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Ahead of Wall Street

Thursday, October 20, 2016

Weekly Initial Jobless Claims, a news conference with ECB President Mario Draghi and a fresh crop of Q3 earnings results are on tap before the bell this morning. The finance-heavy early earnings season has shown some real progress in pushing out of a 5-month-long earnings recession.

Jobless claims for the week rose 13K to 260K, and last week was revised up 1000 claims to 247K, which is an historically low read. Though we’ve not broken through the 250-275K range to the downside, doing so is a very rare feat. Continuing claims were also historically low at 2.057 million. All signs point to continuing strength in the U.S. labor market.

Mario Draghi, President of the European Central Bank, has issued some quotes in his speech today regarding policy for helping strengthen the European Union (EU) going forward. He expects “inflation to rise gradually” in the coming months, and that the central bank “will use all instruments,” “preserving substantial monetary support,” even though the “baseline scenario is subject to downside risk.” The euro spiked above $1.10 following the comments, but remains historically low, as well.

Verizon VZ posting Q3 earnings of $1.01 per share on $30.9 billion in sales. This is a beat of 2 cents on EPS but a slight miss on the top line. Net adds in the quarter reached 442K, but both earnings and revenues are down single digits year over year.

Walgreens Boots Alliance WBA brought in $1.07 per share on $28.6 billion for its Q3. Again this is a mixed result, with an 8-cent positive surprise on the bottom line but a miss on sales. Walgreens has not posted an earnings miss for at least the last 5 quarters.

Travelers Insurance TRV topped expectations on both top and bottom lines, its $2.45 per share and $6.96 billion surpassing the $2.37 and $6.76 billion, respectively. Earnings remain down year over year, but revenues have gained since Q3 2015.

American Airlines AAL clobbered expectations on earnings, posting $2.80 versus the $1.66 in the Zacks consensus estimate. Sales beat, too, albeit slightly: $10.59 billion over $10.55 billion, down 1% year over year. The airline sector is currently in the bottom 15% of all sectors in the Zacks consensus.

Finally, Dunkin Donuts DNKN posted a mixed Q3 report, beating by 2 cents to 60 cents per share on $207 million in sales, down roughly $6 million from what was expected. Earnings year over year for Dunkin has risen to low double-digits, though revenues are roughly flat from a year ago.

Insofar as Q3 earnings season is reflecting relative strength from previous quarters, a much more comprehensive analysis on the prospect of Q3 earnings gains can be found in Zacks Director of Researvh Sheraz Mian’s latest Earnings Trends report: Is the Earnings Recession for Real"

Mark Vickery
Senior Editor

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Earnings and Economic News

Key Earnings Reports For Oct 20, 2016

Economic Event Reported
(+) Bloomberg Consumer Comfort Index - Oct 20, 2016 --
(+) Philadelphia Fed - Oct 20, 2016 --
(+) Existing Home Sales - Oct 20, 2016 --
(+) Initial Claims - Oct 20, 2016 --
(+) Treasury notes (10 yr) - Oct 20, 2016 --
(+) Treasury bills (3 mth) - Oct 20, 2016 --
(+) Federal Funds Rate - Oct 20, 2016 --
(+) Leading Indicators - Oct 20, 2016 --