US stock markets charged out of the gates this week buoyed by continued optimism on US/China trade talks and what appears to be some clarity surrounding Brexit. The S&P punched through this summer’s all time high amid general strength in global markets. Earnings season got into high gear, providing lots of information for traders to digest heading into Wednesday’s FOMC announcement. As expected on Wednesday, the Fed cut rates by 25bps and also signaled policy is now firmly on hold. Rates fell and the dollar weakened after Chair Powell said it would take a “material” reassessment of the Fed’s outlook to cause the central bank to alter policy at this point.
Thursday saw investors retreat to more of a risk-off posture after overnight reports suggested the Chinese continued to harbor significant doubts that any long-term trade deal is possible with the current administration. The report offered little in terms of new, incremental information and was quickly met with more upbeat tones out of Washington DC. On Friday, the equity breakout gathered steam with NASDAQ making is first new all-time high since July after a surprisingly strong October employment report. On top of better than expected payrolls growth, an upward revision to hourly earnings brought the year-over-year growth rate back up to 3.0%. The consumer looks to be in very solid shape heading into the all-important holiday season. Rates drifted marginally higher, recouping some of the post-Fed decision pull back, helped by a chorus of accompanying Fed commentary that solidified expectations that rate cuts are over for the time being. The S&P500 hit fresh all-time highs, rising 1.5% this week, while the DJIA gained 1.4%, and the Nasdaq added 1.7%.
In corporate news this week, Alphabet kicked off a heavy week of earnings reports with a big profit miss as the company continues to invest in cloud and machine learning infrastructure. Facebook posted beats on its top and bottom line amid solid daily active user growth in North America. Apple surpassed street estimates and issued solid guidance for the holiday quarter, while also noting continued growth in its wearables and services units. Kraft’s quarter surprised to the upside, pointing to a potential turnaround for the beleaguered food company. Fiat Chrysler and Peugeot confirmed renewed plans to merge into what would become the world’s fourth-largest automaker. Alphabet announced it would acquire Fitbit for $2.1B in cash, as the tech giant looks to jumpstart its wearables product line. Tiffany’s confirmed it had received an unsolicited non-binding proposal from LVMH, though mid-week reports indicated deal talks could be currently at a standstill. Twitter’s CEO announced that his social media platform would ban political ads, in sharp contrast to Facebook’s laissez faire policies to political promotions. Microsoft was announced as the winner of DoD’s $10B JEDI cloud computing contract, beating out Amazon.
MON 10/28
HSBA.UK Reports Q3 Net $3.0B v $3.9B y/y, adj Pretax $5.35B v $5.7Be, Rev $13.3B v $13.8B y/y
WBA Reports Q4 $1.43 v $1.41e, Rev $34.0B v $33.9Be; Raises cost savings target to >$1.8B by 2022
*(US) OCT DALLAS FED MANUFACTURING ACTIVITY INDEX: -5.1 V 1.0E
FIT Alphabet reportedly in talks to acquire Fitbit - press
