Interest charge

After Netflix beat, Tesla could charge this rally

Here’s what you need to know on Wednesday, October 19

Stock markets started the week in bullish form, with Monday’s strong gains initially built into the start of Tuesday’s session. However, bond yields remained stubbornly above 4% across the curve, which dampened enthusiasm for equities and saw the rally falter as Wednesday progressed. However, some renewed vigor is being injected into the bulls after another round of strong earnings across the board. Most notable of all was Netflix’s solid subscriber growth, which saw the stock rise 13% after hours.

Already this morning we have seen the trend continue, with airlines now looking strong, and food companies appearing to be in good shape as Nestlé raises prices without destroying demand. It is becoming increasingly clear that perhaps for many companies demand is holding up even as inflation rages on. This is the beginning of an inflationary phase, and this can often be the case. Once consumers have exhausted their savings and interest rate hikes hit, it is in the second half of an inflationary recession that the damage is done. All of this means there is no hope for a Fed pivot, and even a more aggressive stance may be needed.

The dollar is reluctant to break above 150 against the yen, but it is even higher with the Dollar Index up almost 1% at 112.92. Oil is higher although the US says it will exploit the SPR again. Bitcoin is lower and gold is also lower at $1,633. One of the headwinds in this latest rally in equities is rising bond yields. UK inflation is back above single digits and US 10 and 30 year yields are now approaching 4.1%. This will hit the high duration sector hard. Tesla needs to sustain this rally with decent earnings after the close.

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European markets are down: Eurostoxx -0.5%, FTSE -0.7% and Dax -0.2%

US Futures Contracts are down Nasdaq, S&P and Dow are all -0.4%.

Major Wall Street News (SPY) (QQQ)

British inflation rose back above 10% in September, above forecasts.

Proctor & Gamble (PG) beats on profits on higher prices.

ASML up 5% after strong results.

Tesla (TSLA) earnings after closing.

Amazon (AMZN) made a breakthrough in home insurance in the UK.

Netflix (NFLX) beats on subscriber, EPS and revenue.

Elevance Health (ELV) beats on EPS and revenue, boosts outlook.

Nasdaq (NDAQ): (the stock not the index!) Beats both EPS and earnings.

United Airlines (UAL) beats on earnings and increases forecast.

Nestle raises its forecast for the full year as it pushed through price increases with no negative effect.

Travelers (TRV) beats on the top and bottom rows.

JB Hunt Transport (JBHT) mentions a subdued holiday season due to lower shipping volumes. It beat EPS and revenue.

Interactive Brokers (IBKR): the net interest margin jumped.

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