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Good morning! Stock market futures suggest an open below Friday's close after disappointing economic data emerged from the Eurozone and China. On Friday's session, both the Dow Jones and the S&P 500 hit record highs.
Today, watch for earnings from Herbalife Ltd. (NYSE: HLF) after the closing bell. The health company has been the center of a long public battle between activist investors Bill Ackman and Carl Icahn over its marketing model. In addition, keep an eye on the election polls. On Tuesday, American voters head to the polling booth to decide whether Democrats or Republicans will have control of the Senate over the next two years. Our Chief Investment Strategist Keith Fitz-Gerald says we can expect a modest rally if the GOP takes the Senate. But Keith cautioned that Republicans face a challenge that could threaten the predicted November sweep. In an interview last week, Keith talked about that challenge and offered some key advice to investors on how to deal with a rocky U.S. stock market.
Here's what else you should know – including "Money Morning Tip of the Day" – this Monday morning:
- Dollar Surge: This morning, the U.S. dollar advanced to a seven-year high against the yen and a two-year high against the euro. The rise of the dollar can be attributed to the Bank of Japan's Friday announcement that it will engage in a massive bond-purchasing program to stimulate its economy and stave off deflation. Meanwhile, more speculation has begun that the European Central Bank will soon unleash its own stimulus efforts to reignite economic growth. The dollar's surge is putting increased pressure on commodities like oil, gold, and silver.
- Global Grumbles: On Saturday, China reported that its official Purchasing Managers' Index (PMI) for October slipped to 53.8, a five-month low and a decline from September's 54.0 reading. In addition, the nation's services sector grew at the slowest rate in nine months, fueling increased concerns on demand in the nation's real estate market. The situation in Europe is no better. The Eurozone's final October PMI reading registered at 50.6, missing consensus estimates of 50.7.
- Watch for iWatch: Tech giant Apple Inc. (Nasdaq: AAPL) will not launch its highly anticipated Apple Watch until spring 2015, according to a report from 9to5Mac.com. The Apple news site quoted a senior vice president, and inferred from a quote that the Apple Watch would follow the U.S. Holiday season and the Chinese New Year (February 19). On Friday, shares of Apple closed at $108 per share, a new record for the tech giant. The stock surge comes two weeks before the company will pay a quarterly dividend of $0.47 to shareholders on November 13. The company will return roughly $2.8 billion in the dividend payout.
- Merger Mania: Shares of Sapient Corp. (Nasdaq: SAPE) surged more than 41% in pre-market hours on news it would be acquired by French advertising group Publicis SA (NYSE: PUBGY). The $3.7 billion all-cash deal will be announced on Friday. The merger is a big deal for Publicis, the third-largest marketing company in the world. The firm is attempting to keep up with rivals after a botched merger attempt with ad agency Omnicom Group Inc. (NYSE: OMC). That deal was announced in 2013, but the two companies ultimately abandoned the merger earlier this year over cultural differences and managerial differences.
- Flying On: This weekend, Virgin Group's Founder Richard Branson promised to keep his commercial space travel company Virgin Galactic operating, despite concerns about the industry's future. Last week, private space transportation experienced two major accidents that threaten its outlook. Six days ago, a cargo rocket carrying supplies to the International Space Station exploded moments after takeoff. The rocket's owner, Orbital Sciences Corp. (NYSE: ORB) saw its shares fall by 14%. On Friday, Virgin Galactic's flagship vehicle SpaceShipTwo crashed in the Mojave Desert, killing one pilot and seriously injuring the other.
- Oil Prices Today: As the dollar rallies, oil prices are flat this morning. Brent crude, the global benchmark priced in London, rose marginally to hit $85.90 this morning. Meanwhile, WTI crude, priced in Manhattan, rose 0.25%, to hit $80.75 per barrel.
- Economic Calendar: Today's economic calendar features an update on U.S. construction spending, the Gallup U.S. consumer spending measure, and the Global Manufacturing PMI.
- Earnings Reports: Stay tuned for earnings reports from Acxiom Corp. (Nasdaq: ACXM), American International Group Inc. (NYSE: AIG), American Water Works Company Inc. (NYSE: AWK), AOL Inc. (NYSE: AOL), CF Industries Holdings Inc. (NYSE: CF), DIRECTV (Nasdaq: DTV), Dominion Resources Inc. (NYSE: D), GrubHub Inc. (Nasdaq: GRUB), and Herbalife Ltd. (NYSE: HLF).
Full U.S. Economic Calendar November 3, 2014
- Gallup US Consumer Spending Measure at 8:30 a.m.
- Chicago Federal Reserve Bank President Charles Evans speaks at 9:30 a.m.
- PMI Manufacturing Index at 9:45 a.m.
- ISM Manufacturing Index at 10 a.m.
- Construction Spending at 10 a.m.
- Global Manufacturing PMI at 11 a.m.
- 4-Week Bill Announcement at 11 a.m.
- 3-Month Bill Auction at 11:30 a.m.
- 6-Month Bill Auction at 11:30 a.m.
- Dallas Federal Reserve Bank President Richard Fisher speaks at 12:40 p.m.
Money Morning Tip of the Day: The Bank of Japan (BOJ), Japan's central bank, just tricked global markets by lavishing them with an awesomely sweet Halloween treat. There's only one problem, and that's how the addition of all this fake sweetener stuff will end. Our Shah Gilani pulled back the curtain to what's really happening with centralized planning and so-called stimulus efforts around the world. Keep reading. Your heart is going to pound…
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.