الأسبوع المقبل: أسبوع حافل للاقتصاد الأمريكي

يقبل علينا أسبوع آخر مزدحم في عالم الشؤون المالية. تشمل أهم موضوعات هذا الأسبوع مؤشرات الاقتصاد الأمريكي وقراءات الناتج المحلي الإجمالي المتقدمة للربع الثالث وبيانات نفقات الاستهلاك الشخصي الأساسي لشهر سبتمبر. من جهة البنوك المركزية، يتحدث البنك المركزي الأوروبي وبنك كندا بينما تضارب الأسواق على ارتفاعات السعر المحتملة. يستمر أيضًا موسم الأرباح مع أكثر الأسابيع ازدحامًا هذا الفصل حتى الآن.

التعافي الأمريكي في بؤرة الاهتمام مع صدور تقارير الناتج المحلي الإجمالي للربع الثالث ونفقات الاستهلاك الشخصي الأساسي

لقد كان التضخم هو الشأن الساخن في الاقتصاديات العالمية والأمريكية في أغلب العام. وقد ازدادت أهميته بصورة إضافية مع بدء الاقتصادات في الخروج من الجائحة.

يصدر يوم الجمعة مؤشر التضخم الذي يفضله الفيدرالي، مؤشر نفقات الاستهلاك الشخصي الأساسي، ليقيس تضخم السلع الاستهلاكية في سبتمبر.

أظهر أغسطس زيادة بنسبة 0.4% في نفقات الاستهلاك الشخصي، وهو ما كان متماشيًا بوجه عام مع التوقعات. وبعيدًا عن الطعام والطاقة، وقف مؤشر نفقات الاستهلاك الشخصي الأساسي عند 0.3% في الشهر الماضي. وشكل هذا أيضًا ارتفاعًا بنسبة 3.6% عام مقابل عام في أغسطس.

رأي الفيدرالي الرسمي هو أن قفزات الأسعار مؤقتة. ربما يكون محقًا. فقد انخفضت مكاسب نفقات الاستهلاك الشخصي الشهرية بصورة أساسية إلى النصف منذ ارتفاع أبريل البالغ 0.6%. وتدعم هذا الزعم المؤشرات الأخرى، مثل المعدل المتباطئ لنمو مؤشر سعر المستهلك.

يصدر أيضًا معيار رئيسي آخر لتعافي الولايات المتحدة الاقتصادي هذا الأسبوع. حيث تُنشر أرقام الناتج المحلي الإجمالي المتقدم الفصلي للربع الثالث يوم الخميس. دون شك، يتطلع الفيدرالي والبيت الأبيض إلى أن يتجاوز النمو التوقعات بعد الربع الثاني المخيب للآمال.

أظهرت أرقام الناتج المحلي الإجمالي للربع الثاني في البداية أن الناتج المحلي الإجمالي للولايات المتحدة قد تمدد بنسبة 6.3%، بالرغم من مراجعته بالزيادة في التقرير النهائي إلى 6.7%. وقد توقع Dow Jones نموًا بنسبة 8.2% في الربع الثاني.

أقل ما يقال عن توقعات الربع الثالث لعام 2021 إنها مختلطة. ففيدرالي أطلنطا، الذي توقع نموًا بنسبة 5.7% من قبل، قد خفض توقعه لنمو الربع الثالث إلى 0.5% فقط.

إن Goldman Sachs أكثر تفاؤلًا بكثير، لكنه قد خفض أيضًا توقعاته للنمو. فقد توقع فيما سبق نموًا بنسبة 6.2% في الربع الثالث. والآن، يبدو المستوى أقرب إلى 5.7%.

استمرارًا مع Goldman، يذكر البنك تقارير الوظائف الضعيفة وتأثير المتحور دلتا كأسباب للنمو المتباطئ. بصورة واقعية، فإن الناتج المحلي الإجمالي الأمريكي كان سيتباطأ في كل الأحوال مع بلوغ الاقتصاد ما يشبه الوضع الطبيعي فيما قبل الجائحة.

مراقبة البنوك المركزية: البنك المركزي الأوربي وبنك كندا يتحدثان اليوم

يبدو أن البنك المركزي الأوروبي واقع في مشكلة، إذا صدقنا التقارير. وفقًا لاستبيان Deutsche Bank الذي أُجري على 600 مستثمر، يتوقع 42% أن يبقى البنك المركزي الأوروبي مسالم أكثر مما يجب لمدة أطول مما يجب.

قال أندريا إنريا، رئيس المجلس الاستشاري للبنك المركزي الأوروبي، إن الحرص ما زال هو الشعار، بالرغم من الإشارة إلى أن التطلعات الاقتصادية للاتحاد الأوروبي آخذة في التحسن.

وتشير نماذج داخلية غير منشورة إلى أن التضخم قد يبلغ هدف البنك المركزي الأوروبي المتصور البالغ 2% قبل عام 2025. بناء على هذا قد تُرفع المعدلات في وقت أبكر من المتوقع. لقد بدأ بعض المستثمرين في التسعير بمعدلات أعلى في بداية عام 2023.

يقول صانع سياسة البنك المركزي الأوروبي بابلو هرنانديز دي كوس إن رفع المعدلات ليس قريبًا بعد. فهو لا يرى أي تغييرات في معدل البنك الأساسي حتى 2023 في أقرب تقدير. ربما يكون بعض المستثمرين قد بدأوا التسعير بناءً على هذا بالفعل.

قد يتسبب هذا في مشاكل لبعض بلدان جنوب أوروبا غير القادرة على إبقاء المعدلات منخفضة لأكثر من ذلك، وفقًا لماركوس فروهاوف من Germany daily FAZ.

هل تتشكل أزمة ثقة في البنك المركزي الأوروبي؟ يُزعم أن الارتفاع التضخمي يؤثر على العناصر الأفقر في الاتحاد الأوروبي أكثر مما يؤثر على البلدان الأغنى. البنوك المركزية المستقلة، مثل الفيدرالي أو بنك كندا، لديها رفاهية القدرة على العناية بأنفسها بصورة أساسية، بدلًا من الالتزام بالخط المالي المرسوم في بروسل.

سيكون من المثير رؤية طريقة معالجة البنك لهذه التحديات، وإذا كان هناك أي إشارة إلى تغير في المعدلات، فستُذكر بالتأكيد في مؤتمر البنك المركزي الأوروبي المنعقد يوم الأربعاء.

بالحديث عن رفع معدلات الفائدة المبكر، يمكن لبنك كندا أن يستعد على الأرجح لذلك. سنعرف المزيد حول موقف بنك كندا يوم الأربعاء، لكن الاقتصاديين يعتقدون أننا سنرى الأمور تتغير في الشمال الأبيض العظيم في أبريل.

يعتقد ديفيد ولف من Fidelity والمستشار السابق لبنك كندا أننا سنرى المعدل يرتفع في ذلك الوقت. تقارير الوظائف القوية والتضخم الجائر، الذي يقبع عند ضعف مستوى بنك كندا المستهدف البالغ 2%، قد يدفعوا الحاكم تيف ماكلم.

