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Two of the world's largest economies risk recession



Investors have recently set aside the pace of global growth, opting for optimism in a "phase one" US-China trade agreement. But dampened economic data expected from Europe this week could change the mood.

Germany may post data on Thursday indicating that it is in recession. Economists surveyed by Reuters believe the world's fourth-largest economy shrank 0.1% between July and September – marking two straight quarters of negative growth.

It is possible that Germany – which has been hit by the trade war, as well as falling global demand for cars – just avoided a bullet. Exports rebounded unexpectedly in September, increasing by 1.5% compared to the previous month. Data from August was also revised upwards.

"With today's data, a technical recession is not yet a done deal," Carsten Brzeski, ING's top German economist, told clients, noting that Germany could have avoided another contraction "until the last minute."

Recession or not, the reality is that Germany's economy, the largest in Europe, looks very weak. A reminder of that can give investors a shock.

"The fact remains that the German economy has been in de facto stagnation for more than a year," Brzeski said. "This is clearly nothing to get too excited about."

Not to be missed: Also on the calendar is Federal Reserve leader Jerome Powell's testimony before the congress on the US economy, which takes place Wednesday and Thursday.

Expect Powell to grill where the Fed goes after three straight "insurance" cuts to interest rates. But he is also likely to face questions about weak production and business investment data ̵
1; and what it tells us about the strength of the world's largest economy.
First: UK will report GDP data on Monday. The country's economy shrank for the first time since 2012 in the second quarter, as global growth and Brexit fears swelled – but economists polled by Reuters believe the country will narrowly avoid a recession by chopping 0.4% growth between July and September.

Walmart shines on the American consumer

It's no secret that the strength of the American consumer has helped support the US economy. Now, here are two fresh data points: Walmart ( WMT ) reports on Thursday's revenue, and the US retail trade for October hit on Friday.

Investors will look to Walmart's results to measure the health of retail on its way into the holiday shopping season, according to my CNN Business colleague Nathaniel Meyersohn. Walmart, the US's largest retailer, is seen as a watch in the consumer economy.

From Nathaniel: "Walmart's shares are trading all the time, so the company will have a high bar to meet with investors. Wall Street expects Walmart to make it easy."

Scene: Walmart has defended its stores against Amazon and squeezed its advantage with middle- and low-income buyers across the country. In recent years, the company has invested heavily in lowering prices, rebuilding stores and expanding pickups and deliveries online, Nathaniel points out.

In the meantime, monthly retail sales are expected to increase 0.2%, compared with a slight decline in September. Will this be enough to ward off the market bears?

"The state of the American consumer has never been healthier," wrote US economist Ellen Zentner's Morgan Stanley to customers Friday.

The streaming wars are heating up with Disney +

Disney ( DIS ) CEO Bob Iger has had a dominant 2019. Take it from my CNN Business colleague Frank Pallotta:
  Disney CEO Bob Iger is taking the biggest risk of his career

"This year alone, Disney's film studio boasted the highest year in boxing history, with months to spare. Its parks and ski resorts opened the biggest expansion ever with the innovative Star Wars: Galaxy & # 39; s Edge. Oh, and on top of all that, he closed the company's $ 71 billion acquisition for most of 21st Century Fox. "

But that won't mean much if Disney +, the company's upcoming streaming service, is not a here. The media industry is evolving rapidly, and Disney, one of the largest media companies on the planet, has to stay ahead of the curve and competition – which now includes Netflix, Apple, Amazon, CNN superiors AT&T and Comcast.

Disney + launches in the US, Canada and the Netherlands on Tuesday. Patrice Cucinello of Fitch Ratings sees the strategy as a clear game to scale up quickly, pointing to $ 6.99 per month and a large amount of content that will be available.

In a research note Friday, Cucinello predicted strong early subscriber growth, in part because Disney can afford to offer discounts and cheap packages. Let the streaming wars begin.

Read more: Disney CEO Bob Iger is taking the biggest risk of his career

Up Next

Monday: UK GDP

Tuesday: Disney + launches; German economic mood; CBS ( CBS ) Overstock ( OSTBP ) Tyson Foods ( TSN ) [19659032] SmileDirectClub ( SDC ) and Tilray ( TLRY ) revenue
Wednesday: Jerome Powell testifies before Congress; US inflation; Canada Goose ( GOOS ) Luckin Coffee ( LK ) Cisco ( CSCO ) revenue
Thursday: Jerome Powell testifies before Congress; Germany GDP; Canopy Growth ( CGC ) Walmart, Weibo ( WB ) NVIDIA ( NVDA ) revenue
Friday: US retail sales; J.C. Penney ( JCP ) and JD.com ( JD ) earnings

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