17Oct2017 Pre-Market Commentary: Wall Street Flat Ahead Of Earnings, US Dollar Continues To Rise, Gold Sinks Below A Key Psychologically 1,300 Level, Inflation Seen Rising

Here is the current market situation from CNN Money

European markets are higher today with shares in London leading the region. The FTSE 100 is up 0.27% while Germany’s DAX is up 0.09% and France’s CAC 40 is up 0.02%.

Powell likely next Fed chief, though Yellen best suited: economists

LONDON (Reuters) – Jerome Powell likely will be the next Federal Reserve chairman, according to a slim majority of economists in a Reuters poll – but most of them said current Fed Chair Janet Yellen would be the best option.

Global stocks stay buoyant as dollar, bond yields rise

LONDON (Reuters) – World equity markets held close to all-time highs on Tuesday, as investors latched on to rising bets on higher borrowing costs in the U.S. and Britain.

Goldman Sachs beats Wall Street as bond trading falls less than expected

(Reuters) – Goldman Sachs Group Inc beat Wall Street estimates, as bond trading fell less than expected, and investment banking and investing and lending helped buoy results.

Strong drug sales, Actelion buy power J&J’s profit beat

(Reuters) – Johnson & Johnson reported a higher-than-expected quarterly profit and raised its full-year forecast, driven by strong demand for its new cancer drugs and gains from its acquisition of Swiss biotech Actelion.

Airbus takes control of Bombardier CSeries in rebuff to U.S. threat

MONTREAL/TOULOUSE, France (Reuters) – Airbus SE has agreed to take a majority stake in Bombardier Inc’s CSeries jetliner program, a deal that could allow the Canadian planemaker to sidestep U.S. tariffs threatened in a trade dispute with Boeing.

Morgan Stanley smashes estimates on strength in wealth management

(Reuters) – Morgan Stanley posted a much higher-than-expected quarterly profit on Tuesday as record revenue from its wealth management business helped offset the blow from a slump in trading activity.

Futures flat as investors assess earnings from big names

(Reuters) – U.S. stock index futures were steady on Tuesday as investors assessed earnings reports from big corporates, including investment bank Morgan Stanley and healthcare major Johnson & Johnson.

NAFTA trade ministers to square off over hard-line U.S. demands

WASHINGTON (Reuters) – Trade ministers from the United States, Canada and Mexico wrap up a contentious round of NAFTA trade talks on Tuesday marked by aggressive U.S. demands that have left the future of the 23-year-old free trade pact in doubt.

Patently tough: Long road ahead for Qualcomm in China case against Apple

SHANGHAI/BEIJING (Reuters) – Qualcomm Inc wants to hit Apple Inc where it hurts most: iPhone sales in China – one of its biggest global markets where most of its flagship smartphones are made.

Goldman Beats Despite 26% Drop In Fixed Income, Equities Disappoints; Avg Comp Slides To $339,190

Following strong earnings from Morgan Stanley earlier this morning, which without a balance sheet (with rising credit loss provisions) to drag it down, reported solid, and better than expected trading and wealth management revenues, all eyes were on Goldman. And after last quarter’s abysmal report, which saw FICC revenue tumble 40% in Q2, Goldman Sachs did not disappoint, reporting Q2 revenue of $8.326BN, above the $7.54BN expected, and 2% higher from the $8.168BN reported a year ago. This was also the highest quarterly revenue reported by the bank since Q2 2015, when the company generated revenues of $9.1 Billion. Goldman’s EPS of $5.02 was also above the $4.17 expected, although there was just one number that interested investors: the company’s FICC trading which at $1.452BN came in stronger than the $1.37BN expected, although it was still a 26% drop from the $1.964BN reported last year.

Less impressive was Goldman’s equity sales and trading, which dropped 7% Y/Y to $1.668BN, and missed expectations of a $1.70BN. However, this was more than offset by the surge in Goldman Investing and Lending (Prop) which jumped 35% Y/Y to $1.883 billion.

