Saturday, December 8, 2018

Hopes for China trade deal fade; Yield curve inverts

TradeTheNews.com Weekly Market Update: Hopes for China trade deal fade; Yield curve inverts
Fri, 07 Dec 2018 16:09 PM EST

It was a jarring week for investors which saw the Dow trade lower by nearly 800 points in two separate sessions before sliding another 559 points on Friday. Traders were forced to navigate the anomaly of a Wednesday US market closure due to the observance of Former President George H. W. Bush’s funeral which may have hampered liquidity and goosed volatility. Stock trading opened on a decidedly positive note after President Trump and President Xi appeared to reach some sort of a d├ętente at their G20 dinner last Saturday. The euphoria spurred by positive tones coming from the US President was short lived though. Tuesday saw the US Treasury yield curve invert for the first time when the 5-year yield dropped below 3-year and eventually 2-year rates. This alarming growth signal spooked investors and, along with a rethink of just how lasting the trade truce will be, sent stocks careening lower in a global flight from risk assets.

Thursday when markets reopened the panic resumed after news broke late on Wednesday that the CFO of Chinese tech giant Huawei was arrested in Canada and was to be extradited to the US on trade sanction violations. The US 10-year yield dropped below 2.85% for the first time since this summer while the VIX popped back above 25. The Russel 2000 took out the fall lows while the other major US indices appeared poised to retest those Oct/Nov lows. Oil prices also remained heavy heading into the OPEC producers meetings. Oil prices bounced on Friday after an agreement was reached to take an additional 1.2M bpd of supply off the market beginning in January. Friday’s softer than expected November employment data didn’t raise any serious doubts about the prospects for a rate hike on December 19th, but was consistent with growing market expectations for a less hawkish Fed in 2019. Various Fed officials echoed the dovish shift outlined by Powell last week, but the softening of Fed expectations had diminishing effects on investor sentiment and stocks remained under pressure into the closing bell. Trade concerns and troubling signals for growth both home and abroad seem to have surpassed any positive momentum coming from the growing expectation of a wait and see Fed. For the week the S&P500 fell 4.6%, the DJIA lost 4.5%, and the Nasdaq tumbled 4.9%.

In corporate news this week, Nexstar confirmed it would acquire Tribune Media Company for $46.50/shr cash in a $6.4B deal that would make it the largest local TV firm in the United States. Tesaro shares jumped after Glaxo announced it would acquire the cancer-focused drugmaker in a $5.1B all-cash deal. Marlboro maker Altria Group announced a C$2.4B strategic investment in Canada pot firm Cronos, sending the cannabis company’s shares 20% higher on Friday. Toll Brothers dropped after reporting an earnings miss and lackluster guidance, the latest evidence of slowing housing demand. Restoration Hardware jumped on a strong outlook and beats on both the top and bottom line. Lyft filed confidential plans for an IPO with the SEC, beating rival Uber to the punch.

SUNDAY 12/2
(US) US President Trump: China has agreed to remove tariffs on Car imports - tweet

MONDAY 12/3
(UK) UK Home Secretary Javid: No chance of pulling the 11th Dec vote on PM May's Brexit Deal - radio comments
*(UK) NOV MANUFACTURING PMI: 53.1 V 51.7E
(CN) Reportedly China imports first US crude cargo in November after a month's halt following escalation of trade war - press
TRCO Nexstar confirms to acquire Tribune Media Company for $46.50/shr cash in $6.4B deal
TSRO To be acquired by GSK for $75/shr cash in $5.1B deal
(US) MARKIT NOV FINAL MANUFACTURING PMI: 55.3 V 55.4E
CRON Altria reportedly in discussions to acquire Cronos - press
(US) Atlanta Fed raises Q4 GDP forecast to 2.8% from 2.6% prior
*(AU) RBA LEAVES CASH RATE TARGET UNCHANGED AT 1.50%; AS EXPECTED; Low rates support the economy

TUESDAY 12/4
(UK) UK Parliament find Government in contempt over Brexit legal advice; UK Gov defeated in contempt motion 311-293; Orders Gov to publish full advice immediately
(RU) Sec of State Pompeo: reiterates US position that Russia is cheating on the INF treaty; US has given Russia a 2-month deadline to come back into compliance
(UK) UK PM May Government defeated 321-299 in Vote on Parliament Brexit Power

WEDNESDAY 12/5
*(IN) INDIA CENTRAL BANK (RBI) LEAVES REPURCHASE RATE UNCHANGED AT 6.50%; AS EXPECTED
*(UK) NOV PMI SERVICES: 50.4 V 52.5E (28th month of expansion but lowest since July 2016)
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATE UNCHANGED AT 1.75%; AS EXPECTED
Oman Energy Minister: OPEC+ agrees to recommend a cut, has consensus for Oil production cut
(US) Association of American Railroads weekly rail traffic report for week ending Dec 1st: 567.3K, +0.4% y/y
(US) FEDERAL RESERVE BEIGE BOOK: ECONOMIC GROWTH 'MODEST OR MODERATE'; LABOR MARKETS TIGHTENED FURTHER
HUAWEI.CN Canada reportedly arrests global CFO, Deputy Chairwoman and daughter of founder, Wanzhou Meng in Vancouver on trade sanction violation suspicions in the US - Globe & Mail
HUAWEI.CN Confirms Wanzhou Meng is detained by Canada authorities Dec 1st, not aware of any wrongdoing by Meng, not provided with much information so far; confirms US is seeking to extradite her

THURSDAY 12/6
(US) Q3 FINAL NONFARM PRODUCTIVITY Q/Q: 2.3% V 2.3%E; UNIT LABOR COSTS Q/Q: 0.9% V 1.0%E
*(US) DOE CRUDE: -7.3M V -1ME; GASOLINE: +1.7M V +1ME; DISTILLATE: +3.8M V +1ME
(US) Atlanta Fed cuts Q4 GDP forecast to 2.7% from 2.8% prior
(US) Fed Reports Q3 Financial Accounts: Household Change in Net Worth: $2.07T v $2.278T prior
JPM CEO Dimon: we still have a strong economy; trade, oil and Brexit are creating uncertainty which is roiling the markets; see 60% chance of a US/China trade resolution - CNBC interview
LYFT.IPO Announces Confidential Submission of Draft Registration Statement for Proposed Initial Public Offering

FRIDAY 12/7
(EU) EURO ZONE Q3 FINAL GDP Q/Q: 0.2% V 0.2%E; Y/Y: 1.6% V 1.7%E
CRON Announces C$2.4B strategic investment from Altria Group; Altria agreed to acquire 146.2M shares at C$16.25/shr
(US) NOV CHANGE IN NONFARM PAYROLLS: +155K V +198KE
(US) NOV UNEMPLOYMENT RATE: 3.7% V 3.7%E (matches the lowest since 1969)
(US) NOV AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 3.1% V 3.1%E; AVERAGE WEEKLY HOURS: 34.4 V 34.5E
(US) DEC PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 97.5 V 97.0E
(US) Atlanta Fed cuts Q4 GDP forecast to 2.4% from 2.7% prior
BAS.DE Cuts FY18 Adj EBIT -20% to -15% y/y (prior slight decline up to -10% y/y) due to the Chemicals segment

Barron’s weekend summary

Barron’s weekend summary: Cover story on firms benefitting from offering subscription services; Cautious feature on AAPL; Positive features on AMAT, CAT, DVMT 
Cover story: Subscription services are giving companies as different as MSFT and DE regular revenue streams and benefiting investors; Recurring payments are also changing the way Americans consume software, music, movies, TV, fitness, clothing and food (Positive on SNPS, ADVS, CDNS, AZPN, ADBE, ADSK, INTU, MODN, PTC, PRO, GWRE). 

Features: 1) Cautious on AAPL: As the company’s iPhone juggernaut slows down, it could look to ADBE as a model and create a subscription service for Apple Music, iCloud storage, AppleCare warranties, and its rumored video service; 2) Story looks at how Bernie Madoff perpetuated his massive fraud, and at some of the warning flags investors should keep in mind to avoid sophisticated Ponzi schemes; 3) Positive on DVMT: Michael Dell and Silver Lake Partners will reap $11B by gaining control of VMW, but holders of the tracking stock—who aren’t getting as much as they deserve in the deal—will still benefit by owning stakes in a company with $90B in annual revenue; 4) Positive on AMAT: While the company faces near-term challenges, the long-term outlook for growth remains bright, because new, more sophisticated chips require more manufacturing equipment; 5) Positive on CAT: Shares are down, yet investors have dire concerns that seem at odds with business conditions and near-term earnings forecasts, and the recent selling looks overdone; 6) Story says many taxpayers will get a nasty surprise when they finalize their 2018 returns, but there are still ways to minimize the damage from new restrictions on deductions and other changes to the tax law. 

Technology Trader: Positive on PYPL: Company has “become an essential arms merchant in the raging war for e-commerce dollars” as retailers such as WMT, TGT, and BBY battle AMZN—and is flourishing in the transition to smartphone e-commerce. 

Trader: As the market grows more volatile, investors should own high-quality, low-volatility stocks, and not chase the market’s moves, says Savita Subramanian of BAC/Merrill Lynch; Positive on LEN: Housing doesn’t have to boom for the stock to do well, and with a dismal spring selling season baked in, shares are cheap—and likely to rise on even a modest upswing in home sales; A recent paper from the New York Fed says that equity markets treat the Fed chair “almost as the pope of Wall Street,” and that his or her words can significantly move equity markets. 

