Friday, October 27, 2017

Rosy Corporate Earnings and Strong Data Keep Markets Cheerful

TradeTheNews.com Weekly Market Update: Rosy Corporate Earnings and Strong Data Keep Markets Cheerful
Fri, 27 Oct 2017 16:08 PM EST

US indices managed to end the week at fresh all-time highs once again. Early on, outstanding Q3 earnings reports by certain key Dow components propelled sentiment, and by week’s end exceptional results from several of the largest, highest profile technology companies resulted in a fresh breakout for the NASDAQ. Economic data on both sides of the Pond continued to exceed expectations keeping the accelerating global synchronized growth/reflation narrative firmly intact. European preliminary PMI figures inched up to levels not seen for years in most cases, while Friday saw the advance estimate of US Q3 GDP print above 3%, indicating the best six-month stretch of growth seen in three years. Stock volumes picked up noticeably, and several brief spikes in the volatility index were again quickly met with willing buyers driving the VIX back below 10 on Friday. For the week, the DJIA gained 0.5%, the S&P500 added 0.2%, and the Nasdaq surged 1.1%.

Several undercurrents continued to play out and affect trade away from equities and Q3 earnings season. Republicans inched closer to tax reform after the House was able to pass a budget resolution and send it over to the Senate. The news helped keep upward pressure on Treasury yields and buoyed the Dollar. Despite the stronger dollar crude futures continued to rally, with Brent crude breaking above $60/bbl for the first time since mid-2015. By midweek the US 10-year yield had tested the highest levels since March and the Dollar index reached a 3-month high. Spreads between US Treasury and Bunds widened after the ECB, as expected, extended its QE program while reducing the size of the asset purchase targets. Draghi offered little to suggest a rate hike was in the offing leading many to view the news with a dovish tint. By Friday, reports that President Trump was zeroing in on Powell for the Fed chairmanship, along with the uncertainty engendered by the Catalonian government declaring independence from Spain, helped keep a lid on interest rates though the Dollar continued to track higher.

In corporate news this week, the spotlight was on the tech sector, as Google, Intel and Microsoft shares all jumped after announcing strong earnings results. Amazon also posted a big beat, and some reports indicated the online retail behemoth was making moves to enter the wholesale pharmacy space. Twitter rose on user growth numbers and the possibility that it could turn its first-ever profit next quarter. Caterpillar and 3M shares were boosted after earnings blowouts and upbeat outlooks, highlighted by strong demand in Asia. Whirlpool was slammed as raw material cost headwinds accelerated, a trend that showed itself across a multitude of industrial earnings reports. Polaris Industries hit 52-week highs following the release of solid earnings and forecasts, which auger well for consumer discretionary spending heading into the holidays. On the M&A front, Cisco reached a deal to acquire Broadsoft at $55/shr for $1.9B aggregate price, as the networking hardware giant aims to push faster into the collaboration market. Shares of Axalta rose double digit percentages on Friday after a report that it was in early stage merger talks with Akzo Nobel to form a dominant player in the global coatings business.

SUNDAY 10/22
(CN) China End-Sept Property loans outstanding CNY31.1T – PBOC (update)
(CN) CHINA SEPT PROPERTY PRICES M/M: RISE IN 44 OUT OF 70 CITES VS 46 PRIOR; Y/Y RISE IN 67 OUT OF 70 CITIES VS 68 PRIOR

MONDAY 10/23
Foxconn reportedly will ship 25-30M iPhone X devices in Q4 (down from previous forecast of 30-35M) - Chinese press report
(UK) OCT INDUSTRIAL TRENDS TOTAL ORDERS: -2 V +9E
DEL Confirms to combine with Potlatch for EV of $4.0B in all stock deal; Agreement provides for conversion to REIT structure
(EU) EURO ZONE OCT ADVANCE CONSUMER CONFIDENCE: -1.0 V -1.1E

TUESDAY 10/24
NOVN.CH Reports Q3 $1.29 v $1.25e, Core Op $3.38B v $3.35Be, Rev $12.4B v $12.2Be
BAS.DE Reports Q3 adj EPS €1.45 v €1.30e, EBIT (adj) €1.76B v €1.75Be, Rev €15.3B v €15.1Be
(FR) FRANCE OCT BUSINESS CONFIDENCE: 109 V 109E; MANUFACTURING CONFIDENCE: 111 V 110E
(FR) FRANCE OCT PRELIMINARY MANUFACTURING PMI: 56.7 V 56.0E (13th month of expansion and highest since Apr 2011)
(DE) GERMANY OCT PRELIMINARY MANUFACTURING PMI: 60.5 V 60.0E (35th month of expansion)
(EU) EURO ZONE OCT PRELIMINARY MANUFACTURING PMI: 58.6 V 57.8E (50th month of expansion)
AAPL Reportedly will sell half planned iphone X orders (~20M units) this year due to reported issues with the face ID components - Japan press
PII Reports Q3 $1.28 v $1.22e, Rev $1.48B v $1.40Be
GM Reports Q3 $1.32 v $1.07e, Rev $33.6B v $31.6Be
CAT Reports Q3 $1.95 v $1.22e, Rev $11.4B v $10.6Be
HACK Raytheon CEO Kennedy "Equifax breach was tip of the iceberg" - CNBC interview
TXN Reports Q3 $1.26 v $1.12e, Rev $4.12B v $3.92Be

