Market Perspective for November 13, 2017

Equities traded flat on Monday as early General Electric (GE) weakness offset gains in consumer stocks. CEO John Flannery announced a 50 percent cut to GE’s dividend with a plan to refocus the company on the core divisions of healthcare, power and aviation. Proctor & Gamble (PG), Wal-Mart (WMT) and McDonald’s (MCD) extended gains from last week.

The U.S. Dollar Index opened the week higher against most major currencies. The British pound weakened on Monday. The 10-year Treasury yield started the week near 4 percent, but bond investors have turned to the high-yield bond market, where the interest rate spread over treasuries has increased in the past two weeks. Crude oil approached $57 a barrel on Monday.

Consumer price inflation for October will be out on Wednesday. Economists are looking for a 0.1- percent increase in headline CPI and a 0.2-percent increase in core CPI. Core producer prices are expected to rise 0.2 percent. Retail sales will also be available on Wednesday. The consensus forecast calls for a 0.2 percent increase ex-autos. Industrial production and capacity utilization, housing starts and building permits for October, and the November NAHB home builders’ index will also be released.

China’s new loans for October were below expectations. Money supply data also showed a credit slowdown. Copper initially shrugged off the news on Monday morning, but it gave up nearly all its gains as the day wore on. Later this week, the Eurozone and Japan will announce third-quarter GDP growth. CPI data for the Eurozone and Canada is also due.

Cisco (CSCO) and Applied Materials (AMAT) will headline tech earnings this week. The analyst consensus for Cisco calls for $0.55 per share, the same as a year ago. Applied Materials is expected to report $0.90 per share, up from $0.66 last year. Retail earnings will also heat up with Target (TGT) reporting on Wednesday, followed by Wal-Mart (WMT) on Thursday. L Brands (LB), Sally Beauty (SBH), Children’s Place (PLCE), Advance Auto Parts (AAP), Ross Stores (ROST), Best Buy (BBY), Gap (GPS), Abercrombie & Fitch (ANF), Foot Locker (FL). Tyson (TSN), (JD) and Netease (NTES) will also report.


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