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Ahead of Wall Street

Monday, October 15, 2018

Monday markets in the Far East — from Japan to Shanghai to Hong Kong to Australia — were all down overnight, spoiling the idea that a Friday resurgence in these markets was a new start of indexes ramping higher, as Q3 earnings results here at home begin to command headlines. Included among concerns across the Pacific are the significant ties of Asian banks with the kingdom of Saudi Arabia, currently under fire for the disappearance of a Saudi journalist who had been critical of the kingdom in his articles in the Washington Post.

We also see weaker-than-expected Retail Sales numbers for September this morning, with a headline of +0.1% growth well beneath the +0.7% analysts had been looking for. Stripping out auto sales, we actually get a negative number: -0.1%, lower than the +0.2% we saw in the August totals. Although if you take out auto sales AND gas, this number splits the difference: unched.

Part of this might be explained with a significant drop of 0.8% in gasoline sales, although part of the reason we always include numbers independent of these sorts of costs is because of their inherent volatility month over month. There is also a Control number, used for synthesizing various components in overall revenues in the Retail space, and this was surprisingly higher than expected, at +0.5%.

The main takeaway here is that costs are still going up, and still doing so relatively gradually. Analysts — including Fed members who decide on interest rates — are always looking for economic reads that pop out of normal trends, and although we see a bit of static within the wide variety of figures over all in Retail Sales, it will take more subsequent results to see if these high Control numbers and low Sales ex-Auto do anything more than balance each other out.

October Empire State results also were posted ahead of today’s opening bell, with 21.1 ahead of the 19.3 expected and 19 reported for September. These are still relatively tepid numbers for New York State’s productivity, although still in agreeably positive territory, so no alarm bells to strike here, either. These are also reads that often demonstrate notable volatility, but we haven’t seen any real outliers here in some time.

Finally, helping continue the ball rolling for the burgeoning Q3 earnings season, Bank of America BAC is the latest of the big Wall Street banks to report earnings this morning, with results once again better than expected: 66 cents per share beat the bottom line by 4 cents, with quarterly revenues of $22.8 billion topping the $22.6 billion in the Zacks consensus. A big increase in Net Income year over year combined with lower investment banking fees helped spur the company’s quarter.

This makes 10 straight quarters of positive earnings surprises for B of A — easily the longest string of beats in the past decade or so. Shares are trading up 25 cents per share in today’s pre-market at this hour, with shares still down year-to-date and up slightly year over year. Bank of America, ahead of the earnings report, carried a Zacks Rank #3 (Hold) with a Style Score (Value - Growth - Momentum) of F. For more on BAC’s earnings, click here.

Mark Vickery
Senior Editor

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Earnings and Economic News

Key Earnings Reports For Oct 15, 2018

Economic Event Reported
(+) Treasury bills (3 mth) - Oct 15, 2018 4:15 PM Eastern Time
(+) Treasury notes (10 yr) - Oct 15, 2018 4:15 PM Eastern Time
(+) Federal Funds Rate - Oct 15, 2018 4:15 PM Eastern Time
(+) Retail Sales ex-auto - Oct 15, 2018 --
(+) Business Inventories - Oct 15, 2018 --
(+) NY Empire State Index - Oct 15, 2018 --
(+) Retail Sales - Oct 15, 2018 --