• We got inflation updates from the US which were also somewhat encouraging. Both CPI and PPI came in below expectations. In the CPI report we did see some of what we hoped were transitory pressures (Travel and Lodging, second-hand car prices) subside. On the other hand, there is upward pressure on property costs which will be more sustainable. So, we are likely to have a higher level of inflation but not at some of the extreme levels we have seen in recent months.

• China is a bit more mixed. Q3 GDP missed forecasts as did Industrial Production but much of this occurred in September as power outages spread. So, the weakness is not due to lack of demand. On a positive note, Retail Sales accelerated in September as the number of lockdowns declined.

• The reporting season will capture more of the headlines over the next few weeks and the start has been promising. The consensus forecast is that Q3 earnings for the S&P 500 will be up 30% YoY, 11% higher than at the start of the year. Even over the last four weeks this was increased by 1.6%.

• What we have seen over the last week supports our positioning, a strong growth background with easing in inflation pressures translating into very strong earnings growth. Equities benefit and bonds remain reasonably well behaved. What could derail it is the rampant energy prices and power supply issues. Governments seem alert to the potential growth impact so policies will be implemented to alleviate income pressure from the higher prices. Supply response has been muted so far but that could change and normally does.