North American Morning Briefing: Stock Futures Waver Ahead of Big Tech Earnings –


Watch For:

Canada Consumer Price Index for September; EIA Weekly Petroleum Status Report; results from Verizon; Canadian Pacific Railway; IBM; Tesla

Opening Call:

Stock futures wobbled ahead of corporate results that will provide insight into the effects on the technology industry of inflation and supply-chain disruptions, including from the global chip shortage.

Telecommunications giant Verizon is scheduled to post earnings before the opening bell. Tesla and IBM are expected to report after markets close.

Stocks have climbed in recent days as investors parsed strong earnings. Major companies have said that labor shortages, higher raw-materials prices and supply-chain issues haven’t eroded profits substantially, reassuring investors.

For tech companies like the ones reporting Wednesday, investors will be watching for an update on disruptions in the semiconductor space and the ability of large firms to increase prices to consumers, according to Kiran Ganesh, a multiasset strategist at UBS Global Wealth Management.

“Markets are taking a bit of a breather after a very strong run. Earnings are very good so far, across a pretty broad range. We’re looking out for margins, and comments on input costs, and we haven’t really seen too much concern on that,” he said. “This is what’s really been supporting the rally.”

Netflix shares slipped 1.3% in after hours trading. The company said it added more new users than expected in the last quarter, but its co-chief executive also apologized for defending a controversial comedy special by Dave Chappelle.

Investors are awaiting a Federal Reserve report about economic conditions known as the Beige Book, which is expected to be released at 2:30 p.m. ET.

Overseas, the pan-continental Stoxx Europe 600 advanced 0.2%, while in Asia, major benchmarks were mixed.


The dollar was little changed in Europe, despite the slightly weaker sentiment in most stock markets.

Healthier risk conditions and the repricing of expectations for central banks’ monetary policies worldwide could send the dollar lower in coming days, although any losses might ultimately prove modest, said Westpac.

The European Central Bank is likely to underscore its dovish guidance next week, while the Federal Reserve is expected to announce QE tapering at its Nov. 2-3 meeting, a backdrop that should underpin the dollar, Westpac added.

Commerzbank said the dollar is unlikely to suffer a sustained downward correction in the near term as elevated U.S. inflation forecasts support the market’s expectations for interest-rate rises by the Fed.

The foundation for the dollar’s strength is “anything but secure” as inflation could fall more rapidly and sharply than the market expects next year, said Commerzbank currency analyst Thu Lan Nguyen.

“But there is still no reason for the market to massively revise its inflation and thus interest rate expectations–at least as long as there are no clear signs that the global supply bottlenecks are starting to ease.”


The yield on the benchmark 10-year Treasury note reached 1.673% early Wednesday, its highest level since May, up from 1.634% Tuesday. It then eased back slightly.

“Higher yields mean stock valuations start to look more challenging and it undermines the ‘no alternatives’ argument for stocks if bonds start to yield something meaningful,” said UBS’s Ganesh. “We’re not near that point yet, but if we incrementally move up, investors will start to grow a little more concerned.”

Tim Duy, chief U.S. economist at SGH Macro Advisors, said comments from the Fed are moving in an overall hawkish direction. He said it will be important to see if Jerome Powell pushes back on such talk at his upcoming speech on Friday.


Crude oil futures were down around 1% in Europe after the latest API data showed a bearish reading on U.S. inventories, according to DNB Markets’ Helge Andre Martinsen.

While the market had expected a build of 1.3 million barrels in the most recent reporting week, crude stocks actually rose by 3.3 million barrels. Investors will be keeping an eye out to see whether Department of Energy data, released later Wednesday, back up those API figures, Martinsen added.

Base metals prices were lower after China said it was looking to intervene in energy markets.

China’s National Development and Reform Commission suggested it was looking at ways to bring down soaring coal prices, a move that could ease pressure on metals makers and has already prompted a sharp drop in Chinese coal futures.

Rising energy prices have been driving production curtailments at smelters and pushing base metals prices higher.



Tesla Poised for Record Quarterly Earnings on Supply-Chain Resilience

Tesla Inc. is expected to notch a third consecutive quarterly profit, thanks in part to the electric-vehicle maker’s ability to navigate persistent global supply-chain disruptions.

