FT : SoftBank reports $6.4bn quarterly loss after WeWork investment sours

SoftBank reports $6.4bn quarterly loss after WeWork investment sours

SoftBank reported a quarterly net loss of ¥700bn ($6.4bn) after its outsized investment in crisis-hit property group WeWork soured, jeopardising Masayoshi Son’s ambitions to launch another $100bn investment fund. 

The dismal results on Wednesday came two weeks after SoftBank agreed to a $9.5bn package to rescue the US office-sharing group following an aborted attempt to go public. Its latest deal sank WeWork’s valuation from $47bn in January to $8bn.

The WeWork debacle has been a rare blunder for Masayoshi Son, the billionaire founder of SoftBank and an aggressive dealmaker who claims to be guided by a gut feeling in picking winners in the technology industry.

His most successful bet has been an early investment in Alibaba, but even gains related to the Chinese ecommerce group did not help to offset unrealised valuation losses totaling ¥537.9bn related to WeWork and a decline in share price for ride-sharing group Uber. 

For the July to September quarter, the company reported a net loss of ¥700bn, falling far below analyst estimates of a net loss of ¥241bn and compared to its year-earlier profit of ¥526bn.

Adam Neumann, the WeWork cofounder, helped to convince SoftBank to commit $10.65bn to the company, but governance concerns killed WeWork’s hopes for an initial public offering after it failed to fetch even a $15bn valuation from investors.

Mr Neumann was ultimately forced out of the company, but not before he secured a controversial $1.7bn exit package even as 4,000 WeWork employees are to be fired.

The crisis at WeWork fuelled concerns among investors about the Vision Fund’s investments in other companies, and darkened prospects for SoftBank to launch a second fund after its first Vision Fund pumped $70bn into 88 companies.

FT : Société Générale takes third-quarter restructuring hit

Société Générale takes third-quarter restructuring hit
France’s third-largest bank misses analysts’ forecasts

Société Générale’s profits came in below estimates in the third quarter as revenues at its investment bank faltered amid a restructuring effort.

France’s third-largest bank reported net income fell 34.8 per cent to €854m, from €1.3bn a year ago, due in part to a €115m charge related to the closing of the bank’s operations in the Balkans. Analysts had expected a net income figure of €942m.

SocGen’s equity trading revenue — long considered one of its key strengths — dropped 20 per cent in the quarter “against a backdrop of lower volumes and adverse market conditions, particularly in August”.

Revenues from fixed income, currency and commodity trading rose 1 per cent in the quarter, which the bank put down to “strong client activity in financing and rates and credit, offsetting impact of business closures”.

The gain lagged French rival BNP, which posted a 35 per cent year-on-year jump, and Wall Street rivals who had an increase of around 10 per cent.

Overall, revenue at its global banking and investor solutions business — which takes in trading and investor funding — dropped 7.6 per cent. It “delivered resilient net income in an unfavourable environment, without yet benefiting from the positive effects of the ongoing restructuring which is ahead of its 2020 objectives”, said chief executive Frédéric Oudéa, who has led the bank for 11 years.

The Paris-based lender announced 1,600 job cuts in April following several quarters of poor performance at its investment bank as part of a push to reduce its annual costs by €500m. The bank plans to close its commodities business and proprietary trading unit and is reorganising its fixed-income division to make it more profitable.

The bank’s international retail revenues gained 5 per cent and French retail revenues were up slightly.

As part of its deleveraging and reduction of risk-weighted assets, SocGen has built up its capital buffer, having hit its 2020 core equity tier one capital target of 12 per cent last quarter.

“Once again this quarter, we have achieved results very much in line with our objectives and priorities. In terms of capital, there was a further substantial increase in the CET1 ratio to 12.5 per cent,” said Mr Oudéa.

The bank’s shares have declined 3 per cent this year.

