NOTABLE MOVES
- U.S. Core Durable Goods Orders m/m at 0.1% vs expected 0.5%. Durable Goods Orders m/m at 0.8% vs expected -1.3%. The Fed-sensitive 2-yr yield was unchanged at 2.86%, while the benchmark 10-yr yield closed one basis point higher at 3.14%. USDJPY up 0.10%, $112.37.
- German Ifo Business Climate at 102.8 vs expected 103.1. The ECB left its key interest rates unchanged at 0.00%, as expected. ECB confirmed that its plan to end monetary easing by the end of the year remains on track. “Regarding non-standard monetary policy measures, the Governing Council will continue to make net purchases under the asset purchase programme (APP) at the new monthly pace of 15 billion euros until the end of December 2018,” the ECB said in a statement. The decision takes place as concerns mount over Italy’s fiscal policies and their potential impact over the stability of the euro area. The central bank’s president said in a subsequent press conference that he expected euro zone inflation to pick up despite weaker momentum. Euro down -0.16%, $1.1374.
- Brexit negotiations remain in a stalemate, and the latest header on the issue referred to UK’s Brexit Secretary Dominic Raab, who said that the EU’s “intransigence” is preventing them from achieving a deal. Sterling down -0.48%, $1.2819. USDCAD up 0.13%, $1.3072.
- S&P 500 up 1.86%, 2,705.57. Nasdaq up 3.35%, 7,016.39. Nikkei down -3.72%, 21,268.73.
- Heavyweight Microsoft (MSFT 108.30, +5.98) powered the recently struggling information technology sector, closing 5.8% higher after reporting above-consensus top and bottom lines Tesla (TSLA 314.86, +26.36, +9.1%) and Twitter (TWTR 31.80, +4.26, +15.5%) comfortably exceeded earnings expectations. Tesla, in fact, surprised investors by turning a profit last quarter.
- The FANG bunch traded bid, led by Amazon (AMZN 1782.17, +117.97) and Alphabet (GOOG 1095.57, +44.86) sporting gains of 7.1% and 4.3%, respectively, ahead of their earnings reports. Ford (F 8.99, +0.81, +9.9%), Visa (V 140.52, +6.26, +4.7%), Comcast (CMCSA 35.84, +1.72, +5.0%), American Airlines (AAL 32.37, +2.03, +6.7%), and Whirlpool (WHR 111.34, +7.07, +6.8%) all finished with healthy gains, capitalizing on better-than-expected earnings results. Advanced Micro Devices (AMD 19.27, -3.52, -15.5%) issued a revenue warning for the fourth quarter, and Southwest Air (LUV 49.91, -4.67, -8.6%) acknowledged that it is facing some higher-than-expected cost pressures.
- Amazon dropped roughly -7% in after-hours trading on revenue and guidance miss. The e-commerce and cloud giant reported EPS of $5.75 versus consensus estimates of $3.08, according to FactSet. But revenues of $56.58 fell short of expectations for $57.1 billion. In addition, Amazon guided for revenue of $66.5 billion to $72.5 billion, below a $73.79 billion consensus estimate.
- Likewise, Alphabet stock sinks on revenue miss, down more than -3.4% after hours. Alphabet reported EPS of $13.06 versus $10.42 expected and revenues of $33.7 billion versus $34.04 billion expected.
BLOCKCHAIN & CRYPTOCURRENCY NEWS
China’s Alibaba Cloud Expands Enterprise Blockchain Offering to Global Markets
Alibaba Cloud, the cloud computing arm of China’s e-commerce giant Alibaba Group, is enhancing its Blockchain-as-a-Service (BaaS) offering outside China. Alibaba Cloud will expand its enterprise-level blockchain service to major international markets including Europe, the U.S., and South East Asia. The blockchain solution offers a broad range of applications such as automatic deployment, consortium blockchain management, smart contracts, and others. Founded in 2009, Alibaba Cloud is reportedly considered as the largest cloud services supplier in China, as well as the third largest in the world, and now is operating 52 availability zones in 19 regions across the world.
German Central Bank and Deutsche Boerse Successfully Complete Blockchain Settlement Trial
The central bank of Germany, Deutsche Bundesbank, and securities marketplace organizer Deutsche Boerse (DB) have successfully completed the trial of a blockchain solution in the settlements area. The transaction volume and speed of a production system were tested on the Hyperledger Fabric framework and Digital Asset, a distributed ledger (DLT) solution for the financial sector. The high latency for some technology stacks and high CPU-usage were mentioned among weaknesses, while higher resiliency and lower cost of reconciliation due to the joint database were considered to be benefits. The main point of the joint research was bond issuance, settlement, corporate actions, and redemption, as well as cash transfer including the provisioning of digital coins, transfer between market participants, and settlement of cash payments, the summary states.
Japan’s Financial Regulator Mulls Cap on Cryptocurrency Margin Trading
Japan’s Financial Services Agency (FSA) is planning to put a cap on the leverage available for crypto margin trading to curb speculation and risk. Currently, there are no regulations specifically governing the cryptocurrency margin trading space in Japan, with exchanges offering as much as 25 times leverage. That means traders can effectively borrow cryptocurrencies worth up to 25 times the deposit with an exchange, however, just a 4 percent drop in the purchased crypto assets would wipe out the initial deposit. The news follows previous statistics released by the FSA, which indicated cryptocurrency margin trading has seen rapid growth in Japan. For instance, over 80 percent of the total cryptocurrency trading volume in Japan in 2017 came from derivatives trading, which recorded $543 billion. More than 90 percent of that figure came from margin traders. Seven of the 16 licensed exchanges by the FSA now offer marge trading services, adding that a panel comprised of FSA officials and industry experts is now set to discuss ways to impose potential regulations in this area.