MARKET RECAP at 4 pm ET

Stocks ended in the red and Treasury Coming Up yields fell as weak U.S. retail sales data spooked investors, despite Morgan Stanley is expected to report look for an update on the company's generally positive earnings reports. The its third-quarter results before markets full-year financial forecast. dollar dipped, while gold prices rose. open. The U.S. bank is expected to Oil rose due to signs that OPEC and post a fall in quarterly profit. Investors The Commerce Department is allied producers will continue to curb will keep an eye on the bank's scheduled to release annual housing supplies in December. equities trading business, which has starts number for September which is taken a hit in the last few quarters. likely to have declined to 1.320 million units from 1.364 million. The Honeywell International Inc is department is also expected to release STOCKS Close Chng %Chng Yr-high Yr-low expected to report lower year-over- data on building permits, which are DJIA 27006.59 -18.21 -0.07 27398.68 21712.53 year revenue for the third quarter due likely to have fallen to 1.350 million Nasdaq 8124.18 -24.52 -0.30 8339.64 6457.13 to the divestment of its home-security units in September from 1.425 million S&P 500 2989.90 -5.78 -0.19 3027.98 2443.96 products and transportation-systems units in the previous month. In another 16427.18 8.79 0.05 16947.23 13776.88 businesses last year. The company, report, it is expected to show FTSE 7167.95 -43.69 -0.61 7727.49 6599.48 which makes everything from aircraft manufacturing output fell 0.2% in Eurofirst 1542.52 -1.18 -0.08 1554.34 1308.86 Nikkei 22472.92 265.71 1.20 22362.92 19241.37 engines to catalysts used in September after increasing 0.5% the Hang Seng 26664.28 160.35 0.61 30280.12 24896.87 petroleum refining is benefiting from previous month. Separately, industrial robust demand for aircraft spare parts production in September is likely to TREASURIES Yield Price amid booming air travel. Investors will have declined to 0.1% after gaining 10-year 1.7465 7 /32 2-year 1.5916 2 /32 5-year 1.5691 4 /32 KEY ECONOMIC EVENTS 30-year 2.2312 -1 /32 Events ET Poll Prior

FOREX Last % Chng Building permits: number for Sep 0830 1.350 mln 1.425 mln Euro/Dollar 1.1074 0.39 Building permits: change mm for Sep 0830 -- 8.2% Dollar/Yen 108.76 -0.07 Housing starts number for Sep 0830 1.320 mln 1.364 mln Sterling/Dollar 1.2821 0.27 Housing starts mm: change for Sep 0830 -- 12.3% Dollar/CAD 1.3199 0.02 Initial jobless claims 0830 215,000 210,000 TR/HKEX RMB 91.43 -0.05 Jobless claims 4-week average 0830 -- 213,750

COMMODITIES ($) Price Chng % chng Continued jobless claims 0830 1.682 mln 1.684 mln Philly Fed Business Index for Oct 0830 8.0 12.0 Front Month Crude /barrel 53.31 0.50 0.95 Spot gold (NY/oz) 1489.81 8.89 0.60 Philly Fed 6M Index for Oct 0830 -- 20.80 Copper U.S. (front month/lb) 0.0258 -0.0002 -1.06 Philly Fed Capex Index for Oct 0830 -- 25.90 CRB Index Total Return 184.58 0.25 0.13 Philly Fed Employment for Oct 0830 -- 15.80 S&P 500 Price $ Chng % Chng Philly Fed Prices Paid for Oct 0830 -- 33.00

GAINERS Philly Fed New Orders for Oct 0830 -- 24.80 McKesson Corp 144.83 6.66 4.82 Industrial production mm for Sep 0915 -0.1% 0.6% J B Hunt Transport Services Inc 115.65 4.05 3.63 Capacity utilization SA for Sep 0915 77.7% 77.9% AmerisourceBergen Corp 86.06 2.86 3.44 LOSERS Manufacturing output mm for Sep 0915 -0.2% 0.5% Alexion Pharmaceuticals Inc 99.51 -5.30 -5.06 Industrial production yoy for Sep 0915 -- 0.36% Exelon Corp 44.91 -2.15 -4.57 DXC Technology Co 27.87 -1.13 -3.90

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before the MFA Outlook 2019 organized by the Managed Funds Association in New York.

