TradeTheNews.com Weekly
Market Update: Inconclusive Jobs Report Leaves Fed Up in the Air
Fri, 02 Sep 2016 16:03 PM EST
Another week of summer trading was punctuated by a few key data points and
corporate developments. Positive data included the US August Consumer
Confidence reading hitting an 11 month high, while China August Manufacturing
PMI registered its first expansionary reading in 3 months and hit a 22 month
high. Then on Friday, the US nonfarm payroll data missed expectations and
showed some deterioration in hourly earnings and weekly hours. This led to Fed
Fund futures indicating a lesser chance of a September rate hike, shifting
concerns about tighter US rates to December. However, some experts including
Goldman's chief economist Jan Hatzius, cautioned that the payroll gain at 151K
was good enough for the Fed to greenlight a September rate hike. Hours after
the data, Fed hawk Lacker tried to start that sentiment shift by stating that
Fed funds rate should be considerably higher than it is now.
In corporate news, Mylan attempted to stem the tide of bad news flow by
launching a generic version of its own EpiPen, but that did not deter a rare
bi-partisan group of Congressmen from demanding the company appear to provide
for testimony. A lackluster quarterly earnings report from Salesforce.com may
be an indication that the breakneck pace of growth in the cloud sector may be
starting to slow. Canadian fertilizer producers Potash Corp and Agrium
confirmed they are in preliminary merger discussions, though press reports said
a deal could be announced as soon as next week. Meanwhile, Mondelez dropped its
pursuit of Hersey. Wynn and Las Vegas Sands saw good gains on Thursday as
monthly Macau casino revenue rose for the first time in 27 months.
WTI crude futures slipped about 7% on the week as OPEC notched another record
high month of production and traders remained skeptical that the cartel can
reach a deal on a production freeze. Most currency pairs remained in tight
ranges, with the EUR/USD holding below the 1.12 level most of the week. The yen
was a notable exception, rising from 102 to 104 over the course of the week,
despite the yield on the bellwether 10-year Japanese government bond moving
higher towards zero percent (but remaining in negative territory), reaching a
5-month highs. Policy divergence between the BOJ and the Fed contributed to the
yen's underperformance. Equity indices traded sideways and for the week the
DJIA rose 0.5%, the S&P500 gained 0.5%, the Nasdaq edged up 0.6%.
Mon 8/29
MYL: To launch first generic to EpiPen Auto-Injector at a list price of $300/
two-pack carton
(US) JULY PERSONAL INCOME: 0.4% V 0.4%E; PERSONAL SPENDING: 0.3% V 0.3%E
(US) JULY PCE CORE M/M: 0.1% V 0.1%E; Y/Y: 1.6% V 1.5%E
(US) JULY PCE DEFLATOR M/M: 0.0% V 0.0%E; Y/Y: 0.8% V 0.8%E
HSY: Mondelez International no longer pursuing combination with Hershey
(JP) JAPAN JULY JOBLESS RATE: 3.0% V 3.1%E; Lowest since 1995
Tues 8/30
Industrial and Commercial Bank of China Ltd (ICBC):Reports H1 Net CNY150.2B v
CNY149.9Be; Op Income CNY329.0B v CNY336.7B y/y, Net Interest Income CNY234.3B
v CNY252.1B y/y
Bank of China Ltd: Reports H1 Net CNY93B v CNY91.7Be, Net Interest Income
CNY154.9B v CNY163.4B y/y
(EU) EURO ZONE AUG BUSINESS CLIMATE INDICATOR: 0.02 V 0.36E; CONSUMER
CONFIDENCE (FINAL):-8.5 V -8.5E
(DE) GERMANY AUG PRELIMINARY CPI M/M: 0.0% V 0.1%E; Y/Y: 0.4% V 0.5%E
(US) AUG CONSUMER CONFIDENCE: 101.1 V 97.0E (highest since Sep 2015)
AGU: Agrium and PotashCorp confirm preliminary discussion regarding potential
merger of equals
Weds 8/31
(EU) EURO ZONE JULY UNEMPLOYMENT RATE: 10.1% V 10.0%E
(EU) EURO ZONE AUG ADVANCE CPI ESTIMATE Y/Y: 0.2% V 0.3%E; CPI CORE Y/Y: 0.8% V
0.9%E
(US) AUG ADP EMPLOYMENT CHANGE: +177K V +175KE
(US) AUG CHICAGO PURCHASING MANAGER: 51.5 V 54.0E
(US) JULY PENDING HOME SALES M/M: 1.3% V 0.7%E; Y/Y: -2.2% V +2.2%E
(BR) Brazil Senate formally votes 61-20 to impeach President Rousseff for
breaking budget laws, as expected
CRM: Reports Q2 $0.24 v $0.22e, R$2.04B v $2.02Be
(BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC RATE UNCHANGED AT 14.25%; AS
EXPECTED
(CN) CHINA AUG MANUFACTURING PMI (GOVT OFFICIAL): 50.4 V 49.8E (1st expansion
in 3 months and a 22-month high)
(AU) AUSTRALIA Q2 PRIVATE CAPITAL EXPENDITURE (CAPEX) Q/Q: -5.4% V -4.0%E
(CN) CHINA AUG CAIXIN PMI MANUFACTURING: 50.0 V 50.1E
Thurs 9/1
(HK) Macau Aug casino revenue 18.8B patacas v 17.8B prior, y/y: +1.1% (first
rise in 27 months) v -4.5% prior
(UK) UK AUG PMI MANUFACTURING: 53.3 V 49.0E (moves back into expansion and
highest since Oct 2015)
(US) Q2 FINAL NONFARM PRODUCTIVITY: -0.6% V -0.6%E; UNIT LABOR COSTS: 4.3% V
2.1%E
(US) INITIAL JOBLESS CLAIMS: 263K V 265KE; CONTINUING CLAIMS: 2.16M V 2.15ME
(US) AUG FINAL MARKIT MANUFACTURING PMI: 52.0 V 52.1E (lowest reading since
June 2016)
(US) AUG FINAL MARKIT MANUFACTURING PMI: 52.0 V 52.1E (lowest reading since
June 2016)
Friday 9/2
(US) AUG UNEMPLOYMENT RATE: 4.9% V 4.8%E
(US) AUG AVERAGE HOURLY EARNINGS M/M: 0.1% V 0.2%E; Y/Y: 2.4% V 2.5%E; AVERAGE
WEEKLY HOURS: 34.3 V 34.5E
(US) AUG CHANGE IN NONFARM PAYROLLS: +151K V +180KE
DAL: Reports Aug load factor 84.4% v 87.3% y/y; PRASM -9.5% y/y; Aug outage had
$100M negative revenue impact
(US) Weekly Baker Hughes US Rig Count: 497 v 489 w/w (+2%)
(US) Fed's Lacker (hawk, non-voter): Fed funds rate should be considerably
higher than it is now
(ES) PM Rajoy fails 2nd confidence vote in Spain legislature, as expected (vote
170 to 180)
