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Trade Concerns & Q3 Earnings Wrap-Up

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This afternoon, we expect the release of the minutes from the last meeting of the Federal Open Market Committee (FOMC), from October 29th and 30th, when the Fed decided to lower interest rates yet again, to 1.75%. This was the third straight 25 basis-point drop in 2019, following a 25 basis-point raise last December which helped send markets into a tailspin.

For his part, Fed Chair Jerome Powell ticked all the major talking points in his testimony following the last FOMC meeting — “job market remains strong” offset by “weakness in global growth.” But what the minutes released today will point to is whether and where there is any dissent from the Fed Chair’s views. How close was the Fed to putting on the brakes on interest rate policy 3 weeks ago? We intend to find out.

No Phase One?

Delays in a U.S.-China trade agreement that would freeze new tariffs as both sides work out a longer-term trade deal appear to be losing ground today. As China pushes for more tariffs to be lifted, President Trump has promised to push tariffs even further, and this reality creeps closer to a December 15th deadline where new tariffs are scheduled to go into effect.

Throwing another log onto this fire, the U.S. Congress just yesterday passed a bill in support of the Hong Kong protestors, who for most of this past year have been protesting — sometimes violently — what many consider unfair extradition to mainland China. That Congress has decided to publicly align with anti-Beijing forces may see new tactics employed in the ongoing trade war.

In any case, the Phase One agreement, which had helped markets surge as trade representatives attempt to make incremental progress toward an overall deal, does look to be in jeopardy. And the closer we get to December 15th without reaching a Phase One agreement would seem to make it even less likely to occur.

Q3 Earnings Wrap-Up

Target (TGT - Free Report)  shares are up 10% in today’s pre-market, following its impressive positive Q3 surprises on both top and bottom lines. Earnings of $1.36 per share outpaced the $1.19 in the Zacks consensus, and up 25% year over year. Sales of $18.67 billion beat the $18.47 billion expected, up 4.7% year over year.

The Zacks Rank #2 (Buy)-rated company has bounced back in a big way during 2019, not only from late-December lows of sub-$65 per share to nearly $122 as of today’s pre-market, but also in posting better-than-expected earnings results for the first three quarters of the year. This follows earnings misses in three of the previous four quarters. For more on TGT’s earnings, click here.

Lowe’s Companies (LOW - Free Report)  also outperformed on the bottom line in its Q3 earnings report this morning, posting $1.41 per share versus $1.35 anticipated, up 35.6% year over year. But revenues of $17.39 billion slightly missed the $17.69 billion expected, and down 0.2% from year-ago totals. However, shares are up more that 4% ahead of the opening bell. For more on LOW’s earnings, click here.


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