1. Monday Market Madness
The bears reigned supreme yesterday as a sea of selling washed over US markets in response to a bad earnings report from Caterpillar and even worse guidance from chip-maker, Nvidia.
The fallout infected the entire market, sending all major US indexes into the red as investors’ concerns about the depth of the China slowdown returned with a bang.
Nvidia shed a whopping 16% after cutting its Q4 revenue estimate by half a billion dollars, while Caterpillar dropped 8.1% after its earnings missed estimates by a considerable distance.
Both companies blamed China for their poor results – a trend which is likely to persist this week as some of the big names produce their earnings.
Investors are running scared at one of the most important junctures for global markets in the last decade as the S&P 500 flits in and out of recovery territory.
This week will be an incredibly important one as positive earnings from the big boys, and good trade talk developments could hold off global growth concerns, but bad news could spark more sell-off action.
Don’t take your eyes off the markets, more madness may be on its way!
2. Sanctions Ahoy!
That’s right, the U.S.S. Sanctions has just docked in Venezuela as President Trump ramps up the pressure on acting President Maduro to resign. However, Maduro has shown his intentions to not take the news lying down.
The announcement, while somewhat expected, sent ripples through the oil market this morning (as if we needed more volatility there), driving prices higher from yesterday’s global growth-fuelled sell-off.
The oil market has been wracked by the extreme supply-side push and pull factors that have caused the wild price fluctuations we have all been experiencing over the last few months. And the volatility is not over yet.
The outlook on the oil market still looks shaky at best with the Venezuelan crisis set to increase prices, but record rig production in the US and weaker global demand poised to weigh them down. When will the tug of war end?
Maduro will most likely scramble to try to sell his oil elsewhere at a greater cost. China and India are lining up to benefit from the dramatically reduced prices, but without sufficient revenue for the lifeblood of his regime, the internal pressure for change will start to mount on Maduro. Tick-tock, Mr President.
Today we are watching…
Apple will announce its earnings today amid one of its worst years on record. Slowing growth in China and weaker demand for devices has crippled the tech giant. Investors are skeptical about the chances of an earnings beat, but also wary of a wider fallout in the tech sector in the event of a terrible result. The consensus EPS estimate is $4.17 (+7%) on revenue of $84.04bn (-5%). You don’t want to miss this one!
2. Advanced Micro Devices (#amd)
After Nvidia’s train-wreck guidance announcement yesterday, AMD’s upcoming earnings report today may hold more of the same. Chip-makers across the board have taken a hammering thanks to the cyclical downturn, end of the crypto rush and weaker demand in China. AMD’s consensus EPS estimate is $0.08 (flat) on revenue of $1.44bn (-2.7%), but beware of any sneaky surprises!