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Oct 31, 2019

EU - FX on October 31, 2019: Euro rises as dollar weakens on questions about more Fed rate cuts

3-4 minutos - Source: CNBC




GP: US dollar notes 180430
U.S. dollar bank notes are arranged for a photograph on September 7, 2017 in Hong Kong.
studioEAST | Getty Images
The euro gained on Thursday as the dollar weakened after the Federal Reserve on Wednesday cut interest rates for the third time this year and left open the question of whether it would cut them further.
The dollar was falling against most currencies, particularly the Chinese offshore yuan, which rose to an 11-week high.
The Fed lowered its benchmark rate by 25 basis points to a target range of 1.50% to 1.75%. But it dropped a reference in its policy statement that it would “act as appropriate” to sustain economic expansion — language considered a sign of future cuts.
Still, lack of an explicit signal the Fed was done with easing for now was taken as less hawkish than expected, helping to drive the dollar down.
“The new, slightly shorter, statement tries to keep their options open and puts them back into a data-dependent mode, but circumstances could mean that they have less optionality than they think,” said Tim Foster, portfolio manager at Fidelity International in London.
The euro was up 0.1% at $1.1161, after earlier reaching a 10-day high of $1.11705.
It might fall later, though. Reports later on Thursday are expected to show the euro zone’s gross domestic product growth slowed and its inflation rate fell in the third quarter.
The flash HICP inflation data was expected to fall to 0.7% in October from 0.8% in September, according to a Reuters poll. Preliminary third-quarter GDP growth was forecast at 1.1% year-on-year, compared with 1.2% in the second quarter.
“European data won’t provide many reasons to be cheerful about the euro,” ING analysts said in a note.
The dollar index rose on Wednesday to its highest since Oct. 17 as Fed Chairman Jerome Powell spoke about the central bank’s decision. But it slipped 0.4% on Thursday to 97.29, its lowest in a week.
The dollar also fell against the safe-haven Japanese yen, by 0.2% to 108.62 yen. It earlier reached a six-day low of 108.54.
The yen gained after Chile withdrew as host of an APEC summit in November, where the United States and China had been expected to take major steps toward ending a 15-month-old trade war.
Traders still think the world’s two biggest economies will arrive at a trade truce. China’s Foreign Ministry said on Thursday Chinese and U.S. heads of state have been maintaining contact.
The Chinese yuan rallied to its highest in 11 weeks against the dollar. The offshore yuan last traded hands at 7.0345 per dollar, up 0.1%.
“Because of this sort of lull in U.S.-China trade war, you’re starting to see investors getting their toes wet in EM assets,” said Stephen Gallo, European head of FX strategy at BMO Capital Markets. “People are hopeful of a year-end Santa Claus rally ... they’re hopeful we can get a trade deal.”
The Chinese currency was tracking the resurgent risk appetite in emerging markets, instead of leading it, Gallo said.
“I really can’t think of a bullish China story for now.”

Bonds | Treasury Yields Report on October 31, 2019: Treasury yields drop amid doubts over long-term US-China trade deal

Fred Imbert, Silvia Amaro



Treasury yields declined on Thursday as investors loaded up on safer assets amid persisting worries around U.S.-China trade relations.
The benchmark 10-year yield fell to around 11 basis points to 1.68%. The 2-year rate slid by 10 basis points to 1.519%. Yields move inversely to prices.
At around 5 a.m. in New York, Bloomberg News reported Chinese officials have been casting doubt over the possibility of a long-term trade deal with the U.S. The report, which cites unnamed sources, said Chinese officials are concerned about President Donald Trump’s “impulsive nature” and the risk of him backing out of any kind of deal.
Trump later tweeted China and the U.S. were working on an alternative venue to sign phase one of a trade deal which, he said, is “60%” of the overall deal.
Thursday’s moves came after the Federal Reserve on Wednesday cut rates for the third time in 2019. Nonetheless, policymakers signaled that the bank is set to press pause and wait for further data to decide future steps.
The Fed’s Chairman, Jerome Powell, said: “I think we would need to see a really significant move up in inflation that’s persistent before we would consider raising rates to address inflation concerns.”
“Short-term the market will respect the Fed’s posture,” said Gregory Faranello, head of U.S. rates trading at AmeriVet Securities. “But that can change very quickly if we begin to see a more pronounced spillover from the industrial to services/consumer side of the economy. It’s still rough out there.”

Energy | Oil | Oil Price Report on October 31, 2019: Oil falls 1.6% as inventory gain and weak Chinese data weigh

3-4 minutos - Source: CNBC




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A man working in a filling station of Sinopec, China Petroleum and Chemical Corporation, in Shanghai, China, on March 22, 2018.
Johannes EIsele | AFP | Getty Images
Oil prices came under pressure on Thursday from rising U.S. crude oil stocks and weak factory activity in China, with few bullish factors on the horizon.
Brent crude futures fell 40 cents to settle at $60.21 a barrel, erasing earlier gains. They had dropped by 1.6% on Wednesday.
U.S. West Texas Intermediate (WTI) crude futures fell 88 cents, or 1.6%, to settle at $54.18 per barrel. On the month, however, they are set for a rise of about 0.9%, its biggest monthly gain since June.
The front-month Brent contract for December delivery expires on Thursday. The one for January delivery was also down.
Factory activity in China shrank for a sixth straight month in October while growth in the country’s service sector activity was its slowest since February 2016, official data showed on Thursday.
A protracted trade war between China and the United States has been weighing on the demand outlook for oil.
Leaders from the United States and China encountered a new obstacle in their struggle to end the damaging trade conflict when the summit at which they were supposed to meet was canceled because of violent protests in host nation Chile.
U.S. President Donald Trump tweeted a new location would be announced soon.
A Reuters survey showed on Thursday that oil prices are likely to remain pressured this year and next. The poll of 51 economists and analysts forecast Brent crude would average $64.16 a barrel in 2019 and $62.38 next year.
Releasing third-quarter results, Royal Dutch Shell warned that uncertain economic conditions could slow its $25 billion share buyback program, the world’s largest, and had led to a downward revision to its oil price outlook.
The U.S. Federal Reserve cut interest rates for a third time this year on Wednesday, looking to bolster economic growth with a move that could also boost demand for crude.
Yet gains are likely to be capped until inventories start to show sustained declines.
U.S. crude inventories rose by 5.7 million barrels in the week to Oct. 25, the U.S. Energy Information Administration said on Wednesday, compared with analyst expectations for an increase of 494,000 barrels.
“The U.S. stock report was anything but encouraging,” PVM analysts said in a note.
The American Petroleum Institute had previously reported a decline of 708,000 barrels, raising hopes that official figures would also show a fall.
Cushioning the bearish crude data, the EIA showed gasoline and distillate inventories continued to draw.

