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Goldman Sachs again lowers its forecast for the US economy

What happens: Over the weekend, the Wall Street bank cut its forecast for American economic growth, which is being closely watched by the investment community. Goldman Sachs now expects the economy to grow 5.6% this year, compared to an earlier estimate of 5.7%. In 2022, growth is expected to grow by 4%, after 4.4%.

It is the second time that Goldman Sachs has revised its forecast for 2021 downwards within two months.

Breakdown: The bank’s economists team said two main factors were responsible for changing their outlook. On the one hand, the Covid-19 aid programs are to be “significantly” discontinued by the end of the year, which will eliminate a source of income for some households.

The other concern is that consumers are not spending enough money on services to make up for a decline in goods spending.

“Consumers’ service spending needs to rebound quickly to offset a decline in goods spending as the latter normalize from its current elevated level,” Goldman Sachs told its clients. “This is likely to prove challenging as long as Covid cases continue to increase, as many people still feel a little uncomfortable doing a lot of activities that were routine before the pandemic.”

It pointed to going to the movies as a sticking point. (The James Bond movie “No Time to Die” grossed $ 56 million at the North American box office over the weekend. That was a subdued achievement for the Bond brand, reports my CNN business colleague Frank Pallotta.)

Goldman Sachs also believes spending could fall as people continue to work from home, and encourages them to prepare their own lunches instead of going to local restaurants.

Another view: For its part, Bank of America was encouraged by spending trends derived from US credit and debit card data. “We believe the recent drop in cases has helped alleviate concerns about Covid,” said Candace Browning, director of BofA Global Research.

The bank found that daycare spending in September was 52% higher than last year and only 13% lower than the same period in 2019, which it called “an encouraging sign”. It also found that travel and entertainment spending “improved”, although the increases were not felt evenly across the country. In Florida, people were far more willing to sacrifice themselves for entertainment than in states like New York and Pennsylvania.

Conclusion: The overall picture for Covid-19 in the US looks a little better, as new infections and hospital stays are on the decline.

“Hopefully it goes further down,” said Dr. Anthony Fauci, the country’s foremost infectious disease expert, on Sunday.

But the country is still reporting around 95,000 new infections every day, which Fauci describes as “way too high”. That makes it difficult for economists to plan the path for the American economy.

Note this area: US banks have a good look at the health of US buyers as they track cash flows. Investors will be closely following their comments on the matter when they report their gains later this week.

Netflix strengthens its retail push with Walmart deal

Netflix (NFLX) not only want you to enjoy his movies and shows more. It also wants you to buy shirts, dolls, and other novelties inspired by its original programs – creating a new source of income for the company as it loses subscribers in North America. The newest: Walmart (WMT) announced Monday that it has entered into a deal with Netflix to sell merchandise items from popular shows on its website, including a “CoComelon” bed set, “Squid Game” t-shirts and back sets made by Reality -Show “Nailed It!”

“Walmart is now the official one-stop shop to bring your favorite Netflix stories home,” said Walmart executive Jeff Evans in a blog post.

The backstory: Netflix launched an online store in June – a sign that the company was interested in adopting the model perfected by competitor Disney, which makes a lot of money with its intellectual property in theme parks and clothing sales.

The Walmart deal shows it is doubling its efforts. That makes sense.

While Netflix is ​​rapidly growing its international subscriber base, particularly in Asia, it lost 433,000 subscribers in the US and Canada between April and June. Partnering with Walmart opens up a new way to generate revenue – and could generate greater interest in its shows among buyers.

Investor Insight: Netflix stocks have struggled to break out this year. But they made a comeback recently, hitting an all-time high last week when investors got excited about the success of the Korean thriller Squid Game (which I devoured even though I’m here to tell you about markets, not that TV). .

“Squid Game can help that [Asia-Pacific] Region, “JPMorgan analyst Doug Anmuth said in a recent customer statement.[And] it’s another example of local content being well distributed around the world. “

Will Russia benefit from the energy crisis?

A global tussle over natural gas has put Russia in a position of power. At least that’s what investors believe.

See here: President Vladimir Putin’s announcement last week that Russia could step in to ease pressure on European energy markets has eased the massive surge in natural gas prices. Meanwhile, the Russian ruble hit a four-month high against the US dollar on Monday, and the country’s main stock index hit a record high.

Rising energy prices could be a boon for Russia’s economy.

“As the world’s largest exporter of pipeline gas and an emerging major [liquefied natural gas] Exporter, Russia appears to be a winner in market tightening, “Vitaly Yermakov, a researcher at the Oxford Institute for Energy Studies, said in a report released last month.

The question arises, however, to what extent the country can realistically increase production. In a recent customer note, Bank of America said that Russian gas giant Gazprom may have “limited” ability to supply additional volumes as it was still working to meet domestic demand. It also “is already producing near a 10-year high”.

Next

In the United States, bond markets are closed on Columbus Day. Shares are traded as usual.

Coming Tomorrow: The latest US job openings as employers in industries like hospitality struggle to fill vacancies.

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