michigan October survey results as well as advance Q3 personal consumption, GDP price index and core PCE. Away from data, the ECB’s Draghi and Coeure will be speaking at different times. In addition, Total will release its earnings.

Finally, focusing just on the US, Goldman notes that the key economic releases this week are the durables report on Thursday and the Q3 GDP advance estimate on Friday. There are several scheduled speaking engagements by Fed officials this week, including a speech by Vice Chairman Clarida on Thursday.

 
Monday, October 22

There are no major data releases.

Tuesday, October 23

• 09:30 AM Minneapolis Fed President Kashkari (FOMC non-voter) speaks; Minneapolis Fed President Neel Kashkari will speak at a conference on Early Childhood Development and Education.
• 10:00 AM Richmond Fed Manufacturing Index, October (consensus +24, last +29)
• 01:30 PM Atlanta Fed President Bostic (FOMC voter) speaks; Atlanta Fed President Raphael Bostic will speak about the U.S. economy and monetary policy. Media Q&A is expected.
• 02:15 PM Dallas Fed President Kaplan (FOMC non-voter) speaks; Dallas Fed President Robert Kaplan will speak in Galveston, Texas.
• 08:00 PM Kansas City Fed President George (FOMC non-voter) speaks; Kansas City Fed President Esther George will speak on the U.S. payment system on a panel in Sydney.

Wednesday, October 24

• 09:00 AM FHFA house price index, August (consensus +0.3%, last +0.2%)
• 10:00 AM New home sales, September (GS -0.9%, consensus -0.6%, last +3.5%); We estimate new home sales declined by 0.9% in September, following a 3.5% increase in the prior month. We expect the effects of Hurricane Florence to weigh on new home sales. Single family starts decreased in August, while mortgage applications were roughly flat.
• 01:00 PM Atlanta Fed President Bostic (FOMC voter) speaks; Atlanta Fed President Raphael Bostic will take part in a discussion at the LSU Energy Summit in Baton Rouge, Louisiana. Audience Q&A is expected.
• 01:10 PM Cleveland Fed President Mester (FOMC voter) speaks; Cleveland Fed President Loretta Mester will speak at the Forecasters Club in a moderated discussion in New York. Audience Q&A is expected.
• 02:00 PM Beige Book, October FOMC meeting period; The Fed’s Beige Book is a summary of regional economic anecdotes from the 12 Federal Reserve districts. The September Beige Book reported growth at a moderate pace across the country and noted a positive outlook for overall near-term growth, though business contacts in most districts expressed concerns related to trade policy uncertainty. Labor markets were reported to be tight throughout the country, with “widespread” labor shortages including continued shortages of high-skill workers and a number of Districts reporting increased shortages of lower-skill workers. Wage growth was overall modest to moderate, and price increases were also modest to moderate across regions, though all Districts reported increased price pressures. In the October Beige book, we look for additional anecdotes related to labor markets, wage growth, price inflation, and trade policy uncertainty.
• 07:00 PM Fed Governor Brainard (FOMC voter) speaks; Fed Governor Lael Brainard will speak at an event in New York for the promotion of economic and financial literacy.

Thursday, October 25

• 08:30 AM U.S. Census Bureau Report on Advance Economic Indicators; Advance goods trade balance, September (GS -$78.0bn, consensus -$75.1bn, last -$75.5bn); Wholesale inventories, September preliminary (consensus +0.5%, last +1.0%): We estimate that the trade deficit increased in September, as goods imports likely rose further. Outbound container traffic rose by less in the month than did inbound container traffic. We note the possibility that some amount of pull-forward of imports likely occurred before the $200bn round of tariffs took effect on September 24.
• 08:30 AM Durable goods orders, September preliminary (GS -1.0%, consensus -1.5%, last +4.4%); Durable goods orders ex-transportation, September preliminary (GS +0.6%, consensus +0.4%, last flat); Core capital goods orders, September preliminary (GS +0.4%, consensus +0.5%, last -0.9%); Core capital goods shipments, September preliminary (GS +0.4%, consensus +0.4%, last -0.2%): We expect durable goods orders to decrease in the September report, given weaker data from commercial aircraft orders. Given strength in manufacturing surveys from earlier in the month, we see scope for further core capital goods orders growth. Manufacturing production growth was in line with expectations in September, but there was significant growth in the capex-sensitive business equipment category of industrial production. Accordingly, we look for a 0.4% increase in core capital goods shipments.
• 08:30 AM Initial jobless claims, week ended October 20 (GS 215k, consensus 213k, last 210k); Continuing jobless claims, week ended October 13 (consensus 1,660k, last 1,640k): We estimate jobless claims increased by 5k to 215k in the week ended October 20, following a 5k decrease in the prior week. While claims did not appear elevated last week in Hurricane Michael-affected states, we note that claims typically increase in the weeks following the week of the hurricane.
• 10:00 AM Pending home sales, September (GS -0.5%, consensus -0.1%, last -1.8%); We estimate that pending home sales declined by 0.5% in September, following a 1.8% decrease in the August report, due to weaker regional home sales data so far in September. We have found pending home sales to be a useful leading indicator of existing home sales with a one- to two-month lag.
• 11:00 AM Kansas City Fed manufacturing index, October (consensus +14, last +13)
• 12:15 PM Fed Vice Chairman Clarida (FOMC voter) speaks; Fed Vice Chairman Richard Clarida will speak about his outlook for the U.S. economy and monetary policy in Washington. Q&A is expected.
• 09:00 PM Cleveland Fed President Mester (FOMC voter) speaks; Cleveland Fed President Loretta Mester will speak to the Money Marketeers of New York University. Audience and media Q&A is expected.

Friday, October 26

• 08:30 AM GDP, Q3 advance (GS +3.5%, consensus +3.4%, last +4.2%); Personal consumption, Q3 advance (GS +3.4%, consensus +3.2%, last +3.8%); We estimate a +3.5% increase in the first vintage of Q3 GDP (qoq ar). We expect the composition of the report to reflect solid growth in personal consumption (+3.4%) and business fixed investment (+2.9%) alongside a significant boost from federal government spending (+5.0%). We also expect strong inventory growth to contribute 1.9pp.
• 10:00 AM University of Michigan consumer sentiment, October final (GS 98.6, consensus 99.0, last 99.0); We expect the University of Michigan consumer sentiment index to edge down 0.4pt from the preliminary estimate for October due to the stock market decline. The report’s measure of 5- to 10-year inflation expectations stood at 2.3% in the preliminary report for October.

Source: Deutsche Bank, ING, Goldman

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