08.08.16 Monday Morning

Following a series of important central bank meetings, culminating in the Bank of England’s decision to slash interest rates and bump up its QE programme, this week looks relatively empty in comparison.

UK
Despite the fact that the Bank of England’s stimulus decision spurred the FTSE on to 12 month highs one could argue that the index still lacks a clear direction going forwards. It is unlikely to have much help in that regard this week, however, thanks to a rather sparse the economic calendar. The brunt of the UK’s news comes on Tuesday, with the release of the manufacturing and industrial production readings alongside the latest goods trade balance figure. It is likely that the data will reflect the same downward trend evident in last week’s trio of PMIs; what is unclear is whether this news will drag the FTSE from its highs, or whether the index will still be giddy from the BoE’s intervention.

Earnings-wise things are similarly humdrum this week. There are half year figures from Standard Life, Worldpay and Amec Foster Wheeler on Tuesday, alongside a third quarter report from GW Pharmaceuticals, while Prudential and Cineworld Group update on Wednesday and Thursday respectively.

US
While the Bank of England hogged headlines the US still had plenty of its own intrigue last week, with a surprisingly strong non-farm jobs report. This week, however, the region reverts back to a string of B-tier data; the JOLTS job openings figures on Wednesday will compliment that jobs report, while Thursday gives investors a glimpse at the US import prices. Friday is arguably the most important day for data, with the latest retail sales, PPI and prelim UoM consumer sentiment numbers released throughout the afternoon.

With the second quarter earnings rush at an end there are only a few major companies left to report; this week that includes Allergan on Monday, Disney (see below) on Tuesday and Shake Shack on Wednesday.

Eurozone
After being pushed out of the spotlight by its UK and US peers the Eurozone is arguably the busiest region this week. German industrial production and trade balance figures are released on Monday and Tuesday, while the French industrial production and inflation data comes on Wednesday and Thursday. Friday, however, is the biggie; following on from the reveal that its GDP figure had halved quarter-on-quarter to 0.3% the Eurozone gets a fuller glimpse at the start of its growth, with Q2 readings from Germany, Italy and the region as a whole.

Stock of the week: The Walt Disney Co – Q3 2016 Earnings Release
Disney released its first update of the year in February, smashing expectations thanks to a Star Wars-inspired 14% surge in Q1 revenue to $15.24 billion alongside an even more impressive 28% rise in EPS to $1.63. Yet all this was overshadowed by an ESPN-led 5% fall in operating income for its cable networks, currently the most pressing concern for Disney investors due to the fact they comprise over 30% of the company’s total operating income. Flash forward to May’s Q2 results and Disney didn’t even have those headline figures to rely upon. Earnings per share and revue underperformed expectations at $1.36 and $12.97 billion respectively; the media network figures also missed targets, though operating income did rise 9% to $2.3 billion.

In terms of the company’s Q3 results analysts are expecting Disney to post an 11% rise in earnings per share to $1.61 alongside an 8% surge in revenue to $14.17 billion. However, these headline figures may all be for nought if Disney can’t sufficiently assuage investors’ fears over its cable, i.e. ESPN, arm.

(Source: IT-Finance.com 05/08/2016)