DB1.DE Reports Q3 Adj EBITDA €461.7M v €470Me, Rev €734M v €730Me
GOOGL Reports Q3 $10.12 v $13.06 y/y, Rev $33B (ex $7.5B of TAC) v $32.8Be
TUES 10/29
BP.UK Reports Q3 Adj Net $2.25B v $1.8Be, Rev $68.29B v $72.67B y/y
GM Reports Q3 $1.72 v $1.18e, Rev $35.5B v $34.2Be; Cuts outlook as a result of the UAW strike
*(US) OCT CONSUMER CONFIDENCE: 125.9 V 128.0E
(UK) Parliament approves general election to be held on Thursday, Dec 12th - press
WED 10/30
AIR.FR Reports Q3 Net €989M v €957M y/y, Adj EBIT €1.60B v €1.4Be, Rev €15.3B v €15.9Be
CSGN.CH Reports Q3 (CHF) Net 881M v 813.5Me, adj Pretax 1.14B v 1.30B y/y, Rev 5.33B v 5.2Be
DBK.DE Reports Q3 adj Net -€832M v €229M y/y, adj Pretax -€687M v €506M y/y, Net Rev €5.26B v €5.6Be
066570.KR Reports final Q3 (KRW) Net 345.7B v 748.8B y/y; Op B v 781.1B prelim, Rev 15.7T v 15.7T prelim
BAYN.DE Reports Q3 Adj Net €1.04B v €2.87B y/y, adj EBITDA €2.29B v €2.24B y/y, Rev €9.83B v €9.75Be; Adjusts outlook to exclude discontinued operations
*(DE) GERMANY OCT UNEMPLOYMENT CHANGE: +6.0K V +3.0KE; UNEMPLOYMENT CLAIMS RATE: 5.0% V 5.0%E
*(EU) EURO ZONE OCT BUSINESS CLIMATE INDICATOR: -0.19 V -0.24E
GE Reports Q3 $0.15 v $0.12e, Rev $23.4B v $23.1Be
*(US) OCT ADP EMPLOYMENT CHANGE: +125K V +110KE
*(US) Q3 ADVANCE GDP PRICE INDEX: 1.7% V 1.9%E; CORE PCE Q/Q: 2.2% V 2.2%E
*(US) Q3 ADVANCE GDP ANNUALIZED Q/Q: 1.9% V 1.6%E; PERSONAL CONSUMPTION: 2.9% V 2.6%E
*(DE) GERMANY OCT PRELIMINARY CPI M/M: 0.1% V 0.0%E; Y/Y: 1.1% V 1.0%E
(US) Nevada reports Sept casino gaming Rev $1.06B, +6.8% y/y; Las Vegas strip Rev $584.2M, +7% y/y
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 1.75%; AS EXPECTED
(CL) Chile President Pinera: Chile to cancel the planned APEC Summit in Santiago next month amid ongoing protests - press
*(US) FOMC CUTS TARGET RANGE BY 25BPS TO 1.50-1.75%; AS EXPECTED
(US) Fed Chair Powell: Current stance of monetary policy is 'likely to remain appropriate' as long as model of economy continues to remain accurate; would respond accordingly if events materially affect outlook - FOMC press conf
TWTR CEO: Twitter will ban all political ads globally; final policy to be published on 11/15
(JP) Japan Investors Net Buying of Foreign Bonds: -¥1.02T v +¥536.1B prior week; Foreign Net Buying of Japan Stocks: ¥649.5B v +¥522.3B prior week
*(CN) CHINA OCT MANUFACTURING PMI (OFFICIAL): 49.3 V 49.8E (6th straight contraction)
*(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; (as expected); STRENGTHENS FORWARD GUIDANCE
THURS 10/31
SAN.FR Reports Q3 Business EPS €1.92 v €1.72e, Business Net €2.40B v €2.30B y/y, Rev €9.50B v €9.5Be
RDSA.NL Reports Q3 CCS EPS $0.59 v $0.68 y/y, Adj CCS Net $5.88B v $5.84B y/y, Rev $89.5B v $101.5B y/y
(CN) China said to doubt that any long term trade deal is possible with President Trump - financial press
*(IT) ITALY Q3 PRELIMINARY GDP Q/Q: 0.1% V 0.0%E; Y/Y: 0.3% V 0.2%E
KHC Reports Q3 $0.69 v $0.53e, Rev $6.08B v $6.10Be
(US) Pres Trump: "China and the USA are working on selecting a new site for signing of Phase One of Trade Agreement, about 60% of total deal, after APEC in Chile was canceled do to unrelated circumstances. The new location will be announced soon. President Xi and President Trump will do signing!'
