Boris Johnson energy speech, Turkey sets rates, US retail sales

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As the excitement over the US presidential election fades, the focus turns to Europe this week where there is plenty going on despite the restrictions brought by the second wave of coronavirus.

In the UK Boris Johnson will try to put the departure of Dominic Cummings, his influential aide, behind him when he makes a speech on energy policy.

The prime minister has long been planning to make a major green speech setting out his vision for switching to a low-carbon economy.

Mr Johnson is keen to burnish Britain’s green credentials ahead of next year’s COP26 international climate summit in Glasgow. His speech this week is expected to feature pledges on hydrogen, carbon capture and storage, offshore wind and household insulation.

He is also set to give the go-ahead to new nuclear power stations — such as Sizewell — and money for small modular reactors.

Brexit talks will resume in Brussels with Mr Johnson still playing it tough as Thursday’s EU leaders videoconference summit — seen by many as the final deadline for sealing a draft Brexit trade deal — nears.

David Frost, Mr Johnson’s chief Brexit negotiator, arrived in Brussels on Sunday saying that “some progress” on a trade agreement with the EU had been made in recent days, but that substantial differences remained and that a no-deal outcome was still possible.

One EU diplomat described the coming week as “crunch time”, while officials in London also confirmed negotiations were at a crucial point, with one saying: “We’ve got 10 more days, max.”

The EU leaders summit will also discuss the next steps in response to coronavirus, while the European Commission is due to publish its recommendations to EU states on plans to use Covid-19 rapid antigen tests and on quarantine rules this week.

Spain will also be in the spotlight when two suspected members and one suspected accomplice of the jihadist cell that killed 16 people in Barcelona and the coastal resort of Cambrils in 2017 stand trial in the Spanish high court near Madrid.

The attack was the worst in more than a decade in Spain and the country is set to be on high alert following terror attacks in France during the Charlie Hebdo terrorism trial.

In the US President Donald Trump’s claims that his election loss to Joe Biden was due to voting fraud have been accompanied by a flurry of lawsuits attempting to undo the result of the November 3 poll.

Some hearings are set for the coming week, details of which can be found on the Financial Times Lawsuit tracker: where and how is Donald Trump fighting the result?

We can also expect to see a lot of former US president Barack Obama this week after A Promised Land, the first volume of his memoirs on his time in office, hits bookstore shelves on Tuesday.

And finally back on the global stage Saudi Arabia rounds things off this coming weekend when it hosts the virtual G20 summit.

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Central banks

The US Senate is preparing to vote as early as this week to confirm Judy Shelton, Mr Trump’s nominee to the Federal Reserve board and a fierce critic of the US central bank.

Ms Shelton has long been considered a contentious choice for the Fed board, because of her staunch loyalty to Mr Trump, which has called into question her independence, as well as her sympathy for the gold standard. She also compared the Fed’s role in setting monetary policy with the former Soviet Union’s economic planning.

If Ms Shelton is confirmed, it would allow Mr Trump to leave his imprint on the US central bank before he leaves the White House in January.

Bank of England governor Andrew Bailey leads a busy week for speeches with a keynote virtual address on Tuesday to The CityUK conference on the economic recovery after Covid.

BoE deputy governor David Ramsden, chief economist Andy Haldane and several ECB policymakers, including president Christine Lagarde, are also scheduled to speak at various events over the next few days.

Of this week’s meetings, the first monetary policy gathering chaired by Naci Agbal, Turkey’s new central bank governor, on Thursday will be the week’s biggest draw.

Mr Agbal’s appointment on November 7 triggered the departure of President Recep Tayyip Erdogan’s finance minister and son-in-law Berat Albayrak, who had faced months of criticism for his management of the country’s $740bn economy.

Following the upheaval, Mr Erdogan — who is known for his opposition to high interest rates — promised a reset with international and local investors and vowed to “swallow a bitter pill” if necessary to get the economy back on the right track.

Estimates range from no change in the one-week repo rate, currently at 10.25 per cent, to an increase to 16 per cent, according to a Bloomberg survey. The median projection is a rise to 15 per cent.

South Africa’s central bank is likely to keep rates on hold for a second time on Thursday and no changes are expected from the People’s Bank of China on Friday.

Companies news and earnings

Twitter chief executive Jack Dorsey and Facebook chief executive Mark Zuckerberg are due to testify before the US Senate Committee on the Judiciary on Tuesday over their decision to block stories that made claims about president-elect Joe Biden’s son Hunter.

The bulk of the US third-quarter earnings season is behind us now, but the week does bring some retail results, when investor interest is likely to switch to forecasts ahead of the holiday season.

Strong online demand is set to have bolstered retailer Walmart on Tuesday. Home Depot reports the same day, when demand for goods during lockdowns is likely to drive sales, and it is set to be a similar story for Lowe’s and Target on Wednesday.

However, a decline in foot traffic at Macy’s stores is expected to mean a drop in third-quarter sales when it reports on Thursday.

In the UK a range of big-name reports should help to shed some light on how the country is bearing up under coronavirus, with Vodafone up first on Monday, Imperial Brands on Tuesday, when the dividend will be in focus, and Royal Mail on Thursday.

Low-cost airline easyJet reports full-year results on Tuesday, having already warned of a loss of £845m.

Experian, the world’s largest credit data company, is likely to benefit from the rise in US mortgage lending as home buyers take advantage of low interest rates when it reports on Wednesday.

Online trading platform CMC Markets is set to report a jump in first-half earnings thanks to volatility triggered by coronavirus, the US presidential election and the Brexit process.

Speciality chemicals group Johnson Matthey, the world’s biggest supplier of catalytic converters to the auto industry, is likely to post lower profits owing to the coronavirus-led decline in car sales.

Other names to watch in the UK this week include supermarket chain Asda, commercial property company British Land, DIY retailer Kingfisher, outsourcer Mitie, retailer Naked Wines and car and bicycle parts retailer Halfords.

Economic indicators

US retail sales figures for October are out on Tuesday and are forecast to have slowed as the effects of fiscal stimulus fade and the coronavirus pandemic worsens. 

The record-breaking $2tn fiscal stimulus package earlier this year helped to boost consumer spending, but some economists now think the prospects for another package before the presidential inauguration in January are dimming. 

Economists expect retail sales to have grown 0.5 per cent from September, when they rose 1.9 per cent.

US housing starts released on Wednesday are forecast to increase in October, as sales of new homes continue to grow as buyers take advantage of low borrowing costs.

The UK has inflation data out on Wednesday, with levels expected to remain low.

UK retail sales volumes have risen for five consecutive months since their April low, but a small slide is expected when October’s figures are released on Friday.

China’s retail sales for October are set to show further growth on Monday.

Japan has growth figures out on Monday, when the economy is forecast to have bounced back in the third quarter, but only by about half what it has lost to coronavirus.

Colombia’s third-quarter GDP data for the third quarter is released on Tuesday, while Colombia has its growth data for the same period out on Wednesday.

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