The Latest Posts
October 22, 2014
Market Drivers
Jul 10 2014 | 5:10 PM

U.S. markets sold off to start the week as investors took some profits off the table in advance of earnings season. Markets also received some cautious news from overseas when the parent company of Banco Espirito Santo (Portugal’s largest bank) failed to make a bond payment and the central bank’s solvency assurance to investors was ill received. Overall economic news flow has been light. Here are three things that have been driving the market this week.

Earnings Kickoff

Q2 earnings season kicked off this week, with the estimated earnings growth rate for the S&P 500 currently at 4.9% (according to Factset). This is below the 6.8% rate that was expected back on March 31st, but still more optimistic than Q1 projections were. There are some concerns that the market may be overvalued a bit after the strong first half U.S. equities have enjoyed, and the rising forward 12 month P/E ratio (which stands at 15.7). It will be interesting to see if the trend of downward...

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Posted by: Ronald Bohlert
Managing Director, Global Corporate Client Group
Jul 10 2014 | 10:18 AM

From The Trading Floor: Worry over financial stress in Europe has spread to the US. as investors look for safe haven assets

  • Fewer Americans than forecast filed applications for unemployment benefits last week, a sign the job market continues to strengthen. Jobless Claims declined by 11,000 to 304,000 in the week ending July 5th
  • Consumer Comfort for the week ending July 6th increased slightly to 37.6 from 36.4 the previous period.
  • Wholesale Inventories grew by 0.5% for May, lower that the revised 1.0% the previous month
  • In Europe, stocks from the euro zone's periphery led declines. Portugal's PSI 20 Index fell by around 3 percent amid concerns about the health of the financial group Banco Espirito Santo.
  • Following in the footsteps of Germany and the UK, Italy and France reported declines in industrial production in May of 1.2% and 1.7%, respectively

  • Exports from China rose 7.2% in June,...

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Posted by: Charles Brown
Managing Director, The Capital Markets Desk
Jul 9 2014 | 9:58 AM

From The Trading Floor; Markets are trading up this morning after a 2 day sell off in small cap stocks as investors are optimistic about 2nd quarter earnings after Alcoa’s results beat estimates.

  • Mortgage applications for the week ending July 4th rose by 1.9%

  • Alcoa reports Q2 adjusted EPS 18c, consensus 12c. Reports Q2 revenue $5.8B, consensus $5.66B

  • President Barack Obama has asked Congress for $3.7B in emergency funding to deal with an influx of Central American minors illegally crossing the southern border. GOP leaders say they are unwilling to give the administration a "blank check" without more detailed plans to curb the crisis

  • The release of the FOMC minutes from the July 17-18 meeting is released at 2:00 pm EST 

  • Indonesian presidential elections are underway, with the latest polls showing a very narrow margin between candidates Joko "Jokowi" Widodo and ex-...

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Posted by: Charles Brown
Managing Director, The Capital Markets Desk
Jul 8 2014 | 10:12 AM

From The Trading Floor: Investors pared back holdings as they weighed valuations ahead of the start of earnings season

  • Small business optimism declined slightly to 95.0 for June

  • JOLT Job Openings climbed to 4.635 million in May from 4.464 the previous month

  • Consumer Credit is due out at 3:00 pm

  • Standard General confirms in an SEC filing that it is in talks with American Apparel (APP) to shore up the company's finances, reconstitute its board and strengthen its management. If the talks break down, the hedge fund says it could launch a proxy fight to win board seats.

  • The US Treasury will conduct a $27 bln 3‐yr note auction with results at 1:00 p.m

  • Fed President Lacker (Richmond) will be offering an economic outlook at 1:00 p.m. ET while Fed President Kocherlakota (Minneapolis) will provide some thoughts on the economy and monetary policy at 1:45 p.m. ET. Mr. Kocherlakota is...

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Posted by: Charles Brown
Managing Director, The Capital Markets Desk
Jul 7 2014 | 10:05 AM

From The Trading Floor; Equities are trading in negative territory this morning after setting new highs last Thursday as analysts move their estimates forward as to when the Fed will raise interest rates

  • Archer Daniels Midland says it will buy Wild Flavors for €2.2B ($3B) in cash, and assume €100M of net debt. Wild Flavors manufactures flavors and colors for the food industry with a particular focus on healthy products.

  • 2nd Quarter Earnings season unofficially begins on Tuesday after the close with Alcoa releasing earnings

  • IMF head Christine Lagarde warned the pace of growth in the second half of the year could be weaker than expected due to weak investment

  • Bank of Japan Governor Kuroda thinks core inflation in Japan will be about 1.25% year over year for some time

  • Germany's industrial production declined 1.8% month‐over‐month in May

  • Afghanistan’s election for a new...

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Posted by: Charles Brown
Managing Director, The Capital Markets Desk