Although dead as a doornail in the US these days, the dovish “bad news is good news” trade remains alive and well in Europe it seems. At today’s post ECB meeting press conference, the central bank’s president, Mario Draghi, indicated that the ECB plans to revisit its QE program in December when new staff forecasts are out. he noted the economic recovery continues but downside risks remain. He also mentioned that staff have been asked to look into new policy options and that a cut to deposit rates was discussed at today’s meeting. Overall the street has taken the press conference as highly dovish and suggesting more Europe stimulus would be on the way. Personally, I think it would be nice if they would actually reach their current stimulus targets first, but that doesn’t move the markets like today’s talk. US stocks are also rising today but at a more moderate pace, supported by another round of generally positive earnings with 3M, McDonalds, eBay and tech stocks like Texas Instruments offsetting disappointments from Caterpillar and Pulte. Low initial and continuing jobless claims confirm a robust employment market stateside. Earnings remain a key focus for traders with Google (Alphabet), Amazon.com and MicroSoft reporting after the close. In currency markets today, the diving EUR is dragging continental currencies down the drain with it including CHF, NOK and SEK. In contrast, GBP is outperforming its cross channel counterpart by a wide margin, supported by strong UK retail sales. The resource dollars (NZD, CAD and AUD) have also been performing in the top half of the pool, supported by rising oil and copper prices. Tonight and into tomorrow, flash PMI reports may give an initial indication of the overall health of the world economy into October. One last late breaking thing, the US budget crisis could be coming to a head even sooner than thought. The US Treasury just postponed a 2-year debt auction that had been scheduled for Tuesday October 27th blaming the possibility it could breach the statutory debt limit, although auctions for Oct 28 and 29 remain on track for now. Treasury Secretary Lew had recently moved up the day the government would run out of borrowing capacity to Nov 3rd. This makes it pretty much impossible for the Fed to raise interest rates next week and December more likely with all of this hopefully blowing over by then. Corporate News Rogers Communications $0.92 vs street $0.81, maintains guidance, and most importantly, the Blue Jays won last night to stay alive in the baseball playoffs and send the ALCS to Game 6! Shaw Communications op income $573M vs street $569M Precision Drilling ($0.30) vs street ($0.11) rig utilization days down 44% from last year, capex to plunge to $180M in 2016 from $531M in 2015, cutting credit line and changing covenants Teck Resources $0.05 vs street $0.02, sales $2.10B vs street $1.99 3M $2.05 vs street $2.00, trims back full year guidance to $7 73-$7.78 from $7.73 to $8.93. Caterpillar $0.75 vs street $0.78, cuts full year guidance again this time to $4.60 from $4.70, cuts 2015 sales guidance to $48B from $49B and forecasts 2016 sales to fall to $44.3B McDonalds $1.40 vs street $1.27, sales $6.6B vs street $6.4B Union Pacific $1.50 vs street $1.43 eBay $0.43 vs street $0.40, raises full year guidance to $1.80-$1.82 from $1.72-$1.77 Texas Instruments $0.76 vs street $0.68, guides next Q to $0.64-$0.74 above street $0.62 Citrix Systems $1.04 vs street $0.85 Seagate Technology 16% dividend increase PulteGroup $0.33 vs street $0.43, sales $1.51B vs street $1.76B Freeport McMoRan ($0.15) vs street ($0.09) Eli Lilly $0.89 vs street $0.76 American Express $1.24 vs street $1.31 Visa 16% dividend increase Economic News Significant announcements released overnight include: ECB meeting no change to interest rates or QE but asset purchase program to be reviewed in December along with forecasts US jobless claims 259K vs street 265K US continuing claims 2,170K vs stret 2,186K UK retail sales 6.5% vs street 4.8% UK retail ex auto 5.9% vs street 4.7% Canada retail ex auto 0.0% vs street 0.2% Upcoming significant announcements include: 9:00 am EDT US house prices street 0.5% 10:00 am EDT US existing home sales street 5 39M 10:00 am EDT US leading index street (0.1%) 10:30 am EDT US natural gas street 87 BCF vs previuos 100 BCF After 4:00 pm EDT earnings from MicroSoft, Google, Amazon, CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
Dovish Draghi sends EUR plunging, Dax soaring while earnings drive US trading
16:40, 22 oktober 2015