MARKET WRAPS
Watch For:
American Express results; Federal Reserve Bank of San Francisco
President Mary Daly speaks at American Enterprise Institute virtual
event on "Facing an uncertain world: The Federal Reserve and
climate risk"
Opening Call:
Stock futures crept lower Friday, putting the S&P 500 on
course to break a seven-day winning streak that included a fresh
record high.
Stocks have risen in recent days on strong earnings, shaking off
concerns about inflation and supply-chain problems that threaten
the post-pandemic economic recovery. Nearly nine out of 10 U.S.
companies that have reported earnings have beaten Wall Street
expectations, said Mike Bell, a strategist at J.P. Morgan Asset
Management.
In overseas news, China Evergrande Group, the heavily indebted
property giant whose potential default had spooked markets, made an
overdue interest payment to international bondholders, Chinese
state-owned media reported Friday. The payment allowed the company
to stave off default and helped ease investors' broader concerns
about China's property sector.
Evergrande's shares rose almost 5% Friday, while the Lippo
Select HK & Mainland Property index rose more than 3%. "We
think the market priced in more bad news than was likely to come to
fruition," Mr. Bell said.
The pan-continental Stoxx Europe 600, rose 0.3% led by its
technology sector. Asian stock markets were mixed.
Stocks to Watch:
Intel CFO George Davis said adjusted sales next year should
reach at least $74 billion, ahead of Wall Street forecasts, with
revenue growth accelerating in subsequent years. Capital
expenditures could reach $28 billion in 2022 and potentially grow
further in the following years, he said.
---
Snap plunged more than 21% before markets opened, after the
company's earnings missed expectations. The group in part blamed
Apple's new privacy features for disruptions to its advertising
business.
Forex:
The dollar might be poised to recover after the DXY Index
dropped to its lowest in more than three weeks on Thursday, as
investors turned their attention to the prospects of the Fed
scaling back monetary easing, said ING.
"A quite convincing U.S. earnings season is set to leave space
for the more structural concerns about higher inflation and the
prospect of Fed tightening, which, in our view, should provide the
basis of a new gradual re-appreciation of the dollar in the next
few weeks," said ING.
The euro slightly remained higher versus the dollar, shrugging
off the latest eurozone purchasing managers' index survey.
The composite PMI, which measures manufacturing and services
activity, fell to a six-month low of 54.3 in October from 56.2 in
September with a level above 50 signalling growth. Economists
polled by the WSJ expected a reading of 55.2.
The euro has been "quite unreactive" to recent PMI releases,
said ING analysts. "We think we saw the short-term peak around
1.1660 in EUR/USD this week, and we are expecting the pair to move
back below 1.1600 into the Fed November meeting."
Bonds:
Bond yields remain elevated in Europe, boosted Thursday as the
market took note that the labor market looked to be strengthening
as positive jobs data showed initial jobless claims last week fell
to their Covid-19 pandemic low.
The yield on the benchmark 10-year U.S. Treasury note was down
slightly from the six-month high of 1.7% reached in the last
session, but was holding above 1.68%.
Commodities:
Oil futures were down 0.2% in Europe, with Brent on course to
close at a weekly loss for the first time since late August, after
prices came under pressure on Thursday following a broader selloff
in commodities.
In addition, reported "comments from the Russian president that
OPEC+ was increasing output slightly more than agreed [have]
probably not helped sentiment," said ING's Warren Patterson.
Despite what might be a blip this week, inventories look to fall
during the remainder of 2021, he added, meaning "oil prices will
remain well supported."
Gold prices rose 0.6% as the dollar weakened and rising
inflation expectations counteracted the impact of higher bond
yields.
"Because market-based inflation expectations rose to a nine-year
high...real yields actually fell slightly," said Daniel Briesemann,
an analyst at Commerzbank. Still, investors continue to shun gold
exchange traded funds, he added.
Gold ETFs tracked by FactSet had net outflows of roughly $459
million in the week through Thursday.