Tesla delivered around 241,300 vehicles to customers in the three months ended in September, up roughly 73% from a year earlier, despite parts shortages that have hindered auto makers this year.


Nestlé Sales Buoyed by Coffee, Pet Food

Nestlé SA raised its full-year sales guidance for the second straight quarter, buoyed by strong demand for coffee and pet food, despite the continuing challenges of rising input costs and supply-chain snags.

The world’s largest packaged-food company on Wednesday reported a 6.5% rise in third-quarter organic sales growth, with revenue for the first nine months of the year coming in at 63.29 billion Swiss francs, equivalent to $68.60 billion. Nestlé said it now expected full-year growth between 6% and 7%, up from its previous guidance of between 5% and 6%.


Bank of New York Mellon’s Profit Rises on New Business, Asset Growth

Bank of New York Mellon Corp. reported a higher third-quarter profit, as a robust stock market, busy clients and new business all helped lift revenue.

The custody bank’s results joined rival State Street Corp. in beating Wall Street’s expectations and extended gains for both companies’ shares. BNY Mellon and State Street have each rallied by more than 30% so far this year.


Boeing’s First Astronaut Flight on Starliner Faces Further Delay

Boeing Co. executives said the company’s Starliner space vehicle might not carry astronauts until the end of next year, potentially putting it a year behind a previous date to deliver people to orbit for NASA.

After completing a demonstration flight without crew members during the first half of 2022, a test mission with astronauts could occur “maybe by the end of the year,” according to John Vollmer, a Boeing program manager overseeing the Starliner.


Credit Suisse to Pay $475 Million, Admits Defrauding Investors to Settle Mozambique Charges

Credit Suisse Group AG agreed to pay $475 million and forgive $200 million Mozambique owes to investors in coordinated settlements with U.S. and European authorities over loans the bank made in the country.

A subsidiary of the Swiss bank pleaded guilty to wire fraud conspiracy charges in New York federal court Tuesday. Credit Suisse, which previously had maintained it was a victim of rogue employees, admitted to defrauding investors who bought some of the debt and agreed to pay $275 million to resolve both a criminal probe by the Justice Department and a civil investigation by the Securities and Exchange Commission.


Snap CEO Evan Spiegel Says Regulation Alone Won’t Fix Social Media

The boss of social-media company Snap Inc. says government regulation isn’t a substitute for companies working to promote the well-being of their users.

“We’ve always been very open about regulation,” Snap Chief Executive Evan Spiegel said Tuesday at The Wall Street Journal’s Tech Live conference. “The important point to make is that regulation is not a substitute for moral responsibility and for business practices that support the health and well-being of your community, because regulation just happens far too late.”


Netflix Co-CEO Says He ‘Screwed Up’ When Defending Dave Chappelle Special

Netflix Inc. Co-Chief Executive Ted Sarandos said he “screwed up” in his efforts to communicate with employees who were upset over “The Closer,” a recent comedy special by Dave Chappelle in which he made remarks that some viewed as offensive to the transgender community.

In emails to Netflix staff after the special’s debut earlier this month, Mr. Sarandos defended “The Closer,” citing its popularity on the platform and the company’s commitment to creative freedom. He also said the company believed “content on screen doesn’t directly translate to real-world harm.”


SPAC Shareholders Approve Deal That Will Take WeWork Public

Special purpose acquisition company BowX Acquisition Corp. said Tuesday its shareholders approved the previously announced business combination with shared-workspace company WeWork Inc.

BowX said the deal is expected to provide WeWork with cash proceeds of about $1.3 billion.


Netflix Finds Even ‘Squid Game’ Only Has So Much Reach

For Netflix, recovering from the post-pandemic slump is proving to be a complicated plotline.

One major twist came in the form of “Squid Game,” the South Korean survival drama that made its debut on Sept. 17 and has quickly become the company’s biggest TV series ever. Netflix co-Chief Executive Officer Ted Sarandos conceded at the Code Conference last month that its success took even the company by surprise. Netflix said Tuesday in its third-quarter report that 142 million households chose to watch the series in its first month, blowing past the 82 million who watched the company’s previous record holder, “Bridgerton.”


Omnicom’s Revenue Improves as Effects of Pandemic Fade

(MORE TO FOLLOW) Dow Jones Newswires

October 20, 2021 05:50 ET (09:50 GMT)

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