WEDS 10/25
LLOY.UK Reports Q3 PBT £1.47B v £811M y/y, Underlying profit £2.08B v £2.10Be, Total Income £4.62B v £4.28B y/y
HEIA.NL Reports Q3 Organic beer volume +2.5% v 2.8%e
(DE) GERMANY OCT IFO BUSINESS CLIMATE: 116.7 V 115.1E (record high); CURRENT ASSESSMENT: 124.8 V 123.5E V
(UK) Q3 ADVANCE GDP Q/Q: 0.4% V 0.3%E; Y/Y: 1.5% V 1.5%E
(DE) GERMANY SELLS €2.385B VS. €3.0B INDICATED IN 0.50% AUG 2027 BUNDS; AVG YIELD: 0.48% V 0.44% PRIOR; BID-TO-COVER: 1.7X V 1.6X PRIOR
V Reports Q4 $0.90 v $0.86e, Rev $4.90B v $4.62Be
FCX Reports Q3 $0.34 adj v $0.29e, Rev $4.31B v $4.08Be
(US) SEPT PRELIMINARY DURABLE GOODS ORDERS: 2.2% V 1.0%E; DURABLES EX TRANSPORTATION: 0.7% V 0.5%E
(US) SEPT NEW HOME SALES: 667K V 554KE
(US) Atlanta Fed maintains Q3 GDP at 2.7%, unchanged from 10/18
(US) Association of American Railroads weekly rail traffic report for week ending Oct 21st: 560K carloads and intermodal units, +3% y/y
Hynix Semiconductor reports Q3 (KRW) Net 3.05T v 3.0Te; Op 3.7T v 3.8Te; Rev 8.10T v 7.9Te

THURS 10/26
SAN.ES Reports Q3 Net €1.98B v €1.84Be, Rev €12.25B v €12.2B y/y
NOKIA.FI Reports Q3 adj Net €516M v €264M y/y, adj Op €668M v €540Me, Rev €5.54B v €5.64Be
ABI.BE Reports Q3 $1.31 v $1.50e, EBITDA $5.73B v $5.66Be, R$14.7B v $15.4Be
DBK.DE Reports Q3 Net €647M v €279Me, Pretax €933M v €Me, Rev €6.78B v €6.88Be
ORA.FR Reports Q3 EBITDA €3.62B v €3.55B y/y, Rev €10.3B v €10.2B y/y
SU.FR Reports Q3 Rev €5.90B v €6.0Be
BAYN.DE Reports Q3 Net €3.88B (adj) v €1.19B y/y, EBITDA adj €2.20B v €2.12Be, Rev €8.03B v €8.43Be
(DE) GERMANY NOV GFK CONSUMER CONFIDENCE: 10.7 V 10.8E
BARC.UK Reports Q3 adj net £783M v £509M y/y, adj pretax £1.11B v £837M y/y, Core Net rev £5.17B v £5.45B y/y
066570.KR Reports final Q3 (KRW) Net 336B v 315Be; Op 516B v 516.1B prelim; Rev 15.2T v 15.2T prelim
(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT -0.50%; AS EXPECTED; maintains Repo Rate path and current QE bond buying program
2202.HK Reports Q3 (CNY) Net 3.79B v 2.91B y/y, Rev 47.3B v 42.3B y/y
TWTR Reports Q3 $0.10 v $0.06e, Rev $590M v $590Me
F Reports Q3 $0.43 v $0.33e, Rev $36.5B v $32.9Be
(EU) ECB LEAVES 7-DAY MAIN REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED; Extends QE by 9 months until Sept by €30B/month
UPS Reports Q3 $1.45 v $1.44e, Rev $16.0B v $15.6Be
(EU) ECB AMENDS ITS BOND BUYING PROGRAM: TO BUY €30B/MONTH STARTING IN JANUARY; 9-MONTH EXTENSION TO SEPT 2018 (in-line with expectations)
(US) Yellen said to be out of contention for Fed Chair position; Taylor and Powell remain in the race - financial press
(US) Atlanta Fed cuts Q3 GDP to 2.5% from 2.7% on 10/18
AMZN Reportedly received approvals for wholesale pharmacy licenses in 12 states - local press
AMZN Reports Q3 $0.52 v $0.01e, Rev $44B v $42.2Be
MSFT Reports Q1 $0.84 v $0.72e, Rev $24.5B v $23.5Be
GOOGL Reports Q3 $9.57 v $8.43e, Rev $22.3B (ex TAC) v $21.9Be
BIDU Reports Q3 $3.89 v $2.19e, Rev $3.53B v $3.47Be

FRIDAY 10/27
UBSG.CH Reports Q3 (CHF) Net 946M v 827M y/y, Rev 7.15B v 7.03B y/y
CLN.CH Mutually agrees to end planned ~$20B all-stock merger with Huntsman
RBS.UK Reports Q3 Net £606M v -£327M y/y, adj Op £1.25B v £1.05Be, Rev £3.16B v £3.31B y/y; affirms outlook
AAPL iPhone X US ship times hit up to 2-3 weeks as order begin; iPhoneX pre-order supplies sell out, shipping estimates slip drastically - press
3328.HK Reports Q3 (CNY) Net 15.6B v 15.0B, PBT 18.6B v 18.9B y/y, NII 32.1B v 32.6B y/y
MRK Reports Q3 $1.11 v $1.03e, Rev $10.3B v $10.5Be
ICE Sells Trayport to TMX Group for £350M cash; Acquires NGX and Shorcan Energy
(US) Q3 ADVANCE GDP PRICE INDEX: 2.2% V 1.7%E; CORE PCE Q/Q: 1.3% V 1.3%E
(US) Q3 ADVANCE GDP ANNUALIZED Q/Q: 3.0% V 2.6%E; PERSONAL CONSUMPTION: 2.4% V 2.1%E
(US) OCT FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 100.7 V 100.7E
AXTA Akzo Nobel reportedly makes approach about potential merger with Axalta - press