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BlackBerry beats the street and ends an era, OPEC and inventories keep oil hopping

apple iphone ipad tablet

apple iphone ipad tablet

BlackBerry is rallying in pre-market trading today on better-than-expected earnings and improved guidance. The company reported adjusted EPS of $0.00, better than the ($0.05) per share loss expected.

CEO John Chen raised the full-year adjusted earnings outlook to ($0.05) to break even from a previously projected loss per share of ($0.15), based on improving margins and lower interest costs.

Traders appear to be shrugging off a shortfall in revenues which were $352 million below the $390 million that had been widely expected. Trades have decided to focus on the 89% revenue growth over year in their software as services business to $156 million, surpassing the $105 million in revenues generated by the Mobility Solutions (hardware) business.

Today also marks a big transition for Blackberry and the end of an era for the company announcing that it is "ending all internal hardware development and will outsource that function to partners" starting with a joint venture in Indonesia. The company plans to shift its focus fully to communications and security software development reducing capital requirements and increasing margins.

The big swings in global indices around the first US Presidential debate have subsided for now as traders wait for the next shoe to drop, likely post-debate voting poll results. The twists and turns of a close campaign between wildly different policy directions may continue to drive trading swings and opportunities over the next six weeks or more. US index futures are down marginally this morning.

European indices have caught up with yesterday's US afternoon advance with the FTSE ‎up 0.6% and the Dax up 0.7%. Some of the pressure has come off of Deutsche Bank amid reports of possible state support to deal specifically with potential US fines but only as a last resort.

Crude oil is up again this morning with WTI up 0.6% and Brent up 0.8%. Traders have decided to look past this week's Algeria informal meetings toward the formal OPEC meeting on November 30 for a potential production freeze deal as some progress appears to have been made. Saudi Arabia indicated it is open to compromise suggesting limits could be set for Iran, Nigeria and Libya that are higher than current depressed level but that make sense (ie relative to historic production). Iran’s oil minister indicated this week’s informal talks could lay the foundation for a deal with his country looking to get back to 4.0-4.2 mmbbbls per day (reports vary) of production from the current 3.6 mmbbls. 

Meanwhile, the US supply and demand situation continues to improve and provide fundamental support. API inventories fell by 0.75 mmbbls last week. Traders now look to today's DOE report for confirmation. Gasoline is also climbing this morning ahead of its own inventory number.

Today brings US Durable Goods orders and several Fed speakers including testimony to Congress by Chair Janet Yellen. Last night SF Fed President Williams joined Dallas Fed President Kaplan and other non-voters this year who have stated they would have voted for a rate hike last week had they ‎been able to do so. 

With the Fed unlikely to touch interest rates until after the election the focus of the next month turning to earnings and politics, today's numbers and comments are less likely to have an impact on USD unless someone surprises and changes their stance in a major way. Indications on the health of the US economy could influence trading in stocks and commodities on any carry through for corporate earnings or resource demand expectations.

Corporate News

BlackBerry     $0.00 vs street $0.05, software revenues up 88% over year, revenues $352M vs street $390M, CFO leaving, getting out of the hardware business 

Economic News

US API crude oil inventories        (0.75 mmbbls) 

China consumer sentiment        115.2 vs previous 111.5

Norway retail sales            0.4% vs street 0.6% 
Germany Gfk consumer confidence    10.0 vs street 10.2
France consumer confidence        97 unchanged as expected
Sweden consumer confidence        100.4 vs street 95.0 
Italy consumer confidence        108.7 vs street 109.0

Upcoming significant economic announcements include:

8:30 am EDT         US durable goods orders        street (1.5%)
8:30 am EDT        US durables ex transport        street (0.5%)
8:30 am EDT        US capital goods orders nondef ex air    street 0.1%

10:00 am EDT        FOMC Chair Yellen testimony
10:10 am EDT        FOMC Bullard speaking 

10:30 am EDT        US DOE crude oil inventories        street 3.0 mmbbls
10:30 am EDT        US DOE gasoline inventories        street 0 mmbbls

1:30 pm EDT        FOMC  Evans speaking
7:15 pm EDT        FOMC George speaking

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