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Forex Blog - US Market Update (TTN)
US Market Update
Dow -115 S&P -11 NASDAQ -28
- (US) ICSC/GS weekly chain store sales w/e Oct 16th: -0.7% w/w; +1.7% y/y
- (PD) Poland Sept Sold Industrial Output M/M: 13.2% v 13.3%e; Y/Y: 11.8% v 11.4%e
- (PD) Poland Sept Producer Prices M/M: +0.1% v -0.1%e; Y/Y: 4.3% v 4.2%e
- (US) Sept Housing Starts: 610K v 580Ke; Building Permits: 539K v 575Ke
- (US) Redbook Retail Sales w/e Oct 16th: +2.6% y/y; MTD: +0.2% v Sept
- (BE) Belgium Oct Consumer Confidence: -2 v -4 prior
- (BR) Brazil Sept CAGED Formal Job Creation: 246.9K v 300.0Ke
- (CA) Bank of Canada (BOC) left its key Overnight Rate unchanged at 1.00%; As expected
- This morning's surprise PBoC rate hike and a brace of disappointing earnings reports are weighing heavily on equity indices and commodities while forcing the Greenback higher. China raised interest rates for the first time for nearly three years as it continues its exit from support for the economy. In earnings, investors were disappointed with aspects of earnings from Apple, IBM and Bank of America, among others, even as headline numbers met or exceeded expectations. The September housing starts data showed a surprising gain, with strength seen in single home starts, for the strongest report in the series since April. However Sept building permits missed expectations and fell on a m/m basis, with many analysts troubled by the widening spread between the two key forward-looking housing market indicators. The Fed's Evans reiterated his belief there is evidence the US has entered a liquidity trap while both he and New York Fed Governor Dudley reiterated tacit support for further Fed asset purchases. Precious metals have fallen sharply in the wake of the China decision, with December gold trading at $1,340. Oil is right at the bottom of the range seen over the last two weeks, just above $81. US Treasury prices have pared some early losses keeping the benchmark 10-year yield right around 2.5%.
- Apple delivered another quarter of impressive earnings outperformance in its Q4 report. The firm's top and bottom lines predictably exceeded analysts' expectations, and understated EPS guidance for next quarter predictably came in below par. Note that although iPhone shipments may have grown a whopping 91% on a y/y basis, analysts are disappointed that iPad shipments were lower than the Street had expected. After the data, iSuppli forecasted that Apple would ship 43.7M iPads in FY11. IBM came in modestly ahead of Q3 estimates and raised its 2011 outlook. There were a few troubling lines in its report, however, with signed service contracts down on a y/y and q/q basis and outsourcing revenues down sharply over year-ago levels. The company blamed some late signings, but investors were spooked nonetheless. AAPL is down 2%, while IBM is down more than 3%.
- Third-quarter numbers from Goldman Sachs were solid, although the picture was more mixed with Bank of America. Both Goldman's earnings and revenue beat the Street, although the firm's trading revenue fell on a q/q and y/y basis for a second quarter in a row. BoA posted a $10.4B write-down tied to new financial regulations in Q3, leading to another quarter of losses. On an operating basis, the bank earned $0.27/shr, well ahead of expectations, while revenue was in line. According to CEO Moynihan, BoA made money every trading day in trading operations and saw further stabilization in its loan book and in loan quality across the board. After falling as much as 2% in early trading, BAC is back in the black, while shares of GS are up more than 2.5%, leading the banks higher in mid morning trade. In other financial sector earnings, both Bank of New York and Zions Bancorp met expectations, in part on much lower loss provisions.
- Dow components Coca Cola and Johnson & Johnson both disclosed relatively staid Q3 results, with quarterly performance in line with analysts' estimates. Defense major Lockheed Martin missed revenue targets and cut its 2010 outlook due to the sale of certain units. KO is flat, while shares of JNJ are down 1.5%. United Health, the first major managed care name to report, did very well, crushing EPS targets, beating on revenue and raising its 2010 outlook. Nevertheless, UNH is down 2.5%.
- Central bank actions are weighing heavily on global markets during the New York session. The rate move by China's central bank pulled the carpet out from under the appetite for risk. The rate hike comes ahead of China's September GDP and inflation reports (due on Wednesday), although the move was initially viewed as a gesture ahead of this weekend's G20 finance ministers' meeting. Commodity-related and emerging markets were initially the most affected by the rate move. The Bank of Canada left rates unchanged (as expected) but lowered its 2010 and 2011 growth forecasts. The BoC now expects the economic recovery to be more gradual than it had projected in its July Monetary Policy Report. In the US, Fed members were vocal in renewed calls for possible QE2, helping to smooth the bullish tone of the greenback.
- With investors fleeing risk, the dollar strengthened against major pairs. EUR/USD tested below the 1.38 handle while GBP/USD tested below 1.57 (aided by a weak CBI industrial data). The environment seemed ripe for possible BoJ currency intervention as the USD/JPY nudged up to approach the 82 level, but no signs of action were even remotely seen.
- 11:00 (EU) ECB's Costa Speaking in Frankfurt
- 11:30 (US) Fed's Lockhart to Speak on Economy
- 12:50 (US) Fed's Fisher Speaks in New York
- 13:20 (US) Kocherlakota Speaks in Fargo, North Dakota
- 15:00 (BR) Brazil Sept Tax Collections (BRL) 62.6Be v 62.7B prior
- 16:30 (US) EIA Energy Inventories
- 16:00 (US) Fed Gov Bernanke Gives Brief Remarks in Fairfax, Virginia
- 17:00 (US) ABC Consumer Confidence w/e Oct 17th: No est v -45 prior
- 17:00 (CO) Colombia Aug Industrial Production Y/Y: 5.5%e v -0.2% prior; Retail Sales Y/Y: 12.3%e v 13.8% prior
- 18:00 (PD) Polish Central Banker Belka,
- 18:00 (HU) Hungarian Central Banker Kiraly Speaks
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