Please note that the SIA Wealth Morning Minutes will not be issued Friday. They should return on Monday October 23rd.
The first full week of earnings season continues to get overshadowed by wider macro developments. The US 10-Year Treasury Note Yield is on the rise again, trading above 4.90% this morning for the first time since 2007, and it is approaching the big 5.00% round number. Meanwhile, the Germany 10-year Bund yield is climbing closer to 3.00% once again.
Investors appear to be focused on two potentially significant US speeches scheduled for today. Fed Chair Powell speaks at noon EDT with investors looking for hints on the future of interest rates with the next Fed decision less than two weeks away on November 1st. Tonight US President Biden takes to the airwaves, apparently looking to drum up support for more aid to Ukraine and Israel.
US indices fell 1.0%-1.6% yesterday as investors fretted over rising treasury yields and disappointing results, particularly from Morgan Stanley and United Airlines. So far today, US index futures have stabilized at a lower level, trading flat to up 0.2%, but losses have continued in Europe where the Dax is own 0.2% and the FTSE is down 1.0%. Energy and metals trading is mixed. Copper is up 0.5%, Gold is down 0.2% and US Crude Oil is down 0.6%.
Overnight earnings, and investors reaction to them, has been mixed. Netflix is up 13.8% in premarket trading, clawing back recent losses, after beating the street on earnings ($3.73 vs street $3.49) and reported subscribers grew by 8.8 million, its best pace since 2020. Tesla*, on the other hand, is down 6.7% premarket after posting disappointing earnings ($0.66 vs street $0.73). American Airlines crushed street expectations on earnings ($0.38 vs street $0.25), and is up 1.6% in premarket trading, a significant uptick considering that competitor United Airlines fell 9.6% yesterday after reporting results. American Express and Schlumberger headline tomorrow’s earnings reports.
Today’s economic data is also mixed. US weekly initial jobless claims dropped back under 200K, a sign of a strong economy. The Philadelphia Fed Manufacturing Survey was worse than feared, however (-9.0 vs street -6.6). Canadian Raw Material prices increased more than expected (3.5% vs street 2.3%).
*Shares of Tesla are held in some portfolios managed by SIA Wealth Management.