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Economic Data Deluge and Q4 Bank Earnings

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Today marks the somewhat momentous occasion whereby a trade deal with China is expected to be signed at the White House. I say “somewhat momentous” because this does not put trade tensions between the world’s two largest economies completely to rest; what’s expected today is a preliminary agreement on certain tenets of trade, or a “Phase One” deal. Even still, considering the harm caused by the trade war on both sides of the Pacific, we’ll take it.


There is no timeline for a “Phase Two” agreement expected, though we suspect much talk around such a goal will be heard before the ink is dry on today’s agreement. There is lots of heavy lifting yet to do regarding a trade deal between the two countries, not the least of which is protection related to Intellectual Property issues.


Ahead of today’s regular trading, December Producer Price Index (PPI) headlines have hit the tape. Much as we saw yesterday with the Consumer Price Index (CPI), results this morning were a tad cooler than expected: +0.1% on the headline, +0.1% “core” (subtracting volatile food and energy costs). This is below the 0.2% expected for both headline and core, but higher than the headline 0.0% reported for November.


Trade is up 0.1% month over month, and Final Demand year over year is +1.3% — 20 basis points higher than reported a month ago. Trade year over year reached +1.5%, ex-food & energy 1.1% — lower than consensus estimates. Therefore: positive territory is always good, though we continue to see a “muddle through” economy on a plurality of metrics.


The Empire State Index for January came in at 4.8 — smack dab in the middle of our trailing 12-month range on +17.8 (May) and -8.6 (June). Today’s figure is the highest since August, which also posted a 4.8, and was higher than the expected 3.9 and December’s print of 3.5. Manufacturing in the state of New York stays consistent with other plodding economic strength.


Goldman Sachs (GS - Free Report) posted its second straight quarterly earnings miss this morning, with earnings of $4.69 per share below the $5.20 in the Zacks consensus, and well off the year-earlier bottom line of $6.04 per share. Revenues in the quarter of $36.5 billion were in-line with expectations and the $35.3 billion in the year-ago quarter. Litigation charges hindered Goldman’s quarter, with Total Operating Expenses soaring 42% year over year. For more on GS’ earnings, click here.


Bank of America (BAC - Free Report) , however — a Zacks Rank #2 (Buy)-rated company — surpassed estimates on both top and bottom lines: 74 cents per share outpaced expectations by 6 cents, on $22.3 billion in revenues that beat the $22.0 billion analysts were looking for. Sales & Trading rose 13% in the quarter, slightly offset by a drop in Net Income of 4%. For more on BAC’s earnings, click here.


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