Interview: Matthew McLennan of First Eagle Global favors companies with strong competitive advantages and market positions, as well as conservative leverage, regardless of where they’re located (picks: XOM, ORCL, WY). 

Profile: Luz Padilla, manager of the DoubleLine Emerging Markets Fixed Income fund, was cautious as this year’s emerging markets rout unfolded, and believes developed markets could be the tinder for the next crisis. 

Follow-Up: Cautious on LRCX: If earnings have finally hit bottom, the shares could be a deal, but if not, the question is how low they can still go. 

European Trader: Cautious on DB: The fact that shares are down doesn’t make them a bargain, and investors should consider dumping them in any forthcoming rallies, or purchase out-of-the-money put options that will pay out if the stock falls. 

Emerging Markets: Investors will almost certainly make money in Asia over the next three years, says Edmund Harris of Guinness Asset Management, but things could certainly get worse during the next 12 months. 

Commodities: Silver prices quietly sit close to their lowest levels in nearly three years following a 15% decline this year, and the metal deserves a closer look. 

Streetwise: Politicians should stop criticizing GM chief Mary Barra for plant closures, since she is guiding the 110-year-old company toward the autonomous, electric future, while expanding its profit margins and U.S employment.

Sunday, December 2, 2018

Barrons weekend summary

Barrons weekend summary: Positive feature on PGR; cautious on FB 
Cover story: “The explosive growth of digital data, along with better tools to analyze and store it, has jump-started a once-niche industry that packages under-the-radar information”; so-called alternative data, such as language tracking software that detects consumer sentiment, is becoming mainstream, creating potential and risk for investors. 

Features: 1) Cautious on FB: Company has gotten past a string of scandals recently, but there is the risk its prospects may be damaged more than the market expects down the road by Washington and Brussels; 2) Positive on PGR: Company, the No. 3 auto insurer in premium volume behind State Farm and Geico, has excelled at every major aspect of the business, and offers a tech-like growth story with its sophisticated analytics; 3) Regular investors are increasingly able to take advantage of alternative data, such as credit-card use or location tracking, offered by firms such as AMTD or Sentieo. 

Tech Trader: Positive on MSFT: Tech giant’s revival bucks a trend in which once-great companies such as Sun Microsystems or Digital Equipment flounder and disappear; Under chief Satya Nadella, it made a bold pivot away from Windows, putting its cash cows at risk, and successfully transitioned to cloud computing. 

Trader: Earnings estimates are likely to keep falling, says Dennis DeBusschere of Evercore ISI, and with the S&P 500 trading about at 15.8 times forward earnings, the risk of lower profits will limit future returns; Positive on APTV: For investors unwilling to bet on automakers such as GM because of tough competition and high capital needs, Aptiv, a supplier that sells key safety technologies for driverless cars, could be a good play;The annual meeting of the American Society of Hematology will feature developments from big firms such as CELG, AMGN and smaller ones such as BLUE and Genmab. 

Interview: Raghuram Rajan, governor of the Reserve Bank of India, has an independent streak that has drawn backlash; He talks to Barron’s about where the next crisis might be brewing, China’s debt, and why investors should care about income inequality. 

Profile: Robert Hyman, manager of the ALPS/Core Commodity Management Complete Commodities Strategy fund is trying to mitigate the contango that has cost about six percentage points per year for the past 10 years to the Bloomberg Commodity Index. 

Follow-Up: 1) Positive on GM: Automaker is taking the right steps with its plan to shutter plants and focus on its profitable truck/SUV business and autonomous vehicles, but investors are giving it little credit, and shares are undervalued; 2) Cautious on GE: Story offers four suggestions for how chief Larry Culp can turn around the troubled company: Be bold at GE Capital, sell part of GE Healthcare, infuse new life into the culture, and switch deal-making priorities. 

European Investor: Positive on J.D. Wetherspoon: Shares of British pub chain, which recently dropped after an earnings scare, are cheap, and offer a persistently high return on equity. 

Emerging Markets: Markets are skeptical about the ability of Mexico’s incoming President Obrador to deliver on socially generous campaign promises and deal with a “caravan” of migrants massing on the U.S. border. 

Commodities: “Achieving a balance in the oil markets is proving to be a challenge for OPEC and its allies, and they face their stiffest test yet when they meet in Vienna next week.” 

Streetwise: If there’s value in stocks, it’s in foreign markets, says Doug Ramsey of Leuthold Group—companies such as those in the MSCI EAFE index could gain 10% just to get back to median valuations.

Fed’s Powell “put” the market at ease amid G20 trade discussions

TradeTheNews.com Weekly Market Update: Fed’s Powell “put” the market at ease amid G20 trade discussions
Fri, 30 Nov 2018 16:05 PM EST

Investors had a host of issues to chew on this week, but ultimately the Fed Chairman’s speech on Wednesday moved the needle ahead of the weekend G20 meeting. Powell softened his comments on the whereabouts of the ‘neutral’ rate from Oct 3rd that many believed was a major catalyst for the recent US stock market correction. By acknowledging rates were “just below” the range that most Fed members viewed as neutral he appeared to offer investors an early Christmas gift by leaving the door open to backing away from some or even all of the Fed’s projected 2019 rate hikes. The economic numbers largely supported the dovish tilt as US data softened, oil prices plunged further, key inflation readings stayed subdued, and overseas growth signals remained worrisome.

Risk assets held the post-Powell gains heading into the G20 meeting on Friday. Expectations grew for the Xi/Trump summit as even some of the White House’s most ardent China hawks suggested something was likely to come of the meeting. Market expectations seemed to coalesce around the notion the two sides could zero in on a deal to de-escalate the trade dispute, involving the US delaying implementation of further tariffs in return for China policy modifications on farm and energy product restrictions. US Treasury yields fell and the curve flattened, rekindling fears of a potential curve inversion when the 2-year and 5-year yields converged to within a few basis points on Friday. For the week, the S&500 gained 4.8%, the DJIA rose 5.1%, and the Nasdaq added 5.6%.

GM’s announcement of a major restructuring headlined the corporate news this week. Citing shifting consumer tastes in automobiles, GM announced it would cease operations at three plants in the US and Canada and cut thousands of jobs with the expectation of saving billions of dollars in costs and capex. The US and Canada governments expressed displeasure at the move and President Trump said he would look at clawing back GM subsidies and bailout costs. United Technologies completed its acquisition of Rockwell Collins and confirmed the next step in its plans, splitting the conglomerate into three more focused entities. In a reversal from the consumer optimism surrounding the Black Friday weekend, Tiffany shook high end retailers with a subpar earnings report and a cut to its same store sales guidance for the fiscal year. Meanwhile, Salesforce reinvigorated trading in tech growth names with an impressive Q3 report. The week closed out with a report of a database breach at Marriott that may have exposed the personal information of half a billion customers over the last 4 years, sending the hotel’s shares down more than five percent.


MONDAY 11/26
(IT) Italy ruling coalition said to be discussing lowering 2019 budget deficit to GDP target from 2.4% to 2.0-2.1% - press
*(DE) GERMANY NOV IFO BUSINESS CLIMATE: 102.0 V 102.3E; CURRENT ASSESSMENT: 105.4 V 105.3E
GM Reportedly to cut car production in North America, will stop building some car models; to announce significant job cuts in N.A. among salaried and executive workers - press
GM Confirms accelerates transformation; cuts production from 5 plants; to take charge of $3.0-3.8B
(US) NOV DALLAS FED MANUFACTURING ACTIVITY: 17.6 V 24.5E
(US) Pres Trump: not happy with GM's decision to cut auto production; expects GM will put something else in Ohio; the country has done a lot for GM
UTX Confirms to Separate Into Three Independent Companies; Completes Acquisition of Rockwell Collins; affirms dividend of $0.735 post split; Cuts FY18 $7.10-7.20 v $7.27e (prior $7.20-7.30); Raises Rev $64.5-65.0B v $64.8Be (prior $64.0-64.5B); Affirms organic Rev ~+6%

TUESDAY 11/27
(US) Fed Vice Chair Clarida (moderate, voter): Gradual rate hikes appropriate as data shows way to neutral policy
(US) Nevada reports Oct casino gaming Rev $1.06B, +7.5% y/y; Las Vegas strip Rev $593.4M, +12.2% y/y
(EU) Reportedly US President Trump to impose 25% tax on European carmakers next week after G20 meeting - German press
*(US) NOV CONSUMER CONFIDENCE: 135.7 V 135.9E
GM Pres Trump expresses disappointment in GM, says he is studying cutting all GM subsidies, including for electric cars
CRM Reports Q3 $0.61** v $0.50e, Rev $3.39B v $3.37Be
GSK Unilever reportedly in exclusive talks to acquire nutrition unit from GlaxoSmithKline including Horlicks drink brand - FT
(CN) China Ambassador to US Cui: doesn't believe anyone in Beijing is thinking seriously about pulling back from US Treasury debt market if trade disputes worsen

WEDNESDAY 11/28
TIF Reports Q3 $0.77 v $0.76e, Rev $1.01B v $1.05Be
(US) Q3 PRELIMINARY GDP ANNUALIZED Q/Q: 3.5% V 3.5%E; PERSONAL CONSUMPTION: 3.6% V 3.9%E
(US) NOV RICHMOND FED MANUFACTURING INDEX: 14 V 15E
*(US) OCT NEW HOME SALES: 544K V 575KE
(US) Fed Financial Stability Report: large US banks are strongly capitalized; business debt high relative to GDP
*(US) DOE CRUDE: +3.6M V +0.5ME; GASOLINE: -0.8M V 0ME; DISTILLATE: +2.6M V -0.5ME
(US) FED'S POWELL: POLICY RATE IS 'JUST BELOW' ESTIMATES OF NEUTRAL; GREAT DEAL TO LIKE ABOUT THE US ECONOMY - PREPARED REMARKS AT NY ECONOMIC CLUB
(US) Association of American Railroads weekly rail traffic report for week ending Nov 24th: 470.9K, +3% y/y
(CN) US Trade Rep Lighthizer: China has yet to offer meaningful proposals; Chinese policies on auto tariffs are egregious

