Yesterday’s rebound in US markets managed to generate a positive finish
for the first time in three days but markets finished well off their highs, suggesting a wider concern perhaps that while yesterday’s bank earnings numbers were better than expected, they weren’t strong enough to suggest that the US economy was anything other than the best of a pretty poor bunch
The slowdown in mortgage lending from both Wells Fargo and JP Morgan
appears to suggest that the US consumer remains very much in a cautious mood when it comes to big ticket items and this could well be reflected in the latest retail sales numbers for September which are due later today.
Expectations are for a decline of 0.1%, down from the 0.6% rise in August
, though this slowdown in retail spending could well be mitigated by the launch of Apple’s new iPhone 6 last month, which saw large queues outside Apple stores across the US for several days.
There was also evidence of some significant discounting going on in a lot of the major retailers as they looked to shift stock in the wake of the end of the school holidays.
Empire manufacturing is expected to slow slightly in October, down from 27.54 to 20.25,
while all eyes will be on tonight’s latest Fed Beige Book survey which will give some important clues as to how manufacturing and the rest of US industry is doing in all of the Fed regions.
On the earnings front we will get the latest from Bank of America
and while a slowdown in investment banking revenue is expected, it is the mortgage lending numbers which will garner most scrutiny as to the health of the US housing market.
Abbvie shares will also be in focus after this morning’s news story that the company was reconsidering its offer for UK based Shire Pharmaceutical
, which has seen Shire’s shares drop sharply this morning. With a break fee of $1.6bn this could well prove to be an expensive day for Abbvie, in the same way it has already been for Shire.
This aversion to the inversion story could translate across a number of different sectors as companies re-evaluate any plans they might have to go down this road.
This could well be the death knell for any hopes that Pfizer might revisit the AstraZeneca deal
when the lock-up period expires later this year.
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