Tuesday, November 5, 2019
Stock market indexes this Tuesday morning look to extend their record run, after closing at all-time highs Monday afternoon. We also see Q3 earnings reports continue to flow rapidly, and we even get a couple main economic data points this morning, one of which has come out ahead of the opening bell.
Positive sentiment regarding trade between the U.S. and China — including talk about a “Phase One” agreement, which may include a roll-back on some tariffs of Chinese imports. This news has been taken very well on both sides of the Pacific; Chinese stocks rallied on the news that President Xi Jinpeng may soon visit the U.S. to sign a Phase One agreement.
The U.S. Trade Balance for September came in roughly in-line with expectations at -$52.5 billion, an improvement from August’s -$54.9 billion, and a good ways from the near-term low -$60.8 billion reported in December 2018, right when initial negative affects from the U.S.-China trade war began to manifest. As expected, Goods Exports were down (a further function of the trade war), although Chinese currency improvements have helped the bottom line. Services were also in-line with expectations.
This is the smallest monthly trade deficit since April, which was the last time this figure was better than -$52 billion. From an historical perspective, the U.S. Trade Balance had always kept strictly neutral; this began to change in the late 1970s, but it wasn’t until trade with China in the late 1990s — and fell off a cliff the following decade until we were perpetually sub-$60 billion month after month. The only solace came following the Great Recession of a decade ago, when the deficit improved to the -$30 billions, but the overall trajectory is once again downward.
The Institute for Supply Management (ISM) will post new results for its Non-Manufacturing index for October. Expectations are for a month over month improvement to 54% from the 52.6% reported last month. Any figure above 50% indicates growth, and non-manufacturing (aka Services) data has not posted a sub-50% month since we climbed out of the Great Recession in 2010. Late last week, ISM Manufacturing results improved to 48.3% from 47.8% posted in September — in non-growth territory and residing around multi-year lows.
Peloton (PTON - Free Report) has brought forth its first earnings statement since going public, for its fiscal Q1 2020, with surprisingly strong subscriber growth, up 103% year over year to more than 1.6 million, for quarterly revenues of $228 million. Low churn rates (sub-1%) also helped Peloton kick off its publicly traded history in a positive light. That said, shares are trading down in today’s pre-market, likely due to a miss on the bottom line: -$1.29 per share versus -39 cents expected.
Chicago-based real estate services major Jones Lang LaSalle (JLL - Free Report) far outpaced estimates on its Q3 earnings report this morning, reporting $3.52 per share versus $2.73 on the Zacks consensus for a positive earnings beat of 29%. Revenues of $4.50 billion bettered estimates by 3.3%. Both figures also outperformed the year-ago tallies of $3.02 per share and $3.97 billion, respectively.
Shares of Jones Lang LaSalle have grown 19.2% year to date, slightly below pace of the S&P 500 overall. Currently the stock is trading within the mid-range of its 2019 levels, though pre-market activity is non-existent. The company had a Zacks Rank #3 (Hold) rating on a Value-Growth-Momentum score of A ahead of the Q3 release. For more on JLL’s earnings, click here.
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