Articles

Goldman Sachs with a view on the euro, running ‘tariff’ scenarios for the US election outcome:

• if the Republican party win the presidency and Congress could lead to higher tariffs
• 10% U.S. tariff on all imports
• 20% on Chinese products
• tax cuts
• would likely push up inflation
• would likely lead to Federal Reserve interest rate rises, to US rates much higher than in the EU
• could cause the US dollar to rise sharply and euro to drop by up to 10%

GS also run a scenario on a narrower trade war, in which Trump only imposes further tariffs on China, could see the euro fall by around 3%.

GS on a Democratic sweep or divided Democratic government:

• likely result in some initial dollar downside

This article was written by Eamonn Sheridan at www.forexlive.com.

Shares of Starbucks are down nearly 6% after hours following a weak report on preliminary Q4 earnings.

• Global comp sales -7%
• US comp sales -6%
• China comparable store sales declined 14%

This could be a sign of a weakening consumer but I think it’s more about Starbucks losing its cool. The company also suspended its guidance for FY 2025.

The slump isn’t exactly a surprise given that the company fired its CEO it September. It looks like the new CEO is doing the ‘kitchen sink’ thing.

This is what the earnings release said:

The company’s
results were primarily driven by softness in North America’s revenues
in the quarter, specifically a 6% decline in U.S. comparable store
sales, driven by a 10% decline in comparable transactions, partially
offset by a 4% increase in average ticket. The accelerated investments
in an expanded range of product offerings coupled with more frequent
in-app promotions and integrated marketing to entice frequency across
the customer base did not improve customer behaviors, specifically
traffic across both Starbucks Rewards and non-SR customer segments,
resulting in lower-than-expected performance. Additionally, China
comparable store sales declined 14%, driven by an 8% decline in average
ticket compounded by a 6% decline in comparable transactions, weighed
down by intensified competition and a soft macro environment that
impacted consumer spending.

This article was written by Adam Button at www.forexlive.com.

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After Close:

• Enphase Energy (ENPH)
• Baker Hughes (BKR): Estimate EPS $0.60. Revenues $7.211 billion
• Seagate Technology (STX): Estimate EPS $1.48. Revenues $2.129 billion
• Texas Instruments (TXN) Est. EPS $1.37 Revenues $4.12 billion

Wednesday

Before Open:

• Boeing (BA)
• AT&T (T)
• Coca-Cola (KO)
• Thermo Fisher Scientific (TMO)
• CME Group (CME)
• Boston Scientific (BSX)
• General Dynamics (GD)

After Close:

• Tesla (TSLA)
• Lam Research (LRCX)
• IBM (IBM)
• ServiceNow (NOW)
• Viking Therapeutics (VKTX)
• T-Mobile (TMUS)
• Sands (LVS)

Thursday

Before Open:

• American Airlines (AAL)
• UPS (UPS)
• Southwest Airlines (LUV)
• Nasdaq (NDAQ)
• Carrier (CARR)
• Tractor Supply Company (TSCO)

After Close:

• Dexcom (DXCM)
• Deckers Brands (DECK)
• Western Digital (WDC)
• Skechers (SKX)

Friday

Before Open:

• New York Community Bancorp (NYCB)
• Colgate-Palmolive (CL)
• Piper Sandler (PIPR)

The bigger names are still week or more away:

• -Nvidia: November 14
• – Meta – October 30
• – Apple – October 31
• – Amazon – October 31
• – Alphabet/Google – October 29
• – Microsoft – October 30

This article was written by Greg Michalowski at www.forexlive.com.

• EPS $1.47 versus $1.38 estimate
• Revenues $4.15 billion versus $4.12 billion

Forward guidance:

• Q4 revenues $3.7 billion – $4 billion versus estimate $4.08 billion
• EPS estimate $1.07 – $1.29 versus expectations of $1.35

Shares are down -1.54% as the market reacts to the forward guidance

This article was written by Greg Michalowski at www.forexlive.com.

Inflation data from Singapore is about it. Due at 0100 US Eastern time.

Oil inventory data is due from the US, the private survey, just after 4.30 pm US Eastern time.

