TradeTheNews.com Weekly Market Update: Holiday week melt up continues
12/29/2023 4:06:35 PM
The Dow and S&P touched fresh all-time highs, while the S&P traded within 0.5% of a new high during the final week of 2023. The driving force for markets remained the premise that central banks will leave rates on hold or take them lower in 2024. M&A continued to percolate, particularly in the pharmaceutical industry which hopefully portends well for increased capital markets activity in 2024. Economic data led by the Richmond Fed data was decidedly soft, underscoring the underlying bid in US Treasury markets while also helping push oil prices lower. The S&P extended its win streak to nine weeks in a row, gaining 0.3% for the week and 24% on the year, while the DJIA rose 0.8% for the week and the Nasdaq added 0.1%.
The equity market meltup continued through most of the week in the absence of much corporate news, though M&A among drug developers continued apace. Bristol Myers Squibb announced its second major acquisition in two weeks, agreeing to pay $4.1B in cash for radiopharmaceutical therapy developer Rayzebio. Gracell Biotechnology, which specializes in CAR-T cell therapies, announced it would be acquired by AstraZeneca for $1.2B in cash.
WEEKEND
(UR) Russia Pres Putin has reportedly again been privately signaling that he is open to a ceasefire in Ukraine since Sept 2023, as long as Russia can declare victory; Putin said to have signaled perfect timing would be before Mar 2024 elections in Russia - NYT
MON 2/25
AAPL Reportedly asked some of its supply chain partners in Taiwan and South Korea to help accelerate the development of its first foldable iPhone model; May launch as soon as end-2024 or during 2025 - Taiwanese press
005930.KR Said to postpone Taylor (Texas) fab mass production from H2 2024 until 2025 [reason not initially disclosed, but TSMC also postponed production at its US fab in Arizona to 2025] - press
WAB Reportedly building Small Nuclear Reactor named 'eVinci' for Saskatchewan Govt in Canada that can reportedly run for eight years or more without water - financial press
TUES 2/26
GRCL To be acquired by AstraZeneca in ~$1.2B deal; Gracell shareholders to receive $2.00/shr (equivalent to $10.00/ADS) in cash at closing, plus a non-tradable CVR for up to $0.30/shr
(IL) Hamas and the allied Islamic Jihad said to have rejected an Egyptian proposal for Gaza's govt overhaul in in return for a permanent ceasefire; Hamas wants ceasefire first - Politico
8267.JP Aims for a 5% to 10% drop in total truck use via improved load rates; Also hopes to shave 5% to 10% off driving distance using AI - Nikkei
(IR) IAEA report: Iran from June to Nov tripled rate at which it is producing uranium enriched to 60% purity to ~9kg/month, the rate just below the level needed for nuclear weapons and the level it reached before slowdown - press
RYZB To be acquired by Bristol Myers Squibb for $62.50/shr all-cash in ~$4.1B deal; To be dilutive to BMY’s non-GAAP diluted EPS by ~$0.13 in 2024
MDGS Launches pilot of a wireless charging solution for EV charging in automated parking systems in Israel; Notes the system will be able to charge all electric vehicles at efficiencies of >93%
Mastercard SpendingPulse: Holiday season US retail sales (not adj for inflation and ex auto) +3.1% y/y [**Note: on Sept 22nd, expected US holiday sales from Nov 1st to Dec 24th to rise 3.7% y/y]; Spending online is increasing at a faster pace than in-store
(US) US Trade Representative announces the further extension through May 31st, 2024 of the COVID-related tariff exemptions in the China Section 301 investigation
GBTC Appoints Mark Shifke Chairman; Effective January 1st
(US) Dec Philadelphia Fed Non-Manufacturing Regional Index: +6.3 v -11.0 prior (highest since May 2022)
(US) Dec Dallas Fed Manufacturing Activity: -9.3 v -19.9 prior
WED 2/27
(SE) Turkey’s parliamentary foreign affairs committee approves Sweden’s NATO membership bid
(JP) Bank of Japan (BOJ) announces Bond purchases for Jan-Mar 2024: Set a lower limit for purchases of some govt bonds in shorter maturities; Trims JGB buying frequencies in long-term maturities
HLAG.DE Considers current situation with Red Sea and Suez Canal security still too dangerous; Will continue to reroute ships via the Cape of Good Hope in South Africa
(CN) China State Planner Head: China will push changes to fundamentally boost household consumption - 14th five-year plan speech
(TR) Turkey Pres Erdogan: Israel PM Netanyahu is no different than Hitler
MAERSKB.DK Said to have scheduled several dozen container vessels to travel via the Suez Canal and the Red Sea in the next several weeks - press
WMB Announces $1.95B acquisition of Strategic Gulf Coast Natural Gas Storage portfolio with direct access to LNG export facilities and interstate pipelines
(US) DEC RICHMOND FED MANUFACTURING INDEX: -11 V -3E; New Orders -14
(IS) Israel Defense Min Gantz: The situation on Israel's northern border 'must change' and the time for diplomacy is running out
(US) TREASURY $58B 5-YEAR NOTE AUCTION DRAWS 3.801% V 4.420% PRIOR, BTC 2.50 V 2.46 PRIOR AND 2.52 OVER THE LAST 12
(US) US White House: To provide final package of up to $250M in additional assistance to Ukraine as current funding runs out
THRS 2/28
(RU) Russia Pres Putin during recent meeting in Mar 2023 said to have told China Pres Xi that Russia's fighting in Ukraine will take 'at least five more years' so that China 'hedged its bets' - Nikkei
(CN) China Defense Ministry: Taiwan govt deliberately hyping up so-called China army PLA threat for their selfish gains; China is aware of moves from Taiwan military, will take all necessary measures to safeguard national sovereignty and territorial integrity
