Watch Microsoft tonight; Texas Instrument outlook is denting semiconductor sentiment Watch Microsoft tonight; Texas Instrument outlook is denting semiconductor sentiment Watch Microsoft tonight; Texas Instrument outlook is denting semiconductor sentiment

Watch Microsoft tonight; Texas Instrument outlook is denting semiconductor sentiment

Equities 5 minutes to read
Peter Garnry

Head of Equity Strategy

Summary:  In today's equity update we talk about Texas Instrument's earnings release last night and how its outlook for Q4 has dented sentiment in global equities. We also look at French business surveys for October and talk about whether global equity markets are actually in some kind of a stealth bear market. Finally we touch on earnings expected today that can move the market.

Earnings releases are published at a racing speed these days and often it’s not easy to gauge which single release gets the market’s attention. Last night’s outlook from Texas Instrument (TXN:xnas) was a massive disappointment for those looking for early signs of a rebound in the semiconductor industry. Texas Instrument guides Q4 revenue in the range $3.07-$3.33bn against analysts estimate of $3.59bn saying economic activity is weakening and trade tensions are holding back investments from customer. The two biggest decliners among their customer segments are carmakers and communication equipment makers. Texas Instrument is saying they will cut production against this weak environment which is a sign that layoffs could also be on the table. European equities are down 0.4% with semiconductors leading the declines down 2%.

Source: Bloomberg

On the macro front French business surveys for October shows the worst confidence in the manufacturing sector since Q1 2015 after being more stable than many other countries in Europe this year. It shows that the downside dynamics in the economy are spreading not turning around. Eurozone consumer confidence numbers (advance) for October are out at 14:00 GMT and is expected to decline a bit from the September reading. As with the US consumer, the European consumer is still quite confident given the clear signs of recession in the manufacturing sector which is most likely due to robust employment as the economic slowdown has still not started widespread layoffs among companies.

Source: Bloomberg

As the frequent reader of our equity updates knows we view the equity market with skeptical eyes as the levels do not fit the overall picture of US-China trade war, 20-month straight economic slowdown, recession in Germany and Sweden, and likely imminent negative profit growth. Wall Street Journal had a great article yesterday questioning whether global equities could be in a stealth bear market. Many equity indices have still not recouped the highs from January 2018 so S&P 500 flirting with all-time highs gives the indication of a strong market, but weakness is evident everywhere. In our Market Call podcast this morning we also discussed the fact that US leveraged loans are not bid indicating risk-off in the far corners of risky assets.

Source: Wall Street Journal

Otherwise all eyes today are on Caterpillar (CAT:xnys) reporting Q3 earnings at 10:30 GMT where analysts are expecting the first negative revenue decline y/y since Q4 2016. Caterpillar is also always an interesting company to follow as its large exposure to Asia Pacific in the construction sector makes it a could indicator on economic activity.

Boeing (BA:xnys) is also reporting Q3 earnings before the US market open, but the time is unspecified, and this is a crucial release for the aircraft maker still embattled in a scandal around its 737 Max plane which a ruling in Indonesia overnight saying that it was Boeing’s faulty 737 Max design that was guilty in the Lion Air Flight 610 crash in October 2018. Any weak guidance will pose a significant downside risk for investors as valuation multiples are still rich given the issues around the 737 Max plane and the fact that revenue growth was -35% y/y in Q2 and expected to be -22% y/y in Q3. Yesterday, European aviation regulators also said that they will not necessarily follow an approval schedule from the US aviation regulator FAA which means that a global return to the skies for the 737 Max could extend well into 2020.

The most important earnings release today is from Microsoft (MSFT:xnas) reporting FY20 Q1 earnings tonight after the close with expectations looking for 11% revenue growth and 9% EPS growth which we believe should be achievable. Microsoft is the biggest component in the S&P 500 Index with a 4.2% weight. Shares are valued at the highest valuation multiple since 2004 so any miss against estimates would most likely be punished by investors and could dent overall sentiment in S&P 500.


The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.