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Ahead of Wall Street

Monday, October 22, 2018

Market futures to kick off a new week are positive at this hour, as Chinese markets overnight were up big for the second-straight session. After weeks of crushing selloffs of up to 15%, especially following weaker-than-expected Q3 GDP reports in the world’s second-largest economy, we see 5% gains in the Shenzhen index, +4% on the Shanghai and +2.3% on the (less sold-off) Hong Kong HSI.

President Xi Jinping and other leaders in Beijing are proactively taking steps to help stimulate its domestic economy, first with promised personal income tax cuts, then more cuts to fees and taxes forthcoming. The most successful of Chinese securities brokers have put up double-digit gains as a result. China is, as we all know, currently embroiled in a rough trade war with the U.S., which promises to take a bite out of both economies over the medium-term.

We are pretty light on U.S. economic data this week, but ahead of today’s open we do see a new September read from the Chicago Federal National Activity Index. The headline of +0.17 was lower than expected and notably under the August read of +0.27. In August, however, this figure has been revised higher — +0.18 was the initial read last month. Over the past three months, we see this survey of weighted averages for national economic activity — including Business Confidence and PMI Manufacturing and Services — at a relatively stable +0.21.

These numbers, when looked at month to month, can often provide volatility. For instance, back in October 2017 we saw a recent high of +0.84, but in May of this year our recent low hit -0.49. That said, this is considered a minor read that probably won’t make too many ripples at the Federal Reserve regarding the future direction of interest rates.

After today’s closing bell, we expect new earnings results from a slew of companies, including TD Ameritrade AMTD and Logitech LOGI. There are also quite a few reports ahead of the bell today, as earnings season really heats up:

Zacks Rank #5 (Strong Sell)-rated Halliburton HAL beat estimates slightly on both top and bottom lines this morning. Earnings of 50 cents per share outperformed the Zacks consensus by a penny, while $6.17 billion in quarterly sales also eked out a positive surprise, and were up significantly from the year-ago’s $5.44 billion.

Halliburton, trading down year-to-date nearly 25%, is down again in the pre-market following its Q3 results. Yet the company’s Style Score (Value - Growth - Momentum) is A, meaning there may be some room for upside if the Zacks Rank can pull back from its sell-rating. For more on HAL’s earnings, click here.

Kimberly-Clark KMB, the Consumer Products giant specializing in paper goods, also posted Q3 earnings results: $1.71 per share outpaced both the $1.64 expected and the year-ago earnings of $1.60 per share. Revenues of $4.58 billion represent a 1.3% beat for the quarter, but lower than the $4.64 billion reported in Q3 2017. Prior to the earnings release, Kimberly-Clark carried a Zacks Rank #3 (Hold). For more on KMB’s earnings, click here.

Mark Vickery
Senior Editor

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Earnings and Economic News

Key Earnings Reports For Oct 22, 2018

Economic Event Reported
(+) Treasury notes (10 yr) - Oct 22, 2018 4:15 PM Eastern Time
(+) Federal Funds Rate - Oct 22, 2018 4:15 PM Eastern Time
(+) Treasury bills (3 mth) - Oct 22, 2018 4:15 PM Eastern Time