EmailPage One
Archive
Last Update: 13-Oct-11 08:47 ET
Earnings Diversion
In a welcomed respite from the European debt crisis, U.S. corporate earnings are acting as a diversion as European leaders find "the devil is in the details".
U.S. equity futures are indicating slight declines for Thursday's open.
Heavyweight, JP Morgan (JPM) proved its worth in earnings. The first of the major U.S. lenders to report not only beat on earnings by eight cents at $1.02 per share, but exceeded revenue estimates by a whopping billion dollars. However, the $1.9 bln boost to revenue from debt valuation adjustment (DVA) and the cautious 2012 outlook is weighing on the stock premarket.
The main point is JPMorgan demonstrated, once again, the benefits of being a broad and diversified bank. This is something Bank of America (BAC) only dreams of. JPM's fortress balance sheet is buttressed with a Tier 1 common ratio of 9.9% and reserves of $29 bln. What was also notable is the fact that credit conditions continue to improve as losses decline and loan growth rises.
On the economic calendar, Initial Claims came in at 404k on target with the Briefing.com consensus. Continuing Claims fell to 3.67 mln from 3.725 mln. The August Trade balance came in at a negative $45.6 bln
After several days of gains, the risk trade is showing slight cracks this morning.
Oil prices are fading, trading at $84.30 per barrel ahead of the weekly inventory report that is expected to show slowing consumption. The commodity complex is showing modest declines after several days of gains.
Treasury yields are slightly lower, but the action has been fairly muted. Third quarter earnings may take some of the focus off the European debt crisis, but its overall impact on yields is still very prevalent. The resiliency of the bond bulls will be tested when the Treasury auctions $13 bln in 30-year Bonds later today (1:00 p.m. ET) …and the twist goes on.
As a side note, the ML U.S. Corporate High Yield Master II Index has dropped 75 bps (10.11% to 9.36%) since October 4 indicating that the risk trade is back on for some participants.
While the Europeans are heading in the right direction, the realization is there is much to be done as deadlines loom. Uncertainty crept back into the European markets with the majors trading lower as policy makers debate the private sector's involvement in the bailouts.
The first of China's September economic data came out overnight. The September trade report showed the impact economic conditions in the U.S. and Europe are having on the Chinese economy. Exports grew 17.1% year-over year compared to a 24.5% increase in August. The figure came in well below expectations. Imports also slowed, growing 20.9% compared to a 30.2% increase in August.
--Kimberly DuBord, Briefing.com
Kimberly DuBord is the Director of Research for Briefing Research, Briefing.com's new strategic investment research service. To request a free trial please email researchsales@briefing.com.
U.S. equity futures are indicating slight declines for Thursday's open.
Heavyweight, JP Morgan (JPM) proved its worth in earnings. The first of the major U.S. lenders to report not only beat on earnings by eight cents at $1.02 per share, but exceeded revenue estimates by a whopping billion dollars. However, the $1.9 bln boost to revenue from debt valuation adjustment (DVA) and the cautious 2012 outlook is weighing on the stock premarket.
The main point is JPMorgan demonstrated, once again, the benefits of being a broad and diversified bank. This is something Bank of America (BAC) only dreams of. JPM's fortress balance sheet is buttressed with a Tier 1 common ratio of 9.9% and reserves of $29 bln. What was also notable is the fact that credit conditions continue to improve as losses decline and loan growth rises.
On the economic calendar, Initial Claims came in at 404k on target with the Briefing.com consensus. Continuing Claims fell to 3.67 mln from 3.725 mln. The August Trade balance came in at a negative $45.6 bln
After several days of gains, the risk trade is showing slight cracks this morning.
Oil prices are fading, trading at $84.30 per barrel ahead of the weekly inventory report that is expected to show slowing consumption. The commodity complex is showing modest declines after several days of gains.
Treasury yields are slightly lower, but the action has been fairly muted. Third quarter earnings may take some of the focus off the European debt crisis, but its overall impact on yields is still very prevalent. The resiliency of the bond bulls will be tested when the Treasury auctions $13 bln in 30-year Bonds later today (1:00 p.m. ET) …and the twist goes on.
As a side note, the ML U.S. Corporate High Yield Master II Index has dropped 75 bps (10.11% to 9.36%) since October 4 indicating that the risk trade is back on for some participants.
While the Europeans are heading in the right direction, the realization is there is much to be done as deadlines loom. Uncertainty crept back into the European markets with the majors trading lower as policy makers debate the private sector's involvement in the bailouts.
The first of China's September economic data came out overnight. The September trade report showed the impact economic conditions in the U.S. and Europe are having on the Chinese economy. Exports grew 17.1% year-over year compared to a 24.5% increase in August. The figure came in well below expectations. Imports also slowed, growing 20.9% compared to a 30.2% increase in August.
--Kimberly DuBord, Briefing.com
Kimberly DuBord is the Director of Research for Briefing Research, Briefing.com's new strategic investment research service. To request a free trial please email researchsales@briefing.com.
