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How Will ISM Data and BMW Earnings Affect the Equity Market? – Before and After | Refinitiv - YouTube
Channel: Real Vision Finance
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welcome to before and after this show is
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all about opportunities around upcoming
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events and announcements and helping you
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understand not only what could happen
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but what you can take away from what did
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happen and the upcoming us
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non-manufacturing is M is going to tell
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us a lot let's take a look at some of
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the possible scenarios in the before
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portion of our episode the Institute of
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Supply Management or is M non
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manufacturing is absolutely key to
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upcoming market action as its this part
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of the US economy that isn't supposed to
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be a drag well not yet anyway
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unlike manufacturing which has been
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taking a beating of late the is M non
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manufacturing represents what's supposed
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to be the healthy parts of the economy
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like business activity and employment
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the manufacturing sector grabs most of
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the headlines but the non manufacturing
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or services sector is a much larger
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component of the US economy the
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September number released on October the
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third was a big shock and the market did
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not like it the instant it came out the
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S&P plunged 1.2 percent in less than 15
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minutes an accelerated sell-off
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especially for this subdued volatility
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environment take a look at this roof in
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ative chart the September
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non-manufacturing is M report missed
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badly the expectation of 55.2 instead
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came in at 52 point 6 and remember the
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magic number is 50 below that and we're
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in contraction territory the
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manufacturing sector can contract
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without creating a recession but on both
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the last two occasions that the non
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manufacturing sector was heading to 50
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and perhaps even below the economy was
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heading towards recession this is a key
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barometer to gauge whether the US
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economy is deteriorating and whether the
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slowdown is spreading to the services
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sector and then ultimately the consumer
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so what should we be looking out for a
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solid beat could create an upside panic
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in equities followed by a key date
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reversal in stocks a bit like a last
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hurrah before people lock in profits in
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line probably means tepid buying on
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unimportant volume a miss and you could
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very well see the same instant reaction
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as October's number
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we're stocks dropping into an air pocket
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and worrying about what happens until
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the next rate setting meeting sub 50 and
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people will be reaching for the hard
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hats as the cause of recession will
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certainly start ratcheting up again if
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you're looking for a way to play this
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though consider the juicy way the retail
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ETF he had a three percent intraday
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range move at the last non-manufacturing
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is M this week we are going to look at
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BMW as they will announce earnings and
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we want to examine some possible actions
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take a look at this roof in ative chart
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BMWs earnings announcements come at a
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time when they face all sorts of macro
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issues autos have been at the epicenter
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of the slowdown in global manufacturing
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that has spread along the supply chains
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from China has seen a steep decline in
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global sales where changes to emissions
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policies in China and Germany have also
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had a huge impact
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BMW is a ground zero of the macro
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slowdown with additional direct adverse
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effects from the trade Wars and brexit
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Germany's manufacturing industry
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dominated by engineering and
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particularly the auto sector has been in
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recession territory for six months
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without officially registering a
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full-blown recession in fact Germany
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registered one of the worst
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manufacturing figures in the developed
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world last month
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when their manufacturing PMI came in at
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a horrendous 41.9 so BMW has got every
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possible impediment to delivering
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results now despite those roadblocks the
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German autos have proven themselves to
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be robust but BMWs results will really
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put that to the test what could happen
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to the stock we should look at BMWs
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biggest competitor Daimler Daimler
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reported on the 24th of October and
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after a slight earnings beat on severely
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lowered estimates the stock rallied that
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day up 3.4 percent Daimler finished the
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month is the best performing stock in
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Germany's headline equity market the dax
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up 14% while BMW was only up 6 percent
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no one expects much from BMW on the
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top-line revenues so this is the time
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for them to show they've learned how to
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navigate an increasingly complex global
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supply chain what's the bottom line here
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since nobody expects much the risk seems
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to be squarely
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on the upside a bullish tape in Germany
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this week even if the German PM eyes are
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wretched which is what we all expect
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would only bolster this take negative
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headlines with constructive price action
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would certainly be a strong buy signal
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for the fourth quarter the big caveat is
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if we have a horrendous miss and a
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lowering of guidance this could lead to
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profit taking in the dax index which was
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one of the best performing indices in
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the world last month up 3.5% largely on
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optimism that the bottom is priced in
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okay so I assume and BMW are two big
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events to be aware of this week but what
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about what happened last week I'm
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referring of course to the hugely
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important
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after the non-farm payrolls a pretty
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decent beat came in at a hundred and
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twenty eight thousand new jobs versus an
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expectation of eighty nine thousand and
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a huge upward revision that added an
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additional 95,000 jobs to the previous
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readings so it seems to fed might just
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have been right to put a pause on rate
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cuts which looked like they may already
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be adding some positive mojo to the
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economy
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the SP is rallied about 40 basis points
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off of it which is not exactly
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earth-shattering but we might be close
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to a near-term top in equities as the
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Fed cut is being fully digested along
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with the realization that the Fed might
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now be on hold for some time but watch
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US banks who will likely love the fact
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that the economy is firm and that rate
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cuts are on hold it gives their margins
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a tiny bit of respite there it is is M
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BMW non-farm payrolls three events that
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have or will shape the markets for the
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rest of the year I'm Jamie and this is
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before and after the twice weekly market
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show from RAF in ative join us again on
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Friday and be sure to share this video
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