Commodities | Gold | Gold Price Report on October 31, 2019: Gold gains as dollar weakens after Fed's interest rate cut

3minutos - Source: CNBC




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Gold bars on display in Tokyo on September 27, 2010.
Yoshikazu Tsuno | AFP | Getty Images
Gold prices climbed on Thursday as the U.S. dollar weakened after the Federal Reserve cut interest rates for the third time this year, but signaled the monetary-easing cycle would be paused.
Hopes that the United States and China will sign a preliminary agreement and call a truce to their 16-month trade war was also a factor behind the Fed’s decision to signal that further rate cuts are on hold.
Spot gold was up 0.77% at $1,506.2 per ounce. Prices have risen nearly 2% this month. U.S. gold futures rose 0.82% to $1,508.9 per ounce.
“We took this step to help keep the economy strong in the face of global developments and to provide some insurance against ongoing risks,” Fed Chair Jerome Powell said.
Powell ticked off an extensive list of reasons why he feels the economy is doing well, and likely to continue to do so under the current stance of monetary policy - from robust consumer spending, strengthening home sales, and asset prices he considered healthy but not to a level of excess.
“Gold might not hold its current upside in the short run as it is likely to suffer a little as some recent economic data showed modest growth in the economy,” said Michael McCarthy, chief market strategist at CMC Markets, attributing the present rise in gold prices to a weaker dollar after Fed’s rate cut.
The dollar index against a basket of six major currencies dipped 0.3% to 97.36, making gold cheaper for holders of other currencies.
“A rise in inflation might be the next catalyst for gold buying in the short run, as the Fed is more likely to tighten with a higher inflation rate, making some investors hedge against it (inflation),” McCarthy added.
Asian shares cheered the rate cut and U.S. stock futures edged higher, with MSCI’s broadest index of Asia-Pacific shares outside Japan gaining 0.2%.
“While buoyed by a weaker dollar, if equities continue to outperform, it’s challenging to see gold move above the $1,510 critical primary resistance level,” AxiTrader market strategist Stephen Innes said in a note.
Among other metals, palladium gained slightly to $1,807.68, after jumping nearly 2% in the previous session, and was set to climb for a third consecutive month.
Silver edged up 0.8% to $18.01 an ounce, while platinum advanced 0.2% to $928.36 an ounce.

Exclusive: WHO, Congo eye tighter rules for Ebola care over immunity concerns

Alessandra Prentice



DAKAR (Reuters) - The World Health Organization and Congolese authorities are proposing changes to how some Ebola patients are cared for, new guidelines show, after a patient’s death challenged the accepted medical theory that survivors are immune to reinfection.
FILE PHOTO: A health worker wearing Ebola protection gear enters the Biosecure Emergency Care Unit (CUBE) at the ALIMA (The Alliance for International Medical Action) Ebola treatment centre in Beni, in the Democratic Republic of Congo, April 1, 2019. Picture taken April 1, 2019.REUTERS/Baz Ratner/
There are many unanswered questions surrounding the circumstances of the woman’s death in Democratic Republic of Congo, which has not previously been reported.
But it has raised concerns because the woman, whose name has not been released for confidentiality reasons, was thought to have had immunity after surviving infection, but fell ill again with Ebola and died.
“That was a big red flag event for all of us,” said Janet Diaz, who leads the World Health Organization’s clinical management team for the epidemic in Congo.
Congo’s Ebola outbreak has infected over 3,000 people and killed more than 2,000 since August last year. It is the second-worst outbreak after one in West Africa between 2013 and 2016 that killed more than 11,000 people.
The woman was working as a caregiver in the high-risk “red zone” of a treatment center in Beni, eastern Congo, according to health officials familiar with her case.
She was one of dozens of people assigned to care for Ebola patients because it was assumed they would not get sick as Ebola survivors, although some researchers have considered reinfection to be at least a theoretical possibility.
Their presumed immunity allowed for closer contact with sufferers, many of them children.
Alima, the medical charity that co-ran the Beni center where she worked, said she tested positive for Ebola and died in July before she could be readmitted for treatment.
But it is not yet known whether the woman received a false positive result the first time she was tested, experienced a relapse or was reinfected, health officials say.
Medical experts say it could be years before Ebola survivors’ immunity is fully understood. Yet the recent case is sufficiently worrying for health authorities to rethink how care should be provided to Ebola patients across eastern Congo.
The WHO and Congolese officials have drafted new guidelines, seen by Reuters, that warn that some Ebola survivors may have “incomplete immunity” and advise that additional measures should be taken to protect them from possible reinfection.
The new protocols would set limits on which Ebola survivors can work in treatment centers and standardize precautions that must be taken.
    Survivors who had mild cases of Ebola and those who were found to have low viral loads - or lower levels of the virus circulating in their blood - while infected “need to be carefully assessed, as they may be at risk for having incomplete immunity after infection,” the draft says.
    Diaz said the protocols were still being discussed with health organizations and could change in the drafting process.

QUESTIONS ABOUT IMMUNITY

    Efforts to contain the Congo outbreak have been hampered by militia violence and public mistrust, but aided by medical advances including new vaccines and therapies.
    Ebola survivors, known as “les vainqueurs” – French for “the victorious” – have been at the forefront of treatment, offering vital care, especially to children.
Their assumed immunity has meant they could spend extended time with patients and provide much-needed human contact. The protective gear they must wear is lighter and less restrictive than that worn by other health workers.
But the draft protocols being discussed by health authorities would bar some survivors from working in the contaminated red zone.
These include people whose immune systems may be weaker because they are pregnant or because they have other infections such as HIV or tuberculosis, and those who had low viral loads during their Ebola infection.
The woman who died was pregnant at the time, which she had not disclosed to the treatment center, according to Nicolas Mouly, Alima’s emergencies coordinator. But it is not known if that played a role in her falling sick again.
Mouly said Congo’s biomedical research institute was running tests to learn more about the case. Officials with Congo’s Ebola response and the institute did not respond to phone calls and text messages seeking comment.
In response to the case, health authorities have reviewed the clinical histories of all Ebola survivors working with Ebola patients, the WHO’s Diaz said. They have also reminded treatment centers to ensure their employees are following biosafety rules.
Much remains unknown about how immunity works in Ebola survivors, including how treatments might affect a patient’s susceptibility to reinfection.
“I think that’s the big question: What is the true immunity of an Ebola patient who survived?” Diaz said. “Everyone’s working very hard right now to both care for patients and also move science along.”
    There have been several confirmed cases of relapse with Ebola, including a Scottish nurse here who was infected in Sierra Leone in 2014 and fell ill again 10 months after recovery.
But the symptoms have tended to be localized in certain parts of the body and are not known to have been fatal, according to Raina MacIntyre, who heads the Biosecurity Program at the University of New South Wales’ Kirby Institute.
No case of reinfection has been confirmed since the disease was discovered near the Ebola River in northern Congo in 1976.
Short-term immunity has largely been treated as a given. And a study of 14 survivors of the first documented Ebola outbreak in 1976 found that all were able to develop an immune reaction to at least one of three Ebola virus proteins 40 years later.
    Alima’s Mouly said the creation of a standardized set of rules for survivors working in treatment centers was a positive step, but recommended further measures to ensure the physical and mental well-being of all survivors.
Additional reporting by Stanis Bujakera in Kinshasa; Editing by Edward Mcallister, Kate Kelland, Alexandra Zavis and Mike Collett-White