يعتقد أيضًا Wells Fargo أننا سنرى تحرك المعدل الكندي في العام القادم.

قال بنك الاستثمار في بيان، «نتوقع أيضًا أن يبدأ بنك كندا في رفع معدلات فائدة سياسته في 2022، حيث يبدأ برفع مبدئي للمعدل قدره 25 نقطة إلى 0.50% في اجتماع السياسة النقدية المنعقد في يوليو 2022، ورفعها مرة أخرى بمقدار 25 نقطة خلال الربع الرابع لعام 2022». «فيما يتعلق برفع المعدلات الأولي، نعتقد أن المخاطر تميل نحو ارتفاع قريب أكثر منه بعيد. نرى أيضًا ارتفاعات متعددة للمعدل في 2023 ونتوقع تشديد متراكم قدره 75 نقطة خلال ذلك العام».

تدعو الأصوات المتشددة إلى تعديل المعدل. دعنا نرى ما الذي سيقوله بنك كندا هذا الأسبوع.

أسبوع قادم زاخر بالأرباح

لا تنس أن موسم الأرباح ما زال قائمًا في وول ستريت. يتعين لهذا الأسبوع أن يشكل تواريخ إصدار التقارير الخمسة الأكثر ازدحامًا في الربع المقبل، مع صدور تقارير العديد من شركات التكنولوجيا الكبيرة.

ستكون Amazon وApple وTwitter وFacebook وSpotify من بين شركات التكنولوجيا الكبرى التي تصدر تقاريرها هذا الأسبوع. سنشهد أيضًا العديد من أعمال السلع الاستهلاكية سريعة الحركة، مثل Coca-Cola تصدر تقاريرها أيضًا.

لمزيد من المعلومات عن أي الشركات تصدر تقاريرها ومتى تفعل، تأكد من تفقد تقويمنا لموسم الأرباح الأمريكي.

أهم البيانات الاقتصادية لهذا الأسبوع

Date  Time (GMT+1)  Asset  Event 
Mon 25-Oct  9:00am  EUR  German ifo Business Climate 
       
Tue 26-Oct  3:00pm  USD  CB Consumer Confidence 
  3:00pm  USD  Richmond Manufacturing Index 
Wed 27-Oct  1:30am  AUD  CPI q/q 
  1:30pm  AUD  Trimmed Mean CPI q/q 
  1:30pm  USD  Core Durable Goods Orders m/m 
  1:30pm  USD  Durable Goods Orders m/m 
  3:00pm  CAD  BOC Monetary Policy Report 
  3:00pm  CAD  BOC Rate Statement 
  3:30pm  CAD  Overnight Rate 
  3:30pm  OIL  US Crude Oil Inventories 
  Tentative  CAD  BOC Press Conference 
       
Thu 28-Oct  Tentative  JPY  BOJ Outlook Report 
  Tentative  JPY  Monetary Policy Statement 
  Tentative  JPY  BOJ Press Conference 
  12:45pm  EUR  Monetary Policy Statement 
  12:45pm  EUR  Main Refinancing Rate 
  1:30pm  EUR  ECB Press Conference 
  1:30pm  USD  Advance GDP q/q 
  1:30pm  USD  Advance GDP Price Index q/q 
  1:30pm  USD  Unemployment Claims 
  3:00pm  USD  Pending Home Sales m/m 
  3.30pm  GAS  US Natural Gas Inventories 
       
Fri 29-Oct  9:00am  EUR  German Prelim GDP q/q 
  1:30pm  CAD  GDP m/m 
  1:30pm  USD  Core PCE Price Index m/m 
  2:45pm  USD  Chicago PMI 
  3:00pm  USD  Revised UoM Consumer Sentiment 

 

أهم تقارير الأرباح لهذا الأسبوع

Mon 25 Oct  Tue 26 Oct  Wed 27 Oct  Thu 28 Oct  Fri 29 Oct 
  3M Co (MMM)  Automatic Data Processing (ADP)  Caterpillar Inc (CAT)   AbbVie (ABBV)  
  General Electric (GE)   Boeing (BA)  Keurig Dr Pepper (KDP)   Alibaba (BABA)  
  Advanced Micro Devices (AMD)  CME Group (CME)  Mastercard (MA)   Aon (AON) 
  Alphabet Inc C (GOOG)  Coca-Cola Co (KO)  Merck & Co Inc (MRK)   Chevron (CVX)  
  Alphabet Inc A (GOOGL)  General Motors (GM)   Newmont Goldcorp (NEM)   Exxon Mobil (XOM)  
Facebook (FB)  Microsoft Corp (MSFT)  The Kraft Heinz Co (KHC)   Shopify (SHOP)   Berkshire Hathaway (BRK.B) 
  QuantumScape (QS)  McDonald’s Corp (MCD)   Takeda Pharmaceutical (TAK)    
  Twitter Inc (TWTR)  Spotify Technology SA (SPOT)   Amazon.com Inc (AMZN)    
  Visa Inc Class A (V)   Ford Motor Co (F)   Apple Inc (AAPL)    
    Pinterest (PINS)  Gilead Sciences Inc (GILD)    
    Teladoc Health (TDOC)  Starbucks Corp (SBUX)    
    Twilio (TWLO)     

Earnings season: Tesla drives through Q3 with another earnings beat

Despite supply shortages, Tesla comes out on top with another record-breaking earnings quarter.

Tesla earnings

Tesla’s headline stats

It’s another expectation-beating quarter for Elon Musk’s Tesla.

The electric carmaker was buoyed by record deliveries in Q3. This translated into higher net income and better margins. Tesla appears to have found chipsets no one else can locate, giving it the edge over its rivals as the world experiences a global computer chip shortage.

The key takeaways from Tesla’s Q3 2021 earnings are:

  • Earnings per share – $1.86 vs. $1.59 estimated
  • Revenue – $13.76 billion vs $13.63 billion estimated

In income terms, Tesla reported net income of $1.62bn. This is the second consecutive quarter the auto manufacturer has reached a $1bn income quarter. It only goes to show just how far Tesla has come. Last year, third quarter net income totalled $330m.

It was reported at the start of October that Tesla vehicle deliveries had outstripped Wall Street estimations. According to Tesla, it delivered 20% more vehicles against Q2 for a total of 241,300. Its Model Y and Model 3, more “affordable” cars, were the most popular models. Ultimately, Q3 vehicle deliveries were up 73% year-on-year.

Analysts had forecast that Q3 deliveries would stack up at 229,242 vehicles.

Gross margins improved from 26.6% overall and 30.6% for Tesla’s main automotive business – another record-breaking metric for Elon Musk’s brand.

Tesla also generated $806 million in revenue from its energy business, which combines solar and energy storage products, and $894 million in services and other revenue. Other revenue comprises maintenance, insurance and merchandise.

Tesla insiders show pre-earnings sell off

In a move that may signal something greater (but also maybe not), Tesla insiders began selling shares prior to the company’s third quarter earnings release.

As you can see from the below, Tesla company insiders have been releasing stocks. Over 450m Tesla stocks have been sold over the past 3 months, worth $7.1m. Compare that with buys of just 764,446.

Tesla inside earnings tool results.