Breaking down the key revenue segments:

3Q trading rev. $3.13 billion, est. $3.04 billion

3Q FICC sales & trading revenue $1.452 billion, est. $1.37 billion

3Q equities sales & trading revenue $1.668 billion, est. $1.70 billion

3Q investment banking revenue $1.80 billion, est. $1.50 billion

3Q Investing and Lending (Prop): $1.883BN, up 35% Y/Y

Discussing the ongoing weakness in FICC, Goldman explained that “net revenues in Fixed Income, Currency …

Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures

Brexit UK vulnerable as gold bar exports distort UK trade figures

– Britain’s gold exports worth more than any other physical export
– Gold accounted for more than one in ten pounds of UK exports in July 2017
– UK’s stock of wealth has collapsed from a surplus of £469bn to a net deficit of £22bn – ONS error
– Brexiteers argue majority of trade is outside EU, this is due to large London gold exports
– Single gold bar (London Good Delivery) is, at today’s prices, worth just over £400,000
– “There are few things you’ll ever touch which pack so much weight into such a small size”
– UK’s economic vulnerability means safe haven gold essential protection

The Cost Of Delusion – Asset Prices & Monetary Policy In An Irrational World

Authord by Chris Whalen via The Institutional Risk Analyst,

Almost as soon as it started, the excitement surrounding earnings for financials in Q3 2017 dissipated like air leaving a balloon.

Source: HedgeEye

Results for the largest banks – including JPMorgan (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) – all universally disappointed, even based upon the admittedly modest expectations of the Sell Side analyst cohort.

Bank of America (NYSE:BAC), the best performing stock in the large cap group (up 60% in the past year), disappointed with a $100 million charge for legacy mortgage issues. Despite strong loan growth, year-over-year BAC’s net revenue is up about 5% but actually fell in the most recent period compared with Q2 ’17.

As with many other sectors, in large-cap financials there was little excitement, no alpha — just slightly higher loss rates on loan portfolios that are growing high single-digits YOY. Yet equity valuations are up mid-double digits over the same period.

The explanation for this remarkable divergence between stock prices and the underlying performance of public companies lies with the Federal Open Market Committee. Low interest rates and the extraordinary expansion of the Fed’s balance sheet have driven asset prices up by several orders of magnitude ab …

Former Miramax Screenwriter Posts Harvey Weinstein Mea Culpa: “Everybody Fu*king Knew”

The LA Times asks: so who has dared to defend Harvey Weinstein?

The answer?: “Oscar-winning director Oliver Stone, actress Lindsay Lohan, actor Tony Denison, fashion designer Donna Karan and director Woody Allen rose to Weinstein’s defense despite a tidal wave of industry condemnation.”

Of course, each of these has subsequently and awkwardly walked back their initial enthusiasm for defending Weinstein as more accusations piled on and were substantiated. But what we should really be talking about is the decades of silence across the entertainment industry which few brave souls tried to warn about years ago.

It was such an “open secret” that Courtney Love could say this back in 2005 at a red carpet appearance, though also worrying, “I’ll get libeled if I say it…”:

.@Courtney Love’s advice in 2005: “If Harvey Weinstein invites you to a party at the Four Seasons, don’t go.” pic.twitter.com/I1Zq0WvVNM

— HannahJane Parkinson (@ladyhaja) October 14, 2017

And when Hollywood sexual abuse survivor Corey Feldme …

Chinese Cash Will Help Aramco Prove Its Relevancy

With Saudi Arabia bleeding market share in both of the world’s top oil consumers, pitching a public offering to investors may prove difficult. A big private placement with brawny Chinese bidders—reportedly in the works—might do the trick.

China Literature Spins a Pricey Yarn

The Tencent-owned online-books company is headed for a Hong Kong IPO, but a valuation of up to $7 billion may prove a tall tale.

Netflix​ Needs to Keep Feeding the Beast

Netflix investors covet growth above all other metrics, so shares shrugged off the new spending forecast after the company once again saw a strong jump in streaming subscribers for the third quarter.

Currencies: Dollar aims for 4th day of gains; pound flops despite climb in U.K. inflation

The U.S. dollar gains ground Tuesday, set to stretch its win streak to four sessions, with the British pound suffering even in the wake of data showing that consumer-price inflation in the United Kingdom hit its highest more than five years.

Metals Stocks: Gold sinks, loses grip on $1,300 as inflation seen rising

Gold futures early Tuesday falls, retreating from a key psychologically significant level of $1,300 and setting up for its steepest one-day decline in about three weeks.

The Ratings Game: Netflix aims for all-time high as analysts see high double-digit upside for shares after earnings

Netflix shares zip higher in premarket trade on Tuesday, on track to score a fresh record as traders and analysts cheer the company’s third-quarter earnings that largely beat forecasts.