After an extremely heavy economic week, investors have a break as they concentrate on earnings and the ongoing negotiations for passing the Tax Cuts and Jobs Act.
Tax Cuts and Jobs Act: Now with every single lobby group in DC in lockdown, headlines out of the negotiations can potentially affect certain sectors. So if we hear an update on property taxes, we will likely see a reaction in home builders, which were clobbered last week with the announced proposal. As the tax proposals continue to get negotiated, did anybody notice that taxes are going up for homeowners in all the urban cities, so basically every county that Hillary won in the last election?
Earnings: Earnings start to wind down, but first we have another heavy week ahead with 49 S&P 500 companies scheduled to report this week. According to Thomson Reuters I/B/E/S, we have now seen 81% of S&P 500 companies report 3rd quarter earnings so far. Of them, 67% reported revenue above expectations while 74% have reported earnings above expectations. This week has some big ones including Disney.
Fed Members Speak: This week, we have 1 FOMC member scheduled to speak. This will be the first comment by a Fed member since Jerome Powell was announced as the next Fed Chair come February. Not much is expected from William Dudley but any comments hawkish or dovish comments of the outlook with Powell leading could move markets.
Reserve Bank of New Zealand: On Wednesday, (11/8) New Zealand has their version of England’s “Super Thursday” by publishing their policy statement, Inflation statement, Official Cash Rate and Press Conference. With a new government recently forming, the bank is looking to appoint a new governor which will affect monetary policy. If they implement the new government policies of restricting immigration and foreign buyers of housing, we can expect the countries housing bubble to burst (since no more foreign buyers to dump their illegal money), so their monetary policy may have to be more accommodative.
Veterans Day: Friday (11/10) in the US, Veterans Day is celebrated. US Banks and the bond market will be closed but the US equity markets will be open. Volumes will be lighter So make sure to thank a veteran on your off day for their service, oh wait, it’s not a Federal Holiday so companies make you work so you can’t do that.
Saudi Arabia: What is going on in Saudi Arabia? Over the weekend, we saw the arrest of Prince Alwaleed bin Talal, who happens to be a large stakeholder in Citigroup, Twitter and Apple. 8 High ranking Saudi officials were killed in a helicopter crash, and a ballistic missile was shot down by the Riyadh Airport. Saudi markets are down on the news and oil is now trading at a 2 year high. Any further instability to come out of the kingdom could result in higher oil prices and a drop in the broader markets.