Could this be part of a broader trend? Is Musk planning to sell some of his own Tesla holdings? It’s hard to say at this stage, but it’s worth keeping an eye on.

Tesla stock fell 1.5% in after-market trading. As of Thursday morning, the stock was still relatively flat, trading at $866.56. On the whole, Tesla shares are up around 23% across 2021.

According to the Markets.com analyst recommendations tool, Tesla holds a neutral rating.

Tesla analyst recommendations chart.

Contrasting with that is news sentiment which places Tesla in a firmly bullish position.

Tesla news sentiment rating.

Where next for Tesla?

Tesla is in the process of expanding its production capabilities with new factories under construction around the world.

“There’s quite an execution journey ahead of us,” Chief Financial Officer Zachary Kirkhorn said in the brand’s quarterly earnings call.

The centrepiece of its expansion plans is its Berlin “Gigafactory”. The $7 billion project could see cars start rolling off the production line in the next month, but there are still global parts shortages and high commodities prices to contend with.

This didn’t seem to really hold Tesla back in the third quarter. The EV builder seemingly has the ability to pull parts, chipsets, and micro components out of thin air.

“Q4 production will depend heavily on availability of parts, but we are driving for continued growth,” Kirkhorn said.

Also expect to see acceleration of the so called “Full Self-Driving Systems” Tesla is developing. As we reported yesterday, this new tech has its fair share of detractors, not least the National Highway Traffic Safety Administration. The self-driving technology is already under investigation by the NHTSA, and some Tesla fanboys/girls see this as an attack on the brand.

Others just don’t want to see a repeat of several fatal incidents caused by Tesla vehicles on autopilot. It’s imperative Tesla gets this right, otherwise there good be a major clampdown on its autopilot ambitions. But if people are getting hurt, or being killed, by wayward Tesla cars, it’s only right to take a cautious approach.

Let’s mention batteries. Tesla says it is about to make a switch to its standard-range models who currently use a lithium-ion battery with a nickel cathode. Tesla says it will start using a lithium iron phosphate (LFP) mix. Basically, iron is more abundant than nickel. It should make it easier for Tesla to source supplies.

The end goal, says Tesla VP of Powetrain and Energy Engineering Drew Baglino, is to localise battery and car production.

Some supply and critical safety challenges to overcome then for the world’s most valuable car maker.

S Q3 earnings season is in full swing. Stay tuned for more updates. In the meantime, check out our earnings calendar to see which megacaps are reporting and when.

Stocks look heavy, Barclays down despite beat, Unilever rallies on prices

Caution is the order of the day…European stock markets fell moderately in early trade as the risk-on rally that powered Wall Street to fresh all-time highs ran out of steam overnight. Major bourses –0.5%, with the FTSE 100 under 7,200 again and the DAX under 15,500. The yen rose and Japanese equities fell, leading a broad decline in Asian equities overnight as Evergrande shares resumed trading and promptly plunged 13%. US futures are lower after the Dow Jones industrial average recorded a fresh all-time high and the S&P 500 notched is sixth daily gain on the bounce as investors looked through inflation and central bank fears to better earnings.

The Dow rose to a record intra-day high of 35,669.69, but finished the day 0.1% off its record close, gaining 0.4% for the session. As noted here recently, it might just be that the market has passed peak in/stagflation worries, even if the situation is going to be evident in the real economy for many months to come. Earnings are generally beating expectations – 84% so far according to FactSet. As commented on last night, growth is stalled – the Atlanta Fed’s Q3 GDP estimate is down to just 0.5% from +6% in the summer; inflation is running at +5% at least – German producer price inflation is running above 14%; and the yield curve is inverting, but ‘stonks’ just keep on rising. Rates flattish close to multi-month highs today – as noted yesterday there has been some mild steepening in yields, 2s/10s at 1.25%, 5s30s at 0.96.

Travel stocks are doing a little better in early trade with IAG, EasyJet +1% after posting sizeable losses yesterday as the UK signalled it could reintroduce some restrictions, whilst rising case numbers will make the country less accessible to many foreigners.

Oil is a little lower this morning after moving to fresh multi-year highs overnight – WTI just a shade under $84, Brent hitting $86 a barrel. US inventories were bullish with big draws for distillates and gasoline. Global inventories still falling, India is again calling on OPEC to pump more. Reports indicate Exxon is debating abandoning some of its biggest oil and gas projects.

Tesla earnings beat expectations, but the stock fell. Insiders have been selling the stock ahead of the earnings release, which maybe tells you something. EPS rose to $1.86 vs $1.59 expected on a record revenue quarter. gross margins improved – 30.5% for its automotive business and 26.6% overall. Vice president of vehicle engineering Lars Moravy struck a more conciliatory tone about the NHSTA than his boss: “We always cooperate fully with NHTSA.”

Unilever products are just about everywhere in just everyone’s homes. So, when they raise prices it usually affects a lot of people. Unilever raised prices by an average 4.1% in the third quarter across all its brands, helping it to achieve underlying sales growth of 2.5% despite sales volume declining 1.5%. Turnover rose 4%. The company said it is taking action to “offset rising commodity and other input costs”. Share rose over 2%, delivering a boost to the FTSE 100.

Barclays said profits doubled in the third quarter as a strong performance at its investment bank and further reduction in Covid-era impairments boosted earnings. Attributable profit rose to £1.45bn, up from $611m for the same quarter last year. Return on tangible equity returned to a more normal 11.9% from the 18.1% in the previous quarter. Provisions for loan losses fell to £120m as the economic recovery continues to ease pressure on banks.

CEO Jes Staley touted “the benefits of our diversified business model” as Barclays posted its highest Q3 YTD pre-tax profit on record in 2021. Pre-tax profits at the investment bank rose a mighty 51% to £1.5bn, well ahead of expectations. Staley also pointed to consumer recovery and better rate environment. But does Barclays get enough credit for the investment bank earnings? Despite driving the performance in a fashion similar to some of the big Wall Street beasts it seeks to emulate, shares continue to trade at a hefty discount. Barclays trades at a price to book of about 0.5, whilst US peers are above 1, with BoA at about 1.5 and JPM closer to 2. But if investment banking revenues were not that sustainable and ‘can’t be counted on for future quarters’, why do it? Certainly they are more volatile quarter to quarter – revenues from equity trading, M&A and advisory fees cannot be counted on in the coming quarters to the same extent that mortgage fees and credit card fees might be. But discounting these entirely seems like a mistake by investors. Barclays rightly touts its more diversified revenue stream. When consumer and business growth markets are strained – like during the pandemic – volatility in financial markets creates a good environment for trading revenues to prosper. Barclays is reaping the benefits.

After a softer day on Wednesday, the dollar is a tad firmer this morning as risk is on the back foot. Yen also stronger. GBPUSD tests 1.38 support – daily candles suggest near-term top put in at 1.3830 area and maybe calling for pullback towards lower end of the rising channel. Hourly chart points to declining momentum. Test at 1.3740 for bulls.

GBPUSD Chart 21.10.2021

Earnings season: Netflix plays the Squid Game, wins subs beat

Netflix leverages a content backlog into millions of new subscribers according to its Q3 2021 earnings report.