>>> What to look at today - 6th of November 2019

Stocks in Asia drifted in a lackluster session as investors await fresh news on Sino-American trade discussions. The yuan traded stronger than 7 per dollar for a second day.
Stocks ended flat in Tokyo, and fell in Shanghai and Sydney. They were little changed in Seoul and Hong Kong. U.S. futures were flat after the S&P 500 Index closed marginally lower as growth in U.S. service industries pushed market pricing for another rate cut from the Federal Reserve further out. European futures were also steady. Ten-year Treasury yields retreated following gains earlier this week. Bond yields in Australia climbed to the highest since late July, and Japanese rates also climbed.
After Hours Summary: PLT -27%, SUPN -24%, MTCH -16%, WW -12%, ATUS -9%, FIVN +9%, DVA +6%, AVLR / DVN +5% following earnings/guidance

Nikkei +0.22% Hang Seng -0.12% CSI -0.45% Shanghai -0.43% Shenzen -0.87%

Eur$ 1.1074 CNH 7.0037 CNY 7.0017 JPY 108.99 GBP 1.2877 RUB 63.54 CHF 0.9931 TRY 5.7615 WTI$ 56.97 -0.45%

S&P -0.04% EuroStoxx +0.00% Dax -0.04% SMI -0.06%

Macro :
- China Insists Trump Give Up His Favorite Trade Weapon -- Tariffs
- Paul Tudor Jones Sees ‘Most Conducive’ Growth Environment
- SoftBank Reveals $6.5 Billion Loss From Uber, WeWork Turmoil
*- Xerox Considers Cash-Stock Takeover Offer for HP, DJ Reports (1)