Union Pacific Corp is scheduled to report its third-quarter results. The company's investors will be looking for a rebound in the railroad's important intermodal business as well as commentary about progress on the new trade deal, known as the United States-Mexico- Agreement.

World Bank Group President David Malpass is scheduled to address the A file photo of John C. Williams, president of the Federal Reserve Bank of New York speaking to press in Washington during the World the Economic Club of New York in New York, March 6. /Lucas Jackson Bank Group/International Monetary Fund 2019 annual meetings.

0.6% in August. The Labor Reserve Board Governor Michelle LIVECHAT- BREXIT CHAT Department is expected to show initial Bowman are likely to deliver welcome University of Cambridge Professor of claims for state unemployment remarks before the event, "FedListens: European Law Kenneth Armstrong, benefits rose to 215,000 in the week Monetary Policy's Impact on Workers writer of the blog brexittime.com, ended Oct.12 from 210,000 the and Their Communities," in Chicago. explains the latest developments and previous week. Separately, Federal Reserve Bank of the outlook for the future of UK-EU New York President John Williams is relations. (0430 ET/0830 GMT) To join Federal Reserve Bank of Chicago likely to make keynote remarks and the conversation, click here President Charles Evans and Federal participate in a moderated discussion

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Market Monitor

Wall Street lost ground as weak U.S. economic data and simmering geopolitical tensions spooked buyers away from the equities market, despite a string of generally positive third- quarter earnings reports. "The retail sales number has surprised people," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. "It's bringing up ideas that the economy might be slowing down." shares fell 0.82%. Bank of America shares rose 1.51%. General Motors shares were up 1.05%. The Dow Jones Industrial Average fell 0.07%, to 27,006.59, the S&P 500 lost 0.19%, to 2,990.02 and the Nasdaq Composite dropped 0.3%, to 8,124.18.

Treasury yields fell after data showed that U.S. retail sales fell for the first A file photo of traders working on the floor at the , October 9. REUTERS/Brendan McDermid time in seven months in September, adding to concerns that the U.S. economy is slowing. “The retail sales Oil rose, gaining support due to signs between the United States and China figures were pretty disappointing that OPEC and allied producers will and as investors awaited a key Brexit across the board,” said Benjamin continue to curb supplies in December, summit, but bullion's gains were Jeffery, a rates strategist at BMO a weaker U.S. dollar and as traders overshadowed by deficit-hit palladium Capital Markets in New York. The two- covered short positions ahead of an as it again set a record. "A lot of people year notes were up 2/32 to yield industry report on U.S. crude think this (U.S. legislation on Hong 1.59%. Benchmark 10-year notes inventories. The Organization of the Kong) is going to hinder the were up 6/32 to yield 1.75%. Petroleum Exporting Countries and its negotiations with the tariffs (between allies meet on Dec. 5-6 in Vienna to U.S. and China), so again, when the The dollar fell as dismal U.S. retail review output policy. Market tariffs are questionable, people run to sales data painted a gloomy picture of participants believe the group known gold," said Michael Matousek, head the economy and supported the case as OPEC+ could decide to extend trader at U.S. Global Investors. Spot for further interest rate cuts by the production cuts "and wait until world gold rose 0.58% to $1,489.57 per Federal Reserve. "The U.S. economy demand catches up with the supply ounce. U.S. gold futures were up is indeed revealing further situation," said Andy Lipow, president 0.67% to $1,493.40 per ounce. weaknesses, justifying another rate cut of Lipow Oil Associates in Houston. Palladium rose 2.10% to $1,767.91 an by the Fed," said Marc-André Fongern, Brent crude rose 1.02% to $59.34 a ounce, after hitting a record high of a strategist at MAF Global Forex in barrel. U.S. crude gained 0.93% to $1,779.23 earlier. Frankfurt. The dollar index was down $53.30 per barrel. 0.29% at 98. Against the Japanese yen, the greenback fell 0.06% to Gold rose on concerns that 108.77 yen. The British pound was up Washington's stance on 0.28% at $1.28. could hamper trade negotiations

