Here is what you need to know on Thursday, October 14:
Have we missed the dip and is the bottom in? We are not so sure just yet, but the technical picture is one of a struggling recovery for markets on Wednesday as the Fed minutes allay fears of being behind the curve. We are not so sure about that as we feel the Fed is already behind the curve by quite a long way. Inflation is certainly not transitory and the Fed speeding up its tapering program is a possible tacit sign of panic by the central bank. Regardless, the 10-year yield fell, which kept equity investors happy. The bond market, however, is on the curve now and flattening it alarmingly (see chart below).
The flattening of the yield curve is indicative of a flight to safety and is often not a good sign for the overall health of the economy. No need to panic just yet, but keep an eye on this. If it goes negative, then equities will roll over.
Ok, that is enough panic thought for one day, back to what is really happening on the ground. Banks as we predicted are benefitting from higher rates and higher deal activity with more smashes from Wells Fargo (WFC), Bank of America (BAC), Citigroup (C), and Morgan Stanley (MS). The release of reserves, which was permitted now after the worst of the pandemic, was behind some of the strong bank beats. This is a small caveat in the positive headlines that will likely be overlooked by many. The strong results though should help stocks on Thursday, which are looking to build on the turnaround for the Nasdaq witnessed on Wednesday. Just to add in another caveat here, CNBC reports that mortgage foreclosures surged 32% in Q3.
The dollar was due for a breather as it flirts with 1.1600 versus the euro. Bitcoin has stalled at $57,500, gold is at $1,795, and WTI oil trades at $81.40.
European markets are higher: Eurostoxx +1.2%, FTSE +0.5% and Dax +15.
US futures are also higher: S&P +0.9%, Dow +0.8% and Nasdaq +1.1%.
Wall Street (SPY) (QQQ) news
US PPI lower than forecast: 8.6% vs 8.7%. Monthly 0.5% vs 0.65. Core 6.8% vs 7.1%.
Morgan Stanley (MS) beats on EPS and revenue.
Bank of America (BAC) beats on EPS and revenue.
Citigroup (C) beats on EPS and revenue.
United Health (UNH) beats on EPS and revenue.
Wells Fargo (WFC) beats EPS and revenue.
Wallgreen Botts Alliance (WBA) beats on EPS and revenue.
Amazon (AMZN), Facebook (FB), Google (GOOGL), Apple (AAPL): Reuters reports a bipartisan group of Senators plans a bill to bar big tech from favouring their products and services.
Caterpillar (CAT): Cowen begins with an outperform rating.
Taiwan Semiconductor (TSM) profit comes in ahead of expectations, up 3% premarket.
Dominos Pizza (DPZ) misses on revenue, down 3% premarket.
Deere & Co (DE): large workers union goes on strike after labor deal is rejected.
Avis Budget (CAR) down 3% premarket on a downgrade from Morgan Stanley.
Upgrades, downgrades, earnings and premarket movers
Source: Benzinga Pro
Economic releases
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