U.S. futures are heading higher despite nervous sentiment in the market that saw stocks finish yesterday on a flat note. Many investors switched into caution mode amid new U.S. political uncertainties and ahead of a week filled with earnings reports, economic data and recent big M&A. Also on the radar: The FOMC's two-day interest-rate setting meeting for November begins today.
Economy
Over 23M votes have already been cast in the 2016 Presidential Election nationwide, with 11.5M submitted in 12 key battleground states. Democratic-affiliated voters have so far outpaced Republican voters in Colorado, Iowa, Michigan, North Carolina, Nevada, Ohio, Virginia and Wisconsin, but in Arizona, Florida, Georgia and Pennsylvania, Republican-affiliated voters have overtaken Democrats.
The Reserve Bank of Australia kept interest rates unchanged today at 1.5%, indicating what analysts called a "wait and see" approach to future monetary policy easing despite a run of soft inflation figures. The Bank of Japan also held rates and left the pace of bond purchases unchanged, but cut its core consumer inflation forecast for the year ending March 2018 to 1.5% from 1.7%.
Three fresh activity surveys have reinforced hopes of stabilization in the world's number-two economy. China's official manufacturing PMI came in at 51.2 for October, snapping two months of flat readings, while Caixin's private survey recorded the same print, showing the fastest rate of improvement since March 2011. Strength wasn't only seen in manufacturing. The government's official services PMI soared to 54.0, giving equities a boost on the mainland.
Should he leave the Bank of England in 2018 as scheduled or stay until 2021 as entitled? After months of speculation and a weekend of conflicting media reports, Governor Mark Carney chose a third way by saying he will stay in office a year longer than initially planned until June 2019, a few months after the government should have extracted Britain from the EU. Sterling has firmed against major currencies on the news.
Saudi King Salman has replaced the country's long-serving finance minister Ibrahim al-Assaf with Mohammed al-Jadaan, the chairman of market regulator CMA. The change comes as the kingdom tries to diversify its economy and cut its dependence from oil revenue. Al-Jadaan was a force behind opening the Saudi stock market to direct foreign investment last year and oversaw plans to further ease restrictions.
Military buildup: Advancing Iraqi troops have broken through Islamic State defenses in an eastern suburb of Mosul, taking the battle for the insurgents' stronghold into the city limits for the first time. Russia said the resumption of Syria peace talks have been delayed indefinitely, while India and Pakistan tallied at least 13 deaths across their disputed border in Kashmir, where the nuclear-armed neighbors are ratcheting up shelling and small-arms fire.
Venezuela's bolivar has weakened past 1,500 per dollar on the black market following a 19% depreciation of the exchange rate since last week, according to widely-watched website DolarToday. The sharp decrease comes as representatives of President Nicolas Maduro and the government's three main opposition parties begin talks to defuse the country's economic and political crisis.
Stocks
Despite ongoing weakness in oil prices, BP's replacement cost profit - a number analogous to the net income that U.S. oil companies report - rose 35% to $1.66B in the third-quarter. Cost cutting will continue to define the group's activities in the near term, as BP revised its 2016 capital expenditure guidance to $16B from $17B-$19B and warned about pressure on refining margins in Q4. BP -3% premarket.
"Shell delivered better results this quarter... but lower oil prices continue to be a significant challenge across the business, and the outlook remains uncertain," Chief Executive Ben van Beurden said in a statement. Earnings on a current cost of supplies basis reached $1.4B in Q3, after contracting $6.1B a year ago, as higher production from acquisition BG Group and lower operating costs helped support earnings. RDS.A +3.3%; RDS.B +4.2% premarket.
Ford has reached a tentative agreement with unionized workers in Canada, averting a strike that threatened to disrupt production at factories that account for nearly 10% of the automaker's North American output. Unifor said Ford (NYSE:F) would make investments in its Canadian operations in the area of C$700M and promised other undisclosed gains, but it may prove difficult to get the deal approved by members at meetings on Nov. 5 and 6.
More Ford news: The company is postponing its October sales report, following a fire yesterday that caused it to evacuate headquarters. BlackBerry (NASDAQ:BBRY) has also signed a deal to work directly with the carmaker to expand its use of the QNX secure operating system. That opens an avenue into Ford's increasing push into automated vehicles and marks BlackBerry's first direct deal with a major automaker.