Analysis | The Finance 202: Fed's decision to cut rates is a sign Trump's tax cuts have fallen short

By Tory Newmyer



THE TICKER

Federal Reserve Chairman Jerome Powell. (AP Photo/Susan Walsh)
Federal Reserve Chair Jerome Powell ignored a question about whether President Trump's tax cuts have succeeded. But the central bank's decision to cut rates is a sign they haven't. 
The Republican architects of Trump’s tax cut said a big boost in business investment would prove the effort succeeded. That bump in corporate spending has failed to materialize nearly two years after the cuts passed into law and a new government report found it dropped 3 percent last quarter.
Here, via CNBC, is how that spending has looked over the last two years:

Powell cited the drop as one of the factors that prompted the central bank to cut interest rates for the third time this year.
The results render a harsh verdict on Trump's signature domestic achievement. “Compared to what was promised, I think the performance has been really lackluster and underwhelming,” Joel Prakken, chief U.S. economist for Macroeconomic Advisers, tells me. “Or maybe more accurately, whatever impact this had has been swamped by other considerations.”
Namely, the cloud of uncertainty cast by the trade war has kept businesses watching and waiting rather than plowing investments into new structures, equipment and other gear that could help improve efficiency. Tax cut proponents said the law would unleash a flood of that spending, ultimately boosting productivity, which would raise profits and worker pay, laying the foundation for sustained economic growth.
Research by Prakken’s firm found the trade war reduced business investment by about $40 billion in 2017 and 2018, shaving .2 percent off GDP in the process. “When you think about it, as long as that uncertainty is there, I don’t think any amount of tax incentive is going to have that big an impact,” Prakken says. 
Business investment is hardly the only category in which the tax cut is underperforming. Trump promised his signature domestic achievement would “lift U.S. sustained annual economic growth to 3%, or even as high as 6%. His advisers said it would boost average household incomes by at least $4,000 a year. His Treasury secretary said it would pay for itself,” the Wall Street Journal’s Greg Ip writes.

A worker stands by the gate of a construction site along the Mariner East pipeline in Exton, Pa. (AP Photo/Matt Rourke)
It has fallen short on all counts. The deficit is nearing $1 trillion, a seven-year high, largely because of declining tax receipts, for example. And third-quarter GDP growth clocked in at 1.9 percent, indicating the economy is expanding at about its same pace before the tax cut. 
“Quite clearly, I think we can say what they promised is not going to come to fruition,” says Kyle Pomerleau, director of the Tax Foundation’s Center for Quantitative Analysis. “Most people in the tax policy community were saying that’s unrealistic even before the law passed.”
Powell said the central bank "does not see any evidence that business investment will weaken further.” But he also signaled the Fed is done cutting interest rates for the time being. “We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook,” he said.
Tim Duy, the University of Oregon economist, writes on his Fed Watch blog that Powell is effectively declaring victory after the Fed’s series of rate cuts. “Such a ‘policy pause’ forecast feels like a good baseline going into the end of the year,” he writes. “After a fairly hectic year, Powell and his colleagues are moving off to the sidelines.”
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MARKET MOVERS


A trader works on the floor at the New York Stock Exchange. (Reuters/Brendan McDermid)
Stocks notch record high. CNBC's Fred Imbert: Stocks rose on Wednesday as investors cheered the Federal Reserve’s third rate cut of the year and comments from Chairman Jerome Powell that signaled it would be a while before the central bank hikes rates.The S&P 500 hit an all-time high, climbing 0.3% to 3,046.77. The Dow Jones Industrial Average closed 115.27 points higher, or 0.4% at 27,186.69. The Nasdaq Composite ended the day up 0.3% at 8,303.98... Stocks moved to their highs of the day after Powell said in a press conference after the decision that the central bank would need to see a 'really significant' rise in inflation before the Fed thought about hiking."
Hong Kong slides into recession. Bloomberg's Eric Lam and Enda Curran: "Hong Kong’s economy contracted sharply in the third quarter as it entered a recession, exceeding economists’ worst estimates of the damage from nearly five months of protests. Third-quarter gross domestic product retreated 3.2% from the previous three months, after a 0.4% contraction in the second quarter. That’s the worst slump since 2009, in the aftermath of the global financial crisis. Two consecutive periods of negative growth mean Hong Kong has fallen into a technical recession.
"The economic debate now is focused on how long the downturn will last, if recent glimmers of stabilization point to a bottom, and if the U.S.-China trade war and the demonstrations have done lasting damage."

TRUMP TRACKER

TRADE FLY-AROUND:

A person rides a bicycle past a burning barricade during a protest against Chile's government in Santiago. (Henry Romero/Reuters)
China skeptical of long-term trade pact with Trump. Bloomberg's Shawn Donnan, Jenny Leonard and Steven Yang: "Chinese officials are casting doubts about reaching a comprehensive long-term trade deal with the U.S. even as the two sides get close to signing a 'phase one' agreement. In private conversations with visitors to Beijing and other interlocutors in recent weeks, Chinese officials have warned they won’t budge on the thorniest issues, according to people familiar with the matter. They remain concerned about [Trump’s] impulsive nature and the risk he may back out of even the limited deal both sides say they want to sign in the coming weeks.
"Chinese policy makers are gathered in Beijing for a key political meeting that’s set to conclude on Thursday. In meetings ahead of that plenum some officials have relayed low expectations that future negotiations could result in anything meaningful -- unless the U.S. is willing to roll back more of the tariffs. In some cases, they’ve urged American visitors to carry that very message back to Washington, the people said."
— Chile cancels conference where China deal might have been signed: “Chile has canceled a pair of major global summits on the economy and environment in the coming weeks amid unrest in Santiago, scrambling [Trump’s] hopes of signing a first-step trade deal with China at one of the events,” my colleagues David Nakamura and Brady Dennis report.
“Trump was scheduled to attend the Asia Pacific Economic Cooperation forum in Santiago from Nov. 15 to 17. White House officials said he was planning to meet with China’s President Xi Jinping in a bid to lock in details of a ‘phase one’ trade pact that could ease tensions between the economic powers and lay the groundwork for a bigger trade deal next year.”
… But Treasury Secretary Steve Mnuchin says a deal is still likely to be signed in November: “Before the announcement, Mnuchin said the United States was ‘looking forward to President Trump and President Xi signing Phase 1 of our important trade agreement later next month when they’re together in Chile,’ adding, ‘I think that would be an important economic achievement for both of us.’ ”
— Starbucks stock jumps on U.S. and China sales: “Starbucks “reported quarterly revenue that topped analysts’ expectations as cafes in the U.S. and China attracted more customers,” CNBC’s Amelia Lucas reports.
“The company reported global same-store sales growth of 5%. Both the U.S. and China, its two biggest markets, reported strong same-store sales and increasing traffic.”