THURSDAY 11/29
(IT) Italy PM Conte said to be seeking to cut budget deficit target to 2.2%; 'optimistic' country could avoid Excessive Debt Procedure - Stampa
(DE) GERMANY NOV UNEMPLOYMENT CHANGE: -16K V -10KE; UNEMPLOYMENT CLAIMS RATE: 5.0% V 5.1%E (fresh post German reunification record low)
(EU) EURO ZONE NOV BUSINESS CLIMATE INDICATOR: 1.09 V 0.96E; CONSUMER CONFIDENCE: -3.9 V -3.9E
WTI crude trades below $50 mark for first time in more than 1-year
(US) OCT PERSONAL INCOME: 0.5% V 0.4%E; PERSONAL SPENDING: 0.6% V 0.4%E
(US) Former Pres Trump attorney Michael Cohen to plead guilty to making false statements to congressional committees investigating Russian collusion - ABC News
(US) Atlanta Fed raises Q4 GDP forecast to 2.6% from 2.5% prior
(CN) US and China reportedly considering deal to de-escalate trade disputes; likely would focus on delaying US tariffs in return for China policy modifications on farm and energy product restrictions - press
(US) FOMC MINUTES FROM NOV 8TH MEETING: ALMOST ALL SEE ANOTHER RATE INCREASE WARRANTED 'FAIRLY SOON'; FUTURE POLICY STATEMENTS TO EMPHASIZE IMPORTANCE OF INCOMING DATA
(CN) CHINA NOV MANUFACTURING PMI: 50.0 V 50.2E (lowest since July 2016); NON-MANUFACTURING: 53.4 V 53.8E
(CN) China Finance Ministry (MOF): Confirms to adjust cross-border e-commerce import tax from 2019; to raise the annual cross border quota for individuals to CNY26K from CNY20K, effective Jan 1st 2019

FRIDAY 11/30
(EU) EURO ZONE NOV ADVANCE CPI ESTIMATE Y/Y: 2.0% V 2.0%E; CPI CORE Y/Y: 1.0% V 1.1%E
MAR Announces Starwood guest reservation database security incident involving 500M guests
(CN) China Director of International Affairs Wang Xiaolong: the points of consensus between the US and China are rising, though some areas of disagreement remain as trade talks continue - press


Saturday, November 24, 2018

Barrons weekend summary

Barrons weekend summary: Cover looks at opportunities in the FAANG stocks; positive features on to US financial firms; cautious on FB, IGCC 
Cover story: The FAANG stocks—FB, AAPL, AMZN, NFLX, and GOOGL—have lost $1.1T since their peaks, part of which may have been the result of herd behavior; The selloff creates an opportunity for investors to reassess them, because the next opportunity for the FAANGs could come from picking them apart and judging each on its own merits. 

Tech Trader: A new kind of lending has emerged in fintech: Affirm, launched by PYPL co-founder Max Levchin and others, allows users to pay online for goods with the repayment schedule of an installment loan, based on a new process for gauging credit risk. 

Trader: “Investors are fearful that 2019 earnings estimates won’t pan out because of potential global economic weakness, but some reduction in growth already seems discounted in the market”; Bankers are concerned that corporate leverage could trigger the next recession, and Fed chairman Jerome Powell has called out non-financial corporate debt as something to watch; Cautious on TGT: Shares are down after the retailer fell short of same-store sales and earnings estimates, but it’s unlikely the problem is as bad as investors think, and the shares are now a bargain. 

Interview: Jamie Zimmerman of Lifespeed Mananagemet, which specializes in event-driven investing, seeks to profit from asset mispricings from mergers, spinoffs, and bankruptcy filings. 

Profile: Jamie Cuellar, co-manager of the Buffalo Small Cap fund, looks for companies that benefit from long-term trends, such as cost-containment in healthcare and software-as-a-service (top 10 holdings: TWLO, CXW, MTZ, MIME, MDSO, HQY, HMSY, CONE, EGHT, RGEN). 

Features: 1) Cautious on FB: Barron’s likes the stock despite recent controversies, with two caveats: there are concerns about its changing user base and how that will affect selling ads, and it’s possible that recent markdowns could prove to be a lasting reset, not a dip; 2) Positive on WFC, USB, GS, PNC, BK, JPM, BAC: Berkshire Hathaway owns shares in seven of the country’s top 10 banks, a sign the sector offers value because they are less cyclical than other stocks and have more resilient earnings; 3) Early data from CFRA indicated that while it’s still early in the shopping season, hot consumer items—including electronic goods and apparel—are selling fast over the Thanksgiving weekend; 4) Positive on Curaleaf Holdings: As prohibitions against marijuana are relaxed across the U.S. and companies race to obtain licenses and locations, Russia-based Curaleaf is the best funded, though Canadian and U.S. counterparts are catching up; 5) Cautious on IGCC: Company that combines cannabis and blockchain isn’t living up to expectations, and negative details are emerging that are raising questions about its viability. 

European Trader: Positive on Advanced Metallurgical Group: Investors who recently soured on lithium sent shares down, and they look cheap, especially given the company’s expanding profit margins. 

Emerging Markets: Russia has a host of problems, but an oil-price correction isn’t among them—that’s the message the Kremlin is sending in response to Saudi Arabia’s latest call for exporters to unite on a production cut. 

Commodities: Emerging markets such as China and Saudi Arabia are expected to boost demand for uranium, creating significant growth prospects for the sector and benefiting companies such as Kazatomprom. 

Streetwise: Investors who opened cryptocurrency trading accounts during the past year are underwater, and most financial institutions are keeping quiet about their Bitcoin ambitions.

Collapsing oil prices worry markets awaiting Black Friday sales data

TradeTheNews.com Weekly Market Update: Collapsing oil prices worry markets awaiting Black Friday sales data
Fri, 23 Nov 2018 13:02 PM EST

Equity investors had little to be thankful for in this year’s shortened Thanksgiving week trade. Indices moved back towards the late Oct lows on concerns about slowing global growth, Brexit and Italian budget disagreements, and lasting China trade worries. Investors generally responded poorly to late Q3 earnings season reports from the retailers who largely noted growing margins pressures heading into holiday season. US Treasury yields slipped to the lowest levels in more than a month helped by the risk off flows. WTI crude prices careened toward $50 a barrel as global growth concerns and worries about oversupply weighed on oil. For the week, the S&P500 dropped 3.8%, the DJIA lost 4.4%, and the Nasdaq sagged 4.3%.

In corporate news this week, Apple and its suppliers’ shares were weighed upon by reports that the tech giant recently cut production orders for three new iPhone models due to lower-than-expected demand, and a separate report indicating Apple’s largest assembler, Foxconn, planned on nearly $3B in cost cuts amid warnings of anemic smartphone demand. As earnings season wraps up before the US holidays, some key retailers announced results, with Target and TJ Maxx seeing Q3 margins under pressure. Footlocker, however, beat expectations and raised its Q4 comps outlook, and Kohl’s saw strength in apparel. And as Black Friday kicked off, Macy’s CEO said in an interview that he saw a ‘really strong start to the holiday shopping season’ with the caveat of challenges arising from exceptionally strong Q4 comps last year. Nissan removed its long-time CEO Carlos Ghosn following his arrest on suspicion of financial misconduct in Japan. On Friday, Rockwell Collins shares spiked nearly 10% on word that China has approved its merger deal with United Technologies, quashing fears that the deal could get entangled in the Sino-US trade squabble.

MONDAY 11/19
7201.JP Reportedly Chairman Ghosn to be arrested in Japan for alleged financial trading violations - Japanese press
AAPL Reportedly has recently cut production orders for 3 new iPhone models due to lower-than-expected demand - U.S. financial press
(US) NOV NAHB HOUSING MARKET INDEX: 60 V 67E (lowest reading since Aug 2016; biggest drop since 2014)

TUESDAY 11/20
LOW Reports Q3 $1.04 v $0.97e, Rev $17.4B v $17.3Be
BBY Reports Q3 $0.93 v $0.85e, Rev $9.59B v $9.55Be
*(US) OCT HOUSING STARTS: 1.228M V 1.225ME; BUILDING PERMITS: 1.263M V 1.260ME
(US) Atlanta Fed cuts Q4 GDP forecast to 2.5% from 2.8% prior
GPS Reports Q3 $0.69 v $0.68e, Rev $4.09B v $3.98Be

WEDNESDAY 11/21
(US) Association of American Railroads weekly rail traffic report for week ending Nov 17th: 546.5K, +0.04% y/y
(US) Atlanta Fed maintains Q4 GDP forecast at 2.5%
(US) DOE CRUDE: +4.9M V +2ME; GASOLINE: -1.3M V -0.5ME; DISTILLATE: -0.1M V -2.5ME
(US) OCT EXISTING HOME SALES: 5.22M V 5.20ME
(US) OCT PRELIMINARY DURABLE GOODS ORDERS: -4.4% V -2.6%E; DURABLES EX-TRANSPORTATION: 0.1% V 0.4%E
(CN) Reportedly adviser Peter Navarro will NOT be at the upcoming Trump Xi meeting at the G20 - China press
(EU) EU Commission opinion on 2019 draft budget plans; confirms Italy budget is seriously noncompliance with debt reduction commitment; excessive deficit procedure warranted
TKA.DE Reports FY18 Net €60M* v €271M y/y, adj EBIT €1.6B v €1.64Be, Rev €42.75B v €42.3Be

