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Oct 17 2016

Q3 Earnings Reporting Season off to a Decent Start

Market Recap:

The third quarter earnings reporting season is off to a decent start, with about 68% of the few companies who have reported exceeding sales growth and revenue expectations. None-the-less, the S&P 500 and other major indexes lost a couple of percentage points last week as investors fretted over the timing of the next interest rate hike, which is more and more likely going to come this December. So far, financial companies have had the greatest upside surprises, as well as being expected to have the bet revenue and profit growth of the 10 sectors in the S&P.


Looking Ahead / This Weeks Market Moving Events:

While earnings season is off to a decent start, overall expectations continue to be muted. Moreover, markets are still all about the Fed and its next move, hence market participants are more focused on economic data than earnings at this moment. Last week’s sell-off was partially driven by weak Chinese data, more of which will be released this Tuesday evening.


  • Monday: Industrial Production, Empire State Manufacturing Survey. Bank of America (BAC), IBM (IBM), and NETFLIX (NFLX) report earnings.
  • Tuesday: CPI, Housing Market, Redbook report and Chinese Data (after the close). Black Rock (BLK), Harley Davidson (HOG), Intel (INTC), Johnson & Johnson (JNJ), Phillip Morris (PM), Yahoo (YHOO) report
  • Wednesday: Housing Starts, Mortgage Applications and Beige Book. Abbot Labs (ABT), American Express (AXP), Halliburton (HAL), Morgan Stanley (MS), Tupperware (TUP) report.
  • Thursday: Jobless Claims, Philly Fed Business Outlook Survey, Existing Home Sales, Leading Indicators are reported. Schlumberger (SLB) and Verizon (VZ) report
  • Friday: Oil Rig Count. GE (GE), McDonalds (MCD), Whirlpool (WHR) report.


Oct 10 2016

Fixed Income Markets – the real action last week

Market Recap:

Stocks ended a volatile week on a slight down-note Friday, as major indexes lost a fraction of a percent. While most investors are focused on the S&P 500 or DJIA, the real action last week was in fixed income markets. The benchmark 10 Year Treasury yield has climbed by nearly ¼ point since late September, indicating that market participants are seeing an increasing chance of a December or January rate hike. International bourses mirrored U.S. volatility last week, declining slightly across the board. The U.S. dollar remained fairly steady against other major currencies, with the exception of the Mexican Peso which rose to a six month high. The Peso is largely seen as an election indicator, rising as a Mr. Trump’s poll numbers fall and rising when his chance of winning the election improve.


This Week’s Market Moving Events:

Monday: Happy Columbus Day

Tuesday: Small Business Optimism Index. Alcoa (S: AA) reports

Wednesday: Job Openings. CSX Corp (S: CSX) reports

Thursday: Import Price Index. Delta Air (S: DAL) and Wynn Resorts (S: WYNN) report

Friday: Retail Sales, PPI, Consumer Sentiment, Business Inventories. CitiGroup (S: C), JP Morgan (S: JPM) and Wells Fargo (S: WFC) report

Oct 03 2016

This Week’s Market Moving Events

Market Recap:

Stocks vacillated at the end of the third quarter, during which stocks (S&P 500) gained about 1 ½% – which isn’t bad considering that Q3 is historically the worst performing quarter of the year. High-quality dividend paying stocks – led by energy and telecom shares – performed very well during the quarter, while financial stocks continued to lag. The recent negative news headlines and problems facing Deutsche Bank and the new-account scandal facing Wells Fargo aren’t helping the image of the beleaguered sector (you’ll be happy to know that we have very little exposure to financial shares, and no exposure to Wells Fargo or Deutsche Bank).


Looking Ahead:

While politics and the Fed are dominating the headlines, many of the key drivers for equity market performance in the fourth quarter will be released this week. Amongst them are the critical motor vehicle sales and consumer spending reports, construction spending and factory orders, and of course the September Jobs report. Investors have spent the summer months fretting over the timing and impact of the next interest rate hike by the Fed. As data continues to be mixed, with the positive slightly outweighing the negative, this week’s reports could prove to be a turning point for some FOMC voting members who have been waiting on more data. A series of small disappointments could prove fortuitous for markets, while strong data will likely cause volatility (aka buying opportunities) as ‘fear’ of a December rate hike resurface.


This Week’s Market Moving Events:

Monday: Motor Vehicle Sales, PMI & ISM Manufacturing reports, Consumer & Construction Spending

Tuesday: Redbook Report, Chinese & Japanese economic data (after the close)

Wednesday: EU Retail Sales, International Trade, Factory Orders, ISM & PMI non-Manufacturing data.

Thursday: Chain Store Sales, Jobless Claims

Friday: September Employment Report

Sep 12 2016

This Week’s Market Moving events

The perception of an increased potential for a September rate hike drove market participants to sell just about every asset class, causing major stock indexes to decline by 2 ½%, Oil falling by 3 ½% and bond yields to rise to the upper end of their recent trading range. This emotional (over) reaction to some Fed members indicating that a rate hike might be warranted shouldn’t come as a surprise as every Fed observer has long known that the Fed wants to raise rates and continues to look for data that supports their desire to raise rates. Unfortunately, the ‘data dependent’ Fed is unlikely to find sufficient positive economic figures that supports such a move. And while the absence of strong data doesn’t mean the Fed won’t move, it is a strong indication that at most they will likely raise rates only once before taking another extended break from monetary policy action. As such, investors should expect a further flattening of the yield curve when the Fed moves, an environment that shouldn’t hurt the outlook for equities in the long-term.


This Week’s Market Moving events:

  • Monday: Chinese Economic data (10 PM EST)
  • Tuesday: German Economic data, Small Business Optimism Index
  • Wednesday: Mortgage Applications, Import / Export data
  • Thursday: Retail Sales, PPI, Empire State Manufacturing Survey, Business Inventories, Industrial Production
  • Friday: Consumer Prices and Consumer Sentiment

Aug 29 2016

This Week’s Market Moving Events

Stocks vacillated around the flat mark for most of the week, as market participants waited for Fed Chair Yellen to speak on Friday and provide further insights into when the Fed may resume its interest rate hikes. On Friday, Dr. Yellen took the stage at the annual Jackson Hole summit and in essence reiterated what had been said before – that while the case for a rate hike is strengthening, the Fed will remain data dependent and cautious in its approach. So, this week, investors will likely wait until Friday’s August employment report before making any portfolio decisions, of course then comes the three day Labor Day weekend which will be followed by some critical international data, including Japan and European Union GDP data. In other words, be prepared to hurry up and wait a bit longer, and in the meantime, a slow continued melt-up seems to be the most likely scenario.


This Week’s Market Moving Events:


Monday: Japanese Economic Data, Dallas Fed Manufacturing Data

Tuesday: Case Shiller Home Price Index, Consumer Sentiment, Investor Confidence data

Wednesday: Chicago PMI, Pending Home Sales

Thursday: Motor Vehicle Sales, ISM & PMI Manufacturing indexes

Friday: August Employment Data


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