Wednesday, October 23, 2013

10 Things You Need To Know Before The Opening Bell, October 23, 2013

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Wednesday, October 23, 2013

10 Things You Need To Know Before The Opening Bell

Good morning. Here's what you need to know.

Asian markets saw a nasty sell-off, with Japan's Nikkei down 1.95%; Hong Kong's Hang Seng, 1.36%; and Korea's KOSPI, 0.99%. European markets were likewise down, and U.S. futures were pointing lower too.
A Chinese bank story from Bloomberg is causing some worry this morning. "Industrial & Commercial Bank of China Ltd., the world’s most profitable lender, and its four largest rivals expunged in the first six months 22.1 billion yuan ($3.65 billion) of debt that couldn’t be collected, up from 7.65 billion yuan a year earlier, filings showed," according to the report. "That didn’t pare first-half profits, which climbed to a record $76 billion, as provisions were set aside in earlier periods when the loans began souring."
Spain finally emerged from recession, posting 0.1% GDP growth in the third quarter. The figure broke its 9-quarter negative streak. You've got to start somewhere.
This morning we'll get some data releases on U.S. housing and imports. At 8:30 a.m. ET, U.S. import prices will come in. Economists are expecting a 0.2% increase, up from last month's 0.0%. At 9:00 a.m. we'll have the U.S. house price index. Economists are looking for a 0.8% increase from last month's 1.0% jump.
At 10:00 a.m. the Bank of Canada will announce its interest rate decision. "The Bank of Canada will likely keep its benchmark overnight rate at the 1% level, where it’s stood for more than three years, for at least eight more months as disappointing economic growth keeps consumer price pressures near the very bottom of the inflation-target range," report the Wall Street Journal's Nirmala Menon and Don Curren.
At 10:00 a.m. we will also see Eurozone consumer confidence. Economists are expecting a -14.5 print, slightly better than the last reading, -14.9. Any number below zero indicates negative consumer sentiment.
Global machinery giant Caterpillar will report Q3 earnings before the opening bell this morning. Analysts are expecting EPS to come in at $1.68, down from $2.54 in the year-ago quarter. Boeing will also report, with EPS expectations at $1.55 (up from $1.35 a year ago).
After yesterday's weak jobs report, Goldman Sachs' Jan Hatzius wrote clients about the significance of the disappointments of recent months. "The 3-month average gain in nonfarm payrolls is now down to 143,000, the weakest pace since August 2012. Other measures are even softer, with 3-month averages of 82,000 for total household employment growth and 42,000 for 'payroll-consistent' household employment growth," he wrote.
Activist investor Carl Icahn reduced his stake in Netflix from 9.98% to 4.5%, he tweeted yesterday. It was a pretty solid trade for the hedge funder, who bought Netflix at $58 and sold it $322, a whopping 457% return.
$13 billion Justice Department settlement aside, investors — led by Goldman Sachs Asset Management and BlackRock — are seeking $6 billion from banking giant JP Morgan over mortgage-backed securities sold to them before the financial crisis, the FT reports. Two years in the making, the deal would likely follow the format of the $8.5 billion settlement between investors in Bank of America agreed upon in 2011, according to the report. JP Morgan anticipated this case when it set aside $9 billion last quarter for legal matters, according to the WSJ.