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Top News

UAW, GM leaders have a deal to end headed by New York. The U.S. Justice 3%. The bank's equity trading business strike, now workers will decide Department approved the deal in July. outperformed its peers with a 13% General Motors and the United Auto jump. Net interest income also came in Workers union reached a tentative deal Bank of America beats profit higher at $12.34 billion and accounted for a new four-year labor deal, moving estimates on surge in advisory, for more than half of its total revenue. closer to ending a costly month-long lending Net income applicable to common strike that shut down GM's most Bank of America beat Wall Street shareholders fell 21% to $5.27 billion, profitable factories in a test of wills over estimates for quarterly profit as it or 56 cents per share, hit by a $2 billion the future of U.S. auto industry jobs. earned more in advisory fees and its impairment charge. Neither the UAW nor GM released loan book expanded, easing concerns details of the deal, which is subject to that lower interest rates would crimp U.S. chipmaker Broadcom told to ratification by UAW members. A new growth at the second-largest U.S. stop exclusivity deals till EU probe contract is expected to include bank. "In a moderately growing ends commitments by the automaker to economy, we focused on driving those Broadcom has been ordered to halt invest billions in U.S. vehicle factories things that are controllable," Chief exclusivity deals with six TV and to build new generations of electric Executive Brian Moynihan said. modem makers for up to three years vehicles, as well as U.S. electric "Across nearly every line of business, while EU antitrust enforcers investigate vehicle battery plants. Union leaders we were seeing strong customer whether these agreements are aimed worry that a shift to electric vehicles activity." On a conference call with at thwarting rivals. The move by could cost thousands of jobs at engine analysts, BofA's top executives warned European Competition Commissioner and transmission factories. Analysts about challenges from lower interest Margrethe Vestager suggests she may have estimated the strike cost GM rates and expectations of further cuts, be more willing to take temporary but more than $2 billion in lost production, but remained confident about meeting rapid action against tech giants though some of that could be made up its earlier forecast of 1% growth in full- deemed to be abusing their dominance through overtime work. The strike year net interest income. Revenue from rather than wait for investigations to be halted production of GM's large pickup investment banking fees jumped 40%, finalised. "It doesn't necessarily say trucks and sport utility vehicles - key while consumer banking revenue rose drivers of the company's global profit.

FCC approves merger of T-Mobile, Sprint on vote split on party lines - sources T-Mobile US's proposed $26.5 billion tie-up with Sprint won formal approval from the Federal Communications Commission in a vote split along party lines, two sources told Reuters. Chairman Ajit Pai and two Republican commissioners voted to approve the deal while two Democratic commissioners voted against it, the sources said. The text of the approval order is not expected to be released until later in the month. The deal to combine the third and fourth largest U.S. wireless carriers, which has been fighting for government approval since April 2018, still faces a lawsuit brought by a group of state attorneys general, A smartphones with Sprint logo are seen in front of a screen projection of T-mobile logo, in this picture illustration taken April 30, 2018. REUTERS/Dado Ruvic

