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An October Carryover



Chief Market Analyst

Playoff baseball is set to begin, the leaves are starting to change colors, and the kids are wishing it was summer. That can mean only one thing. The month of October has arrived.

The early read of things is that the stock market should start today’s session on a higher note. The futures for the major indices are trading 0.3% to 0.4% above fair value.

There is some carryover action from Monday, including leadership from Apple (AAPL), which is indicated 0.6% higher on no news, and some weakish final manufacturing PMI readings for September out of Japan and the eurozone.

The Jewish holiday of Rosh Hashanah, which ends this evening, has also carried over and is expected to contribute to reduced trading activity.

More broadly, there has been a carryover of monetary policy accommodation and tempered growth forecasts.

The Reserve Bank of Australia cuts its key lending rate by 25 basis points to 0.75% and said it stands ready to do more if needed. The WTO for its part cut its world merchandise trade volume growth forecast for 2019 to 1.2% from a 2.6% growth forecast in April, citing escalating trade tensions and a slowing global economy.

For the time being, the stock market isn’t looking too bothered by the economic news. That could change if the ISM Manufacturing Index for September ( consensus 50.2; Prior 50.4), which will be released at 10:00 a.m. ET, ends up being weaker than expected.

Then again, the market seems to be fixated more on the consumer than the manufacturer when it comes to fretting the economic outlook, and, so far, the consumer has been keeping real frets in check.

There isn’t a great deal of corporate news of note.

Ford (F) said it expects to take an $800 million to $900 million impairment charge in the third quarter for its India Automotive operations, but its stock is little changed. Charles Schwab (SCHW), meanwhile, answered the recent move by Interactive Brokers (IBKR) and said it is eliminating commissions for online U.S. stock, ETF, and options trades. Shares of SCHW are down 6.0% in pre-market trading while TD Ameritrade (AMTD) and E*Trade (ETFC) are down 13% and 12%, respectively.

Elsewhere, China’s market was closed for the Golden Week holidays, which kicked off today with a 70th Anniversary celebration of the People’s Republic of China, where President Xi said no force can stop China’s development.

Another development that in Asia that drew attention was the weak 10-yr Japanese Government Bond auction, which featured the weakest bid-to-cover ratio since 2016, according to Bloomberg News. That sent bond yields higher in Japan, as well as other sovereign markets. The 10-yr Treasury note yield is up seven basis points to 1.75% in a move that is leading to some pre-market strength in the financial sector, which should assume an early leadership position.

Originally Posted on October 1, 2019 – An October Carryover

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