10 things you need to know today
China faces deflation pressures. China's consumer prices climbed by just 1.3% year-over-year, which was much slower than the 1.6% pace in September and the 1.5% expected by economists. Producer prices fell 5.9%. These weak inflation readings open the door for more monetary stimulus from the People's Bank of China.
Portugal's government is about to be ousted by socialists. "Portugal's centre-right government looks likely to be ejected from office on Tuesday evening, only a month after the country's most recent parliamentary election," Business Insider's Mike Bird writes. "A vote of no confidence from the country's parliament is expected to send Prime Minister Pedro Passos Coelho packing, with a left-wing coalition waiting in the wings. The two centre-right parties that formed a coalition after the 2011 election ran under a 'Portugal Ahead' banner in 2015, winning 38.6% of the vote and 106 of the parliament's 230 seats."
The IEA says oil is going to $80. In its World Energy Outlook report, the International Energy Agency predicted that oil prices, which are near $47 a barrel, will rise gradually to $80 by 2020. The agency forecasts prices to rise as drilling capacity tightens.
Small-business optimism goes nowhere. The NFIB's small-business optimism index was unchanged at 96.1 in October, missing expectations for an improvement to 96.4. "The October NFIB survey gave no indication of a resurgence in growth in the small business sector with the Index remaining below the 42-year average of 98," NFIB chief economist Bill Dunkelberg said. "The labor-market components might have held at historically strong levels, but this time owners reported no net growth in employment, which is a significant drop from reports in the previous four months."
Greece can't persuade creditors to release bailout funds. "Greece failed to convince European creditors Monday to release vital bailout funds to shore up the country's public coffers and its crippled banks, but hopes are high that a deal will be concluded within a week," AP's Pan Pylas reported. "There are open issues," eurogroup head Jeroen Dijsselbloem said.
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Goldman Sachs sees a 60% chance the recovery last for four more years. "The current economic expansion is now more than six years old, raising questions about its 'life expectancy,'" Goldman Sachs' Zach Pandl writes. "Fortunately, the historical record suggests the age of the expansion has little bearing on the risks of a downturn - i.e. recession odds are only loosely related to time. Using a dataset on developed market business cycles, we calculate that the unconditional odds that a six-year-old expansion will avoid recession for another four years - and mature into a 10-year-old expansion - are about 60%."
The Fed is on "the knife's edge." During a webcast on Monday afternoon, DoubleLine Funds' Jeffrey Gundlach acknowledged that odds are up that the Federal Reserve hikes interest rates in December. He attributed some of the change to Friday's jobs report, which he said was "pretty good in a number of ways."
Gap warns. The clothing retailer offered some ugly preliminary sales numbers ahead of its official third-quarter earnings announcement. Net sales fell 3% to $3.86 billion, largely because of unfavorable currency moves. "The company noted that the translation of foreign currencies into US dollars negatively impacted the company's reported net sales for the third quarter of fiscal year 2015 by about $98 million, primarily due to the weakening Japanese yen and Canadian dollar," management said. Global comparable-store sales, or sales at stores open at least a year, fell 4% in October, which is worse than the 2% decline expected. Management expects to report earnings of $0.62 to $0.63 per share, weaker than the $0.67 expected by analysts.
Markets are lower. US futures are modestly lower, with Dow futures down 22 points and S&P futures down 2.2 points. Asian markets closed mixed, with Japan's Nikkei up 0.1% and Hong Kong's Hang Sent down 1.4%. European markets are broadly lower, with the UK's FTSE 100 down 0.4%, Germany's DAX down 0.2%, and France's CAC 40 down 0.4%.
Not much data on deck. At 8:30 a.m. ET, we'll get the import price report. Economists estimate import prices slip 0.1% month-over-month or 9.4% year-over-year.