TODAY ON WALL STREET: A glimmer of hope

This morning, a glimmer of hope was perceptible among investors in the U.S. The coordination of fiscal and monetary policies seems to be limiting the economic damage caused by the pandemic. However, volatility is still very high as Covid cases soar.

The US GDP grew at a historic 33% annual rate in the third quarter and it should return to pre-crisis levels in the last quarter of 2021. US household consumption is still growing by more than 40% year-on-year, thanks to measures to support purchasing power.

Economic activity in the euro zone rebounded by 12.7% in the third quarter. German GDP grew by a record 8.2%, while that of France rebounded by 18.2% over the period.

European inflation figures were also released earlier today. The Consumer Price Index adjusted for the most volatile items is 0.2% and in line with the consensus. Very low inflation, which is even negative (-0.3%) if we take into account the prices of food, alcohol and energy.

The ECB confirmed yesterday that it will act as a firefighter of the European economy, but only from December. In the meantime, governments are working to protect exhausted hospital structures from an overwhelming influx of coronavirus patients.

US tech giants published their results yesterday. Investors are enthusiastic about the rebound of advertising at Alphabet (Google), but punish Apple because of a disappointing number of iPhones sold, especially in China, where the lack of 5G technology has been prohibitive for some customers. On Amazon.com, the results are there but the costs related to the coronavirus swell, so the stock declined after the session. This will not prevent the company from making record profits in the 4th quarter, especially if part of the world is condemned to order its Christmas gifts online. At Facebook, advertisers have returned but the group is cautious for 2021, hence a slightly negative reaction after the session.

The atmosphere is tensed this weekend, less than five days before the presidential election. It is more than likely that a second wave will hit the United States before a vaccine can provide sufficient immunity. There are currently about a dozen serious vaccine candidates in advanced or near-late-stage development around the world. Even with the significant mobilization of industry and distribution networks that is taking place, it will take until spring at best to achieve satisfactory levels of protection.

Today, we have household income and expenditure, the Chicago PMI and at the University of Michigan Consumer Confidence Index.