Finger-Pointing

Russian President Vladimir Putin accused Ukraine of carrying out an attack that badly damaged a key bridge linking annexed Crimea to the Russian mainland, his first comments on an episode that further highlighted the woes of his military in the eighth month of its invasion. “The authors, the executors, the commissioners are Ukraine’s secret services,” Putin said at a meeting with Alexander Bastrykin, chairman of Russia’s Investigative Commission, according to a transcript posted on the Kremlin website. Putin will now speak with members of his Security Council on Monday. The event typically gathers top state officials and the heads of Russia’s defense and security agencies to discuss matters of national importance. 

Clash of the Tories

Liz Truss is preparing for battle with her ruling Conservative Party as she gears up for crunch meetings with backbench MPs and her cabinet in a bid to quash any attempt at rebellion just one month into her UK premiership. A poorly-received package of tax cuts and a fractious annual conference sent markets reeling and the prime minister’s ratings plummeting — with warnings from senior Tories that the party could face oblivion in the event of an election. On Wednesday, Truss will directly address her mutinous rank-and-file Tory lawmakers in an attempt to re-assert her authority. Getting her MPs onside is crucial for Truss to advance her growth plan through parliament.

Covid Dilemma

As most of the world moves on from Covid-19, President Xi Jinping is set to trumpet his strict measures to control the virus at China’s once-in-five-year party congress. The question now is how long they can last. Since the initial outbreak emerged in the central city of Wuhan, many people in China have been more or less supportive of mass testing, citywide lockdowns and strict hotel quarantine, but signs are emerging that patience is wearing thin. However, any easing carries big risks and would undermine Xi’s approach both at home and abroad, and risk making him look weak at a time when the Communist Party leadership is facing criticism over a slowing economy. 

Brutal Earnings Season

Investors expect this earnings season to pummel stocks further and will watch Apple in particular as a bellwether of global economic conditions. More than 60% of the 724 respondents to the latest MLIV Pulse survey say this earnings season will push the S&P 500 Index lower. That means no end in sight to the dismal run for stocks, after a tumble Friday decisively dashed hopes that the eye-popping rally early last week would be the start of something bigger. The results underscore Wall Street’s fear that even after this year’s brutal selloff, stocks have yet to price in all the risks stemming from central banks’ aggressive tightening as inflation remains stubbornly high.

Goldman’s Consumer Dream Ends

Goldman Sachs CEO David Solomon once predicted the firm would be a leader in retail banking, like it is on Wall Street. The expansion proved expensive. Solomon, 60, who’s spent much of his four years atop Goldman pitching shareholders and his own executives on the benefits of building a full-service digital bank, is now reeling in those aspirations and the resources dedicated to the project. Cost overruns and missed profitability goals have set off a rising tide of discontent inside the firm, concerned questions from regulators and most worryingly, the dismay of shareholders.

Coming Up…

European shares are poised for a soft start to the week after a strong US jobs print bolstered wagers for more aggressive Fed hikes. The IMF and World Bank kick off annual meetings in Washington. The ECB’s Mario Centeno and Philip Lane speak at events, while the Fed’s Lael Brainard and Charles Evans address a conference. Russian President Putin Vladimir Putin has called a meeting of his Security Council for Monday. Norway and Denmark issue inflation data. It’s a light day on the earnings front.

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(Source: Bloomberg, Oct. 10-2022)