Chinese manufacturing activity fell to an eight-month low in October, raising another warning signal as hopes for a temporary truce in the U.S.-China trade talks were dealt a further blow.
WSJ

POCKET CHANGE


— The bellwether counties of a recession: "Why do we care how Robertson County, Tenn., Pontotoc County, Miss., Boone County, Ill., and Elkhart County, Ind., are doing, or how much they have in common? Because, in addition to manufacturing big-ticket luxuries beloved by the middle class, they have predicted every recession since 1975. Their 12-month average employment numbers always fall before a wider downturn begins," my colleague Andrew Van Dam reports.
"What can we learn from them today? Our most recent numbers, from early this year, show them bending south, but not cratering. But local officials remain upbeat, and it’s too early to tell if the counties are preparing to slip ahead of a downturn, or if any hint of weakness is just a temporary hiccup."
  • Why these four?: "... Unlike many others that weaken before the broader economy, they have shown strong job growth in recent decades. Their past downturns were exceptional and thus struggles there might plausibly signify something bigger. And the implications are immense. These four counties won’t determine the next election. But the economy they inform us about will."
What's happening right now?:


Twitter CEO Jack Dorsey. (Jose Luis Magana/AP)
— Twitter to ban all political ads: Twitter “said it would ban all advertisements about political candidates, elections and hot-button policy issues such as abortion and immigration, a significant shift that comes in response to growing concerns that politicians are seizing on the vast reach of social media to deceive voters ahead of the 2020 election,” my colleague Tony Romm reports.
“Twitter CEO Jack Dorsey announced the shift in policy in a series of tweets, stressing that paying for political speech has the effect of ‘forcing highly optimized and targeted political messages on people.’ The move marks a break with Twitter’s social-media peers, Facebook and Google-owned YouTube, which have defended their policies around political ads in recent weeks.
  • What a subtweet: Dorsey’s announcement came as Facebook was unveiling its earnings report.
— Lawsuit claims Juul put 1 million tainted pods into the market: “A former executive contends in a new lawsuit that Juul released 1 million tainted vaping pods into the market, then failed to warn retailers and consumers,” my colleague Taylor Telford reports.
“Siddharth Breja, who had been the vice president of global finance, claims in a lawsuit filed Tuesday that he was ‘inappropriately terminated’ in March, days after raising concerns about a shipment of mint-flavored refill kits and for protesting the company’s refusal to alert the public. The suit also alleges that Juul breached several California business regulations … Juul is already facing scores of lawsuits and federal scrutiny stemming from allegations it created a youth vaping epidemic.”
— Fiat and PSA agree to merge: “Fiat Chrysler Automobiles NV and Peugeot maker PSA Group of France have agreed on the terms of a merger that would create one of the world’s largest auto makers by volume with a market value of $48.4 billion, said people familiar with the situation,” the Wall Street Journal’s Eric Sylvers, Ben Dummett and Nick Kostov report.
“The boards of Fiat Chrysler, Peugeot and Exor NV, the Agnelli family holding company that controls the Italian-American car maker, approved the deal on Wednesday, the people said. Fiat Chrysler Chairman John Elkann is slated to become chairman of the newly merged company while Peugeot Chief Executive Carlos Tavares would be CEO. Both would have seats on the board of the new company, which would comprise six Peugeot appointees, including Mr. Tavares, and five from Fiat Chrysler.”

MONEY ON THE HILL


Family members of Boeing Co. 737 Max crash victims hold photographs as CEO Dennis Muilenburg speaks. (Andrew Harrer/Bloomberg News)
— Boeing CEO grilled for second day: House Democrats “revealed key documents from their investigation into the deadly crashes of two 737 Max jets, pressing Boeing’s chief executive for more answers as he returned to Capitol Hill for a second day of hearings punctuated by sharp exchanges and incredulous reactions from lawmakers,” my colleagues Ian Duncan, Michael Laris and Lori Aratani report.
The “hearing was far more intense than Muilenburg’s appearance before a Senate committee Tuesday. He sat almost level with families of the crash victims, who groaned at Muilenburg’s repeated evocation of his boyhood on an Iowa farm and were angered when Hamilton stumbled over the date of the second crash. Lawmakers raked through the documents they had gathered, asking Muilenburg to account for opportunities seemingly missed to avert the crashes. One congressman returned for several rounds of questioning to establish a single fact, while others assailed Muilenburg for taking home $30 million last year.”

DAYBOOK

Today:
  • Fiat Chrysler, Re/Max Holdings, Bristol-Myers, Clorox, Cigna, DuPont, Altria, Royal Dutch Shell, Sirius XM and Sanofi are among the notable companies reporting their earnings
Friday:

THE FUNNIES

From The Post's Tom Toles:

BULL SESSION

Nats win the World Series! The Post's Dave Sheinin and Sam Fortier: "Suddenly, it was all over, and the blue-jerseyed visitors were spilling and screaming out of every corner of Minute Maid Park — from their dugout along the third base line, the bullpen in left field, the expanse of outfield, all four corners of the diamond — and converging upon the joyous pile of humanity forming near the center. Once the Washington Nationals had no more giant mountains to climb, they took the small dirt hill of the pitcher’s mound, and they hugged and bounced.
"With one more comeback win, at the end of a comeback season for the ages, the Nationals were World Series champions. A 6-2 victory over the Houston Astros in Game 7 on Wednesday night sealed it, delivering the first baseball title for the nation’s capital since Walter Johnson’s Senators won their only one in 1924."
Here's a look at the end of the game and its aftermath:
From the Nats's Twitter feed:
From ABC News producer Chris Donovan:

Market Insider | Biggest Moves Premarket: Stocks making the biggest moves premarket: Altria, Bristol-Myers Squibb, Generac, Apple and more