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that now we have all cases lined up said. The two ride-hailing companies earnings and a stronger dollar. The where interim measures will be used had been asked to appear as part of a bank, which gets bulk of its revenue but it means that the tool is on the House Transportation and from managing money of clients such table," Vestager told a news Infrastructure Committee inquiry on as big banks and hedge funds, said net conference. "And if we find cases that safety and labor practices as interest revenue fell 18% to $730 live up to the two things that have to be lawmakers seek to prepare legislation million, hurt in part by a lease-related fulfilled at the same time, yes, we will that will impact the industry. "Their impairment of $70 million, higher indeed use interim measures more failure to appear at this hearing is a interest-bearing deposit and funding often," she said. This is the first such telling sign that they would rather suffer costs. On a per share basis, net order in 18 years. Broadcom said it a public lashing than answer questions income rose to $1.07 from $1.06, would comply with the order but would on the record about their operations," reflecting buybacks that have lowered launch an appeal in the European the head of the panel, U.S. the number of shares. courts, disputing the commission's Representative Peter DeFazio, a assessment of provisions in its Democrat, said in his prepared executive confident Libra contracts. remarks. "Perhaps they don’t want to will win enough financial backers talk about what their model is doing to Facebook, whose digital currency Boeing CEO says 'fully supportive' drive down wages and turn our project Libra has been abandoned by of board's move to split jobs -memo transportation workforce from a skilled, several high-profile partners including Boeing Chief Executive Dennis trained pool of workers earning living PayPal, Visa and Mastercard, still Muilenburg told employees he was wages to another casualty of the gig expects to get 100 banks and financial "fully supportive" of the board's economy," DeFazio said. firms on board once it addresses decision to split his chairman and CEO regulatory concerns, the head of the roles, allowing him to focus on running Abbott revenue misses as heart project said. "It will take time for us to the world's largest planemaker, devices eclipse diabetes gains address all of the regulatory concerns according to a memo seen by Reuters. Abbott Laboratories fell just short of that were raised and it's our duty and Muilenburg said the "division of labor" Wall Street estimates for quarterly our responsibility to come with answers was the latest action taken by the revenue, as weakness in the medical to all of these questions," head of Libra board and senior company leaders to device maker's cardiovascular David Marcus told a panel at the "strengthen Boeing's governance and business overshadowed strong International Monetery Fund (IMF) safety management processes" as it performance in its fast-growing conference in Washington. "I think struggles to get its fastest-selling 737 diabetes care unit. A 63% jump in sales once we've done this then I think we'll MAX jetliner back into the air following of FreeStyle Libre continuous glucose see more banks and traditional deadly crashes. "I'm accountable to monitor powered the diabetes unit's financial services firms join the effort," you, our customers, the flying public better-than-expected revenue of $665 Marcus said, adding it was harder for and all of our stakeholders for million. The cardiovascular business, large, regulated financial firms to "take delivering on this - and each of us the company's biggest that houses the an active part in this fight right now, carries our share of the responsibility," MitraClip, posted sales of $2.40 billion, given the climate and the pressure." Muilenburg said in the memo sent after below estimates of $2.44 billion, the board's decision was announced according to two analysts polled by UK watchdog opens formal probe of on Friday. Lead Director David . Abbott narrowed its 2019 Amazon Deliveroo deal Calhoun, a senior managing director at adjusted earnings per share forecast to Britain's competition regulator said it Blackstone Group, will take over as a range of $3.23 to $3.25, from a prior had launched a formal investigation non-executive chairman, Boeing said. It expectation of $3.21 to $3.27. into Amazon.com's investment in food added that the board had "full delivery company Deliveroo, setting a confidence" in Muilenburg, who will BNY Mellon beats profit estimates Dec. 11 deadline for a decision on the retain the CEO and president titles and on cost controls first phase of its probe. The remain on the board. Bank of New York Mellon reported a Competition and Markets Authority better-than-expected quarterly profit, as (CMA) said it was looking into whether Ride-hailing companies Uber, Lyft the world's largest custodian bank cut Amazon's investment in May, when it won't testify before Congress costs to counter weakness in its led a $575 million fundraising, could Uber and Lyft declined to appear at a investment management business and result in a "substantial lessening of U.S. House of Representatives hearing lower interest rates. Fee revenue fell competition" within the United on issues relating to the ride-hailing 1%, hurt by outflows since the third Kingdom. industry, a congressional committee quarter of last year, lower performance

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North Korean leader Kim Jong Un rides a horse during snowfall in Mount Paektu in this image released by North Korea's Korean Central (KCNA) on October 16. KCNA via REUTERS