Netflix earnings

Netflix’s headline stats

It’s been a good quarter for Netflix. New subscribers keep flooding in, seemingly attracted by new event TV shows, such as the global smash Squid Game. What’s more, Netflix’s EPS beat estimates too.

The key takeaways from Netflix’s third quarter earnings report are:

  • Revenues – $7.48 billion vs $7.48 billion forecast
  • Earnings per share (EPS) – $3.19 vs $2.56 estimated
  • New global paid subscription additions – 4.4 million vs 3.84 million forecast

The important thing to note here is the growth of new paid subscribers. These are Netflix’s bread and butter. Users may have been attracted to the streaming platform thanks to a large chunk of new shows and movies finally hitting Netflix. The pandemic appears to have created a significant backlog of content which is now making its way onto release schedules.

South Korean dystopian horror series Squid Game is the standout here. The show has been getting rave reviews and may become a significant draw going forward. According to Netflix, 142 million households watched Squid Game in its first four weeks.

“Like some of our other big hits, Squid Game has also pierced the cultural zeitgeist, spawning a Saturday Night Live skit and memes/clips on TikTok with more than 42 billion views,” the company said. Demand for consumer products related to the show is high, it added.

Netflix’s official guidance for subscriber numbers in Q4 is eight million – nearly double that of Q3. Is that overly optimistic? Maybe, but we are approaching winter in the Northern Hemisphere. Shorter days and colder temps may lead to an uptick in subscribers as people stay inside during winter conditions.

There is yet more content to come.

“We’re in uncharted territory,” Netflix co-CEO Reed Hastings said. “We have so much content coming in Q4 like we’ve never had, so we’ll have to feel our way through, and it rolls into a great next year also.”

Netflix share performance

As we can see, Netflix’s earnings per share levels beat expectations in Q3, coming in at $3.19 against $2.56 forecast by Wall Street.

Shares did drop 1% after the bell yesterday, however. It’s interesting. Achieving sustainable subscription growth is one of the cornerstones of Netflix’s business. You would have thought, after posting subscription and EPS beats, the firm’s shares would have grown.

As of Wednesday morning, Netflix shares are back in the green, trading for around $640.88 at the time of writing.

Where next for Netflix?

Netflix’s next frontier is gaming.

The streamer said it has begun testing video game streaming, possibly in a similar way to Microsoft’s cloud-based Game Pass service, in certain countries.

It’s still very early days for this, but Netflix subscribers may soon be able to play some form of video games via their TVs. It’s unlikely Netflix will be launching a console to compete with Sony, Nintendo, or Microsoft.

Personally, I can’t see them making great strides in this sphere. Gaming is already a highly competitive environment as it is, and Microsoft’s Game Pass has been a bit of a major market disruptor.

It would take a lot for Netflix to really make an impact on the gaming world, at least in the form of triple A titles, in my view. Mobile and app-based games are probably the way to go.

But with 200 million subscribers – double Xbox Live’s 100 million – and a competitive price point, some casual gamers might find a home with Netflix.

US Q3 earnings season is in full swing. Stay tuned for more updates. In the meantime, check out our earnings calendar to see which megacaps are reporting and when.

Tesla stuff, Squid Games

Tesla stuff: Haters hate, regulators regulate: don’t confuse the two. Duke University engineering and computer science professor Missy Cummings is set to become a new senior adviser for safety at the National Highway Traffic Safety Administration. Many Tesla fanboys and girls are crying foul. Cummings, a former pilot and robotics expert, is seen as ‘anti-Tesla’. Now that’s kind of interesting in the first place: you’re either definitely for Tesla or definitely a hater. No room for a middle ground. That’s kind of odd for a carmaker. Most people are not anti or pro Ford, or GM. They maybe like/dislike their cars, think they’re doing a good/bad job with the tech and think management are capable/useless. No one would say they’re anti-Ford. They might have an objective, rational view on the cars and/or the stock, but not a creed. But rational objectivity and Tesla seldom go hand in hand. And I’m not sure if you could say she’s anti-Tesla per se, just sceptical about the level of technology that is being touted around by some companies. But, particularly Tesla. 

 

For instance, last year she tweeted“LMAO…there is NO WAY Tesla will have a viable robo-taxi service this year. My lab has been running controlled experiments on Tesla Autopilot & I can say with certainty that they are not even close to being ready. My student on this project should get hazardous duty pay.”  In one 2018 tweet she said “The only killer robot out there is @elonmusk’s Tesla.” There are lots of examples on the feed.

 

It’s fair to say Cummings is a vocal critic of the ability of self-driving systems to cope with bad weather, and authored plenty of research that calls into question some of the main claims that companies like Tesla make when they market their ‘full self-driving’ systems. There are numerous papers, some choice tweets and essentially you can say she doesn’t buy the tech being anything like close enough to be objectively safe for the roads.  

 

After news of her appointment broke Elon Musk tweeted today: “Objectively, her track record is extremely biased against Tesla.”  

 

Tesla’s self-driving technology is already being investigated by the NHTSA. The company must provide the regulator with extensive data about its Autopilot system by Friday. Tesla has been getting away with marketing ‘Full Self Driving’ technology for a while; Cummings could mark time for a much tougher stance. Steven Cliff, deputy administrator since February, has also been nominated by the White House to lead the NHSTA. He’s currently in charge of the Tesla investigation. Another Tesla ‘hater’, according to many. Regulators are maybe finally going to regulate.

 

Meanwhile, in other Tesla ‘stuff’. Get a load of Elon Musk, who told a customer apparently not impressed with the look of the side mirrors on the cyber truck, that it’s OK to remove them. “They’re required by law, but designed to be easy to remove by owners,” he tweeted. I am ‘absolutely sure’ that is not irresponsible or unsafe…

 

Tesla earnings are due out today: the company hit record deliveries in Q3 as it found chips no one else seems to be able to find. EPS is seen around $1.50, on revenues of $13.6bn. Looking for updates on the Berlin Gigafactory, competition in China, internal chip production, Cyber truck and Semi releases, and, of course, the beta FSD progress. Let’s hope for some analyst questions around the NHSTA today.

 

Squid Games: Netflix posted solid subscriber growth in the third quarter of 4.4m, well ahead of the 3.84m expected. A deluge of hit new content that had been delayed by the pandemic is helping to drive interest such that the company anticipates 8.5m net adds next quarter. Earnings per share were a handsome beat at $3.19 vs $2.56 expected. In Q3, revenue grew 16% year over year to $7.5 billion, while operating income rose 33% vs. the prior year quarter to $1.8 billion. Content and subscribers are in good shape, but free cash flow remains elusive as it reported a second consecutive quarter of negative free cash. Still when you have low-cost, high margin content in multiple languages, you think Netflix will be able to drive non-US subscriber growth substantially in the coming years. Shares fell slightly in after-hours trade.

 

Markets: Stocks are flat again this morning in early trade in Europe, with the FTSE 100 hovering around the 7,200, looking like it has decent support.  The S&P 500 rallied three-quarters of one percent yesterday to close within 0.4% of its record high. Megacap tech had a decent day despite rising bond yields. If it’s stagflation then growth is still a premium.  

