Daily Briefing – Wednesday, November 1, 2017
Coming in the midst of a relatively hot earnings season, tomorrow’s not-so-anticipated FOMC meeting is barely causing a ripple. The USD is on its way steeply up and indexes all closed in profit last night. US consumer confidence is at a 17-year high, with the Chicago PMI up to 66.2 (its highest since 2011) and the Dallas business index at 27.6 – up from September’s 21.3. Case-Shiller reported a 5.9% increase in house prices YoY.
Consumer inflation across the Eurozone unexpectedly toppled to 1.4% YoY, even as Q3 GDP beat expectations at 2.5% YoY and unemployment down to 8.9% – all this softening hopes of some easing of ECB quantitative easing. The GBP is up about 30 pips as optimism radiates from Brexit talks. EU chief negotiator Michael Barnier has agreed to speed up negotiations and the British government has finally hired staff to deal with the Brexit aftermath. The Bank of England has warned that London stood to lose about 75,000 jobs in its financial sector. Ahead of tomorrow’s expected rate increase by the Bank of England, HSBC yesterday issued a warning that consumer and corporate spending cold both be hurt by the move – especially considering the impact on mortgage rates.
Following yesterday’s official drop in manufacturing and non-manufacturing PMIs, the privately operated Caixin reading shows Chinese manufacturing as holding at a steady 51 throughout October. South Korean exports also took a beating, and the nation’s trade balance withdrew to $7.3bn. Meanwhile, the Nikkei is at a 21-year high after jumping 2% during the session after the country’s manufacturing PMI rose to a pleasing 52.8. The New Zealand Dollar finally surged nearly a percent as employment data came in last night – unemployment down to 4.6% and the participation rate up to 71.1%. Australia’s manufacturing index, on the other hand, declined in October from 54.2 to 51.1 due to an increase in energy costs and a rising AUD.
Oil added 70 cents on the barrel yesterday, putting Brent at a 2-year high, as the American Petroleum Institute put out a 5-million barrel withdrawal report. Petrol also recorded a 7.7mB drawdown, and distillates, 3mB.
As retail trade soars in China, Alibaba’s quarterly earnings are expected to show $7.82bn in Q3 sales – up 58% from last year’s $4.93bn. That translates into an EPS of 1$1.04 – up from 76 cents YoY. And Facebook also reports today, its shares up 1% yesterday after beating expectations regularly since its IPO 5 years ago, as mobile advertising now accounts for 88% of overall sales. This quarter, expect share earnings to be up 82cents to $1.28 on revenues of $9.85bn – up from last year’s 7. The news for Tesla may not be as good, as its earnings per share are expected to topple from a 4 cent return last year to a $3 loss this year. Although shares are up triple the benchmark rate, a lot is resting on the success of its Model 3. GoPro is expected to show a quarterly earnings loss of 5 cents on the share, up from last year’s 7, and Yelp’s EPS is also expected to be in the red at -0.1 cents to the share.
|12:15 PM GMT||US: Employment Change, followed at 2 by ISM’s Manufacturing PMI, and the Fed’s Monetary Policy & Interest Rates at 6.|
|11:50 PM GMT||Japan: Foreign Investments|
|0:30 AM GMT||Australia: Imports, Exports & Trade Balance.|