Peter Schacknow



Check out the companies making headlines before the bell:
Altria (MO) – The tobacco producer beat estimates by 4 cents with adjusted quarterly profit of $1.19 per share, 4 cents above estimates, with revenue also beating forecasts. Altria also took a $4.5 billion writedown on its investment in e-cigarette maker Juul, on the possibility of further FDA actions as well as bans on e-cigarette products by various states and cities.
Bristol-Myers Squibb (BMY) – The drugmaker came in 10 cents above estimates with adjusted quarterly earnings of $1.17 per share, with revenue above estimates as well. However, Bristol-Myers also cut its full-year guidance.
Generac (GNRC) – The maker of home and commercial generators reported adjusted quarterly profit of $1.43 per share, 10 cents above estimates, with revenue also beating Wall Street forecasts. Generac said rolling power blackouts in California are among the key factors boosting demand for its generators.
Estee Lauder (EL) – The cosmetics company reported adjusted quarterly earnings of $1.67 per share, 7 cents above estimates, with revenue also beating forecasts on strong results from the company’s skin care unit. However, it lowered its full-year outlook on anticipated softness in brick-and-mortar retail. Estee Lauder also raised its quarterly dividend by 12 percent to 48 cents per share.
Cigna (CI) – The insurance company beat estimates by 18 cents with adjusted quarterly profit of $4.54 per share, while revenue also came in above Wall Street forecasts. Cigna said it saw strength across all its business lines during the quarter.
Marathon Petroleum (MPC) – Marathon announced its intention to spin off its Speedway gasoline station chain into a separate, publicly traded company. Activist investor Elliott Management had been calling for a Speedway spin-off, among other moves to enhance shareholder value.
Clorox (CLX) – The household products maker beat estimates by 5 cents with quarterly earnings of $1.59 per share, though revenue was slightly below forecasts. Clorox said it is still working through challenges in its bags and wraps efforts and its charcoal business, but it is growing volume and margins in three of its four business segments.
Dunkin’ Brands (DNKN) – The restaurant chain operator earned an adjusted 90 cents per share for its latest quarter, 9 cents above estimates, although revenue was below forecasts. U.S. sales were helped by strong demand for Dunkin’s premium beverages like espresso and cold brew. Dunkin’ also raised its full year earnings forecast.
Apple (AAPL) - Apple reported quarterly profit of $3.03 per share, beating the consensus estimate of $2.84. Revenue also beat forecasts, as expanding iPad and AirPod demand and growth in services helped offset a drop in iPhone sales.
Starbucks (SBUX) – Starbucks matched Wall Street estimates with adjusted quarterly profit of 70 cents per share, with the coffee chains revenue above analyst forecasts. Global comparable store sales grew a better than expected 5 percent, helped by a jump in cold drink sales.
Facebook (FB) – Facebook earned $2.12 per share for its latest quarter, compared to a consensus estimate of $1.91, with revenue also above Wall Street forecasts. Facebook’s average revenue per user came in at $7.26 during the quarter, higher than analysts had estimated.
Twitter (TWTR) - Twitter will ban all political ads globally starting Nov. 22, amid growing concerns about the spread of false and misleading information.
Lyft (LYFT) - Lyft lost $1.57 per share for its latest quarter, smaller than the $1.66 that analysts were anticipating. The ride-hailing service’s revenue exceeded expectations, and Lyft said it anticipated reaching profitability in about two years.
Fiat Chrysler (FCAU) – Fiat Chrysler and Peugeot’s parent, Groupe PSA, announced their intention to work toward a binding merger agreement. The automakers’ tentative proposal which see each company’s shareholders own 50 percent of the newly combined entity.
Ford Motor (F) – Ford and the United Auto Workers union reached a tentative labor deal, just days after GM workers ratified a labor agreement that ended a 40-day walkout.
Etsy (ETSY) – Etsy matched Street forecasts with quarterly profit of 12 cents per share, while the online crafts marketplace saw revenue exceed Wall Street forecasts. Gross merchandise sales were up by more than 30 percent, but the company also saw gross margins decline by more than 3 percentage points.

US Market | Futures Indicator: US futures point to a higher open after Fed signals a pause in rate cuts

Elliot Smith



U.S. stock index futures were higher Thursday morning.
At around 03:40 a.m. ET, Dow futures rose 21 points, indicating a positive open of more than 26 points. Futures on the S&P — which closed at an all-time high in the previous session — and Nasdaq were both seen slightly higher.
The Federal Reserve cut interest rates by 25 basis points for the third time this year on Wednesday. Comments from Chairman Jerome Powell indicated that the central bank would be hitting pause on monetary policy easing for now, and there will be no hiking until inflation rises “significantly.”
Earnings season remains high on the agenda for investors, after Apple on Wednesday forecast sales ahead of Wall Street expectations for the holiday season while Facebook reported its third straight climb in quarterly sales growth.
Italian-American automaker Fiat Chrysler (FCA) is set to report earnings Thursday after announcing a landmark merger with French rival PSA Peugeot Citroen, which will create the world’s fourth-largest car maker.
FCA will pay its shareholders a 5.5 billion euro ($6.1 billion) special dividend and the two companies will join forces through a 50-50 share swap. The new company’s shares will be listed in New York, Paris and Milan.
A slew of economic data is due at around 09:30 a.m. ET on Thursday, including PCE (personal consumption expenditure) price index and Core PCE price index figures, along with personal income and spending. Figures are also expected on wages and the latest weekly jobless claims.

Oct 30, 2019

Bonds | Treasury Yields Report: Treasury yields fall after the Fed cuts rates for the third time in 2019

Thomas Franck




U.S. government debt yields slipped on Wednesday after Federal Reserve officials cut rates for a third time in 2019 and said they’d need to see a marked and persistent rise in inflation before hiking borrowing costs in the future.
The yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 1.789%, while the yield on the 30-year Treasury bond was also lower at around 2.263%. The 2-year Treasury yield, more sensitive to changes in central bank policy, fell to 1.622% following the Fed decision.
Though the Fed voted to cut its overnight lending rate by 25 basis points, yields rose slightly after officials suggested in a statement that its third rate cut for 2019 could be followed by a pause in policy adjustments. The Fed will now target the federal funds rate in a range between 1.5% and 1.75%.
“The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate,” the statement said. FOMC members cited weak inflation outlook and global growth concerns in cutting borrowing costs again.
The FOMC removed a key clause that had appeared in post-meeting statements since June, when it began broadcasting that it would “act as appropriate” to sustain economic growth in the U.S. Its removal signaled to some that the series of “mid-cycle adjustments” rate cuts could be put on hold for now.
But Chairman Jerome Powell added later on Wednesday that the central bank would need to see a sustained and significant uptick in price pressures before considering future rate hikes.
“So I think we would need to see a really significant move up in inflation that’s persistent before we would consider raising rates to address inflation concerns.”
Both Kansas City Fed President Esther George and Boston Fed President Eric Rosengren dissented and would have preferred to leave rates unadjusted. St. Louis Fed President James Bullard, who had previously favored steeper rate cuts, did not dissent with the Fed’s October decision.
“I thought the goal of the meeting was to try not to force Powell’s hand to cut and I thought the statement he gave on the offset was down that path ... he said things that were more balanced,” said Jim Schaeffer, deputy chief investment officer at Aegon Asset Management.
“Then I thought he got more hawkish in the meeting, talking about insurance,” Schaeffer added. “But toward the end he seemed to pull it back a little. The bottom line from Powell is not that they aren’t going to cut again, but don’t expect it.”
Since the Fed’s September meeting, the economic situation in the U.S. has proved stable, with softness in retail sales largely balancing multidecade lows in the unemployment rate and modest wage increases. Some have suggested that with trade tensions between the U.S. and China easing, better-than-expected corporate profits and stronger data, the Fed will be anxious to halt its “mid-cycle adjustment” of lowering rates.
The government’s GDP report on Wednesday showed the economy expanded at a 1.9% rate in the third quarter, better than what economists polled by Dow Jones had forecast but still shy of the 2% in the second quarter.