FRIDAY 11/23
(US) According to Adobe Analytics, Thanksgiving online spending valued at $2.4B, +31.8% y/y - press
(DE) GERMANY Q3 FINAL GDP Q/Q: -0.2% V -0.2%E; Y/Y: 1.1% V 1.1%E
*(FR) FRANCE NOV PRELIMINARY MANUFACTURING PMI: 50.7 V 51.2E (26th month of expansion but lowest since Sept 2016)
*(DE) GERMANY NOV PRELIMINARY MANUFACTURING PMI: 51.6 V 52.2E (47th month of expansion but lowest since Mar 2016)
*(EU) EURO ZONE NOV PRELIMINARY MANUFACTURING PMI: 51.5 V 52.0E (64th month of expansion and lowest since Mar 2016)
COL China gives conditional approval for United Technologies merger deal
*(US) NOV PRELIMINARY MARKIT MANUFACTURING PMI: 55.4 V 55.7E
(SA) OPEC and Saudis are reportedly mulling quiet oil output cuts; considering stretching 2016 output limits into 2019 - press


Saturday, November 17, 2018

Market Weigh Signs of Slower Growth and Brexit Uncertainties

TradeTheNews.com Weekly Market Update: Market Weigh Signs of Slower Growth and Brexit Uncertainties
Fri, 16 Nov 2018 16:25 PM EST

Headwinds persisted this week as a wide swath of headlines whipsawed the major US averages. Stocks opened the Veterans Day Monday under pressure led by the NASDAQ after a key corporate outlook downgrade weighed on Apple shares and the rest of the handset/chip space. The cautions growth narrative was subsequently echoed by other corporate forecasts by managements within that sector, as well as others, later in the week. Tuesday saw sentiment improve when White House adviser Kudlow confirmed a report that US China trade talks have resumed in earnest ahead of the upcoming G20 meeting. WTI crude futures continued fall as many pointed to global growth concerns and potential supply demand imbalances. Traders noted the exacerbated decline in crude prices came alongside as surge in natural gas prices which had many noting of a potential pairs trade gone wrong resulting in forced unwinding. For the week, the S&P lost 1.6%, the DJIA dropped 2.2%, and the Nasdaq fell 2.2%.

Slowing global growth remained an overriding factor as economic data out of Europe, particularly Germany, continued to disappoint. The signals of softening came amid arduous Brexit negotiations that saw PM May and the EU finally come to terms on a draft separation agreement. It remains anything but clear though, if the PM can cajole enough of her Conservative party members to support the deal ahead of a key European summit later this month. Separately, EU and Italian officials continued to trade barbs in the press over fiscal policy resulting in higher borrowing rates there. Fixed income risk barometers began to flash as high yield bond prices slumped, US Treasury yields fell, and the 3-month LIBOR-EURIBOR spread widened to levels not seen since 1999, before the dot com bubble. The benchmark 10-year yield closed below the 50-day moving average for the first time since Labor Day. In the latter part of the week, we heard from a cadre of Fed officials highlighted by Fed Chairman Powell and Vice Chair Clarida. Each acknowledged that the Fed must pay attention to slowing global growth signals going forward, but also indicated rates remain below ‘neutral’ and to this point nothing has altered the thinking that they need to gradually rise to that neutral level. The Greenback backed away from its strongest levels in more than a year late in the week as Treasury yields moved lower.

For the week's corporate news, on Monday, Lumentum shares fell precipitously after the company slashed its outlook, noting a large customer (presumably Apple) asked to materially reduce shipments. The news hit Apple shares along with its other suppliers, and on Tuesday, Qorvo followed suit, cutting guidance on lower recent demand for flagship smartphones. Semiconductor firms were also under pressure this week, after Nvidia cut its outlook on rising inventories and semi equipment maker Applied Materials forecast a soft Q1. KB Home added to woes in the homebuilder sector by guiding a weaker than anticipated Q4, which weighed on Home Depot and Lowes. In the retail space, Macy’s and Walmart dropped despite beating and raising earnings, and Williams Sonoma fell after reporting in line with expectations. On the M&A front, AthenaHealth confirmed a deal to be acquired by Veritas Capital for $135/share in cash, SAP announced the acquisition of Qualtrics for $8B just days ahead of its IPO, and Johnson Controls divested its power solutions business to Brookfield for $13.2B in cash and stock. Shares of Acadia Healthcare fell as much as 20% on Friday on a report that its LBO process has stalled. PG&E fell sharply this week on liability concerns relating to the disastrous 'Camp' wildfire consuming wide swaths of Northern California, but shares bounced off their lows on commentary from state regulators indicating they don't want to force the utility to go bankrupt.

SUN 11/11
XM To be acquired by SAP for $8B cash

MON 11/12
BBVA Recent strength being attributed to Mexico's govt vows no change in banking laws
LITE Cuts Q2 $1.15-1.34 v $1.67e, Rev $335-355M v $423Me (prior $1.60-1.75, Rev $405-430M), Op margin 23-25% (prior 28-30%) (update)
(US) EPA official: EPA to set new regulations to significantly cut nitrogen oxide emissions from heavy duty trucks
AAL.UK De Beers reportedly to cut low end diamond prices by as much as 10% - press
(US) Commerce Dept reportedly circulating a draft report on auto tariffs; Pres Trump to hold meeting Tues with trade advisers to discuss the report - press
(CN) On Friday (Nov 9th), US Treasury Sec Mnuchin and China Vice Premier Liu He resumed talks and spoke by phone; the conversation did not lead to any 'breakthrough' - US financial press
(CN) China Vice Premier Liu He to visit the US to pave the way for the Xi-Trump meeting; the Chinese official is expected to visit the US 'shortly' for talks - Hong Kong Press

TUES 11/13
BAYN.DE Reports Q3 Adj €2.89B v €3.88B y/y, adj EBITDA €2.20B v €2.20B y/y, Rev €9.91B v €8.03B y/y
VOD.UK Reports H1 adj EPS 3.56c v 6.32c y/y, adj EBIT €2.31B v €2.46B y/y, Rev €21.8B v €23.1B y/y
*(UK) SEPT AVERAGE WEEKLY EARNINGS 3M/Y: 3.0% V 3.0%E; WEEKLY EARNINGS (EX BONUS) 3M/Y: 3.2% V 3.1%E
*(UK) OCT JOBLESS CLAIMS CHANGE: +20.2K V +23.2K PRIOR; CLAIMANT COUNT RATE: 2.7% V 2.6% PRIOR
*(DE) GERMANY NOV ZEW CURRENT SITUATION: 58.2 V 65.0E; EXPECTATIONS SURVEY: -22.0 V -26.0E
HD Reports Q3 $2.51 v $2.27e, Rev $26.3B v $26.2Be
HD Hurricane related sales negatively impacted US comps by 80bps in Sep and 120bps in Oct - earnings call
(UK) Five pivotal senior ministers reportedly back UK Prime Min May's draft Brexit proposal - Sun's Newton Dunn
JCI Confirms to divest Power Solutions business to Brookfield Business Partners & CDPQ for $13.2B in cash and stock
(IT) Italy Govt publishes letter to the EU: Asks EU for flexibility for extraordinary events, cites spending for floods and infrastructure after Genoa; Confident to reach growth targets
(US) US planning to hold off on implementing auto tariffs for now after Trump meeting

WEDS 11/14
*(DE) GERMANY Q3 PRELIMINARY GDP Q/Q: -0.2% V -0.1%E; GDP Y/Y: 1.1% V 1.3%E (1st quarterly contraction since Q2 2014)
(EU) Euro Zone Q3 Preliminary GDP Q/Q: 0.2% v 0.2%e; Y/Y: % v 1.7%e
(DE) German Bundesbank: Real estate prices may be 15-30% overvalued, some loan collateral values may be overestimated
700.HK Reports Q2 (CNY) Net 23.3B v 18.4Be, Rev 80.6B v 80.4Be
M Reports Q3 $0.27 v $0.13e, Rev $5.40B v $5.38Be
(UK) One govt minister says two ministers, Mordaunt and McVey, will resign the cabinet - UK's Telegraph
(US) House Ways and Means Trade Subcommittee Ranking Member Pascrell (D-NJ): the new USMCA trade deal can't pass as is
(US) Association of American Railroads weekly rail traffic report for week ending Nov 14th: 547.2K, +1.4% y/y
(UK) UK PM May will not deliver statement to media on Wednesday evening - UK police minister
(UK) BBC's Kuenssberg: "Senior Tory tells me Brexiteer anger so high that seems likely there will be a call for no confidence vote tomorrow"
(UK) PM May reportedly has secured Cabinet support for Brexit deal, at least for now - UK's Telegraph
(CN) China govt reportedly has sent written response including concessions to US regarding trade reforms - press
(US) Fed Chair Powell: challenges include how much further to hike and at what pace; pretty good reason economy stays on healthy track; reiterates all meetings are live