 

US 10-year rates rose to a 5-month at 1.67% as the Fed’s Waller said tapering should start in November and that if inflation keeps rising “a more aggressive policy response” might be required in 2022. Bitcoin at or around all-time highs post the ProShare ETF launch.

 

Inflation: UK inflation has fallen! But before we rejoice too much, it’s probably a one-off. CPI fell to 3.1% in September from 3.1% in August. The end of the Eat Out to Help Out scheme at the end of August last year, which led to restaurants raising prices in September, is a big factor. The surge in energy prices and ongoing supply chain problems are still expected to drive inflation to 4% this year. Moreover, the RPI rose 4.9%. 

 

As we said in yesterday’s note on Will the Bank of England actually raise rates in November?, the reading of the inflation print is important: the consensus remains firmly on the MPC voting to raise rates in two weeks’ time. But, as stressed in the same commentary, it’s not a slam dunk given the make-up of the MPC right now. 

Meanwhile, German produce price inflation surged – rising 2.3% month-on-month vs the +1% expected. That took the annual rate to 14.2%. Supply chain and capacity problems abound. Underlines that rising cost pressures are not going away. 

 

Sterling just eased back on the inflation miss. GBPUSD retreated to test the support offered at 1.3770, the OCt 15th swing high, where sits the 50hr SMA. Recent price action indicates this is the chief support before resumption of the uptrend, though we are less convinced that GBP can rally with rate expectations now they are baked in. However, I do see further dollar weakness likely to support further gains for cable following the topping pattern on the last 3 weekly candles.

الأسبوع المقبل: هل جاء تضخم المملكة المتحدة المتزايد ليبقى؟

هناك الكثير مما يجدر الانتباه إليه فيما يتعلق بالبيانات الكبيرة هذا الأسبوع. وأولًا، لدينا بيانات مؤشر سعر المستهلك للملكة المتحدة. هل يبقى التضخم لمدة أطول مما كنا نظن؟ تأتي أيضًا مؤشرات مديري المشتريات الآنية للمملكة المتحدة والاتحاد الأوروبي في وقت يبدو فيه النشاط الاقتصادي في بداية التباطؤ. وهو أيضًا موسم الأرباح الأمريكي مع صدور تقارير الشركات الفاعلة التقنية الرائدة.

مؤشر سعر المستهلك في المملكة المتحدة: صقور تحوم وتقارير ساخنة

من جهة البيانات، تشكل أحدث أرقام مؤشر سعر المستهلك للمملكة المتحدة واحدة من إصدارات الأسبوع الكبيرة.

أظهرت تقارير سبتمبر أن تضخم المملكة المتحدة تجاوز مستوى بنك إنجلترا المستهدف البالغ 2% تجاوزًا كبيرًا في أغسطس. وقد أظهرت البيانات أن أسعار المستهلك ارتفعت بنسبة 3.2% في إثني عشر شهرًا حتى ذلك الشهر، وهي أعلى زيادة شهر مقابل شهر منذ بداية التسجيل في 2017.

قال مكتب الإحصاءات الوطنية أن الارتفاع المفاجئ كان «تغيرًا مؤقتًا على الأرجح» وأشار إلى أن مخطط الحكومة «كل في الخارج لتساعد» EOHO قد يكون عاملًا مساهمًا في القفزة.

وقال مكاتب الإحصاءات الوطنية في تصريحه، «في أغسطس 2020 انخفضت الأسعار في العديد من المطاعم والمقاهي بسبب مخطط الحكومة «كل في الخارج لتساعد»، والذي قدم للمستهلكين طعام وشراب بنصف السعر لأكله أو شربه في المطاعم والمقاهي (حتى 10 جنيه إسترليني) بين الإثنين والجمعة».

«بسبب أن EOHO كان مخططًا قصير المدى، فإن الإزاحة الصاعدة في معدل تضخم الإثني عشر شهرًا لأغسطس 2021 مؤقتة على الأرجح».

لقد كان الخط الرسمي ينادي بأن الأسعار الأعلى انتقالية، لكن هناك أصوات من داخل بنك إنجلترا تحذر من أنه قد يبقى لمدة أطول مما كان معتقدًا في البداية.

فقد قال هيو بيل، كبير الاقتصاديين في بنك إنجلترا، أنه يعتقد أن التضخم المتصاعد قد يبقى لبعض الوقت.

قال بيل في سبتمبر، «من وجهة نظري، فإن توازن المخاطر يتحول في الوقت الراهن نحو مخاوف كبيرة بشأن تطلعات التضخم، حيث إن قوة التضخم الحالية تبدو مصممة على إثبات أنه سيبقى لمدة أطول مما كان متوقعًا في البداية».

يضيف بيل صوته إلى الجوقة المتشددة التي تتزايد بثبات في مجلس بنك إنجلترا. حيث يدعو عدد من أعضاء لجنة السياسة النقدية لرفع المعدلات في وقت مبكر من العام القادم. على هذا الحال، قد يؤدي أي تقرير آخر مرتفع لمؤشر سعر المستهلك إلى رفع صوت المتشددين.

هل يسارع مؤشر مديري المشتريات إلى رفع لافتة التباطؤ الاقتصادي؟

إنه أيضًا ذلك الوقت من الشهر الذي تصدر فيه أرقام مؤشرات مديري المشتريات الآنية بسرعة وقوة.

تصدر بيانات المملكة المتحدة والاتحاد الأوروبي هذا الأسبوع في أعقاب تقارير الشهر الماضي، والتي أشارت إلى تباطؤ النمو في هاذين الاقتصادين الكبيرين.

دعنا نبدأ بالمملكة المتحدة. أشار مؤشر مديري المشتريات المركب الآني لشركة IHS Markit إلى أن الناتج قد انخفض إلى أدنى مستوى منذ فبراير. جاء مجموع المملكة المتحدة عند 54.1 في هذا الشهر، منخفضًا عن 54.8 في أغسطس.

يبدو أن التعافي يتباطأ بينما نتقدم نحو أشهر الشتاء. لا يخلق النشاط الاقتصادي الأقل مع التضخم الأعلى أكثر النواتج إيجابية في المستقبل بالنسبة للاقتصاد البريطاني.

هبط مؤشر مديري المشتريات في قطاع الخدمات إلى 54.6 في سبتمبر من 55.0 في أغسطس، وهو أدنى مستوى له منذ فبراير، حين كانت بريطانيا ما زالت قيد الغلق. وهبط التصنيعي من 60.3 إلى 56.4، وهو، مرة أخرى، أدنى مستوى منذ فبراير.

إنها نفس القصة عبر القناة. حيث أعاقت قيود الإمداد النمو الأوروبي، مما دفع تكاليف المدخلات إلى أعلى قيمة في 20 عامًا في جميع أنحاء الاتحاد الأوروبي في الشهر الماضي. هل تظهر بيانات مؤشر مديري المشتريات لهذا الشهر الأمر ذاته؟

من جهة الأرقام، أظهر التقرير المركب من IHS أن النمو الاقتصادي قد انخفض إلى أدنى قيمة في خمسة أشهر في سبتمبر. حقق الاتحاد الأوروبي 56.1 هذا الشهر مقابل 59.0 في أغسطس.

