| Claims and GDP data, ECB decision day, and a mass of tech earnings due. Eco checkWeekly initial jobless claims numbers at 8:30 a.m. Eastern Time are expected to be slightly below last week's 787,000. Continuing claims are seen dropping below 8 million. At the same time the first reading of third-quarter GDP is published, and it is forecast to be a record with annualized growth of more than 30% in the three months to the end of September as the U.S. economy reopened after the pandemic lockdown. Decision dayThe European Central Bank announces its latest policy decision at 8:45 a.m. this morning, followed by a press conference with Christine Lagarde at 9:30 a.m. Until recently this meeting was expected to be little more than a holding pattern until further measures were announced in December, but the very rapidly deteriorating Covid situation in Europe may hasten a move from the central bank. Both France and Germany announced new lockdowns yesterday, while Spain and Italy are considering further measures. Earnings, earnings, earningsThere was a mixed bag of corporate results in Europe with Royal Dutch Shell Plc posting a larger-than-expected profit, while Credit Suisse Group AG earnings missed estimates. Lloyds Banking Group Plc made a profit of more than 1 billion pounds ($1.3 billion) and Volkswagen AG's quarter was boosted by robust demand from China. In the U.S. almost all the tech giants are up today, with results due from Twitter Inc., Facebook Inc., Google parent Alphabet Inc., Apple Inc. and Amazon.com Inc. Markets riseEquities are regaining some of the ground lost in yesterday's rout which saw the S&P 500 Index fall 3.5%. Overnight the MSCI Asia Pacific Index slipped 0.3% while Japan's Topix index closed 0.1% lower. In Europe the Stoxx 600 Index was 0.5% higher by 5:50 a.m. as investors awaited the latest ECB decision. S&P 500 futures pointed to a 1% gain at the open, the 10-year Treasury yield was at 0.781% and gold was little changed. Election updateJoe Biden continues to maintain a solid lead over President Donald Trump in the latest polls with only days left to the vote. The U.S. Supreme Court did not rule in Republicans' favor in two cases brought to force North Carolina and Pennsylvania to stop counting mail-in votes on Nov. 3. The very high level of early voting in Texas means Democrats are now starting to hope they can flip the state. Trump holds rallies in Florida and North Carolina today. What we've been readingThis is what's caught our eye over the last 24 hours. And finally, here's what Joe's interested in this morningFor as long as I've been following markets and the economy, people have been talking about how rates have nowhere to go but up, and how the Fed is largely out of ammo. Then in every downturn, the Fed responds in some powerful fashion and the cycle starts again. However in his latest column for Bloomberg Opinion and then in an appearance with us on TV, former NY Fed President Bill Dudley argued that for real, the Fed is out of firepower this time. At least in the conventional sense, he has a strong point.
The key is to understand how forward guidance works. The Fed has made it clear that it won't hike rates until the economy hits certain employment and inflation benchmarks. There's some ambiguity about where those levels really are, but there's an assumption that we won't be back to pre-crisis levels of unemployment, or see sustained inflation anytime soon, so the market may surmise that there's no chance of a rate hike before 2023. But let's say that things get really bad again. Suppose there's no more stimulus coming, and the hampers the economy much more than people appreciate right now. Well then the market will adjust and conclude that those benchmarks of full employment and inflation won't be met until maybe 2027. So then the curve adjusts and automatically, assumptions about the timing of the next rate hike get pushed.  The beauty of forward guidance is that there's an automatic easing built in if things get worse... the market automatically pushes out the timing of the first rate hike. So in a sense, there's not much *more* that can really be done, when the existing policy automatically gets easier with every setback. All that being said, there is probably more the Fed can do outside the rates world, by making money more available or enticing to small businesses, state and local governments and so on. But simply from an adjusting rates standpoint, credible forward guidance is about as strong as it gets. Joe Weisenthal is an editor at Bloomberg. The world's most influential leaders will be there. Will you? Click here to join Bloomberg New Economy Forum for a virtual Global Town Hall on November 16-19 and be part of change in real time. Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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