ZK Officially launches ZEEKR 007 with 800V platform featuring the debut of ZEEKR’s new lithium iron phosphate (LFP) cells and battery packs, capable of replenishing 500km (311 miles) of range in 15 min on a DC fast charger
About half of the container ship fleet that regularly transits the Red Sea and Suez Canal is currently avoiding these routes - press
(BR) Brazil mid-Dec IBGE Inflation IPCA-15 M/M: 0.4% v 0.3%e; Y/Y: 4.7% v 4.6%e
Redfin: U.S. pending home sales dropped 4% y/y during the four weeks ending Dec 24, the smallest decline since Mar 2022; New listings +12.2% y/y (biggest uptick since June 2021)
(US) NOV PRELIMINARY WHOLESALE INVENTORIES M/M: -0.2% V -0.2%E
(US) Nevada reports Nov casino gaming Rev $1.37B, +12.6% y/y, Las Vegas strip Rev $821.0M, +22.6% y/y
BA US FAA reportedly closely monitoring inspections of Boeing 737 MAX planes to look for potential loose bolts in the rudder control system - press
(US) NOV PENDING HOME SALES M/M: 0.0% V 0.9%E; Y/Y: -5.1% V -6.6% PRIOR
(US) DOE CRUDE: -7.1M V -2.4ME; GASOLINE: -0.7M V +0.1ME; DISTILLATE: +0.7M V +0.7ME
(US) TREASURY'S $40B 7-YEAR NOTE AUCTION RESULTS: DRAWS 3.859% V 4.399% PRIOR, BID-TO-COVER RATIO: 2.50 V 2.44 PRIOR AND 2.54 OVER LAST 12 AUCTIONS
(US) Former Pres Trump has been disqualified from Maine Republican Primary Ballot for role in 2021 attack on US Capitol in ruling by Maine Sec of State Bellows, a Democrat; Trump's team will appeal [**Note: the second state in two weeks to disqualify Trump’s GOP candidacy]
FRI 2/29
(ES) SPAIN PRELIMINARY DEC CPI M/M: 0.0% V 0.2%E V -0.3% PRIOR; Y/Y: 3.1% V 3.2%E (lowest annual pace since Aug)
(RU) Russian govt spokesperson Peskov: In case of seizure of Russia assets, Kremlin analysed possible retaliatory steps in advance; There is a list of Western assets Russia could confiscate in retaliation
(CN) China appoints former Navy chief Dong Jun as its new Defense Min - press
(US) DEC CHICAGO PURCHASE MANAGER’S INDEX (PMI): 46.9 V 50.0E
(US) Weekly Baker Hughes Rig Count: 622 v 620 prior (+0.3% w/w)
TradeTheNews.com Weekly Market Update: Softening data bodes well for soft landing scenarios
9/1/2023 4:21:50 PM
The final week of August saw investors thankfully put a rough start to the month further into the rear view mirror. Trading volumes were some the lowest of the year which belied a week that offered a litany of key economic readings and developments, along with swath of influential tech and consumer related earnings reports. Animal spirits initially served as a tailwind when Monday saw several modest M&A announcements. None was more important than the news the FTC opened the door for the $28B Horizon Therapeutics/Amgen deal to be able to close as early as this fall. China stimulus headlines continued to serve as a buoy to underlying sentiment, culminating in confirmed changes to China’s mortgage market, and the PBOC’s 200 basis point cut to the forex reserve requirement ratio. The Yuan continued to creep up off of recent multi-month lows, while copper and crude prices remained on firmer footing.
Clearly the overarching narrative to trade this week was the softening economic data, and the implications for global central banks. Eurozone PMI figures remained well into contraction territory causing some ECB officials to dial back rhetoric, and along with that expectations they will raise rates in September. Importantly, Tuesday the US July JOLTS data sent both stock and bond prices sharply higher. The headline data fell to its lowest level in roughly 2-years, nearly 700K openings below estimates. It served as a precursor to Friday’s August US employment report. The unemployment and labor force participation rates both jumped more than expected, while wage growth decelerated. Payrolls remained robust and weekly hours ticked up, but regardless, the Fed is likely to cheer the signs of normalization seen filtering through labor market. The jobs readings were sandwiched around July PCE data which further supported the belief the Fed can look to hold rates here and see how their restrictive stance plays out before deciding if rates need to go any higher. Nevertheless risks remain for Fed officials, probably none more so than oil prices, which appear to breaking out to the upside. Saudi crude output continued to dwindle in August even as Aramco is said contemplating an historic $50B share offering. De-inverting along the US yield curve was prevalent throughout the week as traders’ focus moved away from whether the Fed will hike the funds rate again, towards betting on a soft landing and if and when they will start to consider cutting rates next year. For the week, the S&P gained 2.5%, the DJIA rose 1.4%, and the Nasdaq recouped 3.2%.
Corporate news this week continued to highlight the struggle to get a clear picture of what is happening in retail. Dollar General, a discount chain that usually fares well when consumers are strapped, reported a stinker of a quarter and cut its outlook, laying much of the blame on ‘shrink.’ Walgreens Boots cuts its fiscal year forecast as it announced its CEO will step down. Costco reported another month of lukewarm same store sales growth in the low single digits. Meanwhile, Best Buy beat earnings expectations handily and affirmed its forecast that tech product demand should bottom out this year and stabilize in 2024. High tech names were also a mixed bag. Salesforce reported a good EPS beat and raised guidance and Dell blew out estimates, sending its shares up more than 20% on Friday. Broadcom was a different case, providing mostly in-line results and guidance, and noting that it would not have made its numbers if not for strong AI-related spending from customers.