Keep an eye on :
- ADS GY : Adidas Earnings Beat Estimates on North America Sales Momentum
- AF FP : Air France-KLM CEO Sees Robust Air Travel Demand in 10 Years
- AGFB BB : Agfa-Gevaert Third Quarter Adjusted Ebit Matches Estimates
- AGS BB : Ageas Third Quarter Net Income 1.6% Above Estimates (1)
- AH NA : Ahold Delhaize 3Q Adj. Op. Profit Beats, Outlook Confirmed (1)
- ALO FP : Alstom 1H Adj. Ebit Rises 5%, Confirms Outlook
- APAM NA : Aperam Third Quarter Ebitda Beats Highest Estimate
- ATC NA : Altice USA Cuts Full Year Revenue Forecast
- AML LN : Aston Martin’s New $120,000 Motorcycle Isn’t Even Street-Legal
- AML LN : Aston Picks Beijing for SUV Launch With China Key to Future
- SPR GY : Axel Springer Keeps Forecast Amid ‘Difficult’ Environment
- AZN LN : Sun Pharma, AstraZeneca in China Novel Oncology Products Pact
- B2H NO : B2Holding Third Quarter Operating Profit Beats Highest Estimate
- BARN SW : Barry Callebaut FY Sales Miss; States New Mid-Term Guidance (2)
- BALTA BB : Balta Group Nine Month Adjusted Ebitda EU54.6 Mln, -2.3% Y/y
- BMW GY : BMW 3Q Ebit Beats Highest Estimate; Guidance Confirmed
- BNR GY : Brenntag Narrows FY Op. Ebitda Growth to Low End Range
- BRAV SS : Bravida Third Quarter Net Sales Miss Lowest Estimate
- BREE LN : Breedon Holders M1 Cement Holding to Offer Up to 139.7m Shrs
- BWO NO : BW Offshore Convertible Bond Initial Conversion Price $10.24
- ALCAR FP : Carmat: 73% First Patients Achieved Primary Endpoint in Pivotal
- CGG FP : CGG Raises FY Segment Operating Income Forecast to Above $200m
- COL SM : Colonial Nine Month Recurring Ebitda EU210 Mln, +4% Y/y
- DIA SM : DIA Nine Month Net Loss EU504.3 Mln Versus EU45.8 Mln Y/y
- DLG GY : Dialog Semi Beats Estimates in Life After Apple Dependence
- EDP PL : EDP Holder CNIC to Offer 48.8m Shares via Societe Generale --> EDP Shares Priced at EU3.60/Share in Offering by Orise
- ZIL2 GY: ElringKlinger Reaffirms Outlook; Sees Higher Organic Rev. Growth
- EQNR NO : Equinor Makes Oil, Gas Discovery Near Fram Field in North Sea
- EQT SS : Temasek-EQT JV to Start India Green Energy Platform, ET Says
- EVT GY : Evotec, Vifor Pharma in 50:50 JV for Nephrology Therapeutics
- FRA GY : Fraport Third Quarter Ebitda Meets Estimates
- HDD GY : Heidelberger Druck Downsizes Board, CTO Plenz to Leave in June
- HNR1 GY : Hannover Re Raises 2019 Net Guidance, Sees 2020 of About EU1.2b
- IDR SM : Indra Nine Month Net Income EU65 Mln, +18% Y/y
- INTU LN : Intu Says Equity Raise ‘Likely’ In Bid to Help Fix Balance Sheet
- ISS DC : ISS Cuts Outlook as CEO Says Goals He Set Were Too ‘Ambitious’
- ISS DC : ISS Cuts Outlook for Operating Margin, Free Cash Flow
- INW IM : Inwit Nine Month Ebitda EU167.7 Mln, +3.3% Y/y
- KOJAMO FH : Kojamo 3Q Revenue Beats Estimates, Specifies Outlook
- MMB FP : Lagardère Contests CAF Decision to Cancel Its Agency Agreement
- LSE LN : To Lure More IPOs, London May Even Change Its Rules: ECM Watch
- MC FP : Deal With Tiffany Would Put Pressure on LVMH Competitors: HSBC
- MCOVB SS : Medicover Third Quarter Revenue Beats Highest Estimate
- MONT BB : Montea Nine Month Adjusted EPS EU2.45 Vs. EU2.08 Y/y
- MGNS LN : Morgan Sindall Sees Earnings Slightly Above Previous Views
- MTC LN : Mothercare U.K. Arm’s Collapse Threatens Loss of 2,500 Jobs
- MTRS SS : Nordic Capital to Offer About 20% of Munters Group Shares
- NN NA : NN Group CRO Jan-Hendrik Erasmus to Step Down, to Join Aviva
- NOEJ GY : Norma 3Q Adj. Ebita -9.6% to EU38.7m; Confirms Lower Rev. View
- ODF NO : Odfjell Third Quarter Revenue $214.2 Mln
- ONTEX BB : Ontex 3Q Adjusted Ebitda, Revenue Meet Estimates
- ORP FP : Orpea Raises FY Revenue Goal to EU3.74B; 3Q Rev. Up 9.1%
- PST IM : Poste Italiane Third Quarter Net Income Beats Highest Estimate
- PUB FP : WPP Wins AXA Global Media Account
- RBS LN : Ex-RBS Official Says Restructuring Unit Faced Treasury Pressure
- RAYB SS : Raysearch Laboratories Sees 3Q Hurt on License Sales, Costs
- RRTL GY : RTL 9M Revenue Up 2.8% to EU4.6 Bln, Cofirms 2019 Forecast
- RST LN : Restore Says Performance is in Line With Expectations
- RDSA NL : Shell to Buy Offshore Wind Company Eolfi in Clean Power Bet (1)
- CFR SW : Deal With Tiffany Would Put Pressure on LVMH Competitors: HSBC
- GLE FP : SocGen’s Cabannes Says Uncertainty Hit Equities Product Demand
- SOPH LN : Sophos 1H Revenue Rises to $365.8M From $349.5M in 2018 (1)
- SLHN SW : Swiss Life Nine Month Net Fee And Commission Income CHF1.32 Bln
- TLG GY : TLG 9M FFO Up 6.9% to EU107.7m; Raises FY FFO View to Abt EU147m
- UCG IM : UniCredit Completes Transfer of EU4.1B NPLs for Securitization
- UCG IM : DoValue to Be Servicer on UniCredit’s Prisma NPL Securitization
- VOE AV : Voestalpine Lowers Full-Year Outlook, Reviews All Business Units
- VONN SW : Vontobel 9-Mo Client Assets CHF217.1b; Remained on Track in 3Q
- WALWIL NO : Wallenius Wilhelmsen Third Quarter Ebitda Beats Estimates
- WDI GY : Wirecard Third Quarter Ebitda 1.1% Above Estimates
- WPCT LN : Woodford’s Income Focus Fund May Be Taken Over, Telegraph Says
- WPP LN : WPP Wins AXA Global Media Account

>>> Europe : Brokers Upgrades * Downgrades - 6th of November 201

>>> Up
* Bakkafrost Raised to Buy at SEB Equities; PT 647 kroner
* Ferrexpo Raised to Overweight at JPMorgan; PT 190 pence
* IAG Raised to Outperform at Bernstein; PT 650 pence
* Iliad Raised to Overweight at Morgan Stanley
* Krones Raised to Hold at Bankhaus Lampe
* Safran Raised to Outperform at Credit Suisse; PT 162 euros
* Schaeffler Raised to Buy at Pareto Securities; PT 10.60 euros