*(US) OCT CHICAGO PURCHASE MANAGER INDEX (PMI): 43.2 V 48.0E (lowest since Dec 2015)
(US) House of Representatives has sufficient votes to pass impeachment inquiry measure (as expected)
*(CN) CHINA OCT CAIXIN PMI MANUFACTURING: 51.7 V 51.0E (3rd month of expansion and highest since Feb 2017)
FRI 11/1
*(UK) OCT PMI MANUFACTURING: 49.6 V 48.2E (6th straight month of contraction, but highest since Apr 2019)
*(US) OCT AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 3.0% V 3.0%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
*(US) OCT CHANGE IN NONFARM PAYROLLS: +128K V +85KE
*(US) OCT ISM MANUFACTURING: 48.3 V 48.9E; PRICES PAID: 45.5 V 50.0E
(US) White House advisor Kudlow: we are working on 'tax cuts 2.0', want tax cuts for the middle class
Thursday saw investors retreat to more of a risk-off posture after overnight reports suggested the Chinese continued to harbor significant doubts that any long-term trade deal is possible with the current administration. The report offered little in terms of new, incremental information and was quickly met with more upbeat tones out of Washington DC. On Friday, the equity breakout gathered steam with NASDAQ making is first new all-time high since July after a surprisingly strong October employment report. On top of better than expected payrolls growth, an upward revision to hourly earnings brought the year-over-year growth rate back up to 3.0%. The consumer looks to be in very solid shape heading into the all-important holiday season. Rates drifted marginally higher, recouping some of the post-Fed decision pull back, helped by a chorus of accompanying Fed commentary that solidified expectations that rate cuts are over for the time being. The S&P500 hit fresh all-time highs, rising 1.5% this week, while the DJIA gained 1.4%, and the Nasdaq added 1.7%.
In corporate news this week, Alphabet kicked off a heavy week of earnings reports with a big profit miss as the company continues to invest in cloud and machine learning infrastructure. Facebook posted beats on its top and bottom line amid solid daily active user growth in North America. Apple surpassed street estimates and issued solid guidance for the holiday quarter, while also noting continued growth in its wearables and services units. Kraft’s quarter surprised to the upside, pointing to a potential turnaround for the beleaguered food company. Fiat Chrysler and Peugeot confirmed renewed plans to merge into what would become the world’s fourth-largest automaker. Alphabet announced it would acquire Fitbit for $2.1B in cash, as the tech giant looks to jumpstart its wearables product line. Tiffany’s confirmed it had received an unsolicited non-binding proposal from LVMH, though mid-week reports indicated deal talks could be currently at a standstill. Twitter’s CEO announced that his social media platform would ban political ads, in sharp contrast to Facebook’s laissez faire policies to political promotions. Microsoft was announced as the winner of DoD’s $10B JEDI cloud computing contract, beating out Amazon.
MON 10/28
HSBA.UK Reports Q3 Net $3.0B v $3.9B y/y, adj Pretax $5.35B v $5.7Be, Rev $13.3B v $13.8B y/y
WBA Reports Q4 $1.43 v $1.41e, Rev $34.0B v $33.9Be; Raises cost savings target to >$1.8B by 2022
*(US) OCT DALLAS FED MANUFACTURING ACTIVITY INDEX: -5.1 V 1.0E
FIT Alphabet reportedly in talks to acquire Fitbit - press
DB1.DE Reports Q3 Adj EBITDA €461.7M v €470Me, Rev €734M v €730Me
GOOGL Reports Q3 $10.12 v $13.06 y/y, Rev $33B (ex $7.5B of TAC) v $32.8Be
TUES 10/29
BP.UK Reports Q3 Adj Net $2.25B v $1.8Be, Rev $68.29B v $72.67B y/y
GM Reports Q3 $1.72 v $1.18e, Rev $35.5B v $34.2Be; Cuts outlook as a result of the UAW strike