SUN 8/27
BP.UK CEO: BP needs rapid and 'just' energy transition; To invest up to 50% of its capital in energy transition by end of the decade - financial press
(CN) China Securities Regulator (CSRC): To slow pace of IPO's at the current stage; Exchanges to lower margin requirements - financial press
3333.HK Reports H1 FY23 (CNY) Attributable Net -33.0B v -64.2B y/y, Op -17.4B, Rev 128.2B v 89.3B y/y; Warns that ability to continue as a going concern still depends on (i) whether it can successfully complete the Proposed Offshore Debts Restructuring, (ii) whether it can successfully negotiate with the remaining lenders on extensions or deferrals
MON 8/28
(CN) China Foreign Ministry: From Aug 30th, inbound travelers to China will no longer need pre-departure antigen test for COVID
(US) US and China agree to launch 'Export Control Enforcement Exchange'; Both countries agree to communicate regularly - US press after US Commerce Sec Raimondo meeting with China Commerce Min Wan
1211.HK Reports H1 (CNY) Net 10.95B v 3.60B y/y, Rev 206.1B v 150.6B y/y
(US) AUG DALLAS FED MANUFACTURING ACTIVITY: -17.2 V -19E
(JP) Japan govt annual economic white paper: Notes Japan may be at an inflection point in its 25-year battle with deflation as price and wage rises show signs of broadening - press
7203.JP Confirms to halt all 14 plants in Japan on Tues night following systems failure; Does not believe it was a cyberattack
TUES 8/29
(CN) CHINA BIGGEST STATE-OWNED BANKS CONSIDER FURTHER DEPOSIT RATE CUTS FOR A THIRD TIME IN A YEAR IN ORDER TO BOOST GROWTH - PRESS
7203.JP Reportedly likely to gradually resume vehicle production at domestic factories in Japan from tomorrow, Aug 29th; Continues to investigate cause of malfunction - press
PDD Reports Q2 (CNY) 10.47* v 7.13e, Rev 52.3B v 31.4B y/y; Saw a positive shift in consumer sentiment, leading to a rise in demand across various product sectors
(US) White House announce first 10 prescription drugs selected for Medicare price negotiations as part of Inflation Reduction Act (as expected); New prices will be announced Sept 1, 2024 and go into effect Jan 1, 2026
(CN) US Commerce Sec Raimondo: China asked US to reduce export controls but US rejected it; Hope export control dialogue with China to boost compliance; Will wait and see if there is action from China - comments from China
MMM Confirms Combat Arms settlement; To contribute a total of $6.0B between 2023-2029, including $5.0B in cash and $1.0B in 3M common stock; Notes agreement is not an admission of liability
BBY Reports Q2 $1.22 v $1.06e, Rev $9.58B v $9.52Be; Continue to expect that this year will be the low point in tech demand after two years of sales declines, but consumer electronics industry should see stabilization in 2024
BBY Guides Q4 SSS -3% to slightly positive; Holiday shopping to return to near pre pandemic patterns; Comp sales -6% y/y first four weeks of Aug - conf call
(US) AUG CONSUMER CONFIDENCE: 106.1 V 116.0E
(US) JULY JOLTS JOB OPENINGS: 8.83M V 9.50ME (lowest since May 2021)
GBTC US federal appeals court rules SEC was wrong to reject Grayscale application for a spot bitcoin ETF
HPQ Reports Q3 $0.86 v $0.86e, Rev $13.2B v $13.4Be; Cuts FY guidance
(US) Weekly API Crude Oil Inventories: -11.5M v -2.4M prior
3382.JP Sogo & Seibu union to go on strike on Aug 31st (first such strike in Japan since 1950s) - Japanese press
WED 8/30
(ES) SPAIN AUG PRELIMINARY CPI M/M: 0.5% V 0.5%E; Y/Y: 2.6% V 2.5%E (2nd month above target and highest annual pace since May)
(UK) JULY MORTGAGE APPROVALS: 49.4K V 51.0KE
(CN) US Commerce Sec Raimondo: Did NOT get resolution of specific issues during China trip; Had productive, candid and constructive meetings in China; Raised the tough issues with Chinese govt; US policy not decoupling - comments from China
(US) NHC on Idalia: Now a major hurricane at Category 4; Still has a few hours left to intensify before it makes landfall near Wakulla/Jefferson County line in Florida; Expected to keep the system near hurricane strength for longer over southeastern Georgia and South Carolina
(US) NHC on Major Hurricane Idalia: Downgraded back from Category 4 to Category 3 ahead of landfall; After landfall, Idalia is forecast to turn toward the northeast and east-northeast, moving near or along the coasts of Georgia, South Carolina, and North Carolina late today and Thursday
000002.CN Reports H1 (CNY) Net 9.87B v 12.2B y/y, Rev 201B v 207B y/y
MCFT Reports Q4 $1.30 v $1.08e, Rev $166.6M v $162Me; Guides FY24 very weak citing significant uncertainty which is limiting retail demand visibility
(DE) GERMANY AUG PRELIMINARY CPI M/M: 0.3% V 0.3%E; Y/Y: 6.1% V 6.0%E
(US) Q2 PRELIMINARY GDP ANNUALIZED Q/Q: 2.1% V 2.4%E; PERSONAL CONSUMPTION: 1.7% V 1.8%E
(US) Q2 PRELIMINARY GDP PRICE INDEX: 2.0% V 2.2%E; CORE PCE Q/Q: 3.7% V 3.8%E
(US) Nevada reports July casino gaming Rev $1.32B, +6.7% y/y, Las Vegas strip Rev $773.4M, +8.0% y/y
