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Pre-market inventory: record GDP growth never means reduction

What happened: On Thursday, the United States read GDP for the first time between July and September. Economists surveyed by Refinitiv predict that the seasonally adjusted annual growth rate of GDP is 31%. Compared with the second quarter, economic growth is expected to be about 7%. Either way, this is the fastest expansion ever.

Don’t expect this to impress Wall Street. For traders who have been looking to the future, the third quarter is already old news, and the imminent situation is starting to arouse real vigilance.

On Wednesday, the Dow Jones Index fell 3.4%, or 943 points, while the S&P 500 Index fell 3.5%. This is the worst day for the two indexes since June.

Behind the decline: People are increasingly worried that the coronavirus cases in North America and Europe are out of control again.

The two largest economies in the European Union, France and Germany, have announced severe restrictions in response to the increasing number of cases. France will close all non-essential businesses, restaurants and bars on Friday for a period of four weeks. Germany will close restaurants, bars and clubs from Monday and instruct residents to stay at home.

Neither country’s new guidelines were as severe as the blockade imposed this spring, which brought Germany and France to a standstill. But they are important enough to cause economic losses in delicate moments.

Economists at Berenberg Bank predict that France’s new lockdown will result in a “significant” drop in GDP between October and December, possibly by as much as 4%. It is now predicted that Germany̵

7;s GDP will fall by 1%.

Anxiety is making the United States not far from Europe, and a new blockade may become necessary. The country recently reported that there are an average of 7 days a day and there are more than 74,000 new Covid-19 cases every day, a record high.

The GDP data for the third quarter will help prove that once the economy can operate without the constraints of social distancing, it will be very resilient.

“[The third quarter] It shows that the economy can rebound quickly. “Bellenberg’s Holger Schmieding and Florian Hense told the customer.

But most investors are already paying attention to the data, and they worry about what they see. Kit Juckes, a strategist at Societe Generale, noted that the report was “completely replaced by events.”

In the technical barbecue on Capitol Hill, the bark is better than the bite

Senator Ted Cruz shouted. His Democratic colleague, Brian Schatz, called the hearing a “lie.” The chairman of the committee, Roger Wicker, could not name the Google CEO.

In a controversial hearing on Wednesday, senators from the Commerce Committee questioned the CEOs of Facebook, Google and Twitter about their content regulation policies. However, my CNN business colleagues Kaya Yurieff and Brian Fung reported that the event was not substantive.

Some legislators called for greater transparency, while others requested explanations for specific cases in which content was deleted or flagged by the platform. Although the focus of the hearing was on an important law, Section 230, which protects the company’s ability to adjust content as appropriate, the senator stepped out of the briefing and raised questions about antitrust issues, misinformation about voting, and Face to face with executives on election interference and other aspects.

Some important points:

  • Schatz and other Democratic senators criticized the timing of the hearing, which was less than a week before the US election. Schatz said: “This is coercion, for election purposes.”
  • Cruz angrily pursued Twitter CEO Jack Dorsey (Jack Dorsey) and pressured him to restrict the content published by the New York Post. He shouted at Dorsey: “Who chose you to be responsible for media coverage?”
Brian’s point: “After more than two years of hearings, it’s time to conclude that many of the hearings are worthless.” He believes that this kind of guerrilla party performance does not help hold executives accountable. This confuses them with vague promises of future transparency.

For investors, more importantly, Facebook, Google and Twitter, as well as Apple and Amazon will release earnings on Thursday. During the pandemic, the rapid growth in demand for online services has enabled technology stocks to hit a record high this year. The third-quarter intelligence is critical to determining whether the crazy earnings can continue.

Shareholder rewards may make a comeback

Since the pandemic has severely hit companies in industries such as oil, gas, and hotels, the company’s board of directors moved quickly to protect cash by cutting profitable rewards for shareholders. Dividends are cut or stopped altogether, and share repurchases are no longer popular.

Now, following a healthy rebound in the third quarter, the company announced plans to increase its dividend payment and repurchase program again.

look here: Royal Dutch Shell (RDSA) The company announced more than expected earnings on Thursday. The company said it is increasing its dividend year by year, which shows confidence in the outlook. Earlier this year, in the face of a plunge in oil demand, Shell cut its dividend for the first time since World War II.

Chairman Chad Holliday said in a statement: “The Board of Directors has reviewed Shell’s recent performance and plans for its future business growth. We believe that Shell can continue to increase its shareholder distribution and contribute to growth. investment.”

Not alone: Credit Suisse (CS) It said on Thursday that it intends to restart stock repurchases in 2021, with the goal of a 5% increase in dividends in 2020 over 2019. The top US banks also stated that they believe that they have enough capital on hand to restart stock repurchases after the Fed’s restrictions are lifted. At the end of the year.

If a new round of pandemic-related shutdowns puts more pressure on companies than expected, the plan may be reversed. But for the time being, the company is sending a clear signal that they do not see the coming funding crunch.


Anheuser-Busch InBev (bud), Comcast (Chinese Medical Association), Dunkin (DNKN), Kellogg (K), Kraft Heinz (KHC), modern (Ribonucleic acid), Molson Coors brewed and Delicious brand brand (Yum) Report the results before the opening of the US market. letter (Gauge), Amazon (Amazon), apple (AAPL), Facebook (FB), Activision Blizzard (ATVI), Starbucks (SBUX) with Twitter (TWTR) Will follow up after the close.

Today is also today: The third quarter GDP of the United States was seen for the first time at 8:30 am Eastern Time, as was the data on the first unemployment claims last week. Economists surveyed by Reuters expect an additional 775,000 claims.

Tomorrow is coming: Europe’s GDP data will provide insights into the economic recovery in the third quarter-just as countries such as France and Germany implement new lockdown measures.

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