A majority of Southwest Airlines' 14,500 flight attendants have approved a new labor agreement. The two-year contract includes a ratification bonus of almost 16% based on the average hours worked over the past three years and annual wage rate increases over the life of the contract. Southwest (NYSE:LUV), which is trying to find labor peace after a tumultuous period, was "thrilled," said Sonya Lacore, vice president of cabin services.
Valeant Pharmaceuticals +4% premarket after shares tanked just before the close on Monday in response to news that ex-CEO Michael Pearson and ex-CFO Howard Schiller are the focus of a DOJ fraud investigation. According to Bloomberg, the nature of the charges are related to the company's hidden ties to now-defunct Philidor, a specialty pharmacy that used dubious tactics to increase insurance reimbursements for Valeant (NYSE:VRX) products.
Not a great quarter for Sony... Net income plunged 86% to ¥4.8B ($45.8M) from ¥33.6B in the same period last year, as the Japanese electronics giant got whacked by a stronger yen, costs from the sale of its battery business and softness in areas like games and semiconductors. Sony's (NYSE:SNE) cash-cow imaging sensor business also took a ¥1.2B hit due to damage from the Kumamoto earthquakes that closed down one of its factories.
Apple Music may be preparing for a major price drop, a pair of sources "working closely" with the streaming service told Digital Music News. The changes are still under discussion, albeit "under serious discussion." If implemented, the decrease could be as much as 20%, which would put the monthly regular rate below $8 and allow Apple (NASDAQ:AAPL) to minimize any damage from "seriously undercutting Amazon Music (NASDAQ:AMZN)."
With Tom Dooley departing his interim position atop Viacom (VIA, VIAB), the company has named veteran Bob Bakish its acting president and CEO. The choice of an internal candidate and temporary-sounding title could be indications of just how quickly Viacom is expected to potentially reunite with its corporate sibling, CBS Corp. (NYSE:CBS), from which it was split off a decade ago.
The board of directors of Reynolds American (NYSE:RAI) has formed a committee of independent directors, not designated by British American Tobacco (NYSEMKT:BTI), to evaluate the latter's $47B takeover offer. Goldman Sachs, JPMorgan and Lazard have been retained as financial advisors to the transaction. In light of the evaluation, Reynolds canceled its investor day scheduled for Nov. 14, 2016.
ChemChina has extended its $43B cash offer for Syngenta (NYSE:SYT) to Jan. 5 while it works to gain regulatory approval for the transaction. On Friday, EU anti-trust regulators opened an in-depth investigation into China's biggest-ever foreign acquisition, setting a March 15 deadline to complete its review.
A surge of blockbuster takeovers and buyouts has provided renewed ammunition for the corporate bond market, supplying fresh kindling in what is already set to be a record year of debt issuance. The backlog of M&A that had yet to be financed slid to $246B at the end of September from more than $900B in late 2015, according to BofA Merrill Lynch, but that figure has climbed 87% to $460B following the recent string of deal announcements.
The new Bond King? After dozens of candidates, a designated committee and two different recruitment firms, Pimco (OTCQX:AZSEY) is finally welcoming its new CEO, Manny Roman. There are high hopes, as he becomes the third man to take to the helm since Bill Gross left in 2014. Roman will attempt to boost profitability in a period of low interest rates and returns and kickstart morale following a series of heavy layoffs.
Today's Markets
In Asia, Japan +0.1% to 17442. Hong Kong +0.9% to 23147. China +0.7% to 3122. India -0.2% to 27896.
In Europe, at midday, London +0.3%. Paris +0.2%. Frankfurt +0.2%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.3%. Crude -0.3% to $46.71. Gold +0.9% to $1284.90.
Ten-year Treasury Yield +1 bps to 1.85%
Today's Economic CalendarIn Europe, at midday, London +0.3%. Paris +0.2%. Frankfurt +0.2%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.3%. Crude -0.3% to $46.71. Gold +0.9% to $1284.90.
Ten-year Treasury Yield +1 bps to 1.85%
FOMC meeting begins
Auto Sales
8:55 Redbook Chain Store Sales
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
2:00 PM Gallup US ECI
Companies reporting earnings today »Auto Sales
8:55 Redbook Chain Store Sales
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
2:00 PM Gallup US ECI
Source: http://seekingalpha.com/article/4017437-wall-street-breakfast-november-begins-lots-excitement
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