Treasurys

TICKER COMPANY YIELD CHANGE %CHANGE
US 3-MOU.S. 3 Month Treasury1.6440.000.00
US 1-YRU.S. 1 Year Treasury1.573-0.0230.00
US 2-YRU.S. 2 Year Treasury1.604-0.0380.00
US 5-YRU.S. 5 Year Treasury1.609-0.050.00
US 10-YRU.S. 10 Year Treasury1.775-0.060.00
US 30-YRU.S. 30 Year Treasury2.256-0.0750.00

News | Federal Reserve: The Fed cuts interest rates, but indicates a pause is ahead

Jeff Cox



The Federal Reserve approved an expected quarter-point interest rate cut Wednesday but indicated that the moves to ease policy could be nearing a pause.
In a vote widely anticipated by financial markets, the central bank’s Federal Open Market Committee lowered its benchmark funds rate by 25 basis points to a range of 1.5% to 1.75%. The rate sets what banks charge each other for overnight lending but is also tied to most forms of revolving consumer debt.
It was the third cut this year as part of what Fed Chairman Jerome Powell has characterized as a “midcycle adjustment” in a maturing economic expansion.
Along with the decrease came language pointing to a higher bar for future easing.
The FOMC removed a key clause that had appeared in post-meeting statements since June saying it was committed to “act as appropriate to sustain the expansion.” Powell had used the phase in early June to tee up the July rate cut, and it has been incorporated into the official language since.
In its place was more tempered language.
“The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate,” the statement said.
Fed Chair Jerome Powell was even clearer in a news conference, saying central bank officials “see the current stance of monetary policy as likely to remain appropriate.”
Market participants had been looking for whether the Fed might start to signal that the policy accommodation, which had come following nine rate hikes since December 2015, would be winding down. The new language suggests an increased level of data dependence rather than an ongoing intent to adjust rates lower. While market pricing had been around 100% for a cut at this meeting, traders had seen only about a 25% probability of a move at the Fed’s next meeting on Dec. 10-11, according to CME data heading into Wednesday’s decision.
In their public speeches, Powell and multiple other Fed officials have characterized the U.S. economy as strong, led by solid consumer spending but threatened by exogenous factors such as global weakness, the U.S.-China tariff war and uncertainties associated with Brexit.

Other changes to statement

The statement continued to view the labor market as one that “remains strong” and economic activity as “rising at a moderate rate.” Descriptions of virtually all other benchmarks of activity remained unchanged, though the committee made a minor tweak regarding business fixed investment and exports to note that they “remain weak.”
The decision comes the same day that the government reported GDP growth of 1.9% that, while reflecting a deceleration, was above Wall Street estimates for 1.6%. Job gains, meanwhile, have slowed in recent months but are well above the 109,000 or so that the Atlanta Fed estimates are necessary to keep the unemployment rate at the 50-year low of 3.5%.
In addition to the solid performance in the jobs market and in consumer spending, stock market averages are around new highs.
Within the Fed, there has been disagreement about whether additional cuts are needed. Regional presidents Esther George of Kansas City and Eric Rosengren of Boston again voted against a reduction, with both maintaining that the committee should have held the line at the previous rate.
President Donald Trump, on the other hand, has pushed hard for the Fed to keep cutting rates and to resume the quantitative easing program the central bank used during and after the financial crisis to stimulate the economy.
The Fed has been buying bonds again, but officials insist it is an effort to stabilize the funds rate within the target range rather than a resurrection of QE. Still, the central bank balance sheet has expanded by about $100 billion over the past month and is back above the $4 trillion mark, $3.6 trillion of which is in Treasurys and mortage-backed securities.
The expansion was due mostly to growth in Treasurys and T-bills.
Wednesday’s statement reflects the recent balance sheet expansion, noting that open market operations will continue at least into the second quarter of 2020, while term and repo operations aimed at stabilizing overnight markets will continue at least through January.

News | Auto Industry: Fiat Chrysler and Peugeot reportedly reach deal to merge

Michael Wayland




Reusable: Peugeot 108
Jens Schlueter | Getty Images

DETROIT – From Daimler-Chrysler to Fiat Chrysler, the former American automaker Chrysler Corp. has gallivanted around the world to find partners to assist in its growth or help keep it afloat.
It now has its sights set on Peugeot maker PSA Group. Both the French carmaker and Fiat Chrysler on Wednesday confirmed they are in talks that could to create the world’s fourth-largest automaker with a roughly $50 billion valuation.
The PSA board approved the merger and the Fiat Chrysler board is set to meet Wednesday, sources told the Wall Street Journal.
Reports of the talks, including a potential “all-share merger of equals,” as the Wall Street Journal first reported, sent shares of Fiat Chrysler surging as much as 8% on Tuesday. The stock is trading slightly higher Wednesday after opening at $14.34 a share.
The confirmation of the talks comes about five months after Fiat Chrysler ended merger discussions with PSA’s French rival, Renault. Fiat Chrysler, the world’s seventh-largest automaker, has been on a quest for a tie-up to grow scale and consolidate costs for several years.
Boards for both Fiat Chrysler and PSA are reportedly in Europe on Wednesday to discuss the talks, however a successful deal is far from guaranteed.

‘Litany of obstacles’

Challenges include consolidation, clashing corporate cultures and government and regulatory approval, among other issues.
Talks of a potential tie-up between Fiat Chrysler and Renault ended earlier this year largely due to the French government, which owns a roughly 12.2% stake in Renault. The French government currently owns a 13.7% stake in PSA.
Bank of America Merrill Lynch analyst John Murphy cited the French government’s ownership as one of a “litany of obstacles” facing such a deal. Murphy said similar to Fiat Chrysler’s potential tie-up with Renault, the “industrial logic” is “unclear unless there is massive headcount reduction.”
Such a deal, according to Murphy, also could alienate U.S. buyers, lowering the potential benefit of the two automakers combining.
Even if the merger goes through, “there is a material risk American consumers may shift to Ford and GM products due to FCA possibly no longer being perceived as an ‘American’ identity, not to mention the potential political implications of this potential deal.”
One possibility PSA and Fiat Chrysler are discussing, according to the Wall Street Journal, which cited unnamed sources, is for Peugeot CEO Carlos Tavares to lead the combined automaker as its CEO, while John Elkann, Fiat Chrysler chairman and heir of the Agnelli family dynasty that founded Fiat, would continue his role with the combined company.
Bernstein analyst Max Warburton said a merger between Fiat Chrysler and Peugeot “has more logic” than one with Renault. He specifically cites the potential for Tavares to create “long-term value.”
“We ultimately think a deal could be made to work — this would be as much about raising performance as it would be about synergies,” he wrote in a Tuesday note to investors.
However, Warburton noted a deal between the two does little to increase business in China, the world’s largest auto market, and the timing is “sub-optimal” given FCA’s earnings are at all-time high.