Insight and Analysis

Fund managers waiting out high- Ripe for a fall: debt U.S. economy expands but trade profile unicorn IPOs after string of rush stokes bond market fears tensions weigh, Fed survey shows flops A growing number of private equity The U.S. economy expanded at a slight A deep disconnect between private firms are taking advantage of Europe's to modest pace in September and early market valuations of companies and buoyant bond market to extract money October but many firms are more the prices their shares fetch on the from companies they hold by loading downbeat about the months ahead, a open market is pushing more mutual them with debt, prompting some Federal Reserve report said, the latest fund managers to the sidelines during investors to warn the fixed income rally sign that the impact of U.S. trade high profile IPOs, anticipating the newly is nearing its peak. Private equity- policies continues to cloud the listed stocks will inevitably fall. The war backed companies have issued bonds country's economic outlook. The study, over what a company is worth comes backing "dividend recapitalisations" in collated from the central bank's as Silicon Valley darlings exit the world recent weeks. Britain's Pinewood discussions with business contacts, of venture capital, where investors are Studios, owned by Aermont Capital, also said the pace of price increases focused on a company's growth and and Spanish gaming company Cirsa, remained modest. "Business contacts potential, and enter the public markets, owned by Blackstone, both issued debt mostly expect the economic expansion where fund managers and analysts put to undertake dividend recaps in to continue; however, many lowered a premium on meeting each quarter's September, raising 500 million pounds their outlooks for growth in the coming revenue and profit expectations. and 375 million euros respectively. six to 12 months," the Fed said.

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CANADA

Market Monitor COMING UP Statistics Canada is likely to show Canada's main stock index ticked factory sales rose 0.6% in August higher, supported by a jump in shares after a 1.3% loss the previous month. of fashion retailer Aritzia following higher quarterly revenue and gains in mining stocks.

TSE's S&P/TSX composite Price C$ chng % chng The 's S&P/ GAINERS TSX composite index was up 0.05%, REUTERS/Mark Blinch Aritzia Inc 18.75 2.59 16.03 at 16,427.18. First Majestic Silver Corp 13.13 1.00 8.24 The U.S. dollar rose 0.03% against its Interfor Corp 14.07 0.87 6.59 Aritzia Inc jumped 16.03% after the Canadian counterpart at C$1.3201. LOSERS Aphria Inc 6.41 -0.76 -10.60 company reported higher quarterly Inc 426.94 -29.97 -6.56 revenue. Turquoise Hill Resources Ltd 0.61 -0.03 -4.69

Top News

market analyst for Monex Europe and Monex Canada. "I think we can pretty much disregard a Bank of Canada rate cut for this year," he added. Statistics Canada said prices for goods rose 1.3% year-over-year in September while prices for services increased by 2.2%. Meanwhile, consumer prices for gasoline fell 10.0% year-over-year in September following a 10.2% decrease in August.

Canada's Co-op Refinery preparing A file photo of a woman browsing in the fruit section of a Loblaw supermarket in Collingwood, for possible strike action , July 28, 2017. REUTERS/Chris Helgren The 135,000 barrel per day Co-op Refinery Complex in Regina,

Canadian inflation holds steady at forecast an annual inflation rate of Saskatchewan, is preparing for 1.9% in September as gas prices fall 2.1%. The Bank of Canada has held its possible strike action after the local Canada's annual inflation rate overnight interest rate steady since workers union declared an impasse in unexpectedly held steady at 1.9% in October 2018, citing strong domestic negotiations over . Federated September, Statistics Canada said in economic data. The central bank's next Co-operatives Limited began its last major release of economic data rate decision is set for Oct. 30. "This is constructing a work camp on Tuesday before a national election, further perfect for the Bank of Canada, it to house temporary contract workers in reducing analysts' expectations the doesn't really show any need for them case of a strike, Gil Le Dressay, vice Bank of Canada will cut rates later this to change tack with their current president refinery operations, said. month. Analysts in a Reuters poll had stance," said Simon Harvey, a FX

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WEALTH NEWS

TRADE WAR Trump says likely won't sign China trade deal until he meets with Xi U.S. President Donald Trump said he likely would not sign any trade deal with China until he meets with Chinese President Xi Jinping at the upcoming APEC Forum in Chile.

