Friday, August 26, 2016

Sideways Markets Slip on Friday After Hawkish Fed

TradeTheNews.com Weekly Market Update: Sideways Markets Slip on Friday After Hawkish Fed
Fri, 26 Aug 2016 16:04 PM EST

Markets drifted sideways most of the week as they anticipated a key policy speech from Fed Chair Yellen at Jackson Hole on Friday. Volumes were light and ranges remained narrow despite relatively heavy news flow including economic data releases and late season earnings reports. Healthcare stocks were in crosshairs for much of the week as several headlines affected trading. Pfizer's acquisition of Medivation pushed up oncology stocks early, but renewed drug price gouging concerns from Washington D.C. weighed on a swath of names competing within the US pharmacy market. After ending last week near $50/bbl, oil prices backed off early in the week exaggerated by a roll in the front month futures contract. Press reports continued to focus on the September meeting of energy producers in Algeria and the potential for coordinated action, but the likelihood of a meaningful agreement still seems low.

Friday's Jackson Hole meeting did induce some broader market volatility, but the trading flows only picked up after Fed Vice Chair Fischer came on TV to offer his explanation of what Chair Yellen attempted to lay out in her speech earlier. The US Dollar firmed and interest rates backed up while stocks came under modest pressure after the two highest ranking Fed officials illustrated their view that the economy continues to improve at a pace that has strengthened the case for at least one rate hike this year. The US benchmark 10-year yield has broken out to a three month high to close above 1.60%. In the wake of the Jackson Hole comments, the Dow swung more than 230 points, its biggest one-day move since late June. For the week, the DJIA lost 0.9%, the Nasdaq fell 0.4%, and the S&P500 dropped 0.7%.

Monday
- (UK) UK govt said to be readying multi-billion-pound post-Brexit housing stimulus - press
- MDVN: To be acquired by Pfizer for $81.50/shr in cash, valued at ~$14B

Tuesday
*(FR) FRANCE AUG PRELIMINARY MANUFACTURING PMI: 48.5 V 48.8E (6th straight contraction)
*(DE) GERMANY AUG PRELIMINARY MANUFACTURING PMI: 53.6 V 53.6E (21st month of expansion)
*(EU) EURO ZONE AUG PRELIMINARY MANUFACTURING PMI: 51.8 V 52.0E (38th month of expansion)
*(UK) AUG CBI INDUSTRIAL TRENDS TOTAL ORDERS: -5 V -10E
- BBY: Reports Q2 $0.57 v $0.42e, R$8.53B v $8.40Be; Raises FY17 guidance
*(TR) TURKEY CENTRAL BANK (CBRT) LEAVES BENCHMARK REPURCHASE RATE UNCHANGED AT 7.50%; AS EXPECTED; again narrows rate corridor
*(HU) HUNGARY CENTRAL BANK (NBH) LEAVES BASE RATE UNCHANGED AT 0.90%; AS EXPECTED
*(US) AUG PRELIMINARY MARKIT MANUFACTURING PMI: 52.1 V 52.6E
*(US) AUG RICHMOND FED MANUFACTURING INDEX: -11 V +6E
*(US) JULY NEW HOME SALES: 654K V 580KE (highest since Oct 2007)
- (IR) OPEC sources see positive signals from Iran on support for joint action to boost oil prices - press
* (US) NORTH AMERICA JULY SEMI BOOK/BILL RATIO: 1.05 V 1.00 prior

Wednesday
*(DE) GERMANY Q2 FINAL GDP Q/Q: 0.4% V 0.4%E; Y/Y: 1.8% V 1.8%E; GDP NSA Y/Y: 3.1% V 3.1%E
- GLEN.UK: Reports H1 Adj Net $300M v $254Me, Adj EBITDA $4.02B v $3.87Be, R$69.4B v $74.8Be
*(UK) JULY BBA LOANS FOR HOUSE PURCHASE: 37.7K V 38.0KE (lowest since Jan 2015)
*(US) JULY EXISTING HOME SALES: 5.39M V 5.51ME
- MYL: US Democratic Presidential candidate Hillary Clinton calls Epipen price hike 'outrageous', calls for Mylan to immediately cut price - press

Thursday
*(DE) GERMANY AUG IFO BUSINESS CLIMATE: 106.2 V 108.5E; CURRENT ASSESSMENT: 112.8 V 114.9E
- 494.HK: Reports H1 Net $72M v $149M y/y, Op $156M v $182M y/y, Rev $8.07B v $8.63B y/y
- 3328.HK: Reports H1 Net CNY37.6B v CNY37.3B y/y, NII CNY68.1B v CNY71.1B y/y
- MYL: Plans to cut patient Epipen cost through use of savings card; Reducing patient cost by 50% off Mylan list price
- 939.HK: Reports H1 Net CNY133.4B v CNY132.5Be
- (IR) Iran Oil Min Zanganeh plans to attend the OPEC meeting in Algeria on Sept 26th
*(US) INITIAL JOBLESS CLAIMS: 261K V 265KE; CONTINUING CLAIMS: 2.15M V 2.16ME
*(US) JULY PRELIMINARY DURABLE GOODS ORDERS: 4.4% V 3.4%E; DURABLES EX TRANSPORTATION: 1.5% V 0.4%E
- (US) Atlanta Fed GDPNow: lowers Q3 GDP forecast to 3.4% from 3.6% on Aug 16th
- (SA) Saudi Energy Minister: Have not discussed specific action regarding a production freeze; Has been no discussions of substance on OPEC production levels - press interview
*(JP) JAPAN JULY NATIONAL CPI Y/Y: -0.4% V -0.4%E; CPI EX FRESH FOOD (CORE) Y/Y: -0.5% V -0.4%E

Friday
*(DE) GERMANY SEPT GFK CONSUMER CONFIDENCE: 10.2 V 10.0E (matches highest level since Oct 2001)
*(EU) EURO ZONE JULY M3 MONEY SUPPLY Y/Y: 4.8% V 5.0%E
*(UK) Q2 PRELIMINARY GDP Q/Q: 0.6% V 0.6%E; Y/Y: 2.2% V 2.2%E
*(US) Q2 PRELIMINARY GDP ANNUALIZED Q/Q: 1.1% V 1.1%E; PERSONAL CONSUMPTION: 4.4% V 4.2%E
- RAX: Agrees to be taken private by Apollo Global at $32.00/shr all cash in $4.3B deal
*(US) AUGUST FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 89.8 V 90.4 PRELIM
- (US) Fed Chair Yellen: case for rate hike has strengthened in recent months - Jackson Hole speech
- (US) Weekly Baker Hughes Rig Count: 489 v 491 w/w (-0.4%) (breaks streak of 8 weeks of increases)
* (US) Fed Vice Chair Fischer: notes strong job reports recently and seeing more evidence the economy has strengthened; emphasizes Fed remains data dependent and thus a rate hike or hikes is possible this year