*(US) OCT CONSUMER CONFIDENCE: 125.9 V 128.0E
(UK) Parliament approves general election to be held on Thursday, Dec 12th - press
WED 10/30
AIR.FR Reports Q3 Net €989M v €957M y/y, Adj EBIT €1.60B v €1.4Be, Rev €15.3B v €15.9Be
CSGN.CH Reports Q3 (CHF) Net 881M v 813.5Me, adj Pretax 1.14B v 1.30B y/y, Rev 5.33B v 5.2Be
DBK.DE Reports Q3 adj Net -€832M v €229M y/y, adj Pretax -€687M v €506M y/y, Net Rev €5.26B v €5.6Be
066570.KR Reports final Q3 (KRW) Net 345.7B v 748.8B y/y; Op B v 781.1B prelim, Rev 15.7T v 15.7T prelim
BAYN.DE Reports Q3 Adj Net €1.04B v €2.87B y/y, adj EBITDA €2.29B v €2.24B y/y, Rev €9.83B v €9.75Be; Adjusts outlook to exclude discontinued operations
*(DE) GERMANY OCT UNEMPLOYMENT CHANGE: +6.0K V +3.0KE; UNEMPLOYMENT CLAIMS RATE: 5.0% V 5.0%E
*(EU) EURO ZONE OCT BUSINESS CLIMATE INDICATOR: -0.19 V -0.24E
GE Reports Q3 $0.15 v $0.12e, Rev $23.4B v $23.1Be
*(US) OCT ADP EMPLOYMENT CHANGE: +125K V +110KE
*(US) Q3 ADVANCE GDP PRICE INDEX: 1.7% V 1.9%E; CORE PCE Q/Q: 2.2% V 2.2%E
*(US) Q3 ADVANCE GDP ANNUALIZED Q/Q: 1.9% V 1.6%E; PERSONAL CONSUMPTION: 2.9% V 2.6%E
*(DE) GERMANY OCT PRELIMINARY CPI M/M: 0.1% V 0.0%E; Y/Y: 1.1% V 1.0%E
(US) Nevada reports Sept casino gaming Rev $1.06B, +6.8% y/y; Las Vegas strip Rev $584.2M, +7% y/y
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 1.75%; AS EXPECTED
(CL) Chile President Pinera: Chile to cancel the planned APEC Summit in Santiago next month amid ongoing protests - press
*(US) FOMC CUTS TARGET RANGE BY 25BPS TO 1.50-1.75%; AS EXPECTED
(US) Fed Chair Powell: Current stance of monetary policy is 'likely to remain appropriate' as long as model of economy continues to remain accurate; would respond accordingly if events materially affect outlook - FOMC press conf
TWTR CEO: Twitter will ban all political ads globally; final policy to be published on 11/15
(JP) Japan Investors Net Buying of Foreign Bonds: -¥1.02T v +¥536.1B prior week; Foreign Net Buying of Japan Stocks: ¥649.5B v +¥522.3B prior week
*(CN) CHINA OCT MANUFACTURING PMI (OFFICIAL): 49.3 V 49.8E (6th straight contraction)
*(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; (as expected); STRENGTHENS FORWARD GUIDANCE
THURS 10/31
SAN.FR Reports Q3 Business EPS €1.92 v €1.72e, Business Net €2.40B v €2.30B y/y, Rev €9.50B v €9.5Be
RDSA.NL Reports Q3 CCS EPS $0.59 v $0.68 y/y, Adj CCS Net $5.88B v $5.84B y/y, Rev $89.5B v $101.5B y/y
(CN) China said to doubt that any long term trade deal is possible with President Trump - financial press
*(IT) ITALY Q3 PRELIMINARY GDP Q/Q: 0.1% V 0.0%E; Y/Y: 0.3% V 0.2%E
KHC Reports Q3 $0.69 v $0.53e, Rev $6.08B v $6.10Be
(US) Pres Trump: "China and the USA are working on selecting a new site for signing of Phase One of Trade Agreement, about 60% of total deal, after APEC in Chile was canceled do to unrelated circumstances. The new location will be announced soon. President Xi and President Trump will do signing!'
*(US) OCT CHICAGO PURCHASE MANAGER INDEX (PMI): 43.2 V 48.0E (lowest since Dec 2015)
(US) House of Representatives has sufficient votes to pass impeachment inquiry measure (as expected)
*(CN) CHINA OCT CAIXIN PMI MANUFACTURING: 51.7 V 51.0E (3rd month of expansion and highest since Feb 2017)
FRI 11/1
*(UK) OCT PMI MANUFACTURING: 49.6 V 48.2E (6th straight month of contraction, but highest since Apr 2019)
*(US) OCT AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 3.0% V 3.0%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
*(US) OCT CHANGE IN NONFARM PAYROLLS: +128K V +85KE
*(US) OCT ISM MANUFACTURING: 48.3 V 48.9E; PRICES PAID: 45.5 V 50.0E
(US) White House advisor Kudlow: we are working on 'tax cuts 2.0', want tax cuts for the middle class
