24.10.16 Monday Morning

With the third quarter officially it’s time for a glimpse at those growth figures, with the UK, US and, to a lesser extent, Eurozone all producing GDP readings this week.

UK
The UK may not have a lot of data to deal with this week, but what it does have is a doozy: the first GDP figure to cover a purely post-Brexit period of time. Since the referendum result the country’s data has by and large bested estimates, so it will be interesting to see whether this can translate to solid third quarter growth. Of course all the usual caveats around any post-Brexit still apply, namely that Britain still hasn’t actually left the EU; nevertheless, a decent reading could well help the pound mount a rebound AND keep the FTSE above 7000.

It is also a fairly important week for the FTSE 100 in terms of earnings, with releases from Premier Inn and Costa Coffee-owner Whitbread on Tuesday, GlaxoSmithKline and Lloyds on Wednesday, Barclays and BT Group on Thursday and RBS on Friday. It is likely going to be those banking stocks that have the biggest impact on the index, especially given reports that each will reveal an increase in PPI-related fines in their respective statements.

US
With the Dow Jones struggling for direction can this week’s data provide any pointers, or will the increasing proximity of the US election leave the index stranded around 18150-18200 once again? There is, admittedly, enough info on offer to try and provoke a reaction. The CB consumer confidence reading is released on Tuesday, while the goods trade balance, flash services PMI and new home sales figures appear on Wednesday. Thursday takes it up a notch with the durable goods orders and usual jobless claims, before Friday unleashes the first glimpse as the country’s third quarter growth (alongside the somewhat overshadowed revised UoM consumer sentiment reading).

While that GDP reading on Friday will draw attention, the real meat of the week will come from the country’s many (many) earnings releases. There are figures from card-card companies Visa and Mastercard, food and drink sector favourites Chipotle, Coca-Cola and Dr Pepper Snapple, a double dose of oil updates from Chevron and Exxon Mobil and a selection of motor statements from Tesla (see below), Ford and GM.

The main focus, however, will be on the omnipotent triple As: Apple, Amazon.com and Alphabet. The former reports on Tuesday, and will be looking to cement its recent recovery with its fourth quarter release; the latter two then both update on their respective third quarters on Thursday, with Alphabet especially chasing Apple’s most valuable company crown.

Eurozone
Caught between the Brexit on one side and the US election on the other it’s hard to pay much attention to the Eurozone at the moment. Nevertheless the region has its own steady stream of data to deal with: Monday sees the French, German and Eurozone-wide flash manufacturing and services PMIs, Tuesday has the German Gfk consumer climate and Italian retail sales figures, Thursday sees the Spanish unemployment rate and M3 money supply data before Friday ends with a bumper pack of GDP and CPI readings.

Stock of the week: Tesla Motors Inc – Q3 2016 Earnings Release
It’s been a typically choppy year for Tesla. A sharp decline as 2016 began, from an opening price of $228.34 to a low of $140 by the start of February, was overcome with the company’s fourth quarter report. While it missed on both revenue and earnings, higher than expected delivery projections for its fiscal 2016 lit a fire under the stock, culminating in a 7 month, and 2016, peak of $269 by the beginning of April. Since then Tesla has been a bit more muted, bouncing between $200 and $230 as it reacted to its first and second quarter reports in May and August respectively.

Already Tesla has confirmed it had a record third quarter sales-wise, shifting 24.5k vehicles, 1.5k more than forecast. In terms of the company’s update next week, then, analysts are expecting Tesla to post a GAAP loss of 53 cents, an improvement on the $1.78 loss seen this time last year, with adjusted earnings of 1 cent per share. While those earnings figures may be underwhelming the company’s projected revenue is anything but, with expectations of an 85% surge year-on-year to $2.3 billion, marking the first time it has crossed the $2 billion mark.