(US) JULY PENDING HOME SALES M/M: 0.9% V -1.0%E; Y/Y: -13.8% V -15.7%E
(US) DOE CRUDE: -10.6M V -2ME; GASOLINE: -0.2M V -1.5ME; DISTILLATE: +1.2M V -0.5ME
2007.HK Reports H1 (CNY) Net -48.9B v +612M y/y, Rev 226.3B v 162.4B y/y; Declares no interim dividend; Will continue to actively adjust sales and pre-sale activities to respond to market changes and capture demand
CRM Reports Q2 $2.12 v $1.90e, Rev $8.60B v $8.52Be; Raises FY24 guidance
CRWD Reports Q2 $0.74 v $0.56e, Rev $732M v $726Me; Raises FY24 outlook
V Reports Aug US payment volume +7%, credit +6% y/y; Global processed transactions +10% y/y - filing
COST Reports Aug Total SSS +4.1% y/y (ex-gas and FX); US SSS +3.2% (ex-gas and FX) v +4.5% prior
THRS 8/31
UBSG.CH Reports Q2 Pretax $29.2B* v $2.62B y/y, Rev $9.54B v $8.92B y/y; Aim to achieve gross exit-rate cost saving >$10B by end-2026; Credit Suisse (Schweiz) AG to be fully integrated
(CN) China reportedly exploring ways to make its own AI memory chips despite US sanctions; May take some China firms up to four years to deliver its own high-bandwidth memory (HBM) chips - SCMP
AAL 99.47% of flight attendants at American Airlines voted to authorize union leaders to call for a possible strike if contracts talks fail
(DE) ECB’s Schnabel (Germany): Underlying price pressures remain stubbornly high; Cannot predict where peak rate is going to be; EU growth prospects are more dire than officials predicted in June
(CN) China Defense Ministry: Rumours that PLA Type 093 submarine had accident near Taiwan strait are completely false
(DE) GERMANY AUG NET UNEMPLOYMENT CHANGE: +18K V +10.0KE; UNEMPLOYMENT CLAIMS RATE: 5.7% V 5.7%E
(EU) EURO ZONE AUG ADVANCE CPI ESTIMATE Y/Y: 5.3% V 5.1%E; CPI CORE Y/Y: 5.3% V 5.3%E
(IT) ITALY AUG PRELIMINARY CPI M/M: 0.4% V 0.4%E; Y/Y: 5.5% V 5.4%E
(CN) China govt raises deduction in personal income tax collection - press
(AT) ECB’s Holzmann (Austria, hawk): Aug inflation is a conundrum for ECB; Another hike or two are possible
(IN) India Aug monsoon rains was the lowest amount in over a century, 36% below long-term average - India Meteorological Department (IMD)
GCO Reports Q2 -$2.79 v $0.59 y/y, Rev $523M v $535.2M y/y; Notes during Q3-to-date, sales trends for the Back-to-School season improved a little further
DG Reports Q2 $2.13 v $2.49e, Rev $9.80B v $9.94Be; Cuts FY23 outloook
(CN) CHINA PBOC CUTS RATES ON SOME EXISTING MORTGAGES, EFFECTIVE SEPT 25TH (as speculated)
(US) JULY PERSONAL INCOME: 0.2% V 0.3%E; PERSONAL SPENDING: 0.8% V 0.7%E
(US) JULY PCE DEFLATOR M/M: 0.2% V 0.2%E; Y/Y: 3.3% V 3.3%E
(US) INITIAL JOBLESS CLAIMS: 228K V 235KE; CONTINUING CLAIMS: 1.73M V 1.71ME (highest continuing claims since July 20th)
(US) AUG CHICAGO PURCHASE MANAGER’S INDEX (PMI): 48.7 V 44.2E
(RU) Russia Dep PM Novak: Russia and OPEC+ have agreed on further action and will announce new main parameters and further steps next week
(US) Atlanta Fed GDPNow: Cuts Q3 GDP forecast from 5.9% to 5.6%
(EU) ECB's de Guindos (Spain): Latest data from July and Aug point towards economic deceleration in Q3 and probably in Q4; Rate decision in Sept is still up for debate
(US) July Dallas Fed Trimmed Mean PCE (m/m) +2.4% v +2.6% prior
NDA.DE Identifies serious indications of shortfall in metals; believes it has been target of further criminal activity; Damages potentially in 3-digit million euro range; Will not achieve prior FY guidance
INTC CEO Gelsinger: Q3 is above mid-point of guidance (guided EPS $0.20 v $0.21e, Rev $12.9-13.9B v $13.5Be) - DB conf comments
UPS Seeks to reduce pilot headcount by offering voluntary separation for 'eligible' pilots amid drop in air freight volumes - press
OXM Reports Q2 $3.45 v $3.46e, Rev $420M v $428Me; Cuts FY23 outlook and guides Q3 weak noting recently seen consumers become a bit more cautious
DELL Reports Q2 $1.74 v $1.13e, Rev $22.9B v $20.8Be
DELL Raises FY24 EPS $6.10-6.50 v $5.56e (prior $5.25-5.75); Guides Q3 $1.35-1.55 v $1.36e, Rev $22.5-23.5B v $21.4Be; Encouraged with some of the signs we are seeing in the macro environment as we move into H2 - earnings call comments
AVGO Reports Q3 $10.54 v $10.42e, Rev $8.88B v $8.86Be
AVGO CEO: All of growth comes from AI-related spending; Without AI, chip unit would have been flat y/y; Believe will get approval for VMware deal by Oct 30th - conf call comments
(US) ILWU says union members voted 75% in favor of approving the new 6-year agreement for West Coast port workers
(US) UAW President Fain: We are far apart in talks; Filed unfair labor practice complaint against GM and Stellantis in the agreement talks, says the companies refuse to bargain in good faith; Did NOT file a complaint against Ford Motor, as the company responded to the UAW’s demands with a counterproposal he heavily criticized
F Said to have made UAW contract offer, said to include 'significant' pay increases; Offered a 9% wage increase through 2027 v the 46% wage hike being sought by the UAW union - press