THURS 11/15
*(ID) INDONESIA CENTRAL BANK (BI) RAISES REVERSE REPO RATE BY 25BPS TO 6.00%; NOT EXPECTED
*(PH) PHILIPPINES CENTRAL BANK (BSP) RAISES OVERNIGHT BORROWING RATE BY 25BPS TO 4.75%; AS EXPECTED
*(UK) BREXIT MIN RAAB RESIGNS; cannot support indefinite backstop arrangement
KBH Guides Q4 Housing Rev $1.31-1.34B v $1.43Be, Gross margin 18.3-18.6%, Op income margin 9.3-9.5% - annual investor presentation
*(UK) OCT RETAIL SALES (EX-AUTO/FUEL) M/M: -0.4% V +0.2%E; Y/Y: 2.7% V 3.4%E
WMT Reports Q3 $1.08 v $1.02e, Rev $124.9B v $124.8Be
*(US) NOV EMPIRE MANUFACTURING: 23.3 V 20.0E
*(US) NOV PHILADELPHIA FED BUSINESS OUTLOOK: 12.9 V 20.0E
FDA issues statement from commissioner on proposed new steps to protect youth by preventing access to flavored tobacco products and banning menthol in cigarettes
*(US) DOE CRUDE: +10.3M V +2ME; GASOLINE: -1.4M V -1.5ME; DISTILLATE: -3.6M V -2ME (biggest rise in crude since Feb 2017)
(US) Atlanta Fed cuts Q4 GDP forecast to 2.8% from 2.9% prior
(CN) US Commerce Sec Ross: still expects eventual China trade deal, but not by Jan - press
(CN) Commerce Sec Ross: US still plans China tariff boost to 25% in January - press
AMAT Reports Q4 $0.97 v $0.96e, Rev $4.01B v $4.00Be
NVDA Reports Q3 $1.84 v $1.91e, Rev $3.18B v $3.24Be; Raises Quarterly dividend 6.7% to $0.16 from $0.15 (indicated yield 0.32%)

FRI 11/16
IMB.UK Issues statement on FDA announcement: notes the menthol cigarette ban proposal would require a multi-year process
*(EU) EURO ZONE OCT FINAL CPI Y/Y: 2.2% V 2.2%E; CPI CORE Y/Y: 1.1% V 1.1%E
(US) Fed Vice Chair Clarida (moderate, voter): no clear signal to take from stock market volatility; have to pay attention to slowing global growth
*(US) OCT INDUSTRIAL PRODUCTION: 0.1% V 0.2%E; CAPACITY UTILIZATION: 78.4% V 78.2%E
(CN) US President Trump: May not have to impose additional tariffs on China; China wants to make a deal on trade, but proposal not acceptable yet (FOLLOW UP: CNBC's Javers: "White House officials tell me that the president was simply expressing optimism about ongoing negotiations with the Chinese when he said the US may not have to impose additional tariffs. I’m told we should not read into that that there is a deal imminent. All eyes still on G20.")


Barrons weekend summary

Barrons weekend summary: Cautious feature on retailers amid fierce competition with Amazon; Positive select oil & gas names 
Cover story: Forty years after Congress passed the Revenue Act of 1978 and created the 401(k), 55 million people have plans totaling more than $5 trillion; The 401(k) rule “has hastened or improved retirement for a large segment of the population, namely people with full-time jobs and matching benefits, but it’s far from perfect,” and needs to be available to more people. 

Features: 1) Cautious on KSS, TGT, TIF, HD, WMT, BBY, TJX: Retailers have managed to counter AMZN by ramping up their e-commerce fulfillment sides, improving supply chains, and taking other offensive steps, but even with a strong holiday outlook not all will ring up gains; 2) Oil’s descent during the past six weeks has shaken traders and sown doubt among investors, and the sector’s volatility could be a red flag for the rest of the economy; 3) Positive on BP, CVX, XOM, Royal Dutch Shell, EOG, COG, EQT: Energy companies have shown financial discipline by reining in capital spending and returning more cash to shareholders, and many shares look attractive despite a recent 15% retreat in the sector; 4) Just 13% of people working in corporate America have a defined-benefit pension plan—and few people work at one company long enough to get a pension that could support them in retirement. 

Tech Trader: Cracks in AAPL’s narrative began to form after its recent earnings report, with some analysts saying its reduced transparency could be a sign iPhone sales have peaked, while two key suppliers singled out Apple for a shortfall in component orders. 

Trader: The U.S. and China could reach a trade deal at the G20 and the Fed could pause on rate hikes, but even those actions might not be enough to fix the market; Positive on AMGN: Biotech generates more than $10B in free cash flow annually, is a good steward of its money, and has more cash than debt on its balance sheet; Positive on THS: Shares of the private-label food maker are down on negative headlines, but its strengths are obfuscated by restructuring-related charges and one-time items as it closes facilities and streamlines production. 

Interview: David Pearl, co-founder of Epoch Investments, believes that looking at growing free cash flow is the way to pick stocks, and says “We are in one of the best economic periods since World War II” (picks: MS, CVS, HXL, AAPL). 

Profile: David Sand and Andy Kaufman of Community Capital Management manage the Community Reinvestment Act Qualified Investment fund, which focuses on investments that are “sustainable, responsible, and impactful.” 

Follow-Up: “The SEC must take the lead in proposing—if not compelling—cooperation and new approaches to improve the accuracy and reliability of the U.S.’s outdated and expensive proxy voting system.” 

European Trader: Positive on British Land, Land Securities: The U.K.-based REITs have taken a hit over Brexit turmoil, but have reached price levels that merit consideration by income-oriented investors who think a Brexit deal will be reached by March 29. 

Emerging Markets: A Chinese yuan weaker than seven to the dollar has acquired symbolic significance, and if it breaches seven, it’s hard to tell where the next line will be; Beijing watchers think a currency defense might be in the offing. 

Commodities: Further natural gas price hikes may follow just as winter gets under way; prices will go up and down with the weather, with upside moves greater than downside moves. 

Streetwise: Economic growth tends to be higher in emerging markets, attracting bankers but putting them in place that are “less well governed, more corrupt, and increasingly polluted,” according to Renaissance Capital.

Tuesday, November 13, 2018

November-December 2018 Outlook

TradeTheNews.com November-December 2018 Outlook: The Results Are In
Tue, 13 Nov 2018 7:23 AM EST

The return of volatility has created dread in some investors and excitement in others that see opportunity in a less complacent market. The stock market had a classic October sell off, but other markets also suffered. The junk bond market had its worst month in a decade, and the 10-year Treasury yield hit a 7-year high as markets reassessed sentiment about Fed rate tightening, even at a “gradual” and predictable pace.

With the resolution of the US midterm elections, at least one of the key uncertainties of the last year is now resolved. The outcome of the election will not only change the tenor of US politics for the next two years, but it will also influence the other major outstanding geopolitical issues that play into the assessment of the balance of risks. Now risk analysis will focus squarely on Fed rate policy, the final outcome of the Brexit deal, and the nascent trade war between the world’s largest economies.

US Election ‘Blues’

In the US, the House going ‘blue’ thwarts any White House dreams of additional tax cuts, but could result in some bipartisan issues getting more attention, particularly infrastructure spending – though it remains to be seen if Trump and the Democrats can agree on the structure of any such spending legislation (highways vs. walls). A Democratic House does give Trump a foil to run against for the next two years and he will definitely use the “obstructionist Democrats” to share the blame for any policy failures, stock market weakness, or economic downturn. On the policy level, the absence of any new fiscal stimulus could give the Federal Reserve some room to slow its monetary tightening if any red flags appear in the economic data, even as it deflects criticism from President Trump about higher rates.

The next two months could see the outcome of Special Counsel Mueller’s probe, which is reportedly near completion. Mueller was in a ‘quiet period’ ahead of the election, but with the votes counted the Special Counsel may soon be ready to announce conclusions and possibly new indictments in the wide ranging investigation of Russian election interference. It will be embarrassing for Trump if more campaign advisors are caught up in the dragnet, but there is no sense of a fatal blow to his Presidency coming out of the investigation. No sooner than Mueller is done, however, House Democrats with newly regained subpoena powers could continue to harry the White House with demands for document related to his taxes and business dealings.

The probe of Russian election tampering could also be a thorn in the side of social media companies in the months ahead. If any hint of foreign influence being exerted through social platforms comes to light, firms like Facebook and Twitter will take a lot of heat, especially from President Trump seeking to assign blame for his party’s election setbacks. The social media firms have added thousands of employees to scan for misinformation campaigns, but have confirmed that they have removed only a few hundred suspect pages and users over the last few months.

Big Decisions in Europe

The same populist wave that swept Trump into power two years ago continues to roil Europe. The official Brexit, brought about by referendum, is now just months away. Meanwhile the new populist Italian government has begun to question EU authority over its budget.

The deadline for an agreement on Brexit keeps slipping but there isn’t much leeway left with the UK scheduled to leave the Union on March 29. By all accounts, most of the Brexit outline is completed but the Irish border remains the sticking point. It will all come down to whether the EU or the UK (and specifically Northern Ireland) will bend in order to save Europe from a ‘hard Brexit.’ If there is no breakthrough in the next few weeks, there won’t realistically be enough time for a new leaders’ summit or legislative debate in the parliaments of the EU27 nations. There is starting to be some speculation that the March 29 Brexit date under Article 50 could be extended but that is not likely to gain any traction with Brexiteers in the UK. Thus European markets will be on edge for the next few weeks as they contemplate the repercussions of a hard Brexit scenario, which is becoming more and more likely.