This article was written by Eamonn Sheridan at www.forexlive.com.

Good morning, afternoon and evening all. Any charts, technical analysis, trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, please do so:

This article was written by Eamonn Sheridan at www.forexlive.com.

In my view, US stocks have been able to rally with yields rising because the market has priced out the risk of a recession while pricing in a larger Fed put in light of Powell’s willingness to pull the trigger on a 50 basis point cut.

That’s a powerful combination but stocks have rallied 9% and election risks are on the horizon. Moreover, US 10-year yields have jumped, which is something that will weigh on real economic activity, particularly in rate-sensitive sectors like autos and real estate.

ZeroHedge highlights a Goldman Sachs note that looks at how far yields have to move to weigh on stock markets.

“Historically, a 2 SD move in US 10 yr yield, equivalent to around 60 bps today (3yr lookback), over a month is when equity market returns are below avg. Given we’ve moved 46bps MTD, this simple rule of thumb argues that a move towards 4.30% is where things would get tricky for stocks”

That leaves about a 10 basis point cushion, which I think is a tough hill to climb in the next week.

That’s a rule of thumb, as they say so take it with a grain of salt. At the moment, I’ve been impressed by the resilience in stock markets today. There are worries building but there certainly wasn’t a rush to the exits today when futures were poor.

I am starting to worry more about housing with 30-year US fixed rates up to 6.85% from a low of 6.11% on Sept 11. I think we need to get back down to those lows or there will be pockets of trouble in the US housing market by mid-2025.

This article was written by Adam Button at www.forexlive.com.

Futures were down more than 30 points today but bids came at the open and now the S&P 500 has fought its way all the way back to flat. The Nasdaq is up 0.2%.

Rising bond yields had the market a bit off balance but with stocks on a six-week winning streak, the bulls are buying every dip as there is no sign of a recession or inflation and the Fed is cutting rates.

This article was written by Adam Button at www.forexlive.com.

I’m not sure I believe any of these reports but Israel’s Channel 12 is out with a report saying the IDF has completed its preparations to attack Iran and that it will happen within days.

WTI crude is up $1.74 to $72.30 today.

This article was written by Adam Button at www.forexlive.com.

It’s the time in the cycle when everything that happens in markets is tied back to politics. I looked at Trump trades on Thursday and aside from some pockets, it’s tough to make the argument that’s the major driver, let alone in stocks or bonds.

But how about the biggest market in the world? One of the consensus is winners on a Trump win is the US dollar, in large part due to higher deficits. If markets were pricing in a higher chance of a Trump win, that should boost the dollar. And what’s happened in the past month? The dollar has rallied alongside Trump’s odds.

Yet Bank of America thinks that’s correlation, not causation. They highlight the Fed 50 bps as the driver as it delivered a Fed put, snuffed out the recession trade and boosted the odds of inflation and a higher Fed funds rate down the line. Moreover, the economic data after the decision was also stronger than almost anyone thought it would be, including a big upside revision to GDI.

They say the rally in the dollar is consistent with improving fundamentals, not politics.

This article was written by Adam Button at www.forexlive.com.

Closing changes in Europe:

• Stoxx 600 -0.2%
• German DAX -0.1%
• France CAC flat
• UK FTSE 100 -0.1%
• Spain IBEX -0.1%
• Italy’s FTSE MIB -0.6%

This article was written by Adam Button at www.forexlive.com.

• Services index +3 vs -1 last month
• Manufacturing shipments -8 vs -18 last month

Other details:

• Employment -17 vs -22 last month
• Wages 16 vs 15 last month
• Prices paid 2.70 vs 3.36 last month
• Prices received 1.71 vs 1.57 last month
• New orders -17 vs -23 last month
• Backlog of orders -14 vs -16 last month
• Capacity utilization -11 vs -20 last month
• Capital expenditures -23 vs -13 last month
• Services expenditure -22 vs -17 last month
• Finished goods inventories 17 vs 20 last month
• Raw materials inventory 12 vs 12 last month
• Equipment and software spending -21 vs -13 last month

The numbers improved but that comes after a particularly bad string of data.

This article was written by Adam Button at www.forexlive.com.