TradeTheNews.com Weekly
Market Update: Market Tensions High As Earnings Season Starts
Fri, 14 Oct 2016 16:04 PM EST
US indices finished lower for the second straight week as investors' risk
appetite faded heading into earnings season. Preannouncements from the likes of
Honeywell, Dover, Ericsson, and Fortinet continued to spook market
participants, along with a disappointing Q3 report from Alcoa, tempering
expectations ahead of the quarterly deluge that begins in earnest next week.
Friday's strong banking results took some of the sting away but traders
nevertheless remain anxious to hear what managements have to say.
A stronger US Dollar, and in particular, continued selling in the British Pound
served as a further headwind to overall sentiment. After last week's 'flash
crash' in GBP/USD, cable moved back towards 1.20 early in the week before
recovering. Separately, Thursday saw the PBOC set the yuan at the lowest levels
since 2010, which also happened to coincide with a particularly soft September
trade report from China, which sent many commodities tumbling. Some of the
growing rumbling surrounding China dissipated on Friday though, after September
inflation numbers moved notably higher.
Interest rates continued to back up. Markets seem to be getting more and more
comfortable with a December FOMC rate hike, especially in light of the
declining poll numbers for Donald Trump. US data reports were largely in line
with the recent trends headlined by September retail sales and final PPI
figures that generally topped estimates. By Friday various segments of both the
US Treasury and UK GILTS yield curves were reaching the highest levels since
before the Brexit vote. An October preliminary University of Michigan sentiment
miss, that included the lowest 5-year inflation expectation since 1979, and a
somewhat dovish speech from Fed Chair Yellen resulted in steeper US curve into
the close. For the week, the S&P500 fell 1%, the DJIA lost 0.6%, and the
Nasdaq dropped 1.5%.
MONDAY 10/10
(CN) China State Council releases guidelines on lowering companies' leverage
and debt ratios; to allow companies to give equity in themselves to banks in
exchange of lower debt - financial press
(EU) EURO ZONE OCT SENTIX INVESTOR CONFIDENCE: 8.5 V 6.0E
2202.HK: Reports Sept contracted sales CNY25.4B v CNY20.0B m/m
TUESDAY 10/11
IEA Sept Monthly Oil Market Report: Forecast both 2016 and 2017 Global oil demand
growth at 1.2M bpd
(DE) GERMANY OCT ZEW CURRENT SITUATION SURVEY: 59.5 V 55.5E; EXPECTATIONS
SURVEY: 6.2 V 4.0E
AA: Reports Q3 $0.32 v $0.35e, R$5.21B v $5.35Be
(US) Sept Labor Market Conditions Index Change: -2.2 v +1.5e
WEDNESDAY 10/12
005930.KR: Revises Q3 Op KRW5.2T v KRW7.8T prelim, Rev KRW47.0T v KRW49.0T
prelim; Q3 guidance revision reflects effects of Galaxy Note 7 crisis
HUM: Raises FY16 EPS ~$9.50 v $9.28e (prior "at least $9.25"); Raises
Q3 EPS ~$3.15 v $2.88e (prior "at least $2.85"); Reports plan year
membership in 4-Star plans or higher at 37% v 78% y/y
(US) FOMC MINUTES FROM SEPT 20-21ST MEETING: REASONABLE CASE COULD BE MADE FOR
BOTH HIKING AND WAITING
WFC: Chairman/CEO Stumpf to retire; President and COO Sloan to take over as
CEO; effective immediately
(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.25%; AS
EXPECTED; (4th straight pause in current easing cycle)
(CN) CHINA SEPT TRADE BALANCE (USD): $42.0B (6-month low) V $53.0BE; Trade
Balance (CNY): 278.4B (6-month low) v 364.5Be
THURSDAY 10/13
UNA.NL: Reports Q3 Rev €13.4B v €13.2Be
*(US) SEPT IMPORT PRICE INDEX M/M: 0.1% V 0.2%E; Y/Y: -1.1% V -1.0%E
*(US) INITIAL JOBLESS CLAIMS: 246K (matches lowest since 1973) V 253KE;
CONTINUING CLAIMS: 2.05M V 2.050ME
CVTI: Guides Q3 $0.12-0.17 v $0.27e (2 est)
(PE) PERU CENTRAL BANK (BCRP) LEAVES REFERENCE RATE UNCHANGED AT 4.25%; AS
EXPECTED
(CN) CHINA SEPT CPI M/M: 0.7% (7-month high) V 0.1% PRIOR; Y/Y: 1.9% (3-month
high) V 1.6%E
(CN) CHINA SEPT PPI Y/Y: +0.1% V -0.3%E (1st increase in 55 months)
FRIDAY 10/14
JPM: Reports Q3 $1.58 v $1.40e, R$25.5B v $24.0Be
C: Reports Q3 $1.24 v $1.15e, R$17.8B v $17.4Be
(US) OCT PRELIMINARY MICHIGAN CONFIDENCE: 87.9 V 91.8E (lowest since Sept
2015); 5 year inflation expectations 2.4% v 2.6% Sept final reading (lowest
since 1979)
(US) SEPT PPI FINAL DEMAND M/M: 0.3% V 0.2%E; Y/Y: 0.7% V 0.6%E
(US) Weekly Baker Hughes US Rig Count: 539 v 524 w/w (+2.9%) (fourth straight
week of increases)
TWTR: Salesforce CEO: have walked away from Twitter bid; Twitter was not the
right fit - FT
(US) Fed Chair Yellen: 'high pressure' policy may be needed for full recovery
from crisis - comments in Boston