>>> Down
* Altice USA Cut to Equal-Weight at Barclays; PT $31
* Altice USA Cut to Sector Weight at KeyBanc
* Arkema Cut to Hold at HSBC; PT 104 euros
* Aumann Cut to Sell at Bankhaus Lampe
* Daimler Cut to Reduce at Commerzbank; PT 45 euros
* Daimler Cut to Reduce at HSBC; PT 45 euros
* Fuchs Petrolub Cut to Hold at Berenberg
* NRC Cut to Hold at ABG; PT 55 kroner
* Outokumpu Oyj Cut to Underweight at JPMorgan; PT 2.40 euros
* Pandora Cut to Hold at Handelsbanken; PT 300 kroner
* Standard Chartered Cut to Sell at Investec; PT 655 pence

>>> Initiation
* Gattaca Rated New Hold at Liberum; PT 125 pence
* TELENOR RE-INITIATED AT HOLD WITH PT NOK180 AT HANDELSBANKEN
* Verona Pharma Rated New Hold at Stifel

>>> Call
* Fuchs Downgraded to Hold at Berenberg After Share Price Surge
* Deal With Tiffany Would Put Pressure on LVMH Competitors: HSBC
* IAG Set For Superior Returns, Raised to Outperform at Bernstein
* Paints and Coatings Attractive, Sell Akzo and Buy PPG: Berenberg
* Iliad Seen Improving Top Line Trends, Raised at Morgan Stanley
* Krones ‘Probably Out of the Woods,’ Up to Hold: Bankhaus Lampe
* Pandora Cut to Hold, But Stabilization Seen Ahead: Handelsbanken

>>> Asia Update

Asia Market Update: Asian indices trade mixed after recent gains, mixed US session; US M&A speculation and Softbank earnings in focus
Wed, 06 Nov 2019 0:30 AM EST

General Trend:
- Xerox said to consider cash and stock offer for HP Inc (US financial press)
- Gainers in Japan include banks after rise in Treasury and JGB yields, decliners include Real Estate companies
- Japanese telecom NTT drops over 4% after announcing earnings and stock split, weighs on sector
- Softbank Group is expected to issue results later today amid writedown speculation
- Toyota Motor is expected to report earnings tomorrow (Nov 7th)
- Shanghai Composite declines in early trading as property and IT shares drop
- Chinese hog farming companies decline, WH Group drops in Hong Kong; Canada PM said China is lifting its ban on beef and pork shipments from Canada
- Postal Savings Bank of China prices $4.7B A-share offering (said to be largest A-share offering in 4 years)
- Hong Kong Exchanges reported Q3 results declined, noted reduced cash market trading volumes
- Geely declines after broker downgrade
- Australian equities weighed down by Consumer and Telecom Services stocks amid rise in bond yields
- Virgin Australia announced plans to suspend its Melbourne to Hong Kong route amid political situation in HK
- Japan Services PMI contracted for the first time since 2016, consumption tax hike and typhoon impact were noted
- China PBoC set yuan at strongest level since early Aug; USD/CNH moved below the 7 level
- China Finance Ministry sold €4.0B in 7, 12 and 20-year bonds [total bids were said to exceed €19.5B]
- China International Import Expo (CIIE) is being held from Nov 5-10th
- MSCI November Semi-Annual Index Review Announcement Scheduled for November 07, 2019 (Thursday)

***Headlines/Economic Data***
Australia/New Zealand
-ASX 200 opened +0.2%
- (NZ) NEW ZEALAND Q3 UNEMPLOYMENT RATE: 4.2% V 4.1%E; Employment Change Q/Q: 0.2% v +0.2%e ; Y/Y: 0.9% v 0.9%e; Kiwi slightly weaker then unchanged
- (NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +3.7% v +0.5% prior
- (AU) Australia sells A$800M v A$800M indicated in 2030 bonds; avg yield 1.2603% v 1.0742%; bid to cover 3.56x v 2.17x prior
- VAH.AU Guides H2 group domestic capacity -2%; sees continued softness in the market; suspends Melbourne to Hong Kong route due to under-performance – AGM
- (AU) Australia Federal Communications Min Fletcher confirms govt will not pursue further relaxation of media ownership laws for the time being

Japan
-Nikkei 225 opened +0.4%
- (JP) Japan FSA planning to ban cryptocurrency investment trusts - Nikkei
- (JP) Bank of Japan (BOJ) minutes from Sept policy meeting (two meetings ago): Appropriate to persistently continue with current powerful easing
- (JP) Japan Oct Final PMI Services: 49.7 v 50.3 prelim (first contraction or reading below 50 since Sept 2016)
- (JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.1% 10-year JGBs: avg yield: -0.099% v -0.158% prior, bid to cover 3.62x v 3.42x prior