TODAY'S TOP HEADLINES
China Evergrande Makes Overdue Interest Payment on Dollar Bonds,
State Media Says
China Evergrande Group made an overdue interest payment to
international bondholders, the state-owned Securities Times
reported Friday, an unexpected move that allows the property
company to stave off a default.
The Chinese real-estate developer on Thursday sent $83.5 million
to the trustee for the dollar bonds, and that financial institution
will in turn pay bondholders, the Securities Times reported. The
financial paper is run by the Communist Party's flagship People's
Daily newspaper.
Read More ->
U.S. Issued $100 Billion in Export Licenses to Suppliers of
Huawei, SMIC
The U.S. Commerce Department issued more than $100 billion worth
of export licenses for semiconductors and other products to
suppliers of Huawei Technologies Co. and another blacklisted
Chinese tech company, as a global chip shortage started to
bite.
The Commerce data, released Thursday by a Republican member of
Congress, shows the department granted 113 export licenses worth
about $61 billion for suppliers of telecom giant Huawei and 188
licenses valued at $42 billion for suppliers of Semiconductor
Manufacturing International Corp., China's largest chip maker, from
Nov. 9, 2020, through April 20 this year.
Read More ->
Moderna and J&J Covid-19 Boosters, Mixing and Matching
Backed by CDC
Centers for Disease Control and Prevention Director Rochelle
Walensky recommended Covid-19 booster shots from Moderna Inc. and
Johnson & Johnson and backed mixing vaccines with a different
booster dose.
With Dr. Walensky's greenlight Thursday, the vaccine doses can
now become available at doctor's offices, pharmacies and
vaccination sites on Friday, a CDC spokeswoman said. It follows
unanimous recommendations from a panel of experts advising the
CDC.
Read More ->
Western Digital-Kioxia Deal Talks Stall
Western Digital Corp.'s talks to merge with Japanese chip maker
Kioxia Holdings Corp. in a $20 billion-plus deal have stalled,
according to people familiar with the matter.
The companies, which had been speaking since early this year,
were working to finalize a stock deal that would have created a
memory-chip powerhouse worth something on the order of $40 billion,
The Wall Street Journal reported in August. Though the talks are on
hold now, they could still be revived, some of the people said.
Read More ->
J&J Talc Claims May Not Belong in Charlotte Bankruptcy
Court, Judge Says
A bankruptcy judge said he is unsure if his North Carolina
courtroom is the right venue for a Johnson & Johnson subsidiary
to potentially settle tens of thousands of talc-related injury
claims and suggested the case could be moved closer to the consumer
goods giant's New Jersey headquarters.
Judge J. Craig Whitley of the U.S. Bankruptcy Court in
Charlotte, N.C. also on Wednesday scheduled a November hearing over
whether the J&J subsidiary placed into chapter 11 last week
should be moved to a bankruptcy court in Delaware or New Jersey,
where thousands of talcum-related injury lawsuits have been
litigated for years.
Read More ->
American, Southwest Say Vaccine Mandate Won't Disrupt
Flights
Airlines say they don't anticipate having to immediately fire
employees not vaccinated by a federal deadline in December, another
challenge for carriers managing travel's rocky recovery from the
coronavirus pandemic.
Major airlines, which conduct business with the federal
government, must require their workers to be vaccinated by Dec. 8
under an executive order signed by President Joe Biden in September
pertaining to federal contractors.
Read More ->
Stellantis, Samsung SDI to Make EV Batteries in North
America
French-Italian car maker Stellantis NV has entered into a
memorandum of understanding with South Korean electronic component
maker Samsung SDI Co. to make battery cells and modules for North
America, it said Friday.
The move is part of Stellantis's plan to make electric cars
represent 40% of its sales in the U.S. by 2030, the company
said.
Read More ->
Whirlpool Doesn't See Appliance Shortage Ending Soon
Shortages of dishwashers and refrigerators are likely to stretch
well into next year, Whirlpool Corp.'s chief executive officer
said, as supply-chain problems constrain production and consumer
demand remains strong.
The Benton Harbor, Mich.-based company has ramped up appliance
production, but delays have grown as waits for components and other
snags lead to back-orders of around six weeks for the average
appliance, said Whirlpool CEO Marc Bitzer.
