Earnings season is well underway. 183 S&P 500 companies will report this week. Only Election and Covid news will reign supreme and will be what most investors will pay attention to this week. The VIX closed at 27.85 last week showing that Volatility is still expected.
Covid-19 Cases in the U. S. have again increased in parts of the country that have not been hit yet. With more testing than anyone else in the world, it is no wonder we are seeing more cases. However, the Death Rate is still lower than it was in April and May of this year.
Election – I do not want to pontificate who will win, as there are so many unknowns. What I do expects during this time of uncertainty is volatility. Mike Khouw always says, “when vol is high sell options and vol is low buy options.” So, I will look to be a seller more than a buyer at this time.
The economic calendar is big this week. Reports will be on sentiment, personal income and spending, and the ever important Q3 GDP. More hard data on what the economy is doing.
Happy Monday. Good Luck out there this week.
Global Spotlight
A meeting between top Chinese policymakers. The fifth plenum of the 19th Congress of the Chinese Communist Party will meet on Oct. 26-29 in Beijing, mainly to discuss the 14th five-year plan for 2021-2026.
A constitutional referendum that defines Chile’s economic future. Chilean voters will go to the polls on Oct. 25 to determine if they are willing to draft a new constitution to replace the current charter from Augusto Pinochet’s dictatorship.
The release of the latest U.S. GDP figures. On Oct. 29, the U.S. Commerce Department will release its first estimate of GDP figures for the third quarter of 2020. The data is expected to show a sharp rebound in the range of around 30 percent on an annualized basis after a similar decline in the second quarter.
An update on South Africa’s budget. On Oct. 28, South African Finance Minister Tito Mboweni will give his long-awaited Medium Term Budget Policy Statement. All eyes will be on the South African government’s projections for future debt targets and specific measures and programs designed to support Pretoria’s debt consolidation plans.
Stratfor.com
Economic Calendar
Briefing.com has a good U.S. economic calendar for the week. Here are the main U.S. releases.
Briefing.com
Last Weeks Numbers
Review Last week’s numbers here. This week let’s look at the Investing.com S&P 500 futures for last week. I like looking at the futures as it gives me a peek into how the market reacts overnight. A gap in price can be explained in the overnight market.
Sectors Trends also help in determining what the market trends are:
Juan Luque from the Incline trading desk points out:
“The Communication Services sector led the way this week returning over 2% and started moving towards the improving quadrant. The Financials, Utilities, and Energy sectors were also up this week. For Utilities, it continues moving strongly in the improving quadrant and with the Financials sector they both move towards the leading quadrant. The remaining sectors were down for the week, with Information Technology losing over 2% and sliding in the lagging sector’s direction. Real Estate reversed in its path and lost strength falling backwards towards the lagging quadrant as well.”
Bloomberg
Earnings
Source I/B/E/S data from Refinitiv
Aggregate Estimates and Revisions
- 20Q3 earnings are expected to be -16.7% from 19Q3. Excluding the energy sector, the earnings growth estimate is -12.4%.
- Of the 135 companies in the S&P 500 that have reported earnings to date for 20Q3, 83.7% have reported earnings above analyst expectations. This compares to a long-term average of 65% and prior four quarter average of 73%.
- 20Q3 revenue is expected to be -3.6% from 19Q3. Excluding the energy sector, the growth estimate is -0.6%.
- During the week of October 26, 180 S&P 500 companies are expected to report quarterly earnings.
Of Note
For the data hounds out there. The Visual Capitalist has a great blog post on how the Pandemic is impacting American Wallets.
Pandemic Personal Finances: Key Takeaways
Based on data from the doxoINSIGHTS Bills Pay Impact Report across 1,568 sampled households, three themes emerge:
- 57% of consumers’ incomes have taken a hit in the past seven months
- 70% have delayed discretionary spending on big purchases
- 75% continue to be very worried about their future financial health
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