Written by Gary
Depending on what analysts you talk to, Wall Street didn’t go anywhere today (SPY +0.6%) in fact, in might go up or down in the next several days according to these wizards.
The Market in Perspective
| Here are the headlines moving the markets. | |
 | U.S. regulator demands companies take action to halt ‘robocalls’U.S. Federal Communications Commission Chairman Ajit Pai on Monday wrote the chief executives of major telephone service providers and other companies, demanding they launch a system to combat billions of “robocalls” and other nuisance calls received monthly by American consumers. |
| Financials, energy push S&P 500 forwardThe S&P 500 rose on Monday, with the biggest boosts coming from the financial, energy and defensive sectors as investors showed caution on the eve of U.S. congressional elections. |
| U.S. renews Iran sanctions, grants oil waivers to China, seven othersThe United States snapped sanctions back in place on Monday to choke Iran’s oil and shipping industries, while temporarily allowing top customers such as China and India to keep buying crude from the Islamic Republic. |
| Amazon plans to split HQ2 evenly between two cities: WSJAmazon.com Inc is planning to split its second headquarters evenly between two locations rather than picking one city, the Wall Street Journal reported on Monday, citing a person familiar with the matter. |
| U.S. reimposes Iran sanctions, Tehran decries ‘bullying’The United States on Monday restored sanctions targeting Iran’s oil, banking and transportation sectors and threatened more action to stop its “outlaw” policies, steps the Islamic Republic called economic warfare and vowed to defy. |
| U.S. renews Iran sanctions, grants oil waivers to China, seven othersThe United States snapped sanctions back in place on Monday to choke Iran’s oil and shipping industries, while temporarily allowing top customers such as China and India to keep buying crude from the Islamic Republic. |
| Eni to look at sanctions measures to see if it can use Iranian crudesItalian oil major Eni will look at the Iran sanctions measures to see if it can use Iranian crudes to allow it greater flexibility in procuring supplies, a spokesman said on Monday. |
| U.S. stocks edge higher ahead of midterms, Fed; dollar fallsWall Street stock indexes mostly rose on Monday, the eve of U.S. midterm elections to determine whether President Donald Trump’s Republican party retains control of congress and also ahead of a meeting of Federal Reserve policy makers. |
| Luxottica founder to propose Milleri as EssilorLuxottica CEOLeonardo Del Vecchio plans to propose Luxottica Chief Executive Francesco Milleri as CEO of the new merged group EssilorLuxottica , a spokesman for the Luxottica founder said on Monday. |
| Midterm-Mania Sparks Chaos In Quiet MarketsThis just seemed appropriate… China was mixed overnight despite extremely weak PMIs, thanks to an incessant bid in the afternoon session…
And European markets went sideways all day…
US Markets saw low volumes – over 20% below average… |
| Howard Marks: “Market Conditions Make This A Time For Caution”Authored by Christoph Gisiger via Finanz Und Wirtschaft, Few investors get paid such deep respect as Howard Marks. The Co-founder and Co-Chairman of the Los Angeles based investment boutique Oaktree Capital not only stuns Wall Street with his exceptional track record, but he’s also highly regarded for his sober-minded notes on the ever-changing moods of the global financial markets. The essence of his investment philosophy is unveiled in his new book, entitled «Mastering the Market Cycle: Getting the Odds on Your Side». It was released earlier this month, is well written and belongs in the library of every prudent investor. During our conversation, the legendary value investor addresses the recent turmoil in stocks and bonds, explains why conditions demand a defensively calibrated portfolio, and reveals how investors can successfully position themselves in the market cycle.
Mr. Marks, when you speak, investors around the globe listen up. What’s the key to your investment strategy?
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| What Wall Street Thinks Of The MidtermsThe consensus view expects a split Congress outcome with a largely muted market reaction, though many are not ruling out a surprise. In order to assess the medium-term market impact of the midterms and recommend trade ideas, SocGen economists, strategists and analysts have worked under three different scenarios according to the election outcome. Scenario 1: Gridlock – GOP Senate and DEM House (most likely): Markets would fear that economy would be more vulnerable from now on with the absence of any further economic stimulus in the event of economic slowdown. Scenario 2: Blue Wave – DEM Senate and DEM House: Markets would stir on speculation of a lame duck presidency and potential impeachment proceedings. Potential upside risk on Infrastructure. Scenario 3: Red Wave – GOP Senate and GOP House (least likely): The least expected scenario for the market, which would probably trigger a short-lived risk-on environment. Trade tensions and Fed tightening will quickly be back in the market focus SocGen’s US economist has provided potential policy outcome stemming from these three potential elections outcomes:
Stocks Largely representing consensu … |
| For The First Time In 19 Months, More Companies Are Cutting Than Raising Revenue GuidanceConfirming investor concerns about “peak profits”, the first cracks in US corporate earnings are starting to appear. On one hand, Q3 earnings season has been impressive: with 75% of the S&P 500 having reported their results so far, 82% percent of companies have beaten consensus expectations on profits, while 61% have beaten on revenue. Earnings growth is running at a solid +26.5% yoy pace in aggregate, a robust pace, while sales are growing at a +8.79% yoy pace. And yet, some profit outlooks have been more negative than from recent quarters which has taken the shine of the good headline numbers. Specifically, as Bank of America calculates, in October, the three-month earnings revision ratio (ERR) fell to 1.11 from 1.32, the lowest level in nearly a year, confirming that the ratio of earnings raises to cuts is crashing down to earth from its recent record post tax reform highs. While revision trends continue to decelerate from early 2018 highs, the ratio remains above its long-term average of 0.87, signalling strong returns at least in the short-term. More concerning is that the more volatile 1-month ERR crossed below 1.0 for the first time in two years, to 0.77 from 1.18, prompting BofA to ask if “this the beginning of a longer trend of estimates cuts?”
Meanwhile, while this breadth ratio has weakened … |
| Capitol Report: Everything you know about the Great Recession is wrong*Wall Street leverage, liar loans, myopic rating agencies, undercapitalized lenders, out-of-control derivatives, overly aggressive government-sponsored enterprises, misincentivized CEOs, captured regulators and foolish Federal Reserve policy have been blamed to some degree for causing the Great Recession that started at the end of 2007. |
| Capitol Report: Here’s how America’s top CEOs are investing in the midterm electionsMany S&P 500 CEOs have been willing to fly a Democratic or Republican flag in the current election cycle, according to MarketWatch’s analysis of data on these executives’ political contributions. |
| Capitol Report: Why these midterms are unique — Democratic House challengers are outraising Republican incumbentsIf the Democratic Party wins back control of the House of Representatives on Election Day, it won’t have been all about fundraising — but big bucks certainly will have helped. |
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