Party time by Beijing Reuters

(Nv. 5 This story is filled in again to correct the spelling of ‘Xiaoping’ in the fourth paragraph)

High-ranking members of the Chinese Communist Party will meet in the coming days and give another green light to President Xi Jinping.

U.S. inflation numbers may prove that the Federal Reserve’s price pressure is transient, while trade data and corporate earnings in Q3 show whether supply chain errors are declining.

1 / PARTY TIME

The meeting of the Chinese Communist Party in Beijing is expected to adopt a historic resolution that lays the groundwork for President Xi to fulfill his unprecedented third term.

The first such resolution, in 1945, set the stage for Mao Zedong to become the main leader, and the second, in 1981, laid the foundations for the era of Deng Xiaoping’s reform.

This may indicate that Xi’s path is ahead, “common prosperity” and far from growth at all costs. It is hard to mention the current precariousness, as China’s sputtering growth engines and credit markets are suffering from a falling global monetary policy – caveat emptor.

2 / PRICE MEASUREMENT

The U.S. consumer price index is expected to rise 0.5% in October, after rising 0.4% in September as Americans paid more for food, rent and other goods.

It remains to be seen whether the current rise in prices, which indicates a temporary rise in the economy as a result of the temporary effects of the pandemic, or the beginning of a new upward trend.

The last meeting of the Federal Reserve believed that high inflation would be “transient,” although he acknowledged that the difficulties in global supply add to the risks of inflation.

It has managed to publicize the reduction in monthly bond purchases without causing the “tantrum” of the market. A strong inflationary print that renews the rate hike debate could change that.

3 / CROSS OF TRADE

Comfort policies in the developed world have driven a high demand for consumer goods, and this year’s trade has spurred the rebound. From emerging economies, from raw materials to semiconductors, exports have risen. Shortages and price increases have arisen.

But the trade may be at a crossroads now. Economists predict that post-COVID normalcy will allow Western consumers to spend less on goods and spend more on travel and dining. This could boost inventories and cool commodity trade in early 2022.

Sunday’s data will show whether China’s energy shortage has slowed exports and whether the cooling economy is hurting imports.

The decline in U.S. exports has led to its trade deficit records, so German data will be seen on Tuesday after August export volumes fell for the first time in 15 months. Finally, on Monday the potential growth of Taiwan semiconductors in exports was 16 months.

4 / BEAT DOA

Next week’s European blue-chips reports are in Allianz (DE 🙂 finance. Aviva (LON 🙂 and Zurich Insurance, Merck and AstraZeneca (NASDAQ 🙂 medications and steelmakers Arcelor Mittal.

European equities have never been higher and recent gains could be a catalyst for new peaks. Quarterly earnings growth expectations rose to 57.2% from 47.6% year-on-year two weeks ago; so far almost 66% of companies have exceeded expectations.

Fears of losing the post-COVID-19 recovery and negative “real” bond yields help explain stock market resilience. But how long can the party last? After all, COVID-19 2020 is expected to slow its profit recovery due to the 2020 recession in 2022.

5 / WALKS GOOD OR NOT?

Global markets are often shaken by investors turning the risk on or off. To confuse things, the current feeling is driven by a mindset of walks or walks.

One day, the major central banks are about to raise rates soon (sell bonds, buy bank shares) and the next day, about tightening as much time as possible (buy bonds, send shares to new brands).

This latter view prevails after the major central banks rejected aggressive rate-raising bets. The Bank of England has exceeded expectations of a rate hike while keeping policy unchanged.

But uncertainty about rate forecasts remains high. And that means a change between days on “walks” and “off on walks” can become commonplace. Prepare for more volatility.