Rewards

Analysts see the merger as a quick way for Peugeot to re-enter the U.S. market after a decades-long hiatus, while continuing to grow its European operations following the company’s acquisition of GM’s European business in 2017.
“This news is not unexpected, given that both companies have been actively exploring tie-ups with others to yield cost savings and other synergistic benefits,” said David Leggett, automotive editor at data analytics firm GlobalData.
For Fiat Chrysler, it would finally cement former CEO Sergio Marchionne’s vision of creating a global automaker with the resources to successfully compete in the ever-changing auto industry.
In 2015, Marchionne, who unexpectedly died in July 2018, called for industry consolidation in a presentation called “Confessions of a Capital Junkie.” Consolidation would save capital that was being wasted by automakers developing redundant technologies, he said.
“These were not hallucinations of somebody looking to grandstand in the industry,” Marchionne said at the time. “We have spent a lot of time trying to understand what makes this machine tick. And the machine can tick a lot better if certain things happened.”
Marchionne believed only a handful of the world’s largest automakers would survive and have the capital to compete as automakers push for autonomous and all-electric vehicles.
The deal with PSA would give Fiat Chrysler access to PSA’s newer vehicle platforms in Europe as well as emerging technologies.
Marchionne’s methodical combination of Fiat and Chrysler a decade ago is considered one of the more successful tie-ups for the auto industry in the recent years.
Chrysler’s previous “merger of equals” with German automaker Daimler-Benz in 1998 was a culture clash and failure that led to a divorce less than a decade later, followed by Chrysler spiraling into bankruptcy in 2009.

Energy | Oil | Oil Price Report: Oil falls more than 1% as US inventory rises, trade war weighs

3minutos - Source: CNBC




GP: US Oil Workers Oil Boom in Texas's Permian Basin 191030
Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 1, 2018.
Benjamin Lowy | Getty Images
Oil prices fell on Wednesday as worries about a possible delay in resolving the U.S.-China trade war, which has hurt global oil demand, competed with a price-supporting drop in U.S. crude inventories.
According to the US Energy Information Administration, US crude inventories increased by 5.7 million barrels from the previous week. US inventories are now at 438.9 million barrels, which is about 1% above the five year average for this time of year, the EIA said.
Brent crude was down 70 cents, at $60.90 a barrel. U.S. West Texas Intermediate (WTI) crude was down 92 cents, or 1.7%, at $54.62 a barrel.
The United States and China were continuing to work on an interim trade agreement, but it may not be completed in time for U.S. and Chinese leaders to sign it next month, a U.S. administration official said.
“Selling came courtesy of the fading optimism over trade and a Fed rate cut. Risk assets were dealt a blow as market players worried that the U.S. and China would delay settling their trade differences,” PVM analyst Stephen Brennock said.
However, U.S. crude inventories fell by 708,000 barrels in the week ended Oct. 25 to 436 million, compared with analysts’ expectations for an increase of 494,000 barrels, according to the American Petroleum Institute, an industry group.
Still, crude stocks at the delivery point for WTI at Cushing, Oklahoma were up 1.2 million barrels compared to the previous week, dragging on futures prices for the benchmark.
“Stocks at the WTI delivery hub have been trending higher since late September, which has put pressure on the prompt WTI time spreads, with the December/January spread this month having shifted from backwardation to a contango,” Dutch bank ING said in a note.
Investors are also awaiting the outcome of the Federal Reserve’s two-day policy meeting this week. The Fed looks set later on Wednesday to nudge along a U.S. economy that is being hampered by slowing investment and weak growth overseas. It would be the third cut this year.
A rate cut would help support oil prices as a stronger economy typically implies higher demand for crude, while falling inventories suggest the market is coming into balance.
The Organization of the Petroleum Exporting Countries and other producers including Russia have cut oil output since January to support prices.
The U.S. government’s Energy Information Administration issues its weekly inventory report at 10:30 a.m. EDT.

Commodities | Gold | Gold Price Report:Gold prices fall after Fed cuts interest rates

3minutos - Source: CNBC




GP: Gold and Silver Casting at the Perth Mint 190918
Gold bars sit in a vault at the Perth Mint Refinery in Perth, Australia, on August 9, 2018.
Carla Gottgens | Bloomberg | Getty Images
Gold prices edged higher on Wednesday having touched a one-week low in the previous session, as investors awaited a decision by the U.S. Federal Reserve on a widely anticipated rate cut.
Spot gold was up 0.2% at $1,490.23 an ounce. U.S. gold futures edged 0.2% higher to $1,493.20.
The U.S. central bank is set to share the statement of a two-day monetary policy meeting at 1800 GMT. Investors expect the Fed to lower rates by a quarter of a percentage point for a third time this year.
“Prices are relatively rangebound ... If the Fed signals a hawkish cut, that could spell more dollar strength in the near term and could suppress gold prices”, said Han Tan, market analyst at FXTM.
“However, if the Fed Chair Jerome Powell still has cognisance of the downside risks to the U.S. economy, of the economic headwinds, and he believes the door is wide open for more rate cuts going to 2020, then you could see some dollar weakness in the near term.”
A weaker greenback makes dollar-denominated gold cheaper for holders for other currencies.
Supporting gold, a rally in global shares stalled on worries that a Sino-U.S. first-stage trade deal could be delayed, after a U.S. administration official said an agreement might not be completed in time for signing in Chile next month.
“The demand for bullion will remain intact because the ‘phase 1’ trade deal doesn’t dismantle existing tariffs ... so given the deteriorating economic conditions and the swelling concerns over the global economic outlook, safe-haven assets like gold will remain supported going into 2020,” FXTM’S Tan said.
Data released on Tuesday showed U.S. consumer confidence fell for a third straight month in October, further helping gold.
Technically, “we would have a first bearish signal only below $1,480, while a rebound above $1,500 could open space for another recovery to $1,520,” ActivTrades chief analyst Carlo Alberto De Casa said in a note.
“As long as prices can remain above $1,460-$1,470, the main trend remains positive, despite the recent weakness.”
Investors also kept a close watch on Brexit developments, where Britain is set to hold a December election after Prime Minister Boris Johnson won approval from parliament for an early ballot.
Elsewhere, silver was steady at $17.80 an ounce, while platinum was unchanged at $920 and palladium was flat at $1,781.