كان هذا دون توقعات السوق بفارق كبير. وأشار استفتاء لوكالة Reuters أن الاقتصاديين والمحللين يعتقدون أن الناتج سيتباطأ، لكن بمعدل أقل كثيرًا يبلغ 58.5.

يبدو أن الأسباب الأساسية هنا هي اختناقات خطوط الإمداد، بجانب تباطؤ عام في نمو الناتج المحلي الإجمالي. يقترب اقتصاد الاتحاد الأوروبي من حجمه الذي كان عليه قبل الجائحة، لذا فإن التباطؤ كان مطروحًا دائمًا، لكنه لم يكن مطروحًا بهذه الشدة.

أتوقع رؤية تقرير مؤشر مديري مشتريات الاتحاد الأوروبي بأرقام أدنى يوم الجمعة، عندما تصدر أحدث البيانات.

أرباح وول ستريت تواصل الوصول مع دخول الأسهم التقنية

في الأسبوع القادم، سنكون في خضم الأمر فيما يتعلق بموسم أرباح الربع الثالث. البنوك الكبرى، بما فيها Goldman Sachs وCitigroup وJPMorgan بدأت الأمور لنا في الأسبوع الماضي. الآن، حان دور كبرى شركات التكنولوجيا لمشاركة أحدث بياناتها المالية.

تتصدر Netflix وTesla الشركات الواجب مراقبتها هذا الأسبوع. فكلتاهما أصدرتا تقارير بأرقام قوية للربعين الأول والثاني، لكنها أشارتا إلى أن الأداء قد يبدأ في الهبوط في الربع الثالث لعام 2021.

لمزيد من المعلومات عن أي الشركات تصدر تقاريرها ومتى تفعل، تأكد من تفقد تقويمنا للأرباح الأمريكية.

أهم البيانات الاقتصادية لهذا الأسبوع

Date  Time (GMT+1)  Asset  Event 
Mon 18-Oct  3:00am  CNY  GDP q/y 
  3:00am  CNY  Retail Sales y/y 
  2:15pm  USD  Industrial Production m/m 
  3:30pm  CAD  BOC Business Outlook Survey 
Tue 19-Oct   1:30am  AUD  Monetary Policy Meeting Minutes 
       
Wed 20-Oct  7:00am  GBP  CPI y/y 
  1:30pm  CAD  CPI m/m 
  1:30pm  CAD  Common CPI y/y 
  1:30pm  CAD  Median CPI y/y 
  1:30pm  CAD  Trimmed CPI y/y 
  3:30pm  USD  Crude Oil Inventories 
       
Thu 21-Oct  1:30pm  USD  Philly Fed Manufacturing Index 
    USD  Unemployment Claims 
       
Fri 22-Oct  7:00am  GBP  Retail Sales m/m 
  8:15am  EUR  French Flash Manufacturing PMI 
  8:15am  EUR  French Flash Services PMI 
  8:30am  EUR  German Flash Manufacturing PMI 
  8:30am  EUR  German Flash Services PMI 
  9:00am  EUR  Flash Manufacturing PMI 
  9:00am  EUR  Flash Services PMI 
  9:30am  GBP  Flash Manufacturing PMI 
  9:30am  GBP  Flash Services PMI 
  1:30pm  CAD  Core Retail Sales m/m 
  1:30pm  CAD  Retail Sales m/m 
  2:45pm  USD  Flash Manufacturing PMI 
  2:45pm  USD  Flash Services PMI 
  Tentative  USD  Treasury Currency Report 

 

أهم تقارير الأرباح لهذا الأسبوع

Tue 19 Oct  Wed 20 Oct  Thu 21 Oct  Fri 22 Oct 
Philip Morris International (PM)   Verizon Communications Inc (VZ)   AT&T (T)   American Express (AXP)  
       
Johnson & Johnson (JNJ)   International Business Machines (IBM)  Intel Corp (INTC)   Schlumberger Ltd (SLB)  
       
Procter & Gamble (PG)  Tesla Inc (TSLA)   Snap Inc A (SNAP)    
       
Netflix Inc (NFLX)        

 

US pre-mkts: Bank earnings strong, Cat upgrade

Very strong bank earnings coming through this morning – JPM led the way yesterday and the latest numbers from peers also look strong. Real good signs of improving loan growth in particular is a positive for BAC.

US pre-market key pointers

Bank of America (BAC)

Strong performance from Bank of America.

  • Net income of $7.7bn, EPS of $0.85 vs $0.71 expected
  • Revenues up 12% year-on-year – JPM was just up 2.2%
  • Net interest income up 10% to $11.1bn – most rate-sensitive of the big banks
  • Record M&A activity – Noninterest income up 14% to $11.7bn, driven by record asset management fees, strong investment banking revenue and higher sales and trading revenues
  • Expenses down on the quarter, flat on the year
  • $624m clawback from bad loan provisions – bottom line flattered less than the JPM numbers.
  • Stock up pre-mkt to tune of 2.5%, having fallen 0.92% yesterday in sympathy with JPM, which is trading mildly higher in pre-mkt.

Wells Fargo (WFC)

Wells Fargo results showed:

  • Net income of $5.1bn, EPS $1.17 vs $0.98 expected
  • Net interest income was down 5%, due to lower loan balances that reflect soft demand, also higher prepayments, lower yields
  • Results include $1.7bn decrease in credit loss provisions – equivalent to $0.30 per share.
  • Pre-mkt trades +1%, having slipped 1.3% yesterday.

Meanwhile, ahead of the cash open on Wall Street, US futures indicate all the major averages will open higher. SPX seen opening up 30+pts at just under 4,400, Dow Jones +200pts at 34,610, NDX at 14,900. Risk looking solid.

  • Walgreens Boots Alliance reported earnings $1.17, vs $1.02 expected, revenues $1bn ahead of expectations, cost-cutting programme a year ahead of schedule. US comparable sales up 8.1% from a year before.
  • UnitedHealth shares +2% pre-mkt after reporting earnings beat and raised guidance.
  • Caterpillar +1% pre-mkt, bouncing of its weakest level since Jan, as Cowen advises clients to buy ahead of the first ‘megacycle’ in 14 years, initiates with ‘Outperform’ rating and PT of $241.
  • Tesla shares are up pre-mkt to their best level in 7 months.
  • Boeing down 1% pre-mkt after report says co. dealing with new Dreamliner defect, production problems
  • FTSE 100 at HOD just a whisker under 7,200
  • Dollar continues to struggle. GBPUSD making a fresh 3-week high at 1.37334.
  • Gold also trades at HOD at $1,800, sitting on its 100-day SMA.
  • Treasury yields lower, 10s at 1.532%

Earnings season: five stocks on Goldman’s radar

Earnings season is underway. Now’s the time to take a look at some stocks that could provide investors with more than the Wall Street consensus would tell you.

US earnings season Q3 2021

Goldman reviews earnings season stocks

Sometimes investors like to break away from the pack. To dare is to do.