The Italian government will be watching the Brexit proceedings with special interest. Though the coalition in Rome insists that it has no desire to leave the EU or the euro, it has been pushing back hard against limits set by the European hegemony. So far Italy’s government has been adamant that it will not make any major changes to its budget plan and won’t veer from its 2.4% deficit/GDP target despite EU objections. Instead, Rome is pinning its hopes on the economic plan creating better than expected growth.

The European Commission has given Rome until mid-November (11/13) to make adjustments to its budget plan, but so far the Italians have been unyielding. If Italy’s government doesn’t pay some heed to Europe’s ‘advice’ regarding the budget and its deficit/GDP ratio should slip further, it could lead to disciplinary action in the spring of 2019 in the form an "excessive deficit procedure." That procedure could potentially culminate in sanctions that will make it even harder for Italy to spend its way out of its economic malaise.

Trade Talks or Trade War

As the dispute over international trade grows more serious, the US election result may ultimately give President Trump a stronger hand in trade talks. Though Democrats did well enough to retake the House, President Trump showed that he can still mobilize his voters, so China and Europe may not be able to simply wait him out of office. President Xi could now be more amenable to reaching an agreement with the Trump White House rather than risk a prolonged trade conflict potentially lasting six more years.

November 30 may be a binary moment as Presidents Trump and Xi meet in Buenos Aires. Arrangements appear to be on track for the two leaders to have bilateral talks on the sidelines of the G20, their first meeting since last July. If they can show some concrete progress toward resolving the impasse on trade between the world’s two largest economies it could alleviate some of the uncertainty hanging over markets. In the alternative scenario, Trump and Xi will bump heads and offer no concessions. That outcome could hasten implementation of US threats to boost existing tariffs from 10% to 25%, signaling the start of a full blown trade war.

To date, China’s biggest export has become strong rhetoric about holding its ground. The standard line from officials in Beijing has become that they do not desire a trade war, but they also don’t fear one. President Trump has also held firm and his only offer so far has been to issue additional punitive tariffs. If the G20 meeting comes and goes with no new overtures on trade issues between the two nations, it may finally shake confidence that a compromise will be found any time soon.

If the G20 is a bust, the Chinese currency could continue to fall against the greenback and test the key psychological level 7.00, which the PBoC has verbally defended in the past. The trade dispute has already weakened both the Chinese stock market and the currency, and a break of that level could stir concerns about capital flight from China. It’s also likely to earn a rebuke from the White House, which has declined to label China a currency manipulator, but knows that the weaker yuan softens the blow of tariffs because it makes exports cheaper.


Fed Steady, Inflation Steady, Oil…

The Federal Reserve has been one of the many targets of President Trump’s ire, but continues to go about its business after the election. With the US labor market at full employment and inflation stable around 2%, the Fed has achieved its mandate and logically continues to unwind extraordinary accommodation, raising rates and paring down its balance sheet holdings. Now the focus is moving to where rate tightening should stop in order to keep the economy humming without allowing it to overheat. The Fed seems to be aiming for a slightly restrictive policy as its endgame, a bit above the ‘neutral’ rate which stands somewhere around 3.00%.

The Fed made no noises about slowing rate hikes at the November meeting, giving every indication that the committee is ready to move again in December (12/18). With the rate hike locked in for next month, the statement and updated Summary of Economic Projections will be scrutinized for any signs that the Fed might blink in the face of both market and political pressure. If inflation shows no signs of percolating higher it could conceivably give the central bank an excuse to pare back tightening expectations. There is already a wing of the Fed that appears to favor stopping at ‘neutral’ to reassess the situation before tightening any further. If that strategy prevails, it means the Fed could raise in December and once more in the Spring and then declare neutral policy has been reached. If there is a “Powell put”, a level at which the Powell Fed would take action to support sagging equity market, it can be surmised that it’s at a lower level than under past Fed Chairs. Even still, the baseline case remains that that Fed will continue hikes throughout 2019 unless there are real signs downside risks are asserting themselves on the economy early next year.

A hard Brexit and unresolved trade tensions could move the needle to the downside. So too could slower economic growth in the US if the fiscal stimulus from the 2018 tax cut turns out to be just a short term ‘sugar high’ as many economists believe. There’s not much evidence yet that the corporate tax cut has changed companies’ long term behavior as the Trump administration predicted, so growth could slip back into the 2.5% range or lower next year.

The inflation outlook is another key factor in the central bank calculus, and as usual energy prices are unbalancing the scales. After demonstrating firm pricing through much of the year, crude oil prices have suffered a 20% decline from recent highs, entering a bear market amid the bout of risk-off behavior in the broader markets, shepherded along by booming US shale production and uncertainty about the OPEC+ production agreement.

An OPEC+ gathering in Abu Dhabi punted the issue, so it will come down to the semi-annual OPEC meeting (12/6) to determine if producers outside North America want to continue efforts to support prices. Even as Iranian exports dwindle under US sanctions, world oil producers will have to decide whether to keep the market in balance or to return to an every-man-for-himself production policy.

On the geopolitical end, the White House will have to contend with European governments which are contemplating a Special Purpose Vehicle to facilitate trade with Iran, circumventing some US sanctions. The SPV idea is sure to ruffle Trump’s feathers and create a negative feedback loop into efforts to resolve tariff issues between the EU and US. If world leaders don’t elect to solve these disputes diplomatically it could ratchet up tensions in the New Year.

CALENDAR OF EVENTS
NOVEMBER
6: US Midterm Election
7: China Trade Balance
8: FOMC Policy Statement; China CPI
9: US PPI

12:
13: UK CPI & PPI; German ZEW Economic Sentiment; Japan Preliminary Q3 GDP; China Industrial Production
14: UK Claimant Count & Unemployment; Euro Zone Flash Q3 GDP; US CPI
15: UK Retail Sales; US Retail Sales; Philadelphia Fed Index
16: UK Inflation Report Hearing; Euro Zone Final CPI; Preliminary University of Michigan Consumer Sentiment

19:
20: US Housing Starts & Building Permits; UK Autumn Forecast (tentative); Joint OPEC-non-OPEC Ministerial Monitoring Committee (JMMC)(tentative)
21: US Durable Goods Orders
22: ECB Minutes; THANKSGIVING HOLIDAY (US)
23: Various Euro Zone Manufacturing & Services PMIs

26: German Ifo Business Climate
27: UK Bank Stress Test Results; US Consumer Confidence
28: US Preliminary Q3 GDP (2nd reading)
29: German Preliminary CPI; US Personal Income & Spending; FOMC Minutes
30: German Retail Sales; Euro Zone Flash CPI Estimate; Chicago PMI; China Manufacturing & Non-manufacturing PMIs; G20 Leaders Summit in Buenos Aires(day 1)

DECEMBER
1: G20 Leaders Summit in Buenos Aires

3: UK Manufacturing PMI; US ISM Manufacturing PMI
4: UK Construction PMI
5: BOE Financial Stability Report; UK Services PMI; US ISM Non-Manufacturing PMI
6: Regular Semiannual OPEC Meeting in Vienna; China Trade Balance
7: US Payrolls & Unemployment
8: China CPI

10: UK Q3 GDP; UK Manufacturing Production
11: UK CPI & PPI; German ZEW Economic Sentiment; US PPI
12: UK Claimant Count & Unemployment; US CPI; China Industrial Production
13: ECB Policy Statement & Press Conference
14: US Retail Sales; Preliminary University of Michigan Consumer Sentiment
15: Japan Lower House Elections

17: NY Empire Manufacturing Index
18: German Ifo Business Climate; US Housing Starts & Building Permits
19: FOMC Policy Statement, SEP, & Press Conference; BOJ Policy Statement
20: UK Retail Sales; BOE Policy Statement; Philadelphia Fed Manufacturing Index
21: Various EU Flash Manufacturing & Services PMIs; UK Current Account; UK Final Q3 GDP; US Durable Goods Orders; US Final Q3 GDP; US Personal Income & Spending

24:
25: CHRISTMAS DAY HOLIDAY
26:
27: Chicago PMI; US Consumer Confidence
28: German CPI

31:
JANUARY
1: NEW YEARS DAY


Saturday, November 10, 2018

Barrons weekend summary

Barrons weekend summary: Cover story positive on Liberty Media 
Cover story: Billionaire John Malone remains the instrumental force behind 10 companies under the Liberty Media umbrella that have a combined value of $80B; Many of the stocks have lagged the market in the past year and look appealing, offering plays on a range of businesses, including cable, sports, and shopping. 

Feature: 1) The recent elections “haven’t meaningfully changed the U.S. economic outlook,” but congressional results could affect U.S. trade policy while a range of state and local elections have implications for economic policy; 2) “The shake-up in the House of Representatives after Tuesday’s election could change the passive posture of the legislative branch, particularly in regards to replacing Nafta.” 

Tech Trader: The growth of 5G technology and its eventually widespread use will be a major event for the communication services value chain, benefiting a range of tech and telecom companies (Positive on INTC, CSCO, KEYS, NATI, TXN, T, VZ, QCOM, COMM, ARRS). 

Trader: The market may be trying to set up for a bullish reverse-head-and-shoulders pattern, but it might not—so Barron’s suggests remaining on the cautious side until the story is clearer; Positive on DLTR: The company has lost its touch during the past year, sending the shares down into the bargain bin, but they are likely to bounce back, especially if an activist investor gets involved. 

Interviews: 1) Libby Cantrill, head of public policy at Pimco, says the firm is cautious about the bond markets and is positioned accordingly; 2) Ron Epstein, who covers aerospace at Merrill Lynch, sees plenty of upside for BA, LMT, and GD, and says Democratic control of the House is the best scenario for defense spending. 