ECONOMIC DATA Weak U.S. retail sales cast pall over slowing economy U.S. retail sales fell for the first time in seven months in September, suggesting that manufacturing-led weakness could be spreading to the broader economy, keeping the door open for the Federal Reserve to cut interest rates again later this month. Retail sales dropped 0.3% last month as households cut back spending on motor vehicles, building materials, hobbies and online purchases. Excluding automobiles, gasoline, building materials and food services, retail sales were unchanged last month after advancing by an unrevised 0.3% in August. Another report from the Commerce Department showing business inventories were unchanged in August. Click on the chart for the full-size image

U.S.-EU TRADE WOES Trump hopeful on trade talks with EU, hints at reprieve for some duties on Italian products U.S. President Donald Trump said Washington was in talks with "some new people" in Europe about trade issues and he hoped the discussions would be successful, as Italy's president urged Trump to avoid counterproductive tariffs.

EVANS SPEAKS Fed's Evans says central bank should be 'aggressive' to boost inflation in low rate world A low interest rate environment sets limits on what Federal Reserve can accomplish with monetary policy, making it important to "proactively" cut rates when risks appear to provide a buffer for the economy, Chicago Fed President Charles Evans said.

IMF ON GLOBAL ECONOMY U.S.-China trade tensions fuel downturn risks, spillover for emerging markets -IMF Trade tensions between the United States and China - the world's two largest economies - are a significant source of risk for the global economy, with "real spillover effects" for emerging markets, top IMF officials said.

FRESH RATING SYSTEM U.S. safety agency to jumpstart revamp of new car rating program The U.S. National Highway Traffic Safety Administration (NHTAS) said it is reviving a long-stalled effort to overhaul the five- star crash rating program for all new vehicles.

DENTAL SUPPLY RULING FTC gets mixed ruling from administrative judge in dental supply fight An administrative law judge at the Federal Trade Commission has ruled Benco Dental Supply and Patterson Companies violated antitrust law by refusing to compete for business of buying groups but dismissed a complaint against Henry Schein.

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KEY RESULTS

Company Name* Quarter ET Smart Estimates EPS Estimates** Year Ago Rev Estimates (mln)

BB&T Q3 BMO $1.02 $1.03 $1.01 $3,008.11 Dover Q3 07:00 $1.52 $1.51 $1.36 $1,804.01 E*TRADE Financial Q3 AMC $1.01 $1.01 $1.00 $742.96 Genuine Parts Co Q3 BMO $1.47 $1.47 $1.48 $5,032.41 Honeywell International Q3 BMO $2.01 $2.01 $2.03 $9,104.65 Intuitive Surgical Q3 AMC $2.99 $2.99 $2.83 $1,064.24 KeyCorp Q3 BMO $0.46 $0.46 $0.45 $1,644.60 M&T Bank Q3 BMO $3.59 $3.57 $3.53 $1,531.00 Morgan Stanley Q3 BMO $1.12 $1.11 $1.17 $9,599.71 People's United Financial Q3 AMC $0.33 $0.33 $0.33 $453.29 Philip Morris International Q3 BMO $1.36 $1.36 $1.44 $7,674.96 PPG Industries Q3 BMO $1.60 $1.61 $1.45 $3,890.96 Snap-On Q3 BMO $2.94 $2.94 $2.88 $909.60 SunTrust Banks Q3 BMO $1.40 $1.41 $1.42 $2,359.20 Textron Q3 BMO $0.85 $0.85 $0.61 $3,318.75 Union Pacific Q3 BMO $2.29 $2.30 $2.15 $5,660.15

*Includes companies on S&P 500 index. **Estimates may be updated or revised; release times based on company guidance or past practice.

I/B/E/S EPS and revenue estimates, and StarMine Smart Estimates, provided by Refinitiv.

The Day Ahead - North America is compiled by Pathikrit Bandyopadhyay and Swathi Nair in Bengaluru.

For questions or comments about this report, email us at: [email protected].

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