Market Insider | Biggest Moves Premarket: Stocks making the biggest moves premarket: GE, Yum, Molson Coors, Garmin, Amgen & more

Peter Schacknow



Check out the companies making headlines before the bell:

General Electric – General Electric reported quarterly profit of 15 cents per share, 4 cents a share above estimates. Revenue also exceeded forecasts and GE raised its full-year cash flow forecast.
Yum Brands – Yum earned an adjusted 80 cents per share for its latest quarter, 14 cents a share shy of consensus forecasts. Revenue also came in below estimates, hurt by a weaker-than-expected performance at its Pizza Hut and KFC units.
Anixter International – The software company agreed to be acquired by private-equity firm Clayton, Dubilier & Rice for $81 per share in cash. The total value of the deal is $3.8 billion including assumed debt, with the transaction expected to close by the end of 2020′s first quarter.
Molson Coors – The beer brewer fell a penny a share short of estimates, with quarterly profit of $1.48 per share. Revenue also came in short of forecasts and Molson Coors announced a restructuring that will slash up to 500 jobs.
Garmin – The GPS and fitness device maker earned $1.19 per share for its latest quarter, well above the 95 cents a share consensus estimate. Revenue also topped forecasts. Garmin saw better-than-expected results in all its units, as well as higher-than-expected profit margins.
Tupperware – Tupperware earned an adjusted 43 cents per share, well short of the 62 cents a share consensus estimate. The housewares maker’s revenue also came in short of forecasts. The company said it was experiencing challenging trends in markets like the U.S., China, Canada, and Brazil. Tupperware also cut its full-year earnings outlook.
Johnson & Johnson – J&J said its testing found no asbestos in its Johnson’s Baby Powder. That testing included a single bottle that the Food and Drug Administration had said contained trace amounts of asbestos, prompting J&J to recall a lot of 33,000 bottles earlier this month.
Fiat Chrysler – Fiat Chrysler said it was in talks about a possible merger with Peugeot maker PSA that could create a combined company worth about $50 billion. Fiat Chrysler had abandoned talks earlier this year to merge with France’s Renault.
Amgen – Amgen reported quarterly profit of $3.66 per share, 13 cents a share above estimates. The biotech company’s revenue also beat forecasts and Amgen raised its full-year guidance amid strong sales of its biosimilar drugs.
Electronic Arts – Electronic Arts reported quarterly profit of 96 cents per share, 10 cents a share above estimates. The video game maker’s revenue also topped estimates. Electronic Arts saw stronger digital sales, including game downloads and in-game purchases.
Mattel – Mattel came in 10 cents a share above estimates, with quarterly profit of 26 cents per share. The toy maker’s revenue was slightly above Wall Street forecasts. Mattel also said it is restating some past earnings following an internal investigation into accounting issues, and the company’s chief financial officer is resigning.
Mondelez International – Mondelez reported quarterly profit of 64 cents per share, 4 cents a share above estimates. Revenue was slightly above forecasts. The snack maker raised its full-year outlook, as sales volume increases across its major markets.
FireEye – FireEye raised its annual revenue guidance, after doubling estimates by reporting quarterly profit of 2 cents per share. The cybersecurity company’s revenue also beat forecasts as it sold more cloud subscriptions.
Advanced Micro Devices – AMD reported adjusted earnings of 18 cents per share, in line with Street forecasts. Revenue was very slightly below estimates, although the chipmaker reported better-than-expected results for its data center business.
Yum China – Yum China beat analyst estimates by 3 cents A share, with quarterly profit of 58 cents per share. The restaurant operator’s revenue was below forecasts, however, as were comparable-restaurant sales at KFC, Pizza Hut, and Taco Bell.
Sony – Sony reported its best-ever second-quarter profit, driven by strong sales of its image sensors. Sales helped offset a drop in earnings from Sony’s gaming division.
Edison International – Edison’s Southern California Edison unit said its equipment will likely be found to have been associated with a 2018 California wildfire that damaged more than 1,000 homes in Los Angeles and Ventura counties.

Bank News | Deutsche Bank Earnings: Deutsche Bank posts 832 million euro loss amid major restructuring

Silvia Amaro




GP: Deutsche Bank 161020
Statues stand outside a Deutsche Bank AG branch in Frankfurt, Germany.
Krisztian Bocsi | Bloomberg | Getty Images
Deutsche Bank reported a net loss that missed market expectations on Wednesday as a major restructuring plan continues to weigh on the German lender.
It reported a net loss of 832 million euros ($924 million) for the third quarter of 2019. Analysts were expecting a loss of 778 million euros, according to data from Refinitiv. It had reported a net profit of 229 million euros in the third quarter of 2018, but a loss of 3.15 billion euros in the second quarter of this year.
Here are some of the key highlights:
  • Total net revenues: 5.3 billion euros in the third quarter vs. 6.2 billion euros a year ago.
  • Common equity tier 1 ratio stood at 13.4% in the third quarter, vs. 14% a year ago.
  • Total non interest expenses: 5.8 billion euros in the third quarter, vs. 5.6 billion euros a year ago.
“Despite having launched the most comprehensive restructuring of our bank in two decades, we delivered profits in our four core businesses during the quarter and grew loans and assets under management,” Christian Sewing, chief executive officer of Deutsche Bank, said in a statement.
He added: “Transformation is fully underway with tangible progress on costs and de-risking. A 13.4% CET1 ratio underlines our strength.”
The embattled German lender has struggled since the global financial crisis of 2008 and the subsequent debt crisis in the euro area. The bank has faced billion-dollar fines, increased market competition, a lower market share in both commercial and investment banking, as well as a series of management changes.
Earlier this year, Deutsche Bank announced a wide restructuring plan in an attempt to revive its business. At the time, Sewing said the bank would be exiting its global equities business, scale back investment banking and slash thousands of jobs. The German bank also plans to cut 18,000 jobs worldwide by 2022.
At the end of the third quarter of 2019, Deutsche Bank reported that it had 89,958 employees — a 5% drop from a year ago.

Higher costs

Net revenues in investment banking fell 5% from a year ago. The private bank business also saw a 3% fall in net revenues and net revenues in asset management also decreased by 4% from a year ago.
Deutsche Bank cited higher expenses in its corporate, investment and private banking units. These included higher spending on controls, technology and internal services. Meanwhile, assets under management rose to 754 billion euros in the third quarter — a 9% increase from a year ago.
Shares of Deutsche Bank are down by about 16% from a year ago.

US Market | Futures Indicator: US futures point to mixed open as investors await Fed rate decision

Sam Meredith



U.S. stock index futures were mixed on Wednesday morning, as market participants waited for the Federal Reserve’s decision on interest rates.
At around 03:00 a.m. ET, Dow futures slipped 20 points, indicating a positive open of more than 6 points. Futures on the S&P — which briefly touched an all-time high in the previous session — and the Nasdaq were both marginally lower.
The moves in pre-market trade come ahead of an expected quarter-point rate cut by the U.S. central bank. It would mark the third time this year the Fed has lowered borrowing costs.
Looking ahead, market expectations for another interest rate cut in December are at 23%, according to CME Group’s FedWatch tool, compared with almost 70% earlier this month.
Meanwhile, a report by Reuters published Tuesday cited an unnamed U.S. administration official as saying an interim trade agreement between the U.S. and China might not be completed in time for signing in Chile next month.
Washington and Beijing secured a limited trade deal earlier this month, in an attempt to end a protracted dispute that has battered financial markets and hammered global growth.
Markets had been expecting the world’s two largest economies to secure a trade truce at an Asia-Pacific Economic Cooperation summit in mid-November.

Data, earnings

On the data front, ADP payrolls for October will be released at around 8:15 a.m. ET. An advanced reading of real GDP for the third-quarter will follow slightly later in the session.
In corporate news, GlaxoSmithKline, CME Group and Yum Brands are among some of the major companies set to report earnings before the opening bell.
Apple, Facebook and Starbucks are scheduled to report their latest quarterly figures after market close.

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