Need to Know
1. Buffett's Berkshire announces stellar profit. Operating profit in the third quarter doubled to $6.88 billion from $3.44 billion a year earlier, and higher than the $6.11 billion expected by Wall Street. Cash-rich Berkshire bought almost $1b of its own stock during the last quarter, and remains flush with cash and ready for more buybacks or acquisitions.
2. The latest Caixin China Composite PMI data (which covers both manufacturing and
services) signaled only a marginal increase in overall Chinese business activity at the start of
the fourth quarter of 2018. Furthermore, the Composite Output Index fell from 52.1 in
September to a 28-month low of 50.5. The report signals weaker performance in both the services and manufacturing sectors in China.
3. 75 S&P 500 members are set to report earnings this week, including heavyweights like Eli Lilly, Humana, Wynn Resorts, Twenty-First Century Fox, Discovery Networks and Disney. As of November 2nd, 78% of issuers have reported a positive EPS surprise. 61% have reported a positive sales surprise. Despite a positive quarter, guidance has been softer than expected. 46 companies have issued negative EPS guidance for Q4 2018. Only 24 have reported positive EPS guidance.
4. Approaching the mid-term elections, an NBC News/Wall Street Journal poll shows Democrats leading by seven percentage points, 50 percent to 43 percent, among likely voters. That's down from a nine-percentage point lead last month. According to GOP strategists, the shrinking lead is due to a resurgence in Trump's base.
5. Canada at full employment, but wage growth stagnates and exports sputter. The odds of another Bank of Canada rate hike in December fell from 30% to 25% as Canada's economy remains lukewarm. However, Bank of Canada Governer, Poloz, has been clear about his intentions to return interest rates to a less accommodation level over the intermediate term. Keep listening to Poloz for clues to a change in this position.
Nice to Know
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- Steve Bannon vs. David Frum: The Rise of Populism Munk Debate
- Howard Marks: Billionaire Investor on Market Cycles (How to Survive the Bad Days & Win the Good Days) [Audio]
Key Data Releases for Monday and Tuesday
- Markit PMI Composite
- Market Services PMI
- ISM Non-Manufacturing PMI
- Loan Officer Survey
- US Mid-Term Elections
- Canada Building Permits
- JOLTS Job Openings
- API Weekly Crude Oil Stock