US Open – Earnings, Draghi, CBRT, Oil, Gold, Bitcoin

US stocks are bracing for the busiest day of this earnings season.  Industrial giants, 3M and Raytheon delivered contrasting results in the pre-market.  3M posted mixed earnings results, but slashed their full year EPS forecast.  Raytheon delivered a beat on both the top and bottom and raised guidance in-line with the average analyst estimate. 

Twitter delivered awful results with revenue slumping and with their forecasts coming in much softer than the street expected. Comcast delivered strong results with a profit beat and solid internet subscriber growth.

For the most part, third quarter earnings results have been coming in better than expected with some of the big misses coming from company related stories and not on a deterioration in the macro environment. 

Draghi

Mario Draghi’s eight-year run as ECB chief wraps up today, with the central bank expected to deliver no changes to policy.  The last meeting saw Draghi deliver fresh stimulative measures with the relaunching of QE and a cut to the deposit rate.  Draghi is likely to be remembered for saving the euro and guiding the region through the European debt crisis.  Draghi however is leaving a divided ECB to Christine Lagarde.  Lagarde’s success will be determined on if she can help governments deliver fiscal policies. 

Turkey,

Turkey’s central bank cut rates more than expected, driving the lira lower by 0.5%. Yesterday’s lifting of sanctions seem to have given the CBRT room to deliver a deeper cut.

Oil

Oil prices remained heavy after Germany’s manufacturing downturn remains firmly in place despite a slight uptick from last month.  The euro area is barely growing as a whole, and we should see that continue to put pressure on demand forecasts.  Oil may struggle for a significant rally unless OPEC + deliver further queues that they will deepen production cuts in December or if we get a significant de-escalation in the US-China trade war. 

Gold

Gold is slightly lower after third quarter earnings have seen just over 80% of companies beat forecasts, while only 14% have disappointed, roughly in-line with recent trends.  Today’s ECB decision is more of a farewell for Mario Draghi and we should not see anything material come out of the meeting.  Gold will remain supported on global monetary and fiscal stimulus, but we are unlikely to get any major queues until next week’s Fed decision. 

Bitcoin

Bitcoin was a casualty of Facebook chief Mark Zuckerberg’s testimony to Congress on the Libra cryptocurrency.  Not a single member of Congress supported Libra and Zuckerberg’s grilling have many investors thinking the Facebook led cryptocurrency will never see the light of day. 

As China nears their own cryptocurrency, we could see Libra lose a lot of international momentum as we will unlikely see US regulators ease up on a plethora of demands.  Congress seems to be making it impossible for Libra to have a successful launch and it seems we are many years away before enough members will be satisfied and by then, we may see a new crypto emerge as king. 

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