(CN) CHINA AUG CAIXIN PMI MANUFACTURING: 51.0 V 49.0E (moves back into expansion, highest since Feb)
TSLA Tesla US cuts Model X prices by ~19% from ~$98.5K to ~$80.0K, now qualifies for US tax credit; Tesla China also cuts price of existing stocks of Model S and Model X by up to 21% following official introducing of new refreshed Tesla Model 3 - press
FRI 9/1
(HK) Macau Aug Casino Rev (MOP): 17.2B v 16.7B m/m; Y/Y: +686% v +678%e
(CN) Reportedly China’s Pres Xi is likely to skip the G20 Summit in India on Sept 9-10th - Indian press
(UK) AUG NATIONWIDE HOUSE PRICE INDEX M/M: -0.8% V -0.4%E; Y/Y: -5.3% V -4.9%E (weakest since July 2009)
(CN) CHINA REPORTEDLY SET TO TAKE MORE ACTION TO REVIVE PROPERTY SECTOR, INCLUDING LIFTING HOME-PURCHASING CURBS IMPOSED SINCE 2010 IN KEY CITIES - PRESS
(CH) SWISS AUG CPI M/M: 0.2% V 0.2%E; Y/Y: 1.6% V 1.5%E (3rd straight reading within SNB's target)
(EU) ECB’s Villeroy (France): Very close to peak rates; Options are open at next and upcoming rate meetings; After overall inflation peaked, underlying inflation has also peaked since April and appears to have begun its decline
(CH) Swiss Aug PMI Manufacturing: 39.9 v 40.5e (8th month of contraction, stays below pandemic lows for 2nd mont
(IT) ITALY AUG MANUFACTURING PMI: 45.4 V 45.7E (5th month of contraction but highest since May 2023)
(DE) GERMANY AUG FINAL MANUFACTURING PMI: 39.1 V 39.1E (confirms 14th straight contraction)
ABBN.CH CEO: China is not really developing as we hoped in the beginning of the year; ABB has been impacted by a softening in China’s property sector; It will be challenging for the rest of the year - CNBC
(SA) Reportedly Saudi crude oil exports dropped to 5.6Mbpd in Aug v 6.8Mbpd in June - press
WBA Sees FY23 adj EPS at or near the lower end of the guidance cut on June 27th ($4.00-4.05 v $4.00e); Rosalind Brewer to step down as CEO; Names Ginger Graham as Interim CEO; effective H1 2024
(HK) Hong Kong raises typhoon warning signal to 10 (maximum) for Super Typhoon Saola - press
(IN) India's 26 opposition parties partner to challenge PM Modi's Hindu nationalist party in May 2024 elections - press
(US) AUG UNEMPLOYMENT RATE: 3.8% V 3.5%E (highest since Feb 2022)
(US) AUG AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 4.3% V 4.3%E
(US) AUG FINAL S&P MANUFACTURING PMI: 47.9 V 47.0E
ARAMCO.SA Reportedly considers selling $50B in shares; Would be the largest in capital markets history
(US) Weekly Baker Hughes Rig Count: 631 v 632 prior (-0.2% w/w)
TradeTheNews.com Weekly Market Update: Soft landing optimism remains ahead of key central bank meetings next week
7/21/2023 4:41:35 PM
Trading opened this week with the disinflation narrative well entrenched, keeping hopes alive that the Fed will be able to successfully engineer the illusive soft landing with just one more rate hike. On Monday, Ford announced significant price cuts to the F-150 Lightning lineup, while July Empire manufacturing data saw its prices paid component fall to the lowest level since August of 2020. A significant number of earnings reports started to roll in, and for the most part bested expectations. Importantly, regional banks found a bid as managements described a challenging environment, but perhaps not as dire as many had expected coming out of the turmoil in late Q1. US retails sales data was mixed but offered little to suggest the US economy is heading towards a recession, echoing what was said on many earnings conference calls. Chinese data overall remained disappointing, keeping the specter of government stimulus front-and-center in many investors’ minds. UK inflation data came in well below expectations, sparking a bid for both the FTSE and GILTS, while terminal BOE rates expectations slipped lower.
Thursday saw US equity markets experiencing the first real turbulence in weeks. Much of it was laid at the feet of earnings from key global technology companies. Taiwan Semi’s numbers disappointed and the chip manufacturer was forced to lower expectations for the second time this year, citing the macroeconomic landscape, particularly in China. Shares of Netflix and Tesla sent the NASDAQ spiraling lower after what were generally viewed as strong quarterly results, but perhaps unable to surpass unreasonably high bars. US Treasury yields moved up after surprisingly large drop in weekly initial jobless claims and the US dollar continued a bounce off the recent lows. The Yen weakened on a BOJ report that said it will not tweak Yield Curve Control (YCC) at next week's policy meeting. Wheat futures trended higher as Russia declined to renew the Black Sea grain deal and ratcheted up tensions by suggesting that commercial vessels in the region could become valid military targets. For the week, the S&P gained 0.7%, the DJIA rose 2%, and the Nasdaq slipped 0.6%.
