It’s a busy week on the corporate front with Apple, Facebook and Tesla earnings the highlights from the US, while the pound will be sensitive to the Bank of England rate decision.
Bank of England
All eyes are on the Monetary Policy Committee (MPC) decision on Thursday, which will be accompanied by fresh economic projections and a press conference with Bank of England governor Mark Carney.
Market indicators suggest a roughly 90% chance the Bank will announce a quarter-point hike to interest rates for the first time in a decade. Third quarter GDP figures beat expectations while inflation has risen to 3%.
There remains a high degree of jeopardy, however, with several MPC members publicly questioning the logic of hiking rates at such an uncertain moment for the UK economy with Brexit on the horizon.
In contrast to counterparts at the ECB and Fed, which have carefully marshalled expectations well in advance, the Bank has shied away from effectively pre-announcing a hike. If the Bank fails to hike next week sterling will get whacked until there is any progress on Brexit.
Apple earnings
Apple (AAPL) is due to report its fiscal fourth quarter earnings after the close on Thursday. There is the usual sweep of metrics to pay attention to but iPhone sales has to be the main focus given they account for the largest share of revenues and there have signs of a muted response to the iPhone 8 so far.
EPS - For Q3 the company posted quarterly revenue of $45.4bn and EPS of $1.67, up from $1.42 in the year-ago quarter. For Q4, EPS is expected to rise to around $1.87.
Revenues - Apple guided revenues in a range of $49bn-$52bn, which at the mid-point of the range is a 7.7% increase from the year-ago period. Q3 was up 7%. Some concerns about the delay of the iPhone X but management probably knew they would not have it in time for Q4. Of more concern is the rough start to iPhone 8 sales which may be a problem in terms of achieving this guidance.
US carriers have indicated lacklustre sales thus far. AT&T reported 3.9% regular monthly customers upgraded in Q3, versus 5.1% when the iPhone 7 was launched last year. This meant 2 million fewer smartphones sold in the quarter by the carrier.
Services - Investors will be looking for another rise in Services revenues, which have continued to grow at a considerable clip to become Apple’s second-largest source of incomes.
Guidance – With the iPhone X due to launch Nov 3rd, there will be a lot of emphasis placed on the fiscal Q1 guidance in terms of sales and revenues. We’ll also be looking at gross profit margin guidance as sign of how Apple thinks the X will boost profitability. Q1 of fiscal 2017 was 38.5%.
Tesla
After three quarterly losses, Tesla (TSLA) is expected to make it four in a row when it reports Q3 earnings after the market closes on Wednesday. EPS is expected to be negative at around -$2.20.
Despite the losses the market has been receptive and TSLA has rallied 60% in the last 12 months, or about three times as much as the rest of the market. So earnings are considered to be less important than what indication there is on demand for the Model 3.
Also due to report after market close on Wednesday is Facebook (FB). The consensus EPS forecast is a little shy of $1.29, versus $0.88 a year ago.
Ryanair
After all the chaos, a time to take stock of the damage, if any, done to Ryanair (RYA) by flight cancellations comes on Tuesday with the 2018 first-half earnings update. It might be too early to see if any reputational damage is lasting, but there could be clues about to what extent the cancellations have affected earnings and the outlook for the rest of the year.
NFP
The monthly nonfarm payrolls report on the US labour market is due Friday at 12:30 (GMT) – the usual timings are out by an hour because North America’s daylight savings time shift occurs a week after Europe and the UK.
Last month the dollar bulls came rushing back to the party thanks to stronger wage data. Average earnings rose by 2.9% from 2.7% the previous month, offsetting concerns about the 33k fall in nonfarm employment.
Since then we have seen Treasury yields climb along with the dollar as markets begin to take the Fed’s commitment to further rate hikes more seriously.
Economic Calendar
(All times GMT)
Sunday, 29 October
Daylight savings time shift in Europe. Note US/Canada shift occurs Nov 5th.
Monday, 30 October
Tentative – German retail sales
08:00 – Swiss KOF economic barometer
08:00 – Spanish flash CPI, flash GDP
12:30 – US core PCE price index, personal spending
13:00 – Germany preliminary CPI inflation
23:50 – Japan preliminary industrial production
Tuesday, 31 October
00:00 – New Zealand ANZ business confidence
00:01 – UK GfK consumer confidence
01:00 – China manufacturing & non-manufacturing PMIs
03:50 – Japan monetary policy statement, BoJ outlook report, policy rate
05:00 – Japan BoJ core CPI
06:30 – BoJ press conference
07:45 – French consumer spending, preliminary CPI inflation
09:00 – Italy monthly unemployment
10:00 – Eurozone CPI flash estimate, EU economic forecasts, preliminary flash GDP
12:30 – Canada GDP, raw materials price index
13:45 – Chicago PMI
14:00 – US CB consumer confidence
21:45 – New Zealand employment change, unemployment rate
Wednesday, 1 November
00:01 – UK BRC shop price index
01:45 – China Caixin manufacturing PMI
09:30 – UK manufacturing PMI
12:15 – US ADP nonfarm employment change
14:00 – US ISM manufacturing PMI
14:30 – US weekly crude oil inventories
18:00 – FOMC statement, federal funds rate
Thursday, 2 November
00:30 – Australia trade balance, building approvals
08:00 – Spanish unemployment change
08:15 – Spanish manufacturing PMI
09:30 – UK construction PMI
12:00 – Bank of England official bank rate, monetary policy summary, inflation report
12:30 – BoE governor Mark Carney speaks
12:30 – US weekly unemployment claims, preliminary nonfarm productivity
Friday, 3 November
00:30 – Australia retail sales
01:45 – China Caixin services PMI
09:30 – UK services PMI
12:30 – Canada employment change, trade balance
12:30 – US nonfarm payrolls, average earnings
14:00 – US ISM non-manufacturing PMI, factory orders
Corporate Calendar
Monday, 30 October
HSBC Holdings (HSBA) – Q3 earnings
Tuesday, 31 October
Pfizer (PFE) – Q3/2017, EPS estimate 0.646
Under Armour (UAA) – Q3/2017, EPS estimate 0.187
BP (BP) – Q3 results
Ryanair (RYA) – H1 2018 earnings
WPP (WPP) – Q3 trading update
Just Eat (JE.) – Q3 order update
Wednesday, 1 November
Facebook (FB) – Q3/2017, EPS estimate 1.283
GoPro (GPRO) – Q3/2017, EPS estimate 0.015
Kraft Heinz Foods (HNZ) – Q3/2017
Office Depot (ODP) – Q3/2017, EPS 0.141
Tesla (TSLA) – Q3/2017, EPS estimate -2.213
Smurfit Kappa (SKG) – Q3 trading update
Next (NXT) – Q3 trading update
Paddy Power Betfair (PPB) – Q3 interim management statement
Thursday, 2 November
Apple (AAPL) – Q4/2017, EPS estimate 1.872
Starbucks (SBUX) – Q4/2017, EPS estimate 0.546
BT Group (BT) – Q2/interim results
Royal Dutch Shell (RDSA/B) – Q3 trading update
Tate & Lyle (TATE) – interim results
RSA Insurance Group (RSA) – Q3 trading update
Friday, 3 November
Smith & Nephew (SN.) – Q3 trading update
Source: Bloomberg
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