Three-and-Three Weekly
Our observations on recent and upcoming developments of interest to investors.

LOOKING BACK

1. COVID-19 Conditions Continue to Ease

•  The U.S. saw 89k daily reported U.S. COVID-19 cases (7-day average), as the two-week trend fell 22%. U.S. COVID deaths (7-day average) eased slightly to just under 1.6k, decreasing 17% over two weeks. (Johns Hopkins)
• Globally, cases dropped 4% over the week while deaths decreased 6%. (Worldometer)
• On vaccinations, 66% of the U.S. population now has at least one dose and 57% is fully vaccinated. (CDC)
• Merck asked the FDA to authorize its COVID-19 pill, which has been shown to be effective in treating the virus.

• U.S. financial companies posted strong earnings reports last week, with managements providing varied economic outlooks. JPMorgan CEO Jamie Dimon was upbeat on the economy; Goldman Sachs chief David Solomon showed similar optimism but highlighted risks including politics, inflation and the virus. (WSJ)
• The companies’ expectation-beating results reflected the release of credit reserves, investment banking deals and asset management results, as well as improving net interest margins. (WSJ)
• The Dow Jones U.S. Financials Index gained 1.8% for the week. (Bloomberg)

3. Markets See Gains, Less Volatility

• The U.S. House of Representatives approved legislation to raise the U.S. debt limit into December, avoiding near-term national default. President Biden signed the $480bn increase into law.
• U.S. inflation accelerated slightly more than expected in September, with the CPI rising 0.4% for the month and 5.4% from a year earlier. FOMC meeting minutes from September indicated concern about more persistent inflation, as Fed officials worried about disrupted supply chains around the world. (Reuters)
• The IMF barely lowered its 2021 global growth forecast and raised its inflation forecast, citing supply chain issues, virus outbreaks and weak vaccination rates in emerging markets. (WSJ)
• Global markets posted strong returns in a calmer week. The S&P 500 rose 1.8%, with growth beating value. Overseas, the MSCI Asia Ex-Japan Index rose 1.9%, while developed markets (MSCI EAFE) rose 2.4%. The U.S. 10-year Treasury yield eased 2.6 bps. (Bloomberg)

LOOKING AHEAD

1. Airlines to Resume Pre-COVID Volume; Reduced Travel Restrictions Coming

• Airlines will be able to operate domestic flights at pre-COVID capacity starting today (10/18). The U.S. will lift travel restrictions on vaccinated international travelers and reopen its borders with Mexico and Canada on Nov. 

2. Major Carriers to Report Earnings

• Various U.S. airlines will announce earnings, including American, Southwest and Alaska Air (10/21).
• Other companies reporting include Johnson & Johnson and Netflix (10/19).

3. Data in Focus: U.S. Housing, Manufacturing and Services

• Tues., Oct. 19 – Sept. U.S. Housing Starts are anticipated to be 1,653k, up from 1,615k in Aug. (FactSet)
• Thurs., Oct. 21 – Sept. U.S. Existing Home Sales are expected at 6,075k, up from 5,880k in Aug. (FactSet)
• Fri., Oct. 22 – Oct. U.S. Manufacturing PMI (Prelim) may hit 60.5, down from 60.7 in Sept. (FactSet)
• Fri., Oct. 22 – Oct. U.S. Services PMI (Prelim) is anticipated at 54.4, down from 54.9 last month. (FactSet)

Source: Neuberger | Berman