Corporate news remained focused on bank and high tech quarterly reports. Bank earnings maintained the trend of the larger institutions mostly doing well, while the regionals had a tougher time making their numbers in the post ‘turmoil’ quarter. Among the bigger firms, Goldman Sachs was a notable exception, missing its EPS line as investment banking deals dried up. Tesla beat earnings expectations on the back of its better than expected unit sales, but shares fell as the EV maker’s aggressive price cuts put a big dent in margins. Taiwan Semi cut its fiscal year guidance, citing weaker than expected demand for traditional servers (non-AI) as big tech firms focus on building their AI capacity. Taking advantage of the current AI hype, Microsoft announces a price increase for AI products, while Apple is said to be stepping up development of its large language model program ‘Ajax’. In a fresh sign that wage inflation is still a significant factor, the United Airlines pilots union reached an agreement that will see wages go up around 40% over the next few years. The deal was so rich that pilots at American Airlines demanded a renegotiation of their contract so that it would be competitive. In M&A news, the Microsoft/Activision deal inched closer to the goal line as the firms agreed to extend the closing date of the merger to give them time to woo US and UK regulators with new remedy proposals.
SAT 7/15
UAL Pilots union reaches agreement in principal, will receive up to 34.5-40.2% pay increases over next years; New labor contract deal estimated at ~$10B - press
SUN 7/16
(CN) CHINA CONDUCTS CNY103B IN 1-YEAR MEDIUM-TERM LENDING FACILITY (MLF) AT 2.65% V 2.65% PRIOR [CNY100B IN 1-YEAR MLF FUNDS ARE MATURING]
(CN) CHINA JUN RETAIL SALES Y/Y: 3.1% V 3.3%E
MON 7/17
TSM Reportedly may cut its FY23 Rev guidance to -10% y/y (prior low-to-mid-single digit decline y/y), citing weaker-than-expected demand for traditional servers (non-AI), high chip inventories and slow demand for non-Apple smartphones - Taiwanese press
(RU) RUSSIA GOVT SPOKESPERSON PESKOV: FOR NOW BLACK SEA GRAIN DEAL IS HALTED; TO RETURN IMMEDIATELY TO GRAIN DEAL ONCE RUSSIAN CONDITIONS ARE MET
(SA) SAUDI ENERGY MINISTRY: REITERATES TO EXTEND VOLUNTARY OIL PRODUCTION CUTS UNTIL END 2024 (in line with June 4th's announcement and Russia's pledge)
(TW) Taiwan’s ruling DPP party presidential candidate Lai plans to visit US as a part of his trip to Paraguay in Aug; China firmly opposes the visit - press
(US) JULY EMPIRE MANUFACTURING: +1.1 V -3.5E
3333.HK Reports delayed H1 FY22 (CNY) Net -48.8B* v +14.4B y/y, Rev 89.3B v 154.1B y/y (1st reported results since early 2021); shares to remain halted until further notice
(CN) US aims to propose China investments rules by end-August; Confirms the outbound investment curbs to be narrowly focused on AI, chips and quantum sectors - financial press
TUES 7/18
NOVN.CH Reports Q2 Core EPS $1.83 v $1.67e, Rev $13.6B v $13.2Be; Raises outlook; Initiates up to $15B share buyback to be completed by end-2025; Sandoz spinoff expected to occur in early Q4 2023
(UK) Kantar announces 12 week grocery market share and sales: UK grocery price inflation rose by 14.9% y/y in the four weeks to July 9th v 16.5% prior (4th consecutive fall)
EUR/USD Euro rises against US dollar for the 9th straight session (longest such streak since 2004)
(KR) South Korea Official Kim: Agreed with US to deploy nuclear-based assets in South Korea more regularly, including nuclear-armed submarine 'USS Kentucky' (first time since 1980s)
(EU) ECB’s Knot (hawk, Netherlands, FSB Chief): Reiterates need to hike in July; Hikes beyond July are possible but not guaranteed; Lot of data between now and Sept
BK Reports Q2 $1.38 adj v $1.22e, Rev $4.45B v $4.38Be
PNC Cuts FY23 outlook; Guides Q3 average loans 'down 1%' q/q, NII -4% to -3% q/q, Rev +1% q/q, Net charge-offs $200-250M v $194M q/q - earnings slides
BAC Reports Q2 $0.88 v $0.84e, Rev $25.2B v $25.0Be; Continue to see a healthy US economy that is growing at a slower pace; Notes highest H1 sales and trading revenue in over a decade
LMT Reports Q2 $6.73 v $6.43e, Rev $16.7B v $15.9Be; Raises FY23 guidance
SCHW Reports Q2 $0.75 v $0.72e, Rev $4.66B v $4.64Be; During June it observed a 'continued and substantial deceleration' in the daily pace of cash outflows v prior months
PLD Reports Q2 Core FFO $1.83 v $1.67e, Rev $2.45B v $1.66Be
(CA) CANADA JUN CPI M/M: 0.1% V 0.3%E; Y/Y: 2.8% V 3.0%E (annual pace back within BoC target range for 1st time in 26 months)
(US) JUN ADVANCE RETAIL SALES M/M: 0.2% V 0.5%E; RETAIL SALES (EX-AUTO) M/M: 0.2% V 0.3%E (3rd straight M/M increase)
(JP) Japan BOJ Gov Ueda: Reiterates stance that still some distance to sustainably achieve the 2% inflation target in Japan
