Daily Agenda: Cloud-based Earnings Drive Tech Giants

Earnings season took a turn for the positive in U.S. stock markets as three technology bellwethers announced stronger-than-expected results. Redmond, Washington-based Microsoft Corp., Seattle-based Amazon.com and Palo Alto, California’s Alphabet (Google’s parent) each reported strong sales for cloud-based products for the three months ending in September. Adjusted profits per share came in at $0.67 for Microsoft versus consensus estimates of less than $0.60 on strong demand for Internet-based products. In a sign of the times, the once dominant PC division of Microsoft realized a nearly 20 percent sales decline versus the same quarter last year. Alphabet announced a $5.1 billion buyback to capitalize on a cash balance that now exceeds $72 billion, after adjusted revenues for the recent quarter grew at a pace of 15 percent year-over-year. Meanwhile Amazon.com recorded a 78 percent gain in its cloud-based Web services unit that helped propel the firm to a $0.17 per share profit versus a loss of $0.95 during the same quarter in 2014. The strong showing by the big three of U.S. tech combined with dovish rhetoric from the European Central Bank contributed to a feel-good rally for most developed world indexes on Friday morning.

Chinese investment bank IPO back on track.Local media sources today reported that China International Capital Corp., a dominant mainland full-service investment bank, will place a targeted $900 million in a Hong Kong initial public offering after the sudden selloff in equity markets scuttled proposals for a float earlier in the year. More than half of the IPO shares will reportedly be placed with a consortium of institutions that includes Newark, New Jersey-based Prudential Financial.

More European yields fall below zero.Comments by European Central Bank President Mario Draghi at the conclusion of the central bank’s monthly policy meeting in Malta sent sovereign bonds higher, with yields for German debt dipping to levels below zero out the curve to a six-year duration while Spain and Italy’s two-year Treasury yields contracted to negative territory as well. In his speech Draghi promised to deploy new stimulus measures before year-end if deflationary pressures continued to drag on the common-currency zone’s economy.

Mixed PMI data in Europe.德国的Markit采购经理指数数据在10月份揭示了大力发散，制造基准跌至51.6以来春季最慢的表现，而服务部门指数攀升至54.5。欧元区综合指数总计比54的预测更好，但更柔软的前锋指标在数据上施加阴影。

Regulators scrutinize dark pools.基于匿名消息来源的媒体报道表明，所谓的“黑暗池”贸易设施的两个运营商接近与监管机构的定居点。瑞士银行信贷瑞士集团和基于伦敦的巴克莱可以支付高达1.5亿美元的合并罚款，以解决他们经营的私人交易场所为某些客户提供的不公平优势。

Portfolio Perspective: Was that Normal?—Bob Savage, CCTrack Solutions

昨日欧洲央行诱发风险反弹,继续s today has become “normal” for many investors. This is the moral hazard of central bankers as they provide an implicit put onto equity markets and by correlation FX and commodities — all by playing with the bond market and expectations about rates. The markets in Europe now price in a negative rate — just one of the tools that no doubt was discussed by the ECB yesterday should they need a new bazooka in December. Most analysts don’t think this happens but the market prices it anyway — and that is the trouble.

Robert Savage is the chief executive officer of CCTrack Solutions in New York.