US bank results, German and UK economic data
The FT's Daniel Garrahan previews some of the top stories the Financial Times is watching in the week ahead, including US bank results, growth data from Germany and the UK, and the women’s march in Washington DC
Filmed by Petros Gioumpasis and Rod Fitzgerald. Produced by Daniel Garrahan. Written by Martin Arnold, Mamta Badkar, Daniel Garrahan, Laura Noonan and Valentina Romei
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Here are some of the big stories the Financial Times will be watching in the week ahead. It's a big week on Wall Street as JPMorgan Chase and Morgan Stanley report results. How healthy are two of Europe's big economies? We'll be looking at growth data from Germany and the UK. And, the Women's March gets under way in Washington DC and across the US.
First, to Wall Street, where bank earnings are upon us once more. It starts with JPMorgan Chase on the crack of dawn on Tuesday and finishes with Morgan Stanley on Thursday. Last year started with a bloody earnings season as investment banks counted the cost of chaotic markets in the final days of 2018. But this year is set to be a different story. The numbers aren't expected to be quite so exciting, so analysts will be watching commentary about 2020's outlook instead.
Investment banks will be the big winners for growth if we look at it year-on-year, and that's mainly because they did so badly in the end of 2018. Morgan Stanley is atop that pile, and analysts surveyed by Bloomberg expect Morgan Stanley's net income to be up 37 per cent year-on-year.
On the flip side of that, then, you have the retail banks. They're going to post weaker numbers year-on-year, and that's simply because the Federal Reserve cut interest rates a few times from Q4 2018 to Q4 2019. Analysts and investors will really be focused on the outlook commentary, particularly things like interest rates and deposit interest rates and when banks have to raise those, but also things like companies' demands for financing heading into the US election, and also loan losses as we come to the end - or possibly to the end - of what has been a very long expansionary cycle for the US economy.
Now, Germany's slide from the powerhouse of the eurozone economy will be confirmed on Wednesday when the preliminary estimates of the country's full-year gross domestic product is released. Europe's largest economy is expected to have grown only 0.5 per cent last year, down from 1.5 per cent in 2018. That's according to recent forecasts by the Bundesbank. And it would be the weakest performer by Germany's economy for six years and one of the slowest growth rates in the eurozone, which is expected to increase by 1.1 per cent last year. But there are two sides to this story.
On the one hand, there's Germany's industrial heartland, the manufacturing sector, which has been hit hard by trade tensions, and we've seen exports slowing. But on the other hand, there is the domestically-focused services sector where growth has remained strong. Consumer spending is fairly healthy, helped by record low unemployment and solid wage growth. And as services makes up two-thirds of Germany's economy, that is keeping its economy afloat. The big question, however, for 2020 will be whether the deep downturn in manufacturing spreads to services, or if Germany's industrial heartland recovers in time to avoid this.
Next, to the UK, which, on Monday, releases its gross domestic output data. And it's a figure closely watched to track the health of the economy as the country prepares to leave the European Union at the end of January. Survey data have pointed to a weak end of the year for the UK economy. Brexit uncertainty has harmed business and consumer confidence, and that's led to a stagnation in business investments. Some economists expect the decisive election outcome to reduce uncertainty and boost economic growth, but most forecast the increase in growth to be small.
Economists predict the economy to have contracted 0.1 per cent in the three months to November compared to the previous three months. If their forecast is confirmed, it means that the economy will have slowed down at the end of the year after largely volatile performance during 2019. The economy is already set to have recorded the slowest growth in a decade in 2019, which is a major challenge for the government ahead of the March 11 budget.
Manufacturing output is said to have contracted in November, reflecting the international downturn in the sector, as well as high Brexit uncertainty. Consumer spending has been the most resilient part of the economy so far this year, thanks to a strong labour market, but there are rising concerns that the wage growth and employment growth will slow.
And finally the Women's March in the US gets underway this week as female political activists gathered to protest for the fourth time since President Donald Trump took office. The organisation's website calling on protesters categorically states: "In 2020, we have a chance to finish what we started three years ago and remove Trump from office."
This year, the organisers of the women-led Civil Disobedience Movement have planned a week of action that will address women's roles in each of three key issues - namely, reproductive rights, climate change, and immigration - and culminate in the March on Washington on the 18th of January. There will be hundreds more sister marches around the US and a handful in countries like Belgium, Germany, and New Zealand.
The march follows a controversial period for the organisation, which late last year replaced three inaugural board members who had come under scrutiny for their association with Louis Farrakhan, a black nationalist leader known for making anti-Semitic remarks. In September, Women's March appointed 17 leaders with diverse backgrounds.
And that's what the week ahead looks like from the Financial Times in London.