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Retail Sales, Bitcoin ETFs, Goldman Reports – What’s Moving Markets

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By Geoffrey Smith — Retail sales and the Michigan Consumer Sentiment index round off a busy week for economic data. Stocks and oil march higher as inflation fears take a back seat for now. Goldman Sachs (NYSE:GS), PNC and JB Hunt (NASDAQ:JBHT) report earnings, and the SEC is close to approving the first ETFs based on Bitcoin, pushing crypto a good bit further into the mainstream of global financial markets. Here’s what you need to know in financial markets on Friday, 15th October. 

1. Retail sales, Michigan consumer sentiment due

A busy week for economic data ends on a consumer-focused note, with the release of U.S. retail sales numbers for September at 8:30 AM ET (1230 GMT) and the Michigan Consumer Sentiment index at 10 AM ET.

Analysts expect a modest drop in sales, reflecting the continued drift of spending back to services and away from goods. As for the Michigan report, all eyes will be on the inflation expectations component of the index, which only slightly retreated from a 10-year high in September.

Data out of Europe overnight showed consumer prices fell in September in France and Italy, the number 2 and 3 economies in the euro zone, while new car registrations were down by over 20% all over the continent as the shortage of chips and other components left dealers short of inventory. Elsewhere, Toyota said it will cut November production by 15% from planned levels due to ongoing shortages, but which stuck to its full-year output targets, bolstering hopes that the worst is over for auto giant.

2. SEC set to allow Bitcoin ETF

Bitcoin extended its recently rally to trade within a couple of days’ march of its all-time high, after Bloomberg reported that the U.S. Securities and Exchanges Commission is set to approve the first exchange-traded fund based on Bitcoin futures.

The SEC’s action would be a watershed movement for Bitcoin and cryptocurrency in general, in giving the first official imprimatur to crypto funds accessible by both retail and institutional investors, thus dramatically increasing the scope for mass engagement with the asset class. The ETFs in question are, however, likely to be based on Bitcoin futures prices, settled in cash, rather than futures on Bitcoin itself.

By 6:15 AM ET (1015 GMT), Bitcoin was up 3.3% at $59,361, while other coins were mixed after riding higher on Bitcoin’s coat-tails over the last week.

3. Stocks set to extend rebound; Goldman, PNC earnings eyed.

U.S. stocks are set to open higher later, extending the gains they made on Thursday after a lower-than-expected producer price inflation number for September triggered a sharp reversal in risk assets.

By 6:15 AM ET, Dow Jones futures were up 138 points, or 0.4%, while S&P 500 futures were up 0.3% and Nasdaq 100 futures were up 0.3%.

Stocks likely to be in focus later include Goldman Sachs, which rounds off a week of mixed bank earnings. Like rival Morgan Stanley (NYSE:MS), Goldman will be relatively less affected by the apparent weakness of main street lending operations given its focus on investment banking. PNC Financial (NYSE:PNC), which also reports, may be more exposed to sluggish trends on Main Street.

Also in focus will be Johnson & Johnson (NYSE:JNJ) after the health giant put its liabilities for tens of thousands of lawsuits related to its talc products into a bankruptcy protection process

4. China eases mortgage rules; no RRR cut

Beijing told state-owned banks to speed up their approval of mortgage loans in the last quarter of the year, as the fallout from China Evergrande’s debt problems reverberates through a highly-leveraged real estate sector.

An increasing number of developers are failing to pay all their obligations on time, with incomplete payments of interest or principal happening almost on a daily basis. With the bond market effectively closed for refinancing, the pressure on developers to complete what sales they can to shore up cash flow is intensifying. The People’s Bank of China broke its long silence on Evergrande, saying that the systemic risks from the country’s largest real estate group are containable.

The Chinese central bank has continued to roll over liquidity in the money markets, without delivering the cut in banks’ reserve ratio requirements that some analysts have predicted. The PBoC often prefers to ease monetary policy through the RRR channel, rather than by cutting its key rates.

5. Crude marches higher as Chinese, European energy scramble continues

Crude oil is on track for its eighth straight weekly gain, adding a cautionary note to those celebrating Thursday’s numbers as evidence that this year’s spike in inflation is already unwinding.

By 6:30 AM ET, U.S. crude futures were up 0.9% at $82.00 a barrel, while Brent crude future were up 0.8% at $84.70 a barrel, having earlier traded above $85 for the first time in nearly seven years.

The scramble for fuel in Europe and China continue to give support to prices, despite data on Thursday confirming a large rise in U.S. crude inventories. Chinese coal futures rose another 5% for a fifth straight day of record highs, while comments from Russian deputy Prime Minister Alexander Novak that Russia could soon begin spot market sales to Europe failed to take much of an edge off natural gas prices.

Retail Sales, Bitcoin ETFs, Goldman Reports – What’s Moving Markets

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