A Close Look At Tuesday’s Key Market Events

A Close Look At Tuesday’s Key Market Events

$INTC

Expect things to heat up Tuesday following the release of China’s latest trade balance report overnight and Intel’s (NASDAQ:INTC) Q-3 earnings report after the close.

I.  China’s Trade Balance report for September,Tuesday, 12 October at 10:30p EDT

Why it it important

1. There are few reports these days that can make global capital markets feel better, or worse, about China’s economy than the trade balance report, which provides insight on its export and import activity
2. China’s devaluation of the RMB Yuan on 11 August triggered criticism for being a tacit attempt to boost China’s exports. Participants will use the report to extrapolate how things might turn in trade channels in coming months with a weaker RMB Yuan.
3. China is undergoing a deliberate transformation to become a consumer-led economy. Import data will help shape the market’s thinking about its progress in making that transformation.
4. This report will be a driver of policy stimulus expectations in China
   China’s trade balance report will feed thoughts about the condition of the global economy since exports account for about 32% of China’s GDP

A close look

1. China had a trade surplus of $60.24-M in August, which was up from $43.03-B in July
2. Exports have declined Y-Y in 6 of the last 8 months. They were down 5.5% in August, which was slightly better than expected at the time.
3. Imports declined 13.8% year-over in August, which was in-line with expectations but the 10th straight monthly decliner

In play Tuesday

China ETFs

1. iShares China Large-Cap ETF (FXI)
2. ProShares UltraShort FTSE China 50 (FXP)
3. db X-trackers harvest CSI 300 China A-Shares Fund (ASHR)
4. iShares MSCI China ETF (MCHI)
5. SPDR S&P China ETF (GXC)
6. China Small Cap ETF (HAO)
7. Market Vectors China ETF (PEK)

Regional ETFs

1. iShares MSCI Emerging Markets (EEM)
2. SPDR S&P Emerging Asia Pacific ETF (GMF)
3. iShares MSCI Japan (EWJ)
4. iShares MSCI South Korea Capped ETF (EWY)
5. iShares MSCI Singapore (EWS)
6. iShares MSCI Australia ETF (EWA)
7. iShares MSCI Taiwan ETF (EWT)

Currencies

USD/CNY
USD/JPY
EUR/USD

Commodities

Treasuries (TBT, TLT, SHY, SCHO)
S&P 500 futures

II. Intel Q-3 Earnings Report after the close

Why is INTC important?

1. Intel is the world’s largest semiconductor company by sales
2. As the leading provider of microprocessors for personal computers, what Intel says about PC demand has wide-ranging implications for other suppliers to PC makers.
3. The Q-3 results and outlook will shed light on the company’s efforts to diversify away from the PC business to higher growth markets like data centers and Internet of Things
4. In Q-2, Client Computing Group revenue declined 13.6% to $7.54-B
5. Data Center Group revenue increased 9.7% to $3.85-B
6. Internet of Things Group revenue increased 3.7% to $559-M
7. Growth in data center, memory, and Internet of Things accounted for more than 70% of Intel’s operating profit
8. Intel’s stock has had a strong run lately, rallying 15% from its low on 24 September. Participants will be looking for confirmation in the company’s results and guidance to justify that move.
9. As one of the 1st reporters in the Q-3 reporting frame, the reaction to Intel’s report will help set the tone for the early season.

What the company said after its Q-2 report in July

1. Q-3 revenue expected to be $14.3-B
2. Q-3 gross margins to be 63% or so
3. FY2015 revenue expected to be down 1% Vs prior view of flat to unch
4. FY2015 capital expenditure forecast cut to $7.7-B, from $8.7

In play Tuesday

Intel Corp (NASDAQ:INTC)

Competitors

1. Advanced Micro Devices (AMD)
2. Avago Technologies (AVGO)
3. NVIDIA (NVDA)
4. Micron (MU)
5. Samsung Electronics
6. Texas Instruments (TXN)
7. ARM Holdings (ARMH)
8. IBM (IBM)
9. Oracle (ORCL)
10. EMC Corp (EMC)

Key Customers

1. Hewlett-Packard (HPQ)…. 18% of Y 2014 net revenue
2. Lenovo Group (LNVGY)… 12% of Y 2014 net revenue

Semiconductor Equipment makers

1. Applied Materials (AMAT)
2. KLA-Tencor (KLAC)
3. ASML Holding (ASML)

Semiconductor ETFs

1. Market Vectors Semiconductor ETF (SMH)
2. PHLX SOX Semiconductor Sector Index Fund (SOXX)
3. SPDR S&P Semiconductor ETF (XSD)
4. Daily Semiconductor Bull 3X Shares (SOXL)
5. Daily Semiconductor Bear 3X Shares (SOXS)

Index ETFs

1. Power Shares QQQ Trust (QQQ)
2. SPDR S&P 500 ETF (SPY)
3. SPDR Dow Jones Industrial Average ETF (DIA)

Stay tuned…

HeffX-LTN

Paul Ebeling

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