Korea
-Kospi opened flat
- (KR) South Korea Sept Current Account: $7.5B v $5.3B prior (11-month high); Balance of Goods (BOP): $8.8B v $4.8B prior
- (KR) Foreigners have turned net buyers of KOSDAQ for the first time in 6-months
- 005930.KR Unveils the Galaxy Fold at China International Import Expo (CIIE), ahead of its official launch later this week
- (KR) South Korea Trade Ministry: South Korea and New Zealand will seek to forge deeper economic ties on the back of free trade agreement (FTA) signed 4-years ago

China/Hong Kong
-Hang Seng opened -0.2%; Shanghai Composite opened flat
- (CN) China Communist Party issues statement on state media: will establish "robust" national security apparatus for Hong Kong, no details provided
- (CN) China PBOC sets Yuan Reference Rate: 7.0080 v 7.0385 prior (strongest fix since early Aug)
- (CN) China PBoC Open Market Operation (OMO): Skips for 8th consecutive session; Net drains nil
- (CN) China Finance Ministry issues final pricing for 7-year, 12-year and 20-year EUR denominated bonds [first EUR denominated issuance since 2004]
- (CN) China PBoC Official: Jan-Sept cross border yuan usage above CNY14.0T, +20% y/y
- (CN) China National Development and Reform Commission (NDRC): Small coal mines added to list of obsolete industries; Adds human resources, AI, elderly care, child care, housekeeping to the list of encouraged industries
- (CN) China PBOC Official: China digital currencty will need to observe all existing rules for cash and forex management; any stable coins accepted in China will need to observe FX rules; Digital currency aiming to substitute paper currency and have no implications for monetary policy
- (HK) Hong Kong Chief Exec Lam: Basic task for HK govt is to restore order; Govt will also deal with problems in the economy

North America
- (US) Fed's Kashkari (dove; non-voter): US interest rates are now modestly accommodative
- (CA) Canada PM Trudeau: China is lifting ban on beef and pork exports
- (US) State and Local Election Results: Democrats have taken Virginia Senate and House for the first time in 20-years
- HPQ Xeorx considers cash and stock takeover offer - US Financial Press

Europe
- (UK) PM Johnson spokes to Pres Trump today, asking him to lift tariffs on UK goods - press

***Levels as of 01:20ET***
- Hang Seng +0.0%; Shanghai Composite -0.2%; Kospi +0.2%; Nikkei225 +0.1%; ASX 200 -0.6%
- Equity Futures: S&P500 -0.0%; Nasdaq100 +0.0%, Dax -0.1%; FTSE100 -0.3%
- EUR 1.1067-1.1080; JPY 109.00-109.19; AUD 0.6886-0.6901; NZD 0.6365-0.6385
- Commodity Futures: Gold +0.2% at $1,487/oz; Crude Oil -0.4% at $56.98/brl; Copper -0.1% at $2.69/lb

>>> US After Hours : PLT -27%, SUPN -24%, MTCH -16%, WW -12%, A

After Hours Summary: PLT -27%, SUPN -24%, MTCH -16%, WW -12%, ATUS -9%, FIVN +9%, DVA +6%, AVLR / DVN +5% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: FIVN +9.1%, HCR +8.8% (light volume), EVH +8.6%, INGN +8.6%, KTOS +8.1%, DVA +6%, PAYS +5.3%, AVLR +5%, DVN +4.9%, ICHR +4.9%, TSLX +2.8% (light volume), SSRM +2.5%, WIFI +1.9%, PTLA +1.8%, LPI +1.5%, GTES +1.3%

Companies trading higher in after hours in reaction to news: SESN +15.5% (reached agreement with the FDA that the post-marketing confirmatory trial for Vicinium will enroll BCG-refractory patients who have received less-than-adequate BCG), WBA +1.4% (after closing 2.6% higher on the day on PE speculation), LULU +0.5% (light volume; initiated with Strong Buy at Raymond James; tgt $275)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: PLT -27.1%, SUPN -24.1% (also reports Phase III P301 trial in patients 6 to 11 years old did not meet primary endpoint), VGR -22.1% (announces decision to reduce quarterly cash dividend to $0.20/share, effective in the first quarter of 2020), FLDM -19.6%, MTCH -15.7%, LTHM -12.7%, SWIR -12.5%, WW -12.2%, GWPH -11.8%, FANG -11.3%, KAR -9.8%, FRGI -9.6%, ATUS -8.8%, WLL -8.4%, ACHC -7.6%, HUBS -6.3%, COHR -5.8%, RRGB -5.8%, BEAT -4.1% (light volume), MCHP -3.8%, NEWR -3.8%, ALRM -2%

