Morning Commentary: Old School Companies Face New Realities
Get link
Facebook
Twitter
Pinterest
Email
Other Apps
A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.
Old School Companies Face New Realities
Share this story:
David Atkinson Foreign Exchange Sales Manager
The U.S. dollar is the sideline story for at least today as global equities are center stage. The Shanghai composite is down 2.26 percent in its overnight session after its energy drink from government support wore off after a 4+ percent gain on Monday. That set the tone for 2-3 percent losses from other Asian equity markets; European equities lost around 1 percent and U.S. equities opened down over 1.5 percent, with the DJIA off over 400 points at the open.
We have been talking about how the U.S. earnings season will tell a global story. Two bellwether companies that released earnings today get us going on that. Caterpillar beat earnings estimates and had its best 3rd quarter ever, but shares are down 7.7 percent. The company noted increasing concerns over cost and notified deals of price increases from 1 to 4 percent worldwide starting in January. The company's statement noted that "material costs were higher primarily due to increases in steel prices and tariffs."
Another company of note, 3M cut its annual forecast as its 3rd quarter sales fell and costs are on the rise. 3M already warned of higher raw material costs but surprised investors by revealing that it expects foreign exchange rates to be a drag on earnings. As recently as last month, the company said FX would have no effect and earlier in the year expected FX to be a 10 cent benefit to earnings.
The point of the stories above and equity markets as a whole is getting a clear-eyed view of how FX and trade skirmishes are affecting companies and which ones are able to distinguish themselves as being able to work through it.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
Italian officials took a softer tone on their fiscal plans, promising the EU that it will take steps to prevent a breach of the limit of -2.4% of GDP. Nevertheless, it is still not there and the EU has told Italy to resubmit its budget plans. Italy has three weeks to do so and if it is seen breaking EU budget rules, it could be subject to penalties of up to 0.2% of GDP. This is one of those inevitable conflicts that will eventually end up with concrete numbers telling the final story. How Italy balances its obligations between the EU and the voters it promised to take care of will be akin to a good magic act.
Want to learn more about international finance, economics, and global events? Sign up for our other Foreign Exchange emails and videos!
Follow City National Bank on social media:
Investment and Insurance Products:
•
Are Not insured by the FDIC or any other federal government agency
•
Are Not deposits of or guaranteed by a Bank or any Bank Affiliate
•
May Lose Value
This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. The Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.
Tune in for a guide to ETFs and investing strategies for potential long-term success. View in a browser Fidelity Fidelity Log in Creating a portfolio with ETFs: Why and how Creating a portfolio with ETFs: Why and how
View this email in your browser Want to watch a recording of yesterday's Simply Successful Investing Webinar. Just click here and use passcode 5q59Z&3M.
Exclusive webinar: The market, my portfolio, and options. Exclusive webinar: The market, my portfolio, and options. View in a browser Fidelity Fidelity Log in The market, my portfolio, and options The market, my portfolio, and options
Comments
Post a Comment