JNJ 3Q Earnings The pace of big name earnings announcements peaks next week with leaders in most sectors present. If markets can avoid a bout of profit taking from fears about US banking and housing, other major announcements could be significant for fueling or dousing the ongoing rally. Here’s a list of highlights from next week’s earnings calendar.
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•Monday: IBM (IBM), Apple (AAPL), Citigroup (C), Halliburton (HAL)
•Tuesday: Bank of America (BAC), Goldman Sachs (GS), Johnson& Johnson (JNJ), Coca-Cola (KO), Yahoo (YHOO)
•Wednesday: Altria (MO) AMR (AMR), ETRADE (ETFC), eBay (EBAY), Fidelity National Financial (FNF), Merck (MRK), Morgan Stanley (MS), Wells Fargo (WFC), US Bancorp (USB)
•Thursday: Amazon (AMZN), American Express (AXP), AT&T (T), Baidu (BIDU), Catapillar (CAT), Eli Lill (LLY), PNC Financial Services (PNC), United Parcel (UPS), Union Pacific (UNP),
•Friday: Verizon(VZ), Schlumberger (SLB)
G-20 Meeting In South Korea Friday
There appears to be more potential for disappointment than major improvement in tensions on competitive devaluation, though expectations are not high. That means continuation of support for emerging market currencies, also commodities on continued USD weakness.
UK Comprehensive Spending Review (CSR) To Pressure the Pound And Broader Markets?
On Wednesday the UK presents both minutes of the Bank of England Monetary Policy meeting and details of its spending cuts to reduce the UK’s budget deficit, which currently stands at 11.5% of GDP.
Chancellor George Osborne announced GBP £80bn of cuts between 2010/11 and 2014/15, the equivalent of 6% of GDP over 5 years, with most departments due for 25% budget cuts.
UK austerity is believed by many to already be priced in, but we’re not so sure. The GBP has benefitted from austerity talk, but may suffer once the specific threats to GDP are clearer.
Wednesday Q3 GDP, September retail sales, industrial production, fixed asset investment. Last month this group helped feed a market rally, and could be influential again in the absence of other major surprises.
Other Key Economic Calendar Events
Main events beyond those cited above include numerous Fed speeches which together may provide some clarity about November’s assumed new stimulus. Remember that long term TIC flows will be reporting August net investment in US vs. non-US securities, which is too early to see how, if at all, certain nations are managing their own currency interventions. We’ll see that in next month’s report.
EU finance minister discuss Euro reforms starting Monday, assorted PMI Wednesday and Thursday.
Continued Expectation That New US Stimulus Will Be Announced At Next Fed Meeting November
Consensus is that the anticipated roughly $500 bln of new stimulus will not add more than roughly 0.2% to GDP, yet markets are up for the past weeks nearly 5% on this alone.
Foreclosure Fraud Scandal Ramifications Hit Bank Shares, But Not Broader Markets
•Bank Shares Plunge, Continued Uncertainty Suggests More Downside Ahead
•The Growing Scandal Threatens Uncertainty For The Core US Banking and Real Estate Sectors
•Wednesday Oct. 13, While Stocks Make Biggest Gains For The Week, 50 State Attorney Generals Announce Investigations Of Mortgage Servicing Industry
•Thursday Oct. 14th Bank Shares Begin To Dive On Spiking Volume
•Florida AG Subpoena’s the America’s Largest Mortgage Processor
Concerns About EU Debt/Banking Crisis Quiet For Now
Axel Weber, head of the German Bundesbank, said that the ECB should stop buying the bonds of Europe’s peripheral economies, maintaining a relatively hawkish tone compared to the Fed. Spreads on bonds from the PIIGS have improved, and the ECB hasn’t bought much of their bonds over the past week. Markets ignored widespread strikes in France protesting pension reforms.
Noteworthy But Not Market Moving
•ECRI WLI Records 19th Straight Week Of Negative Growth
•US Retail Sales Beat Expectations
•UoM Survey Shows Consumer Confidence Down
In sum, greater potential for reversal of current trends, primarily from events surrounding US earnings and the growing awareness of the extent of the US foreclosure fraud’s impact on the financial and housing sectors. Trouble in these can potentially take down global markets, and cannot be ignored.