Airbus earnings, Fed rate decision, US Democratic debate
The FT's Josh de la Mare on some of the top stories the FT will be watching this week, including earnings figures from Airbus, a decision on interest rates by the US Federal Reserve, the latest TV debates of the US Democratic presidential candidates and results from the oil majors
Written by Chris Giles, Lauren Fedor, Sylvia Pfiefer and Anjli Raval. Produced by Josh de la Mare.
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Here are the top stories we'll be watching this week. The US Federal Reserve decides on interest rates as it faces pressure from President Trump to cut. Airbus brings up earnings figures which will show if it's taken over Boeing as the world's largest plane maker. The US Democratic hopefuls vying to be 2020 presidential candidate enter the next round of TV debates. And results out from Shell, Exxon, and BP will show the impact of Opec cuts and geopolitical tensions on the oil majors.
First, to the US Federal Reserve, and an important meeting on the direction of interest rate policy, which President Donald Trump has said should be downwards, despite a relatively benign economic outlook. This is likely to contrast to rate policy at the UK's Bank of England, which meets this week, as well.
This week, the Federal Reserve is almost certain to cut US interest rates from the current rate of 2 and a quarter to 2 and a half per cent by a quarter of a percentage point, we think. The president, President Trump, wants them to cut by more than that, wants a big cut, or at least half a percentage point. But the markets... and we don't really think that's going to happen this time round.
If it wasn't for the presidential pressure, there might well be no cut at all, because the American economy is still growing pretty effectively, pretty well, this year. Inflation is low, but maybe not low enough to warrant interest rate cuts or emergency interest rate cuts. In comparison, the Bank of England, which is meeting on Thursday, is expected to maintain its slightly tightening bias of interest rates.
They're not going to raise interest rates. They're going to wait, and they're going to wait until Brexit is well done and dusted. But I think one thing we might see from the bank this week is that they might loosen that tightening bias a bit. Because, just as in the rest of the world inflation's not a problem, it's not really a problem in the UK either.
Airbus brings out its results for the second quarter, and investors will be focused on the European group's position relative to its rival, Boeing, currently the world's largest plane maker, that is in a state of crisis following the grounding of its 737 Max airplane after two fatal crashes.
Airbus results for the second quarter are expected all but to confirm that the European group will be crowned the world's largest plane maker this year, toppling its arch US rival, Boeing, after a seven-year reign. The company has been increasing output of its popular A320 single-aisle plane that competes with Boeing's 737 Max. The Max has been grounded since March after two fatal crashes, and Boeing has cut production.
The US company last week revealed the scale of the financial costs from the crisis, reporting its biggest ever quarterly loss of $2.9bn. Airbus investors, meanwhile, will be looking for progress on its plans to ramp up production and any lingering signs of constraints in the supply chain. More broadly, the market will want to hear whether demand for new planes is holding up. There are concerns that lower airline profits, slowing economic growth and trade tensions could end the near 10-year aerospace boom.
TV network CNN is to host the next debates of the candidates vying for the 2020 Democratic presidential nomination on Tuesday and Wednesday. The first televised debates took place in late June, and these next debates will take place in Detroit, Michigan, a state that was won unexpectedly by President Donald Trump in 2016.
It will be the second time that the party's candidates have taken the stage ahead of next year's primaries, which actually don't start until February. 20 candidates have qualified to participate based on their polling figures and the number of people who have donated to their campaigns. Ten candidates will take the stage each night in a programme that's going to air on CNN, the cable network.
The line-ups were determined by a random draw. On Tuesday, many people will be interested in the dynamic between Senators Warren and Sanders. The two progressives have yet to be on the debate stage together before, and Senator Warren has been rising steadily in the polls as of late, while Senator Sanders has been slipping.
The following night, a lot of people are going to be interested in what happens between former Vice-President President Joe Biden and Kamala Harris, the Senator from California. If you remember during the last debate, Senator Harris really tore into the former vice-president over his record on race.
Finally, the world's leading oil companies bring out earnings this week. And investors will be looking out for clues on the direction of the oil price as Opec puts in place cuts and tensions remain high in the Gulf.
Some of the world's biggest energy majors, from Royal Dutch Shell to BP and ExxonMobil, are reporting earnings in the coming days. So what are we watching out for? Although oil prices on the whole improved, quarter on quarter, natural gas prices were very weak. Those companies with exposure to US natural gas businesses and liquefied natural gas, where supplies are rising, may see earnings take a hit.
A more muted environment for producing chemicals and seasonal maintenance for refineries could also hold back profits. And market watchers are looking for guidance on oil prices, particularly as Opec enacts supply cuts, even as production outside of the cartel continues to swell. And on geopolitical tensions, which are ramping up from some of the recent events in the Gulf to the US-China trade spat.
And that's what the week ahead looks like from the Financial Times in London.