- China’s five largest banks are facing an increasingly daunting balancing act as they try to avoid snapping a streak of rising earnings. The state-controlled lenders have managed to keep profits increasing every year since 2004, sending a message about the resilience of China’s financial system. Keeping that trend alive is becoming tougher because of rising bad loans and pressure on lending margins. While analysts expect another quarter of profit growth when Bank of China Ltd., Industrial & Commercial Bank of China Ltd., Agricultural Bank of China Ltd., China Construction Bank Corp. and Bank of Communications Co. report earnings this week, it might just be a matter of postponing the inevitable. For the full year, the five are projected to post a 2 percent decline in net income, according to analysts surveyed by Bloomberg.
- It’s going to be a “tough” earnings season for Australia’s biggest banks, according to Goldman Sachs Group Inc. Full-year results due from three of the lenders -- starting with National Australia Bank Ltd. on Thursday -- are poised to show that a record-breaking run of profits is coming to an end amid higher funding costs, lower interest margins and rising bad-debt charges. Australia & New Zealand Banking Group Ltd. may report its lowest cash profit in four years, while Westpac Banking Corp.’s may be little changed, analyst surveys by Bloomberg indicate. The lenders all reported weaker-than-expected cash profit in the first half, the first time in at least a decade that three of the nation’s largest lenders missed estimates at the same time, according to data compiled by Bloomberg.
- Most Asian shares dropped and U.S. equity index futures fell after Apple Inc., the world’s largest company, disappointed investors with its first annual decline in sales since 2001. Crude oil slid to a three-week low and South Korea’s won strengthened. About five shares declined for every two that advanced on the MSCI Asia Pacific Index, with energy companies leading losses. Apple fell as much as 2.9 percent in after-hours U.S. trading, dragging Nasdaq index futures 0.3 percent lower.
- ‘There Are No More Panes of Glass Left in Aleppo’. A look at the destruction of the Syrian city shows food running short and graveyards full, with residents struggling to survive a blockade.
- Activate’s Michael Wolf Predicts What’s Next for Tech and Media in 2017. At WSJ tech conference, strategist says digital gatekeepers will fare better than content media.
- 'We need to clean this up': Clinton aide cried foul on Obama's email denial. (video) One of Hillary Clinton’s top aides urged colleagues to “clean this up” after President Obama claimed in March 2015 he only learned of Clinton’s private email system from news reports -- a statement the aide pointedly challenged by noting the president "has emails" from her non-department address. The directive from Cheryl Mills, one of the Democratic presidential nominee’s most trusted aides, was revealed Tuesday in the newest batch of Campaign Chairman John Podesta’s emails posted by anti-secrecy site WikiLeaks. It is one of several showing how Clinton's inner circle scrambled to correct the record after Obama's initial remarks.
- Russia Unveils First Images Of Nuclear Missile Capable Of Reaching US Soil.
- Richmond Fed Confirms Weakest Economic Trend Since 2008. (graph)
- Apple(AAPL) Slides After Missing Revenue, China, ASPs Despite Better iPhone Sales, Guidance. (graph)
- Insider Stock Buying Drops To Lowest Level In Five Years.
- Oil Tumbles To 3 Week Lows After Unexpectedly Large Inventory Build. (graph)
- Mega-Merger Monday Gains Gone As Crude Crunch Drags Stocks Lower. (graph)
- Donald Trump calls for an investigation into Obama after latest WikiLeaks revelations.
- It’s official: Chipotle’s(CMG) desperate attempt to save itself failed.
- ISIS militants have spread a toxic, corrosive cloud all over the Middle East.
- Apple(AAPL) CEO Tim Cook got testy after an analyst asked him if Apple has a 'grand strategy'.
- Obamacare is perpetuating a death spiral.
- Asian equity indices are -1.0% to -.5% on average.
- Asia Ex-Japan Investment Grade CDS Index 114.75 +.5 basis point.
- Asia Pacific Sovereign CDS Index 33.5 -1.0 basis point.
- Bloomberg Emerging Markets Currency Index 72.59 -.01%.
- S&P 500 futures -.27%.
- NASDAQ 100 futures -.34%.
Earnings of Note
8:30 am EST
- Advance Goods Trade Balance for September is estimated at -$60.5B versus -$59.2B in August.
- Preliminary Wholesale Inventories MoM for September are estimated to rise +.1% versus a -.2% decline in August.
- Preliminary Markit US Services PMI for October is estimated to rise to 52.5 versus 52.3 in September.
- New Home Sales for September are estimated to fall to 600K versus 609K in August.
- Bloomberg Consensus estimates call for a weekly crude oil inventory build of +1,169,000 barrels versus a -5,247,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -550,270 barrels versus a +2,469,000 barrel gain the prior week. Distillate supplies are estimated to fall by -1,332,180 barrels versus a -1,240,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.56% versus a -.5% decline prior.
- None of note
Other Potential Market Movers
- The weekly MBA mortgage applications report, $34B 5Y T-Note auction and the (ETH) investor meeting could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by commodity and technology shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon. The Portfolio is 25% net long heading into the day.