Monday Update

Monday, October 16, 2017 | Eagle, Colorado

Earnings season heats up this week with several notable companies reporting 3rd quarter earnings starting with Netflix after the close today. Wall St. is expecting revenues of 2.9B and earnings of $0.32 per share with expecting $0.30 per share. If achieved, the 2.9B of revenue would be an increase of 26% over 3rd quarter 2016.


Tomorrow is a full day with earnings from Goldman Sachs, Morgan Stanley, IBM, Johnson & Johnson, CSX and Navient (a large company in the business of loaning money to people without jobs… students!).


More banks report on Wednesday including US Bank, M&T Bank and others. We also get numbers from American Express, eBay, and bellwether Alcoa.


Thursday brings another wave of banks, along with Verizon, Winnebago and Sketchers.


We wrap up the week with industrials like General Electric and Honey well, along with oil services company Schlumberger and consumer products company Procter & Gamble.


Last week, major banks like JP Morgan, Wells Fargo and Citibank reported earnings that weren’t enough to maintain their elevated stock prices. This morning, Wells Fargo (Advisors) was ordered by the Financial Industry Regulatory Authority (FINRA) to pay $3.4 million in restitution for making unsuitable recommendations to investment clients.  


According to FactSet, nearly half of S&P 500 companies are reporting negative impacts from Q3 hurricanes. While some sectors may experience temporary bumps in demand, it is hard to imagine and articulate a situation where a natural disaster can be an overall economic windfall.  


Today is the 30 year anniversary of what is known as “Black Monday”. On October 19, 1987 the Dow Jones industrial average crashed 23% in a single day. That was good for a 508 point drop in the index. By contrast, a 508 point drop today would only result in a percentage decline of 2.2%. For the record, the Dow finished the year 1987, positive!


The international markets will be watching Spain this week as the saga continues to play out with the Catalan succession movement. Spanish stocks were down almost 1% today.


In other international news, 31 year-old has declared victory in Austria’s elections setting him up to become Europe’s youngest leader.


In oil markets, Crude is up today to almost $52/barrel on news that Iraq has taken control of some areas in the Kurdish region that had recently been pushing for independence.


On the economic calendar, European Central Bank President Mario Draghi will speak on Wednesday, and we will get weekly crude oil inventories from the Energy Information Administration (EIA). Chair of the Federal Reserve Janet Yellen speaks on Friday and we will get existing home sales numbers from the National Association of Realtors.


From all of us here at Elevate, have productive and prosperous week!


Shane Fleury, RICP®

Chief Investment Officer

Elevate Capital Advisors