A Close Look At Friday’s Key Market Events

A Close Look At Friday’s Key Market Events

$GE

The micro-macro market mix Friday comes with the release of GE’s (NYSE:GE) Q-3 earnings  and the preliminary reading for the October University of Michigan Consumer Sentiment (MSI) report.

I: General Electric’s Q-3 Earnings Report comes before the open

Why it is  important

1. GE is a widely-held stock by retail and institutional investors alike.
2. GE derives more than 50% of its sales outside the US, so its results and commentary will contribute to the market’s perspective on global economic growth trends.
3. Company is undergoing a major transformation, which includes an emphasis on growing its industrial businesses and reducing the size of its financial services businesses through the sale of most of the assets of GE Capital Corp., its wholly-owned subsidiary, which accounted for about 28% of its sales in Y 2014 and 46% of its operating income
4. Stock has run up ahead of its report, up 15% since 28 September, with news on 5 October that Trian Fund Management has taken a $2.5-B stake in the company helping to drive the gains. This suggests GE may have to produce some strong results to attract added near-term buying interest.

What is expected

1. Investors will be concentrating on the performance of its industrial businesses
2. In September GE said it was on track to achieve its prior guidance, which called for FY 2015 industrial operating EPS of 1.13 to 1.20.
3. GE ended Q-2 with a record backlog of $272-B, up from $268-B at the end of Q-1, and Vs $252-B in the prior-year period.

What is in play?

Take a look at Tocca, they have are making and FDA application in one of the biggest sectors in healthcare

1. General Electric (NYSE:GE)

Related stocks

1. Agilent (A)
2. ABB Ltd. (ABB)
3. Boeing (BA)
4. Caterpillar (CAT)
5. Honeywell (HON)
6. United Technologies (UTX)
7. Industrial Select Sector SPDR ETF (XLI) (GE is 10.71% of assets, making it the largest holding)

II. University of Michigan Consumer Sentiment Report (MSI) for October (10:00a EDT)

Why it is important

1. The MSI report will offer a good read of how the stock market volatility, decline in gasoline prices, and recent slowdown in hiring have affected consumer attitudes
2. MSI offers insight not only on consumers’ view of current conditions but their feelings about the future, which are captured in the Expectations Index
3. While income growth is the biggest determinant of consumer spending, the market ascribes some value to this report as a leading indicator of consumer spending
4. The MSI report will help influence the market’s thinking about when the Fed is likely to raise the fed funds rate
5. The Expectations Index, which dropped to 78.2 in September from 83.4 in August, will be a focal point

A close look

The Numbers: Fri, 16 October, Consumer Sentiment 10:00a EDT   Consensus is 86.5, Prior reading at 87.2

What’s in play?

1. US Treasury Complex (TBT, TLT, SHY, SCHO)

Index ETFs

1. SPDR S&P 500 ETF Trust (SPY)
2. PowerShares QQQ Trust (QQQ)
3. iShares Russell 2000 (IWM)

Consumer-related ETFs

1. Consumer Discretionary Select Sector SPDR Fund (XLY)
2. SPDR S&P Retail ETF (XRT)
3. Consumer Discretionary AlphaDEX Fund (FXD)

Currencies

1. USD/JPY
2. EUR/USD

Stay tuned…

HeffX-LTN

Paul Ebeling

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