US stocks and indices have gotten back on track today after being sidelined yesterday by relatively more hawkish talk out of Fed Chair Yellen. Another round of earnings reports has come through much better than had been expected from the Technology, Railroads, Financials and Industrials sectors, indicating that recent advances are being supported by rising earnings. Even though the Fed is concerned about the social media and biotech sectors, some of the stress on large cap valuations can dissipate of earnings keep rolling in like this.
Big deals, real and imagined also have the potential to drive significant trading action today. Apple and IBM announced a big mobile partnership for corporate customers which was seen by traders overnight as positive for them and negative for Blackberry. Meanwhile, a big takeover proposal for Time Warner indicates there’s lots of money out there for deals and could spark takeover speculation in the Entertainment sector.
In currency markets today, NZD is under pressure as falling inflation in New Zealand, particularly milk prices has been seen as taking pressure off the RBNZ to raise interest rates further. On the other hand, NOK and CAD are topping the leader board with crude oil on the rebound today and WTI regaining the $100.00 level. SEK is down slightly as Riksbank minutes indicated low inflation driving an expansionary monetary policy
and interest rate increases unlikely before the end of 2015.
CAD could potentially be active right through the morning with the Bank of Canada decision due. While no change is expected traders may look to the statement for signs of whether the Bank has become more dovish in the wake of soft Canadian employment numbers.
US monetary policy may also have an impact on trading later in the day. Although the second day of testimony from a Fed chair usually is a rehash of the first day, a lunchtime speech from new FOMC member and Vice Chair nominee Stanley Fischer could attract attention as it is one of his first public appearances since officially joining the Board. The beige book may also attract attention later in the day from traders looking for indications of whether economic strength is broadly based or concentrated in a few regions.
21st Century Fox announced that it had made an $80B offer for Time Warner which was rejected. This could still spark new takeover speculation in the Entertainment sector.
Apple and IBM announced a major mobile partnership which will include IBM selling Apple devices to corporate clients and building iOS app versions of about 100 of its corporate software programs and cloud services. This deal could impact sentiment toward Blackberry
Yahoo! $0.37 vs street $0.38, guides next ! revenue to $1.02-$1.06B short of street $1.10B.
Yahoo! announced it has requested to have the amount of Alibaba shares it must sell on the IPO to 140 million from 20-8 million. Will return half of the after tax proceeds of the sale to its shareholders.
Intel $0.55 vs street $0.52, sales $13.8B vs street $13.7B, guides next Q sales $14.4B vs street $14.0B
Bank of America adjusted EPS $0.41 vs street $0.29, revenues $22.0B vs street $21.6B
CSX $0.53 vs street $0.52
Textron $0.51 vs street $0.47
The Farnborough Air Show continues today and orders keep rolling in. Through the first two days, Airbus has the lead on Boeing in large jets with its A330neo upgrade attracting interest. In regional jets, Embraer has the overall lead on Bombardier although it has been winning orders for its CSeries from smaller airlines and for its Q400 turboprops.
Economic reports released overnight and this morning include:
US producer prices street 1.9%
Canada manufacturing sales street 1.0%
China Q2 GDP 7.5% vs street 7.4%
China retail sales 12.4% vs street 12.5%
China industrial production 9.2% vs street 9.0%
China fixed assets 17.3% vs street 17.2%
UK jobless claims (36K) vs street (27K)
UK unemployment rate 6.5% as expected
UK rolling 3M jobs change 254K vs street 243K vs previous 345K
Eurozone trade balance €15.4B vs street €16.5B
NZ consumer prices 1.6% vs street 1.8% vs previous 1.5%
Australia leading index 0.1% unchanged
India exports 10.2 vs previous 12.4%
India imports 8.3% vs previus (11.4%)
Economic reports due later today include:
9:15 am EDT US industrial production street 0.3%
9:15 am EDT US manufacturing production street 0.3%
10:00 am EDT Canada interest rate decision 1.00% no change expected
10:00 am EDT US NAHB housing index street 50
10:00 am EDT FOMC Yellen testimony to Congress round 2
10:30 am EDT US crude oil inventories street (2.75 mmbbls)
10:30 am EDT US gasoline inventories street 0.95 mmbbls
12:00 pm EDT FOMC Vice-Chair nominee Fischer speaks on monetary policy
2:00 pm EDT US beige book