Morning Report: Earnings season kicks off

Vital Statistics:


Last Change
S&P futures 2571 -23.5
Eurostoxx index 346.3 -2.9
Oil (WTI) 50.94 -0.65
10 year government bond yield 2.67%
30 year fixed rate mortgage 4.44%


Stocks are lower this morning on weaker economic numbers out of China. Bonds and MBS are up.


Earnings season starts this week with the banks reporting fourth quarter and full year results. Citi announces today, while Wells and JPM report tomorrow. Markets will be paying particular attention to forward guidance, which has been somewhat cautious overall. With the banks, the big questions concern whether loan demand has remained strong (a proxy for business conditions and the economy overall) and whether the flattening yield curve has depressed net interest margins.


Inflation at the consumer level fell 0.1% MOM in December, and rose 1.9% YOY. Falling gasoline prices drove the decline. Stripping out food and energy, the core CPI rose 0.2% MOM and rose 2.2% YOY. Shelter and restaurants were the big gainers.


The government shutdown enters its 24th day, and the main impacts appears to be at TSA and the national parks. This is an interesting backgrounder on how the mortgage industry lobbied to get 4506-Ts listed as “essential.” The big difference between the Trump shutdown and the Obama shutdown is that Trump is trying to make the shutdown invisible, while Obama wanted to make it hurt.


Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical

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