Morning Reads

Morning Reads

Open Interest Changes



As the third-quarter earnings season kicks into high gear after banks were off to a strong start, most experts believe companies will beat expectations, given the low bar set by analysts in the backdrop of still-high interest rates and slowing demand. "I am seeing plenty of caution in outlooks ahead of this earnings season and the bar seems to be set quite low," said Investing Group Leader Fear & Greed Trader.

Market viewsLSEG's Refinitiv expects overall Q3 earnings for S&P 500 (SP500) companies to increase 1.3% Y/Y. While this is a relatively small growth, it would mark the first increase after three quarters of flat or declining profits. "Growth expectations for 2023 are 2.3%, the lowest since 2020," said analyst Tajinder Dhillon, noting that Q3 is expected to be a small contributor while Q4 will likely see a growth rate of 10.8%. On the other hand, analysts tracked by Bloomberg Intelligence are expecting S&P 500 companies' Q3 earnings to dip 0.8% Y/Y, while Q4 will see a 6.2% rebound.

Sector watch: Refinitiv's Dhillon expects the Industrials and Consumer Staples sectors to continue their streak of positive Y/Y earnings growth. Sectors expected to post Q3 earnings decline include Materials, Healthcare and Real Estate. Energy will likely see weaker earnings, on account of more difficult Y/Y comparisons. SA analyst David Trainer noted that 71% of S&P 500 companies have Street Earnings higher than Core Earnings, while Street Earnings are lower than Core Earnings for 27% of the companies.

Stocks to watch: This week will see earnings reports from big names including Tesla (TSLA), AT&T (T), Netflix (NFLX), Kinder Morgan (KMI), and Philip Morris (PM). Johnson & Johnson (JNJreported Q3 results that topped estimates, while Bank of America (BAC) also posted an earnings beatGoldman Sachs (GS) and United Airlines (UAL) are scheduled to report later today.

Easing sanctions

The Biden administration and the Venezuelan government have agreed to a deal in which the U.S. would ease sanctions on Venezuela's oil industry in exchange for allowing an open, internationally monitored presidential election next year. Venezuela's government and opposition will resume long-suspended talks today in Barbados, where the Maduro government and Venezuela's U.S.-backed opposition will sign a deal to include commitments for a freer vote in 2024. Oil prices steadied on hopes that U.S. sanctions would ease, with WTI crude oil futures (CL1:COM) staying flat after a 1.8% slide on Monday amid Middle East tensions. (84 comments)

Default setting

Google's (GOOGGOOGLsearch deals account for roughly half of all U.S.-based search queries, a government witness said during a hearing for the landmark antitrust trial that the tech giant is facing. “The power of the defaults is very significant,” said Massachusetts Institute of Technology professor Michael Whinston, who was hired by the Department of Justice to provide analysis for its case that Google's deals are anticompetitive. While claiming that Google's deals block out rivals such as Microsoft (MSFT) and DuckDuckGo from up to 50% of all U.S.-based searches, Whinston said another 20% of all domestic searches are made via Google Chrome. Earlier in the case, Microsoft CEO Satya Nadella also warned of Google's monopoly and flagged the risk of AI cementing its lead. (39 comments)

Swift success

At the movies this weekend, it was Taylor Swift's world and other films were just living in it. Taylor Swift: The Eras Tour, which documents the pop superstar's latest tour, dominated the weekend box office to end with $92.8M domestically. That's a full 70% of the domestic industry box office, and it makes for the second-best October domestic opening of all time, just behind 2019's Joker. On a worldwide basis, Swift's film drew $123.5M. The success is especially notable as Swift bypassed traditional distributors to deal directly with AMC Entertainment (AMC). Note that this isn't the only concert-film bonanza this year, as AMC is distributing Renaissance: A Film by Beyoncé on Dec. 1. (41 comments)

Today's Markets

In Asia, Japan +1.2%. Hong Kong +0.8%. China +0.3%. India +0.4%.
In Europe, at midday, London +0.4%. Paris -0.1%. Frankfurt -0.2%.
Futures at 7:00, Dow -0.2%. S&P -0.3%. Nasdaq -0.3%. Crude +0.1% to $86.77. Gold +0.1% at $1,936.60. Bitcoin +2.7% to $28,535.
Ten-year Treasury Yield +5 bps to 4.76%.

Today's Economic Calendar

8:00 Fed's Williams' Speech
8:30 Retail Sales
9:15 Industrial Production
9:20 Fed's Bowman: "Responsible Innovation in Money and Payments"
10:00 Business Inventories
10:00 Housing Market Index
10:45 Fed's Barkin's Speech
5:00 PM Fed's Kashkari: "The Intersection of the Federal Reserve in the Health Care Sector"

Companies reporting earnings today »

What else is happening...

WSB survey results: Joann Fabrics (JOAN) may file for bankruptcy next.

Allstate (ALL) stock gains on report activist Trian Fund has taken a stake.

Shell (SHEL) hits multiyear highs on strategy shift, rising energy prices.

Microsoft's (MSFT) LinkedIn lays off 668 people in broader restructuring.

Suncor (SU) to stick to climate goals; CEO chides Canada energy policy.

Cathie Wood is optimistic about spot Bitcoin ETF; expects bond rally.

Jeff Bezos overtakes Bernard Arnault to be the world's second richest.

Activist Starboard takes over 5% stake in Fortrea Holdings (FTRE).

Duke Energy (DUK) eyes further cuts for Florida customer bills.

Hennessy Funds is bullish on stocks - these in particular.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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