Note: writing from Asia (currently in the Philippines), I am 12 hours ahead of N.A. so the date above may not match your date.
Americans in Best Holiday Shopping Mood in Years
Wow!
Really? Same as 2006-07:
Debt! What debt?
Fed-induced low interest rates are hiding the leverage…
…Fed induced higher rates will reveal the leverage.
Actual debt servicing is back to its previous peak.
U.S. Pending Home Sales Hold Steady
The National Association of Realtors (NAR) reported that pending home sales held steady (-3.5% y/y) during September at an index level of 106.0 (2001=100). This followed a revised 2.8% August decline, initially reported as -2.6%. Sales remained at the lowest level since January 2016 and were 6.7% below the peak during April 2016.
Changes in pending home sales were mixed m/m across regions of the country. In the South, the index declined 2.3% (-5.0% y/y), off 10.4% from the March 2017 peak. The index for the Midwest gained 1.4% (-2.5% y/y), but remained down 8.4% from its March 2016 peak. The index for the West rose 1.9% (-2.9% y/y) and remained up sharply versus early this month. The index for the Northeast improved 1.2% (-2.4% y/y) from the lowest level since late-2015.
U.S. Durable Goods Orders Are Strengthened by Aircraft Bookings
Wow!
EARNINGS WATCH
From Factset:
Overall, 55% of the companies in the S&P 500 have reported earnings to date for the third quarter. Of these companies, 76% have reported actual EPS above the mean EPS estimate, 8% have reported actual EPS equal to the mean EPS estimate, and 15% have reported actual EPS below the mean EPS estimate. The percentage of companies
reporting EPS above the mean EPS estimate is above the 1-year average (71%) and above the 5-year average (69%).At the sector level, the Information Technology (91%) and Materials (85%) sectors have the highest percentages of companies reporting earnings above estimates, while the Telecom Services (50%) sector has the lowest percentage of companies reporting earnings above estimates.
In aggregate, companies are reporting earnings that are 4.7% above expectations. This surprise percentage is below the 1-year average (+5.1%) but above the 5-year average (+4.2%).
The blended earnings growth rate for the S&P 500 for the third quarter is 4.7% today, which is higher than the earnings growth rate of 1.7% last week. Upside earnings surprises reported by companies in multiple sectors (led by the Information Technology sector) were responsible for the increase in the earnings growth rate for the index during the
past week.If the Energy sector were excluded, the blended earnings growth rate for the remaining ten sectors would fall to 2.5% from 4.7%.
At the industry level, the Insurance industry is reporting the largest percentage decline (-66%) and largest dollar-level decline (-$6.9 billion) in earnings of all the industries in the index. As a result, this industry is the largest detractor to earnings growth for the index in Q3 2017. If the Insurance industry were excluded, the blended earnings growth rate for
the S&P 500 would jump to 7.4% from 4.7%.The blended sales growth rate for the third quarter is 5.7% today, which is higher than the sales growth rate of 5.1% last week. If the Energy sector were excluded, the
blended revenue growth rate for the index would fall to 4.5% from 5.7%.At this point in time, 49 companies in the index have issued EPS guidance for Q4 2017. Of these 49 companies, 29 have issued negative EPS guidance and 20 have issued positive EPS guidance. The percentage of companies issuing negative EPS guidance is 59% (29 out of 49), which is below the 5-year average of 75%.
Tech’s Big Get Bigger in Earnings Blowout Three of the world’s biggest companies—Google parent Alphabet Inc., Amazon.com Inc. and Microsoft Corp.-—reported booming quarterly growth, extending their reach and driving the economy further online.
(…) Alphabet on Thursday said profits spiked 33% in the third quarter as users clicked on more ads on smartphones, atop search results and before YouTube videos. Amazon, meanwhile, said its revenue grew by 34% and profits inched up, shrugging off concerns that heavy investments in new warehouses and hiring workers would push it to a loss. And Microsoft reported a 12% revenue increase, capitalizing on a shift to cloud computing. (…)
Alphabet reported a 40% increase in nonadvertising revenue to $3.41 billion, showing the strength of its relatively new cloud-computing business, which sells computing power to other companies over the internet. And pharmaceutical stocks fell Thursday after the St. Louis Post-Dispatch reported that Amazon had obtained licenses from several state pharmaceutical boards. The licenses are for Amazon to sell some medical wholesale equipment, according to a person familiar with the matter. (…)
The tech-earnings triumph extended beyond the three giants. Chip maker Intel Corp.said its profits rose 34% to $4.52 billion and lifted its outlook for the year. Even Twitter, which has struggled for years, narrowed its quarterly loss to $21.1 million, from $103 million a year prior, and forecast that next quarter it could earn its first profit since going public in 2013. Twitter shares rose 18.5%. Two other tech giants— Apple Inc. and Facebook—are due to report earnings next week. (…)
Marketing-research firm eMarketer estimates Amazon will command some 43.5% of e-commerce sales this year, compared with 38.1% last year.
Amazon’s profit increased 1.6% to $256 million, even though the third quarter is typically a period of heavy spending, when Amazon opens new warehouses to get them up and running in time for the holidays. The company’s total number of employees increased to 541,900 from 382,400 in the second quarter, including roughly 87,000 Whole Foods employees.