Companies trading lower in after hours in reaction to news: ZYME -4.1% (enters into $75 mln Open Market Sale Agreement concurrent with automatic shelf registration statement), MPW -0.7% (prices 50 mln share common stock offering at $18.50 per share)

>>> US Close Dow +0.11% S&P -0.12% Nasdaq +0.02% Russell -0.14%

Closing Stock Market Summary

The S&P 500 shed 0.1% on Tuesday in a mixed session that saw more trade headlines and a further increase in Treasury yields. The Dow Jones Industrial Average (+0.1%), Nasdaq Composite (+0.01%), and Russell 2000 (+0.1%) finished just above their flat lines.

Reports indicated that the U.S. is considering removing the 15% tariff rate that went into effect in September and could possibly delay the tariffs in place for December. China, however, reiterated it would want the U.S. to remove all retaliatory tariffs imposed since last year and for the U.S. to be firmer in its commitments to remove them. 

It's a tough ask, but the market presumably understood that negotiations are ongoing and it shouldn't conclude that a "Phase One" deal won't get signed based on these reports. The improved outlook on growth, then, continued to play out in the market, especially after the ISM Non-Manufacturing Index for October increased to 54.7% (consensus 53.3%) from 52.6% in September.

U.S. Treasuries continued to retreat after the report, which sent yields higher in a curve-steepening trade that contributed to the outperformance of the S&P 500 financials sector (+0.4%). The energy sector (+0.5%) was today's leader, while the defensive-oriented real estate (-1.8%), utilities (-1.0%), and health care (-0.9%) sectors posted sizable losses. 

The 2-yr yield rose four basis points to 1.63%, and the 10-yr yield rose eight basis points to 1.87%. The U.S. Dollar Index increased 0.4% to 97.94. WTI crude rose 1.0%, or $0.55, to $57.24/bbl.

Walgreens Boots Alliance (WBA 61.21, +1.56, +2.6%) and Kroger (KR 27.83, +2.84, +11.4%) were some notable gainers in the consumer staples sector (+0.3%). Walgreens held preliminary discussions with private equity firms about a leveraged buyout, according to Reuters, while Kroger issued upbeat FY20 guidance following an encouraging update on its "Restock Kroger" initiative.

Adobe Systems (ADBE 289.29, +11.79, +4.3%) also provided shareholders with upbeat FY20 guidance. Shares rose accordingly, while shares of Uber (UBER 28.02, -3.06, -9.9%) and Peloton (PTON 22.74, -1.87, -7.6%) dropped despite better-than-expected results and decent guidance. Shake Shack (SHAK 66.83, -17.38, -20.6) plunged 21% on disappointing guidance. 

Reviewing Tuesday's economic data, which included the ISM Non-Manufacturing Index for October, the Trade Balance report for September, and the JOLTS - Job Openings survey for September:

  • The ISM Non-Manufacturing Index for October increased to 54.7% (consensus 53.3%) from 52.6% in September.
    • The key takeaway from the report is that it reflects an acceleration of expansion-based activity in October, which is a supportive consideration since the non-manufacturing sector accounts for a significantly larger slice of U.S. economic activity than the manufacturing sector does.
  • The U.S trade deficit narrowed slightly in September to $52.5 billion, as expected, from a downwardly revised $55.0 billion (from -$54.9 billion) in August.
    • The key takeaway from the report is that it wasn't a narrowing driven necessarily by stronger demand. On the contrary, imports (-$4.4 billion) and exports (-$1.8 billion) both declined month-over-month, so the narrowing was simply a function of imports falling more than exports.
  • The September Job Openings and Labor Turnover Survey showed that job openings declined to 7.024 million from a revised 7.301 million in August (from 7.051 million).

Looking ahead, investors will receive preliminary Q3 numbers for Productivity and Unit Labor Costs and the weekly MBA Mortgage Applications Index on Wednesday.

  • Nasdaq Composite +27.1% YTD
  • S&P 500 +22.7% YTD
  • Russell 2000 +18.6% YTD
  • Dow Jones Industrial Average +17.9% YTD