(US) JULY NAHB HOUSING MARKET INDEX: 56 V 56E
MSFT Announces price increase for AI products, to charge businesses $30 per user per month for copilot
WCH.DE Cuts FY23 Rev €6.5-6.8B (prior: €7-7.5B), EBITDA €0.8-1.0B (prior: €1.1-1.4B); Expects weak demand to continue in H2 2023
WAL Reports Q2 $1.96 v $1.98e, Net Rev $669.3M v $659Me
AAL American Airlines pilots union says that the new United pilots' contract has put the American labor deal in jeopardy - press
RIO.AU Reports Q2 Pilbara iron ore shipments: 79.1Mt v 79.9Mt y/y; Pilbara iron ore production: 81.3Mt v 78.6Mt y/y
EL Provides information on cybersecurity incident; The incident has caused, and expected to continue to cause, disruption to parts of the Company’s business operations
WED 7/19
ASML.NL Reports Q2 Net €1.94B v €1.41B y/y, Rev €6.90B v €6.73Be; Raises FY23 outlook, guides Q3 Rev strong, but says customers are currently more cautious and shape of recovery still unclear
ASML.NL CEO: Upcoming US measures against China will Not have major impact on previous guidance - post earnings comments
(UK) JUN CPI M/M: 0.1% V 0.4%E; Y/Y: 7.9% V 8.2%E (slowest annual pace since Mar 2022 and smallest M/M rise since Jan 2023)
- CPI Core Y/Y: 6.9% v 7.1%e (moves off 31-yrs highs)
(EU) EURO ZONE JUN FINAL CPI Y/Y: 5.5% V 5.5%E; CPI CORE Y/Y: 5.5% V 5.4%E (confirms 1st acceleration in Core CPI pace in 3 months)
(US) Reportedly two US antitrust agencies DoJ and Federal Trade Commission proposed merger guidelines to signal a tougher stance against private equity and the technology sector, although no particular sector has been singled out - FT
USB Cuts FY23 Rev $28.0-29.0B v $28.7Be, Total Noninterest expense $17.0B (prior $28.5-30.5B, Total Noninterest expense $17.0-17.5B) - earnings slides
BKR Market softness in North America is expected to be more than offset by strength in international and offshore markets, particularly in the Middle East and Latin America - prepared remarks
GS Reports Q2 $3.08 v $3.25e, Rev $10.9B v $10.8Be
(US) JUN HOUSING STARTS: 1.434M V 1.480ME; BUILDING PERMITS: 1.440M V 1.500ME
ATVI *DISCLOSES UPDATE ON MICROSOFT DEAL; EXTEND DEADLINE TO CLOSE DEAL BY 3 MONTHS TO OCT 18TH; TERMINATION FEE TO INCREASE BY $500M ON AUG 29TH AND BY $1B ON SEPT 15TH TO $4.5B - FILING
ELV CFO: Expect commercial membership growth to re-accelerate in back-half of 2023 and into 2024; affirms FY23 MLR costs - earnings call
GS CEO: Equity capital markets and M&A dialog are picking up; Citing meaningful headwinds to business, we are going into a period of lower results - earnings call comments
(US) DOE CRUDE: -0.7M V -2ME; GASOLINE: -1.1M V -1ME; DISTILLATE: +0.1M V +0.5ME
(RU) Russia Defense Ministry: Will consider all ships traveling to Ukrainian ports on the Black Sea as potential carriers of military cargo, effective July 20th - Russian press
AAL Union Memo: CEO acknowledged that significant improvements must be made to the tentative contract agreement
(US) TREASURY $12B 20-YEAR BOND REOPENING DRAWS 4.036% v 4.010% prior, BID-TO-COVER 2.68 v 2.87 PRIOR AND 2.64 OVER LAST 8 REOPENINGS
TSLA Reports Q2 $0.91 v $0.83e, Rev $24.9B v $24.9Be; Affirms FY23 guidance; Margins decline y/y
ZION Reports Q2 $1.11 v $1.13e, Rev $790M v $757Me; Guides FY24 NII "stable to up slighly"
AA Reports Q2 adj -$0.35 v -$0.59e, Rev $2.68B v $2.63Be
DFS Reports Q2 $3.54 v $3.69e, Rev $3.75B v $3.87Be; Pauses share repurchases do to internal review of card product misclassification from mid-2007
TSLA CEO: Q3 production will decrease slightly; Plan to increase spending on AI; We are taking Nvidia hardware as fast as they can deliver it - earnings call comments
BHP.AU Reports Q4 Waio Iron Ore Production: 72.7Mt v 71.7Mt y/y, Attributable Iron Ore Production: 65.3Mt v 64.2Mt y/y
(CN) CHINA PBOC MONTHLY 1-YEAR AND 5-YEAR LOAN PRIME RATE (LPR) SETTING; LEAVES RATES UNCHANGED; AS EXPECTED
(CN) CHINA PBOC RAISES PARAMETER FOR CROSS-BORDER FUNDING RATIO FROM 1.25 TO 1.5
(AU) AUSTRALIA JUN EMPLOYMENT CHANGE: +32.6K V +15.0KE; UNEMPLOYMENT RATE: 3.5% V 3.6%E
THRS 7/20
2330.TW *CUTS FY23 REV -10% Y/Y IN USD TERMS (PRIOR TO DECLINE BY MID-SINGLE-DIGITS IN USD TERMS) [as speculated]
ABBN.CH Reports Q2 Net $906M v $873Me, Rev $8.16B v $8.13Be
VOLCARB.SE Reports Q2 (SEK) 1.12 v 3.00 y/y, EBIT 5.0B v 5.86Be, Rev 102.2B v 97.9Be; Sees supply and demand continue to normalise in the wider market
2330.TW Reports Q2 (NT$) Net 181.8B v 173.6Be, Rev 480.8B v 534.1B y/y; Q2 Rev from high-performance computing -5% q/q; Delays US Arizona N4 production by 1yr to 2025; Posts its 1st quarterly Net drop since 2019
