Apple, Possible ECB Stimulus Drives Markets Higher

Economic Data

- (BR) Brazil Oct IBGE Inflation IPCA-15 M/M: 0.5% v 0.5%e; Y/Y: 6.6% v 6.7%e

-(US) ICSC Chain Store Sales w/e Oct 17th w/w: -0.3%; y/y: +2.1%

- (US) Redbook Retail Sales w/e Oct 17th: +4.1% y/y, Oct MTD: +0.1% m/m; Oct MTD: +3.9% y/y - (EU) Weekly ECB Forex Reserves: €227.3B v €227.5B prior

- (US) Sept Existing Home Sales: 5.17M v 5.10Me

Heartburn from lousing McDonalds and Coca-Cola results is not preventing markets from racking up impressive gains this morning, as traders home in on possible ECB stimulus talk and Apple's big quarter. Note that the September existing home numbers hit a one-year high. As of writing, the DJIA is up 0.68%, the S&P500 is up 1.27% and the Nasdaq is up 1.65%.

There were conflicting reports making the rounds earlier this morning that the ECB may have begun moving toward full-blown QE. Press reports out around 06:00ET asserted that the ECB was considering buying corporate debt on the secondary market in early 2015, although subsequent reports suggested the ECB had not gotten around to putting corporate bond buying on its December agenda. EUR/USD traded up to test the high end of the range seen over the last week, around 1.2840, but then moved down to 1.2720 on the later stories.

Three-way talks in Brussels between Ukraine, Russia and the EU over the pricing of natural gas supplies for Ukraine should wrap up this afternoon if not delayed. Presidents of both Ukraine and Russia reaffirmed their commitment to work towards peace, just a day after the leader of the pro-Russia Donetsk separatists said the ceasefire was over.

Coca-Cola is looking like a warm, flat soda this morning, with shares down 6.2% as of writing. The firm met expectations, gross margin was up a bit y/y, and global volumes looked good. However, the -1% volume decline in North America was a sign of trouble, and the firm warned that it would be below its long-term EPS growth target for 2014.

McDonalds turned in weak third quarter numbers this morning. Shares of MCD fell 2.5% or so in the premarket, but have nearly made up all the losses as broader markets move up. The firm missed top- and bottom-line expectations, the declines in worldwide comps accelerated from Q2 and it warned October comps would remain in the red.

Apple is up 2.3% in the early going after reportedly stellar results last night. Earnings and revenue growth were impressive and above expectations, margins were strong and iPhone shipments were at the top end of market estimates. Note that executives warned the strengthening USD is becoming a significant headwind.

Shares of Verizon are back in positive territory after dipping into the red in the premarket. Verizon narrowly missed expectations and reported mixed results in its third quarter. The company added more net new wireless customers than a year ago, although churn picked up somewhat as well. On the conference call, Verizon said competition is picking but that the new iPhones would drive a significant upgrade rate in the fourth quarter.

Looking Ahead

- 16:30 (US) Weekly API Oil Inventories

- 19:50 (JP) Japan Sept Trade Balance: -¥780.0Be v -¥949.7B prior (revised from -¥948.5B); Adj Trade Balance: -¥918.5Be v -¥924.2B prior

- 20:30 (AU) Australia Q3 CPI Q/Q: 0.4%e v 0.5% prior; Y/Y: 2.3%e v 3.0% prior