Profile: Ken Taubes, manger of the Pioneer Bond fund for the past 20 years, says higher interest rates have a silver lining for investors, who can be in shorter-duration, shorter interest-rate securities and collect yields without taking on too much risk. 

Retirement: High home healthcare costs are hurting the U.S. population, but there is political momentum behind change, and caregiving is one of the few areas that could find bipartisan support in a divided Congress. 

Follow-Up: Cautious on KR: Upside surprises generally make shares go up, but that hasn’t been true for the retailer for the past five of seven quarters, and while the outlook is bright, investors should consider taking profits. 

European Trader: “There’s lots to like in Hungary, including strong capital flows, fast economic growth, low borrowing costs, and a much improved banking sector. All should help boost local stocks.” 

Emerging Markets: Despite Russia’s challenging political situation with the U.S., the country’s stocks “have become an unlikely paragon for many emerging market investors based on fundamentals,” and valuations are rock-bottom. 

Commodities: “Exchange-traded funds backed by gold increased their holdings by $1B in October, marking a possibly bullish shift in investor sentiment toward the precious metal.” 

Streetwise: To fix healthcare, the U.S. doesn’t need to copy Europe, because the country is already doing so, albeit in overlapping, inefficient fashion—and the best way to solve the problem would through a bipartisan approach that shores up the entire system.

Congress splits, AG Sessions exits and the Fed stays on track

TradeTheNews.com Weekly Market Update: Congress splits, AG Sessions exits and the Fed stays on track
Fri, 09 Nov 2018 16:10 PM EST

Investors entered the week largely in a holding pattern ahead of the US midterm elections and FOMC meeting. Treasury yields remained elevated as bond markets were forced to absorb another slew of bill and coupon supply and indices drifted up into Tuesday’s vote. Equity markets surged after the House went blue as widely expected, but the Republicans added seats in the Senate. Talk of a potential infrastructure deal next year and a continued deregulation push aided risk sentiment along with the notion that gridlock has been historically good for stock market returns. The prospects for another round of tax stimulus receded in most people's minds as well, which spurred a narrative that this could ultimately give the Fed latitude to back away from some of the rate hikes penciled in for 2019, if needed.

Thursday’s Fed statement saw only marginal revisions to acknowledge business spending growth decelerated from its rapid pace earlier this year. Bond yields ticked up though as most viewed the statement as solidifying expectations that the Fed will move rates in December and then again in March. Emerging markets declined after reports circulated that the incoming Mexican President would urge his Congress to go after banking industry profits when he takes power in December. Thursday also saw US Attorney General Jeff Sessions step down at the request of the President, just a day after a fiery press conference at the White House suggested Trump is unlikely to change his contentious demeanor heading into the next Congress. US stock markets rolled over on Friday as derisking hit higher beta indices like the NASDAQ and Russel 2000, in particular, while pushing Treasury yields lower. US October producer prices handily topped expectations, but inflation worries had a hard time garnering momentum in light of the continued precipitous decline in oil prices. WTI fell for the 10th straight day after officially finishing in a bear market on Thursday. Prices dipped below $60/bbl for the first time since March heading into an OPEC monitoring committee meeting this weekend. Equities rode the post-election relief rally to moderate gains on the week: the S&P500 was up 2.1%, the DJIA gained 2.8%, and the Nasdaq added 0.7%.

In corporate news this week, Disney results topped estimates on strength from its film division while weakness in ESPN abated, and the company announced its new streaming service launching in 2019 will be named Disney+. Zillow dropped 20% on business model uneasiness and a cut to its outlook. Twilio surged on a significant beat and guidance raise as the cloud communications specialist saw strong expansions in its client base and revenue stream. Yelp dropped 30% after a miss and guidance cut, pointing to a shift to non-term advertising that has left the company more sensitive to short-term operational issues. Roku also fell after earnings and on reports that Comcast intends to offer its own over-the-top box. Shares of German steel producer ThyssenKrupp dropped after it issued a profit warning attributed to new risk provisions established to address ongoing investigations by the Federal Cartel Office. On the M&A front, Thoma Bravo reportedly approached Symantec about a potential acquisition. Arris confirmed it would be acquired by CommScope for $31.75/share in an all-cash deal valued at $7.4B. And Finisar accepted a $3B cash offer from II-VI Incorporated.

MON 11/5
*(UK) OCT PMI SERVICES: 52.2 V 53.3E (27th month of expansion)
*(EU) EURO ZONE NOV SENTIX INVESTOR CONFIDENCE: 8.8 V 9.8E
7203.JP Reports H1 Net ¥1.24T v ¥1.07T y/y, Op ¥1.26T v ¥1.1T y/y; Rev ¥14.67T v ¥14.2T y/y; To buyback 42M shares (1.44% of shares) for ¥250B, Raises guidance

TUES 11/6
DPW.DE Reports Q3 Net €146M v €641M y/y, EBIT €376M v €393Me, Rev €14.8B v €14.9Be
(IT) EU's Moscovici: Next step on Italian budget depends on the Italian response - comments ahead of the ECOFIN meeting in Brussels
(IE) Northern Ireland DUP's Donaldson: Appears we are heading for a 'no-deal' Brexit
*(US) SEPT JOLTS JOB OPENINGS: 7.009M V 7.085ME
SYMC Thoma Bravo reportedly approached Symantec about potential acquisition - press
(US) US Midterm election results: Fox and NBC predict the Democrats to gain control of the House for the first time since 2010; NBC projects Republicans to retain control of the Senate

WEDS 11/7
ACA.FR Reports Q3 Net €1.1B v €1.06Be, Rev €4.80B v €4.58B y/y
Reportedly Opec+ countries to discuss Oil output cuts for 2019 - press
(EU) Planned update of Brexit for EU envoys said to be moved from Wednesday to Friday as EU awaits British decisions that are currently on the table - financial press
(US) DOE CRUDE: +5.8M V +2ME; GASOLINE: +1.9M V -1.5ME; DISTILLATE: -3.5M V -2.5ME
(US) Association of American Railroads weekly rail traffic report for week ending Nov 7th: 560K, +5.4% y/y
(US) Pres Trump: hopes to work with Democrats on drug prices and infrastructure; dealmaking may be easier with a Democratic House
*(US) JEFF SESSIONS RESIGNS AS ATTORNEY GENERAL AT THE REQUEST OF PRES TRUMP; ACTING AG WHITAKER TO TAKE OVER MUELLER INVESTIGATION - PRESS
(US) SEPT CONSUMER CREDIT: $10.9B V $15.0BE

THURS 11/8
GLE.FR Reports Q3 adj Net €1.23B v €932M y/y, Op €1.93B v €1.45B y/y, Rev €6.53B v €5.95B y/y
SIE.DE Reports Q4 Net €681M v €1.25B y/y, Industrial Business profit €2.15B v €2.14B y/y, Rev €22.6B v €22.2B y/y; to buy back up to €3B in shares by 2021
DTE.DE Reports Q3 adj Net €1.32B v €1.35Be, adj EBITDA €6.21B v €6.02Be, Rev €19.1B v €18.9Be
AZN.UK Reports Q3 Core EPS $0.71 v $0.65e, Rev $5.34B v $5.12Be
ARRS Confirms to be acquired by CommScope for $31.75/shr valued at ~$7.4B inc debt
(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 2.00-2.25%; AS EXPECTED: UNEMPLOYMENT RATE HAS DECLINED, JOB GAINS HAVE BEEN STRONG ON AVERAGE
(CA) Canada govt reportedly disagrees with some US changes to USMCA trade deal text - press
DIS Reports Q4 $1.48 v $1.31e, Rev $14.31B v $13.8Be
YELP Reports Q3 $0.17 v $0.35e, Rev $241.1M v $246Me

FRI 11/9
(MX) President Elect Obrador proposes to scrap bank commissions - press
(UK) Q3 PRELIMINARY GDP Q/Q: 0.6% V 0.6%E; Y/Y: 1.5% V 1.5%E
(UK) SEPT INDUSTRIAL PRODUCTION M/M: 0.0% V -0.1%E; Y/Y: 0.0% V 0.4%E
FNSR To be acquired by II-VI Incorporated for $26.00/shr in cash and stock valued at $3.2B
VOW3.DE Reports Oct Brand Sales 516.9K -6.2% y/y
(US) OCT PPI FINAL DEMAND M/M: 0.6% V 0.2%E; Y/Y: 2.9% V 2.5%E (largest monthly rise since Sept 2012)
(EU) Eurogroup chief Centeno: Sanctions on Italy are not agenda at this time
(US) NOV PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 98.3 V 98.0E
(US) Federal prosecutors reportedly have gathered evidence that Pres Trump participated in hush money payoffs to Stormy Daniels and Karen McDougal; raise possibility that Trump violated campaign laws – WSJ
(MX) Pres-elect Lopez Obrador: will not change banking laws (reversing prior comment); doesn't intend to make change to legal framework in financial sector during first period of administration


Sunday, November 4, 2018

Spooked Markets Still Assessing Trade, Elections, and Earnings

TradeTheNews.com Weekly Market Update: Spooked Markets Still Assessing Trade, Elections, and Earnings
Fri, 02 Nov 2018 16:11 PM EST

Investors headed towards Halloween clearly spooked by the barrage selling that took hold of equity markets in the month of October. Monday saw the Dow finally breech correction territory, briefly touching 10% off the recent highs before a late session upside reversal took hold. Buying momentum ensued into the next session and talk of a potential base resulted in a significant mid-week rebound. October turned to November riding the first multiple days rally for the S&P in more than a month. Sentiment was further aided by a Thursday phone call between President Trump and President Xi when both indicated they looked forward to meeting and G20 at the end of the month. The comments fueled some optimism and speculation about a trade deal, but were also seen with an ample amount of skepticism given the lack of progress to date and in light of next week’s mid-term elections.