AMD CEO: AI will be everywhere in 5 years; AI products market may hit $150B in 3-5 years; AMD prioritizes AI as a top area of its investment - Taiwanese press
ELUXB.SE Reports Q2 (SEK) adj Op -124M v +912Me, Rev 32.7B v 34.1Be; Guides Q3 net rev to turn negative; Expect market demand for FY23 to be negative for all regions, revise outlook for Asia-Pacific to negative from neutral
2330.TW *GUIDES Q3 REV $16.7-17.5B V $19.1BE, GROSS MARGIN 51.5-53.5% V 53.6%E, OP MARGIN 38-40% V 41.3%E
J Selected by Ultra Safe Nuclear Corporation U.K. to support design and development of a new micro modular power reactor (MMR)
(CN) China Commerce Ministry (MOFCOM) holds meeting with Ukraine deputy economy minister; China willing to develop trade and economic cooperation with Ukraine - press
(TW) Taiwan Jun Export Orders Y/Y: -24.9% v -20.3%e (10th straight decline); Sees July orders between -20.7% to -17.1% y/y; Expects orders pick up in H2 on AI demand
(US) "FedNow" transaction network for instant payments, which has been in the works since 2019, set to go live as soon as today, July 20th
JNJ Reports Q2 $2.80 v $2.61e, Rev $25.5B v $24.7Be; Raises FY23 guidance
DHI Reports Q3 $3.90 v $2.81e, Rev $9.73B v $8.33Be; Raises FY23 outlook sharply
FITB Guides Q3 NII down 2-3% q/q; Affirms FY23 NII +3-5% y/y (prior +3-5%) - slides
KEY Guides Q3 NII -6% to -4% q/q; Deposits relatively stable q/q, Loans -3% to -1% q/q, Net charge-offs to average loans 20-25bps - earnings slides
TRV Reports Q2 $0.06** v $2.27e, Rev $10.1B v $10.1Be; Raises Quarterly dividend 7.5%
AAL CEO: We will take care of our pilots; We will match industry wages - CNBC
(US) Redfin: For four weeks ending July 16 home prices posted their biggest increase in over seven months
(US) JULY PHILADELPHIA FED BUSINESS OUTLOOK: -13.5 V -10.0E
SZG.DE Reports H1 Net €243M v €971M y/y, Rev €5.8B v €6.6B y/y
(US) JUN EXISTING HOME SALES: 4.16M V 4.21ME
(US) JUN LEADING INDEX: -0.7% V -0.6%E
SAP.DE Reports Q2 €0.62 (cont ops) v €0.54 y/y, Rev €7.55B v €7.46Be
(RU) Russian Ambassador to US: Not preparing to attack civilian ships in Black Sea despite US claims - Russian press
(US) US Central Command: US to deploy a Marine unit following Iran ship seizure attempts
(JP) JAPAN JUN NATIONAL CPI Y/Y: 3.3% V 3.2%E; CPI EX-FRESH FOOD (CORE) Y/Y: 3.3% V 3.3%E
(CN) Reportedly Ambassador Burns, other officials were hacked in China-linked spying operation - press
ISRG Raises FY23 procedure growth +20-22% y/y (prior: 18-21%), Saw a slower US growth rate in bariatric surgery during Q2 amid patient interest in new weight-loss drugs - earnings call
(US) US Central Command: US to deploy a Marine unit following Iran ship seizure attempts
(JP) JAPAN JUN NATIONAL CPI Y/Y: 3.3% V 3.2%E; CPI EX-FRESH FOOD (CORE) Y/Y: 3.3% V 3.3%E
(CN) China State Planner (NDRC): Issues measures to boost consumption of electronic products and automobiles - China press
FRI 7/21
(UK) JUN PUBLIC FINANCES (PSNCR): £12.0B V £3.7B PRIOR; PSNB (EX-BANKING GROUPS): £18.5B V £22.0BE
(US) Note: On Mon, July 24th, for 2nd time in 12 years and 3rd time in its history, NASDAQ 100 index to conduct a special rebalance
(JP) BANK OF JAPAN (BOJ) SAID TO SEE LITTLE NEED TO ACT ON YCC (YIELD CURVE CONTROL) NOW AND PREFERS TO WAIT FOR MORE DATA; LIKELY TO DISCUSS YCC CHANGE EVEN IF NO TWEAK AT JULY 28TH'S RATE DECISION - PRESS
SCHN.CH CEO: I think it is reasonable to say we expect more decline in volume in 2024 in China - post earnings comments
(US) Biden-Harris Administration secures voluntary commitments from leading Artificial Intelligence companies to manage the risks posed by AI; Microsoft, Meta, Amazon, Google, others pledge to watermark AI content for safety - White House
(CN) China Commerce Ministry (MOFCOM): Plans to relax rules for foreign firms to invest in asset management companies (AMCs) after it exchanged views on data flow and export rules at roundtable - press
(JP) JAPAN TOP FX DIPLOMAT KANDA: REITERATES EXCESSIVE FX MOVES ARE UNDESIRABLE; CONSIDERING ALL OPTIONS
(CN) China Pres Xi: Urging China military to strengthen party leadership; Reiterates call to focus on boosting combat readiness and capabilities to fight
CMA Reports Q2 $2.01 v $1.89e, NII $621M v $618Me; Consumer deposits continued to stabilize after March
AXP Affirms targets for FY24+ Rev growth >10%, EPS growth "mid-teens"; Reports Q2 Master Trust: Net Write Off Rate: 1.8% v 1.6% q/q - earnings slides
UPS Teamsters union confirms labor contract talks with UPS to resume July 25th
(US) Weekly Baker Hughes Rig Count: 669 v 675 prior (-0.9% w/w)
DIS Reportedly ESPN has held discussions with the NBA and NFL as potential strategic partners – CNBC
SPOT Reportedly plans price increases for premium plan in the US, as part of effort to be more consistently profitable - press
