Wall Street earnings

 

The fourth quarter kicked off with a series of fresh all-time highs for the major US indices and bulls will be eyeing fresh momentum from the start of the third quarter earnings releases. The major Wall Street banks kick things off, with Citigroup, JPMorgan, Bank of America and Wells Fargo all due to update the market this week.

As is customary, analysts have been dialling back their Q3 earnings estimates over the last few months. Earnings have been strong so far this year, with EPS growth of 13.6% in Q1 and 11.1% in Q2, but according to Zacks Investment Research expectations for Q3 have declined to a mere 3.2%.

US inflation and retail sales

 

Expectations for a December rate hike by the Federal Reserve will either be gilded or dented by the double-helping of CPI inflation and retail sales data on Friday. As has been repeated time and again, weaker inflation has so far failed to derail the Fed’s plans to raise rates again this year.

August delivered a healthy boost to CPI inflation, which rose 0.4% after a run of nearly flat numbers. The Fed’s argument that pressures keeping a lid on inflation will prove temporary is beginning to be taken more seriously and price growth may start to pick up from here.

FOMC minutes

 

Staying on the Fed and the minutes from the last policy meeting will be pored over for clues about where rates are heading when they are released on Wednesday.

The meeting, at which the Fed left rates on hold and confirmed the start of its balance sheet reduction programme, was viewed as broadly hawkish since it confirmed policymakers are set to raise rates once more this year. However, if anything, the longer term outlook for inflation and rates was more dovish and this may become more apparent in the minutes.

Three of four hawks have given up on two further hikes this year and there is now a strong consensus around one more hike. Four doves still expect no further hikes this year. Two policymakers see no rate hike next year as the dots seemed to indicate the chances of the Fed continuing with hikes next year diminishing. Further out, Fed policymakers see the terminal rate at just 2.8%, down from the previous 3%.

Provident Financial update

 

Provident Financial Group stunned the City when it delivered a giant profits warning in August. Shares tumbled 66% in a single day after it admitted that it gotten an operational restructuring seriously wrong and revealed it is being investigated by FCA. The stock has been on a wild ride since and whilst it is down 75% in the last year it is up more than 40% from the lowest point plumbed in the wake of the profits warning. 

Friday’s interim management statement is the first chance to see whether it’s got its house in order or if things have gone from bad to worse.

Economic Calendar

(All times BST)

Monday, 9 October

All day – Bank holidays in Japan, US and Canada

07:00 – German industrial production

09:30 – Eurozone Sentix investor confidence

Tuesday, 10 October

00:01 – UK BRC retail sales monitor

01:30 – Australia NAB business confidence

07:00 – German trade balance

07:45 – French industrial production

09:00 – Italian industrial production

09:30 – UK manufacturing production, goods trade balance

13:30 – Canada building permits

Wednesday, 11 October

00:50 – Japan core machinery orders

07:00 – Japan preliminary tool orders

15:00 – US Jolts jobs openings

19:00 – FOMC meeting minutes

Thursday, 12 October

00:01 – UK RICS house price balance

00:50 – Japan bank lending, PPI inflation

07:45 – French final CPI inflation

09:30 – Bank of England credit conditions survey

10:00 – Eurozone industrial production

13:30 – Canada new housing price index

13:30 – US unemployment PPI inflation, weekly unemployment claims

16:00 – US crude oil inventories

22:30 – Business NZ manufacturing index

Friday, 13 October

01:30 – Australia RBA financial stability review

Tentative – China trade balance

08:15 – Switzerland PPI inflation

13:30 – US CPI inflation, retail sales

15:00 – Preliminary University of Michigan consumer sentiment

Tentative – US Treasury currency report

All day – IMF begins 3 days of meetings

Corporate Calendar

 

Tuesday, 10 October

BAE Systems (BA.) – trading update

Wednesday, 11 October

BlackRock (BLK) – Q3/2017, EPS estimate 5.516

Mondi (MNDI) – trading update

Thursday, 12 October

Citigroup (C) – Q3/2017, EPS estimate 1.291

Delta Air Lines (DAL) – Q3/2017, EPS estimate 1.558

Domino’s Pizza (DPZ) – Q3/2017, EPS estimate 1.223

JPMorgan Chase & Co (JPM) – Q3/2017, EPS estimate 1.654

GAME Digital – final results

Sky (SKY) – Q1/2018

Friday, 13 October

Bank of America Corp (BAC) – Q3/2017, EPS estimate 0.463

Wells Fargo & Co (WFC) – Q3/2017, EPS estimate 1.026

Provident Financial Group (PFG) – Q3 interim management statement

 

Source: Bloomberg


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