Read More ->
Vista Prepares Pitch for Next Big Software Fund
Vista Equity Partners plans to join the growing list of
private-equity firms pitching large funds focused on technology
deals.
The firm aims to soon open a virtual data room for its next big
flagship buyout fund to allow prospective investors access to
documents related to the offering, according to a letter sent to
investors that was viewed by WSJ Pro Private Equity.
Read More ->
Biden Could Use National Guard to Help With Supply Chain
Bottlenecks
WASHINGTON-President Biden said he would consider deploying the
National Guard to assist with supply-chain bottlenecks that have
led to shortages and higher consumer costs, if his administration
is unable to ease the problem.
"The answer is yes, if we can't move-increase the number of
truckers, which we're in the process of doing," Mr. Biden said
during a CNN town hall on Thursday when asked about deploying the
National Guard.
Read More ->
U.S. Issued $100 Billion in Export Licenses to Suppliers of
Huawei, SMIC
The U.S. Commerce Department issued more than $100 billion worth
of export licenses for semiconductors and other products to
suppliers of Huawei Technologies Co. and another blacklisted
Chinese tech company, as a global chip shortage started to
bite.
The Commerce data, released Thursday by a Republican member of
Congress, shows the department granted 113 export licenses worth
about $61 billion for suppliers of telecom giant Huawei and 188
licenses valued at $42 billion for suppliers of Semiconductor
Manufacturing International Corp., China's largest chip maker, from
Nov. 9, 2020, through April 20 this year.
Read More ->
Investors Bet Inflation Pressures Will Linger
A key measure of investors' inflation expectations has climbed
in recent weeks, adding fuel to concerns about rising consumer
prices.
As of Wednesday, the gauge known as the 10-year break-even rate
suggested that the consumer-price index will rise by an annual
average of 2.57% over the next decade, according to Federal Reserve
Economic Data, or FRED. That is up from a recent low of 2.28% in
late September and the highest level since 2013.
Read More ->
Natural-Gas Prices Fall From Peak as Warm Autumn Buoys
Stockpiles
Natural-gas prices have shed 19% since hitting a 13-year high
earlier this month, reversing some of a run-up that has prompted
fears of exorbitant heating bills and higher manufacturing costs at
a time of already high prices.
A warm start to autumn is behind the decline. With most of the
country yet to turn the heat on, gas has accumulated in storage
facilities faster than expected and shrunk a deficit that prompted
worries over winter price surges and even potential shortages.
Read More ->
Derby's Take: As Fed Balance Sheet Grows, Questions About Its
Impact Remain
The Federal Reserve's newest governor this week pointed to an
uncomfortable truth about the central bank's multitrillion-dollar
balance sheet: Policy makers don't know for sure how it affects the
economy.
"We have no economic theory of how large the central bank's
balance sheet should be. I've never seen it," Christopher Waller
said Tuesday in a virtual appearance.
Read More ->
Supply Bottlenecks Curb Eurozone Economic Growth to Six-Month
Low in October
Eurozone business activity growth slowed sharply to a six-month
low in October amid increasing supply bottlenecks and ongoing
pandemic concerns, flash purchasing managers index data by IHS
Markit showed.
The eurozone flash composite PMI fell to 54.3 in October from
56.2 in September, posting a decline for the third consecutive
month.
Read More ->
Global Finance Watchdog Censures Turkey Over Money Laundering,
Terrorist Financing
WASHINGTON-A global watchdog on Thursday added Turkey to its
list of countries requiring special regulatory oversight for
failing to stop money laundering and terrorist financing, a
designation analysts say will rattle Ankara's already shaky
economy.
The action means Turkey joins a group of 23 countries-including
Zimbabwe, Haiti and Syria-that the Financial Action Task Force
determined "have strategic deficiencies in their regimes to counter
money laundering, terrorist financing, and proliferation
financing."
