October 24th, 2016

US Manufacturing PMI Rises To Highest In 12 Months

When 2016 started off poorly for the US manufacturing sector as a result of the pounding in the E&P sector, with rising concerns about a recessionary impulse among US manufacturing industries, the latest Markit manufacturing report for October has allayed much of the slowdown concerns with a headline print of 53.2, higher than the 51.5 expected, and up 1.7 points from September - the highest print since October of 2015.

VIX Smashed To 12 Handle Drags Stocks Near 'Unch' For October, Silver Jumps, Crude Dumps

VIX has now fallen for 6 of the last 7 days (from an 18 handle to a 12 handle) and until today's mega-merger excitement, stocks went nowhere. Today's gap up open lifts S&P and Dow back near unchanged on the month. Gold and Silver are spiking as crude slides back near $50. Treasury yields are modestly higher (and the curve steeper) on the day.

Key Events In The Coming Week

Looking at the week ahead, the US election enters the home stretch and politics will likely dominate the headlines, especially the closer races in Congress. Despite data being overshadowed by politics, there are some key US releases coming up, with the first estimate of Q3 GDP, the employment cost index and durable goods the main focus.

Goldman Cuts S&P500 Earnings Forecasts For The Next Three Years

"We cut our S&P 500 earnings estimates for each of the next several years. Our revised operating EPS forecasts now equal $105 (2016), $116 (2017), and $122 (2018) reflecting annual growth of 5%, 10%, and 5%, respectively. Low interest rates and peaking margins constrain profit growth in Information Technology, Financials, and Telecom and drive the reduction in our index-level EPS forecast." - Goldman Sachs

Frontrunning: October 24

  • The CEO Behind AT&T’s Huge Time Warner Deal (BBG)
  • AT&T-Time Warner deal sparks calls for scrutiny in Washington (Reuters)
  • Wall Street’s $40 Billion AT&T Pledge Offers Fees and Risks (BBG)
  • Bernie Sanders: Obama Administration “Should Kill” The AT&T-Time Warner Deal (Deadline)
  • Oil prices under pressure as Iraq resists joining output cut (Reuters)

Watergate's Bob Woodward: "Clinton Foundation Is Corrupt, It's A Scandal"

"Yes, it's corrupt. It's a scandal. And she didn't answer your question at all.... the mixing of speech fees, the Clinton Foundation, and actions by the State Department, which she ran, are all intertwined and it's corrupt. You know, I mean, you can't just say it's unsavory. But there's no formal investigation going on now, and there are outs that they have."

Biggest US Discount Brokerage TD Ameritrade Buys Scottrade For $4 Billion

The previously noted surge in Monday merger announcements, which seek to take advantage of still cheap credit before yields rise, got its latest entrant moments ago when discount brokerage TD Ameritrade agreed to acquire peer Scottrade in a $4 billion cash and stock transaction.