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GBP Price May Slip Further as Weak UK Retail Sales Compound Brexit Woes

By Martin Essex

UK retail sales growth fell to 3.0% year/year in September from an upwardly revised 3.4% in August but will likely firm in the coming months, boosting the UK economy overall. News earlier this week that UK average weekly earnings growth climbed by 2.7% year/year in August, a higher figure than both the previous 2.6% and the expected 2.6%, will likely ensure that consumer spending picks up.

That 2.7% growth in earnings is higher than the 2.4% September inflation rate, meaning wages are now expanding faster than inflation and this rise in real earnings should be positive for GBP.

However, the latest Brexit talks between the UK and the EU made little progress, with the only development a comment from UK Prime Minister Theresa May that London is willing to discuss an extension of the transition period after the UK leaves the EU, although she added that she does not plan to use it. May added that she expects this transition period to conclude at the end of 2020, well after the March 29, 2019 date when the UK will cease officially to be an EU member.


Morgan Stanley is bullish on Amazon and thinks earnings will top Wall Street estimates

By Fred Imbert

Morgan Stanley analyst Brian Nowak reaffirmed his bullish stance on Amazon, noting advancements by the internet retailing juggernaut in robotics will offset higher wage costs down the road. Nowak also said Amazon will report better-than-expected earnings next week.

“In all, we estimate the wage increases will increase operating expenses by ~$2.75bn (~2.5%) in FY:19, assuming 23% y/y overall headcount growth in 2019 and ~20% y/y growth in affected employees,” Nowak said in a note to clients Monday.


Amazon, among Wall Street analysts’ favorite stocks to buy on this market dip

By Harriet Lefton

With the fourth quarter shaping up to be considerably choppier than many expected, it’s time to look at Wall Street and see which stocks the experts are betting on as solid picks amid the selloff.

The Dow Jones Industrial Average and S&P 500 fell more than 4 percent last week despite strong gains on Friday. The Nasdaq dropped nearly 3.75 percent for the week.

E-commerce giant Amazon has slipped recently. The shares are down 8 percent in the last month, but the fundamental outlook remains as strong as ever.

Stifel Nicolaus analyst Scott Devitt (Track Record & Ratings) is now out with the stock’s highest price target, at $2,525. That is 38 percent above from current levels. Devitt also added the stock to the firm’s elite Select List, bumping out Alibaba in the process.

As Devitt noted, Amazon is a leader in two large and rapidly growing markets, e-commerce and cloud services. Moreover, its developing ad business is well-positioned to deliver strong revenue growth over the intermediate to long term.


Fed Minutes: FOMC Uncertain About Economy But Steadfast On Rate Hikes

By Darrell Delamaide

The minutes of the late-September, Federal Open Market Committee (FOMC) meeting, released Wednesday after a three-week lag, showed Federal Reserve policymakers in the throes of uncertainty about the US’s economic outlook amid a robust economy, growing labor shortages and trade tensions.

What was not uncertain in the minutes is that the Fed will continue on its path of gradual rate hikes with one more this year and perhaps three in 2019, as the central bank hunts for that elusive neutral rate that neither stimulates nor restricts growth.

The dot-plot graph for interest-rate expectations shows the overnight federal funds rate going into the 3% and above territory in 2019 and 2020, compared to 3% and below for longer-run forecasts.


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