Read More ->
Write to paul.larkins@dowjones.com TODAY IN CANADA
Earnings:
Corus Entertain 4Q
Economic Indicators (ET):
0830 Aug Retail Trade
Stocks to Watch:
Hammond Power 3Q EPS C$0.34; Sales C$95.5M
Expected Major Events for Friday
00:30/JPN: Oct Japan Flash Manufacturing PMI
05:00/JPN: Sep Steel Production
06:00/UK: Sep UK monthly retail sales figures
07:15/FRA: Oct France Flash PMI
07:30/GER: Oct Germany Flash PMI
08:30/UK: Oct Flash UK PMI
08:59/JPN: Aug Final Labour Survey - Earnings, Employment &
Hours Worked
12:30/CAN: Aug Retail trade
13:45/US: Oct US Flash Manufacturing PMI
13:45/US: Oct US Flash Services PMI
14:00/US: Sep State Employment and Unemployment
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Friday
1st Constitution Bancorp (FCCY) is expected to report $0.46 for
3Q.
ASA Gold & Precious Metals Ltd (ASA) is expected to report
for 2Q.
Actinium Pharmaceuticals Inc (ATNM) is expected to report for
3Q.
Altra Industrial Motion Corp (AIMC) is expected to report $0.54
for 3Q.
American Express Co (AXP) is expected to report $1.80 for
3Q.
Bank of the James Financial Group Inc (BOTJ) is expected to
report for 3Q.
Carter's Inc (CRI) is expected to report $1.74 for 3Q.
Chino Commercial Bancorp (CCBC) is expected to report for
3Q.
Cleveland-Cliffs Inc (CLF) is expected to report $2.10 for
3Q.
Corus Entertainment Inc - Class B (CJR.B.T,CJREF) is expected to
report for 4Q.
Daseke Inc (DSKE) is expected to report $0.32 for 3Q.
Emclaire Financial (EMCF) is expected to report for 3Q.
Esquire Financial Holdings Inc (ESQ) is expected to report $0.62
for 3Q.
First Capital Inc (FCAP) is expected to report for 3Q.
First Hawaiian Inc (FHB) is expected to report $0.47 for 3Q.
Gentex Corp (GNTX) is expected to report $0.37 for 3Q.
Gorman-Rupp Co (GRC) is expected to report $0.34 for 3Q.
Greene County Bancorp (GCBC) is expected to report for 1Q.
HCA Healthcare Inc (HCA) is expected to report $4.19 for 3Q.
Honeywell International Inc (HON) is expected to report $2.01
for 3Q.
MetroCity Bankshares Inc (MCBS) is expected to report $0.61 for
3Q.
Norwood Financial Corp (NWFL) is expected to report for 3Q.
PFB Corp (PFB.T) is expected to report for 3Q.
PFSweb (PFSW) is expected to report $-0.11 for 2Q.
Regions Financial Corp (RF) is expected to report $0.54 for
3Q.
Roper Technologies Inc (ROP) is expected to report $2.77 for
3Q.
Schlumberger (SLB) is expected to report $0.36 for 3Q.
Seagate Technology Holdings PLC (STX) is expected to report for
1Q.
Simply Good Foods (SMPL) is expected to report $0.23 for 4Q.
Toast Inc (TOST) is expected to report for 3Q.
Tompkins Financial (TMP) is expected to report $1.44 for 3Q.
Towne Bank (TOWN) is expected to report $0.67 for 3Q.
United Bankshares Inc (UBSI) is expected to report $0.66 for
3Q.
VF Corp (VFC) is expected to report $1.13 for 2Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
Aramark Raised to Buy From Hold by Berenberg
Avaya Holdings Cut to Equal-Weight From Overweight by
Barclays
Carnival Raised to Hold From Sell by Berenberg
Contura Energy Raised to Overweight From Neutral by Piper
Sandler
Denny's Raised to Buy From Hold by Truist Securities
Krispy Kreme Cut to Hold From Buy by HSBC
Lam Research Cut to Hold From Buy by Summit Insights Group
LivePerson Cut to Underweight From Equal-Weight by Barclays
TCR2 Therapeutics Cut to Market Perform From Outperform by SVB
Leerink
Wintrust Cut to Neutral From Buy by Janney Montgomery Scott
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
October 22, 2021 05:50 ET (09:50 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.