It’s all about spotting opportunities from stocks that may be overlooked by Wall Street.

As reported by CNBC, Goldman Sachs has been scanning Wall Street for stocks it believes hold promise for investors looking for something different this earnings season.

Earnings season began in earnest this week with major US banks leading the charge as always. You can use our earnings season calendar to see which megacaps are reporting this quarter and when.

In a note to investors published on Wednesday, Goldman said it expects stocks to rise 6% this quarter. Its spotlighted stocks, however, could offer upsides of 14%.

The investment bank deployed a fairly complex methodology when analysing Q3 2021 earnings season stocks. 1,000 companies in Goldman Sachs’ coverage universe were scanned at the 25 best opportunities were selected when considering EPS of $5 per share over the next four quarters.

After this, the results were filtered through analysts which were above or below Thomson Reuters’ consensus for the upcoming quarter, and the year ahead, “on a key financial metric.”

“Single stock put-call skew is at its highest level in over a year,” Goldman said, encouraging investors to make out-of-money calls on its out-of-consensus stock picks. “Given investors are well hedged, even modest earnings beats are likely to drive a relief rally in specific stocks (on earnings day) and the broad index (over the next three months).”

The out-of-consensus stocks to pick

Please note these are only Goldman Sachs’ recommendations – not hard and fast must-buys. Only invest if you are comfortable with the risk of potential capital loss.

The top five stocks Goldman has selected to watch this earnings season are:

  • Uber
  • Signature Bank
  • Yeti
  • Bank of America Corp
  • Lowe’s

Let’s start with Uber. The ride-hailing service burst onto the scene several years ago as a taxi industry disruptor. Goldman’s Eric Sheridan thinks the app can deliver a 37% upside over the coming year. Sheridan’s earnings estimates put Uber 20% higher than Wall Street consensus right now too.

The idea is that if Uber can close the supply/demand gap, then this should lead to normalised ride pricing, higher demand in general, and thus pre-pandemic profits.

Outdoor retailers Yeti could offer even better upsides than Uber. Goldman considers Yeti a “growth compounder with best in class authentic brand positioning.” It could deliver upsides of 44% if Goldman is on the money. In terms of EPS, Yeti’s could be 8% higher than analysts think in the third quarter and 3% higher in the next.

Investment banks are usually amongst the first to start reporting on Wall Street come earnings season. It’s certainly true this year. Of these, Goldman flags Bank of America as the one to keep an eye on. Goldman’s analysis puts BoA’s upside at 7% – some 10% higher than consensus.

Bank of America’s potential has been pegged to “significant remixing of cash into securities” by Goldman.

Smaller banks are represented by Signature Bank. Ryan Nash, a Goldman stock analyst, forecasts earnings-per-shares to come it at 7% higher than Wall Street forecasts this quarter and 5% for the next four. Signature is on course for a revenue-beating Q3, driven by an acceleration in loan growth.

Rounding off Goldman’s section of potentially consensus-beating stocks is Lowe’s. The DIY probably benefitted more than most from the pandemic last year, but this quarter it could offer investors an upside of 12%.

Goldman’s Kate McShane said Lowe’s position is stronger now than in the last 6-12 months, thanks to bringing forward its seasonal inventory purchases.

Stocks rally, inflation sticks, earnings on tap

Stock markets rose in early trade as investors parsed the latest signs of inflation and the central bank reaction function, whilst earnings season has got underway across the pond with some decent numbers from JPMorgan. Wall Street rose mildly, snapping a three-day losing streak. VIXX is off sharply, which maybe reflects increasing comfort that the market has stabilised, if not able to make new highs just yet.

Earnings season gives investors a chance to ignore some of the noise and market narratives and get into actual numbers. Only this time we expect the corporate reporting season to underline the inflation narrative – the question is whether it’s just inflation or stagflation. Probably we get a bit of both – watch for sandbagging. JPMorgan numbers were positive, but as ever the stock fell despite beating on the top and bottom line. Profits were boosted by better-than-expected loan losses. Trading revenues were robust, asset and wealth management strong, loan growth improving and likely to pick up in 2022. Delta Air Lines also posted numbers that topped expectations including a first quarterly profit ex-state aid since the pandemic. But higher fuel costs and other expenses will hit the fourth-quarter profit – shares fell over 5%. Today sees Citigroup, Bank of America, Morgan Stanley and Wells Fargo report.

Chinese producer price inflation rose 10.7% in September, the highest level since 1996. The China PPI number is an important leading indicator for global consumer inflation. On that front, US consumer price inflation accelerated in September to 5.4%, with prices up 0.4% month-on-month. Core rose 0.2% from August, leaving prices ex-volatile items like energy and food at 4%. US PPI inflation today is seen at +0.6%, +0.5% for the core reading.

Minutes from the Fed’s last meeting indicated the US central bank is likely to commence tapering asset purchases next month. “Participants generally assessed that, provided that the economic recovery remained broadly on track, a gradual tapering process that concluded around the middle of next year would likely be appropriate,” the minutes said.

Post the CPI and FOMC minutes we see Treasury yields lower, the dollar lower, gold firmer. Lower bond yields lifted megacap growth, or at least provided some marginal buying excuse to do so. Inflation is still hot but not getting much hotter. Narrative has clearly exited team transitory to support team sticky. The question now is whether we are at peak in/stagflation fears and this allows the market to move on to start pricing for 12-18 months hence, by which time you’d feel a lot of the post-pandemic bottlenecks and pressures will have eased. The problem for this – still team transitory if you like – is that anything that raises the costs of getting goods from source to consumer is inflationary and the pandemic has certainly been that. But so too is the shift in globalisation trends, eg Brexit.

Sterling is firmer as the dollar weakened in the wake of the CPI report. GBPUSD has broken free of the trend resistance and with bullish MACD crossover in play. Bulls would like to see the previous two highs on the MACD cleared (red line) to confirm reversal of the downtrend since May.

GBPUSD Chart 14.10.2021

Chart: Dollar index easing back to the middle of the channel, but faces pressure from bearish MACD crossover.

Dollar Index 14.10.2021

Yesterday I noted that gold was likely to face some volatility and break free from its recent consolidation. CPI numbers were indeed the catalyst and we saw gold prices hit the highest in a month, approaching $1,800 before pausing. Near-term, consolidation again with the 1hr chart showing a clear flag pattern with the lower end capped by the 23.6% line.

Gold Chart 14.10.2021

Chart showing gold price movements on 14.10.2021

Oil has firmed, with WTI recovering the $81 handle, though price action remains sluggish and sideways for the time being. OPEC yesterday cut its global oil demand growth forecast for 2021 but maintained its 2022 view and cautioned that soaring natural gas prices could boost demand for oil products.

OPEC cuts its demand growth forecast for 2021 to 5.82 million barrels per day, down from 5.96 million bpd. As we noted some months ago, it was always likely that OPEC would need to trim its 2021 forecast since it had always backdated so much of that extra demand to come in H2. The original 6m bpd forecast implied 1m bpd in H1, 5m bpd in H2, which always seemed optimistic. Critically, though, it was not wildly optimistic – demand has come back strongly after shrugging off the summer Delta blues. The cartel maintained its 4.2m bpd growth forecast for next year. EIA inventories today – a day late due to the Columbus Day holiday – forecast 1.1m build.