A disappointing reaction to Apple’s Q3 results and outlook weighed on equity trading Friday. Rates rose and indices slipped lower after the October jobs report was particularly robust while simultaneously members of the Administration tempered expectations for the Trump-Xi meeting. Payrolls snapped back sharply from last month’s disappointment, the unemployment rate held near five-decade lows, and wage growth topped 3% on a y/y basis for the first time since 2009. Despite the whipsawing in stocks and general uneasiness in the broader markets, US Treasury yields finished at recent highs. The US 30-year yield now stands at the highest level since the fall of 2014. The Dollar index broke above 97 for the first time since 2017 as overseas economic data continued to come in short of expectations. WTI crude broke through some technical support, dropping back towards the lows of mid-June, as the US indicated it will issue eight exemptions to the Iran oil sanctions that are set to take effect on Monday. For the week, the DJIA and S&P500 each rose 2.4%, and the Nasdaq gained 2.7% for its best week since May.

In corporate news this week, GM reported an earnings beat, pointing to higher prices and demand in China, and the automaker also foresaw a strong Q4. Both Clorox and Kellogg shares slumped after their managements cited headwinds, and Kraft Heinz said its profit was squeezed by higher costs. In the first quarter under its new CEO, GE fell short on both its top and bottom line and slashed its dividend to one penny per share. Apple shares fell post earnings on conservative guidance and some cautious emerging market commentary, and the tech giant also announced it would no longer break out unit sales in its quarterly reports, to the dismay of many analysts. Facebook pushed higher on stronger than expected profit and improved monetization of its user base. On the M&A front, IBM acquired Red Hat for $190.00/share in order to expand further into the cloud and open source software space. And reports indicated some PE firms are contending to acquire the embattled pizza-maker Papa Johns.

SUN 10/28
*(BR) Brazil Presidential Candidate Bolsonaro declared winner of the election
RHT To be acquired by IBM for $190.00/shr cash for enterprise value of $34B; IBM intends to suspend its share repurchase program in 2020 and 2021

MON 10/29
HSBA.UK Reports Q3 Net $3.9B v $2.9B y/y; adj Pretax $6.19B v $5.73Be; Rev $13.8B v $13.7Be
(MX) Mexico public consultation on Mexico City Airport prefers cancellation of the $13.3B project - US financial press
(DE) German Chancellor Merkel may not run for re-election as the head of the CDU party head but wants to remain as Chancellor - financial press
3988.HK Reports Q3 (CNY) Net 44.2B v 41.8B y/y; to issue up to CNY120B of shares to boost up capital
*(US) OCT DALLAS FED MANUFACTURING ACTIVITY INDEX: 29.4 V 28.1E
(US) Atlanta Fed forecasts initial Q4 GDP growth at 2.6%
(CN) US said to implement next round of China tariffs if Trump talks with Xi fail (expected to meet at G20 on Nov 30th) - press

TUES 10/30
(FR) FRANCE Q3 ADVANCE GDP Q/Q: 0.4% V 0.5%E; Y/Y: 1.5% V 1.5%E
BP.UK Reports Q3 Adj Net $3.84B v $2.79Be, Total Rev $80.8B v $60B y/y; Raises Dividend to 10.25c/shr; Now sees BHP acquisition all funded from cash
(DE) GERMANY OCT CPI SAXONY M/M: 0.2% V 0.4% PRIOR; Y/Y: 2.5% V 2.3% PRIOR
(DE) GERMANY OCT NET UNEMPLOYMENT CHANGE: -11K V -12KE; UNEMPLOYMENT CLAIMS RATE: 5.1% V 5.1%E
(EU) EURO ZONE BUSINESS CLIMATE INDICATOR: 1.01 V 1.16E; CONSUMER CONFIDENCE: -2.7 V -2.7E
(EU) EURO ZONE Q3 ADVANCE GDP Q/Q: 0.2% V 0.4%E; Y/Y: 1.7% V 1.8%E
(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL €4.5B VS. €3.5-4.5B INDICATED RANGE IN 5-YEAR AND 10-YEAR BTP BONDS
GE Reports Q3 $0.14 v $0.21e, Rev $29.6B v $29.9Be; Cuts dividend; To reorganize Power unit
(DE) GERMANY OCT PRELIMINARY CPI M/M: 0.2% V 0.1%E; Y/Y: 2.5% V 2.4%E
(US) Nevada reports Sept casino gaming Rev $991M, +1.3% y/y; Las Vegas strip Rev $546M, -3.7% y/y
*(US) OCT CONSUMER CONFIDENCE: 137.9 V 135.9E (18 year high)
(US) Dollar index trades above 97 for first time since June 2017
PZZA Bain and CVC reportedly among potential suitors contending to buy Papa Johns - press
FB Reports Q3 $1.76 v $1.46e, Rev $13.7B v $13.8Be
BIDU Reports Q3 $2.77 v $2.57e, Rev $4.11B v $4.12Be
(JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED; Vote 7:2 on yield curve control (YCC) setting (Harada and Kataoka again dissent)

WEDS 10/31
SAN.FR Reports Q3 Net €2.3B v €2.2Be, Rev €9.4B v €9.3Be
AIR.FR Reports Q3 Net €957M v €307M y/y, Adj EBIT €1.6B v €1.4Be, Rev €15.5B v €12.8B y/y
(EU) EURO ZONE OCT ADVANCE CPI ESTIMATE Y/Y: 2.2% V 2.2%E; CPI CORE Y/Y: 1.1% V 1.1%E
GM Reports Q3 $1.87 v $1.26e, Rev $35.8B v $34.2Be
*(US) OCT ADP EMPLOYMENT CHANGE: +227K V +187KE
(US) Treasury to sell $37B 2-year, $27B 10-year notes and $19B 30-year bond during week of Nov 5th
(US) Conference Board Oct Total online job ads 4.48M v 4.75M m/m v 4.56M y/y; New ads 1.72M v 1.88M m/m v 1.82M y/y
(US) Fed formally proposes loosening rules for large US banks; most banks under $250B would face reduced requirements (as expected)
*(US) DOE CRUDE: +3.2M V +3ME; GASOLINE: -3.2M V -1.5ME; DISTILLATE: -4.1M V -2ME
(UK) Brexit Min Raab: Expects Brexit deal by November 21st
(US) Association of American Railroads weekly rail traffic report for week ending Oct 27th: 562.8K, +4.4% y/y

THURS 11/1
CARLB.DK Reports Q3 (DKK) Rev 17.6B v 17.1Be
MT.NL Reports Q3 Net $0.9B v $1.4Be, EBITDA $2.73B v $2.7Be, Rev $18.5B v $19.8Be; completes transaction to acquire Ilva S.p.A. and launches ArcelorMittal Italia
CSGN.CH Reports Q3 (CHF) Net 424M v 479Me, adj Pretax 856M v 862Me, Rev 4.89B v 5.05Be
RDSA.NL Reports Q3 Basic CCS EPS $0.68 v $0.70e, adj CCS Net $5.62B v $5.73Be, Rev $100.2B v $75.8B y/y; launches second buyback tranche of $2.5B
(UK) BANK OF ENGLAND BANK (BOE) QUARTERLY INFLATION REPORT (QIR)
(CZ) CZECH CENTRAL BANK (CNB) RAISES 2-WEEK REPURCHASE RATE BY 25BPS TO 1.75%; AS EXPECTED
(UK) BANK OF ENGLAND BANK (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.75%; AS EXPECTED
*(US) Q3 PRELIMINARY NONFARM PRODUCTIVITY: 2.2% V 2.1%E; UNIT LABOR COSTS: 1.2% V 1.0%E
NYT Reports Q3 $0.15 v $0.12 y/y, Rev $417.3M v $385.6M y/y
(US) OCT FINAL MARKIT MANUFACTURING PMI: 55.7 V 55.8E
(CN) China Pres Xi: Pres Trump and I want to expand China-US trade cooperation; US-China economic teams should strength their contacts - Chinese press
(US) Atlanta Fed raises Q4 GDP forecast to 3.0% from 2.6% prior
PACB To be acquired by Illumina at $8/shr for ~$1.2B in all cash transaction

FRI 11/2
(CN) US President Trump has reportedly asked cabinet to draft possible China trade deal - press
CNBC: told that report President directing cabinet to draft China trade deal is not true; two sides remain far apart
*(US) OCT CHANGE IN NONFARM PAYROLLS: +250K V +200KE
(US) OCT UNEMPLOYMENT RATE: 3.7% V 3.7%E (matches lowest since 1969)
(US) OCT AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.2%E; Y/Y: 3.1% V 3.1%E; AVERAGE WEEKLY HOURS: 34.5 V 34.5E
(US) New York Fed Nowcast: raises Q4 forecast to 2.6% from 2.5% prior
(EU) ECB said to be mulling a new TLTRO series in the event of a fresh economic slowdown - press
(EU) European Banking Authority: All 25 banks pass 5.5% fully loaded capital threshold in adverse scenario in EU-wide stress tests – press
(CN) White House Econ Adviser Kudlow: confirms no massive movement between US and China on trade; Have not seen any new proposals out of China; yesterday's phone call between Xi and Trump was "good" but it was "just a phone call" - CNBC interview