Crude Oil Futures Chart 14.10.2021

Nat gas – holding the trend support and 20-day SMA, bearish MACD crossover still in force.

Natural Gas Chart 14.10.2021

Hays shares +4% as fees rose 41% from a year ago. Strong leveraged play on record numbers of job vacancies and staff shortages. Shares have been flat the last 6 months, though +17% YTD, +45% the last 12 months leaves not a lot of room left on the table.

Dunelm still performing strongly against tough comparisons. Total sales in the first quarter increased by 8.3% against a very strong comparative period in FY21, when sales grew by 36.7%. Gross margins were down 10bps and expected to be 50-75bps lower than last year for the full year. Management warned on supply chain problems and inflation but stressed that good stock levels should provide them some cover. Some way to go to for the shares to recover recent highs but encouraging signs.

Markets primed for US inflation, FOMC minutes, JPM kick off earnings season proper

European stocks were off half a percent this morning in early trade after another fragile day on Wall Street saw selling into the close and another weaker finish. All eyes today on the US CPI inflation number, minutes from the FOMC’s last meeting and the start of earnings season with numbers due out from JPMorgan. Asian equities mixed after Chinese trade data was better than expected.

Markets in Europe turned more positive after the first half-hour but it’s clear sentiment is anaemic The FTSE 100 is chopping around its well-worn range, the DAX is holding on to its 200-day moving average just about. Possible bullish crossover on the MACD needs confirming – big finish required.

Dax Chart 13.10.2021

JOLTS: We saw a marked jump in the “quits rate” with 4.3m workers leaving their jobs, with the quits rate increasing to a series high of 2.9%. Tighter labour market, workers gaining bargaining power = higher wages, more persistent inflation pressures.

But… 38% of households across the US report facing serious financial problems in the past few months, a poll from NPR found. Which begs the question – why and how people are not getting back into work and quitting. One will be down to massive asset inflation due to central bank and fiscal policy that has enabled large numbers of particularly older workers to step back sooner than they would have down otherwise. Couple of years left to retire – house now worth an extra 20% and paid off, 401k looking fatter than ever, etc, etc. Number two is something more sinister and damaging – people just do nothing, if they can. Working day in, day out is like hitting your head against a brick wall – you get a headache, you die sooner, and you don’t go back to it once you’ve stopped doing it. Animal spirits – people’s fight to get up and do things they’d prefer not to do – have been squashed by lockdowns.

More signs of inflation: NY Fed said short and medium-term inflation expectations rose to their highest levels since survey began in 2013.

NY Fed inflation expextations 13.10.2021

UoM preliminary report on Friday – will give us the latest inflation expectation figures. This is where expectations stand now. Today’s CPI print is expected to show prices rose 0.4% on the month to maintain the annual rate at 5.4%.

University of Michigan inflation expectations 13.10.2021

The Fed’s Clarida said the bar for tapering was more than met on inflation and all but met on employment. FOMC minutes will tell us more about how much inflation is a worry – we know the taper is coming, the question is how quickly the Fed moves to tame inflation by raising rates.

Watch for a move in gold – it’s been a fairly tight consolidation phase even as rates and the USD have been on the move – the inflation print and FOMC minutes could spur a bigger move. Indicators still favour bulls.

Gold Chart 13.10.2021

US earnings preview: banks kick off the season

Wall Street rolls into earnings season in a bit of funk. The S&P 500 is about 4% off its recent all-time high, whilst the Nasdaq 100 has declined about 6%, as the megacap growth stocks were hit by rising bond yields. S&P 500 companies are expected to deliver earnings growth of 30%, on revenue growth of 14%.

JPMorgan Chase gets earnings season underway with its Q3 numbers scheduled for Oct 13th before the market open. Then on Thursday we hear from Bank of America, Citigroup, Morgan Stanley and Wells Fargo, before Goldman Sachs rounds out the week on Friday. JPMorgan is expected to deliver earnings per share of $3, on revenues of $29.8bn. Note JPM tends to trade lower on the day of earnings even when it beats expectations for revenues and earnings.

Outlook: Nike and FedEx are among a number of companies that have already issued pretty downcast outlook. Supply chain problems are the biggest worry with a majority of companies releasing updates mentioning this. Growth in the US is decelerating – the Atlanta Fed GDPNow model estimates Q3 real GDP growth of just 1.3%. Higher energy costs, rising producer and consumer inflation, supply bottlenecks, labour shortages and rising wages all conspiring to pull the brake on the recovery somewhat. Still, economic growth has not yet given way to contraction and after a global pandemic it will take time to recovery fully.

Trading: Normalisation of financial markets in the wake of the pandemic – ie substantially less volatility than in 2020 – is likely to weigh somewhat on trading revenues, albeit there was some heightened volatility in equity markets towards the end of September as the stock market retreated. Dealmaking remains positive as the recovery from the pandemic and large amounts of excess cash drove business activity.

Costs: The biggest concern right now for stocks is rising costs. Supply-side worries, specifically rising input and labour costs, pose the single largest headline risk for earnings surprises to fall on the downside. The big banks have already raised their forecasts for expenses this year on a number of occasions. It’s not just some of the well-publicized salary hikes for junior bankers that are a concern – tech costs are also soaring.

Interest rates: Low rates remain a headwind but the recent spike in rates on inflation/tapering/tightening expectations may create conditions for a more positive outlook. The 10s2s spread has pushed out to its widest since June. Rising yields in the quarter may have supported some modest sequential net interest income improvement from Q2.

Chart: After flattening from March through to July, the yield curve is steepening once more.

Yield Curve 13.10.2021

Loan demand: Post-pandemic, banks have been struggling to find people to lend to. Commercial/industria loans remain subdued versus a year ago, but there are signs that consumer loan growth is picking up. Fed data shows consumer loan growth has picked up as the economy recovers. However, UBS showed banks were lowering lending requirements in a bid to improve activity, which could impact on the quality, though this is likely a marginal concern given the broad macro tailwinds for growth. Mortgage activity is expected to be substantially down on last year after the 2020 surge in demand for new mortgages and refinancing.

Chart: Consumer loan growth improving

Consumer Loan chart 13.10.2021

Other stocks we are watching

The Hut Group (THG) – tanked 30% yesterday as its capital markets day seems to have been a total bust. Efforts to outline why the stock deserves a high tech multiple and what it’s doing with Ingenuity and provide more clarity over the business seemingly failed in spectacular fashion. The City has totally lost confidence in this company and its founder. No signs of relief for the company as investors give it the cold shoulder. Shares are off another 5% this morning.

Diversified Energy – the latest to get caught in the ESG net – shares plunged 19%, as much as 25% at one point after a Bloomberg report said oil wells were leaking methane. Rebuttal from company seemed to fall on deaf ears. Shares recovering modestly, +3% today.

Analysts are lifting their Netflix price targets, partly on the popular “Squid Game.” Netflix will report its third-quarter earnings next week.

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