TradeTheNews.com Weekly
Market Update: Markets Choppy Ahead of FOMC Next Wednesday
Fri, 16 Sep 2016 16:05 PM EST
Volatility continued this week as the markets pondered the timing of the next
Fed rate hike. The week started off with Fed Governor Brainard making the
dovish case for Fed policy, which helped reverse the risk off sentiment that
built up last week amid a barrage of hawkish commentary from Brainard's
colleagues. A big miss on US Advanced Retail Sales data on Thursday lent
support to the dovish view that the Fed will be on hold next week. But a hotter
than expected US CPI reading on Friday caused markets to once again reassess
expectations for Fed policy as progress toward the inflation target could bring
the next hike sooner. Meanwhile, the BOE kept its policy unchanged this week,
as expected, but said it could cut rates again if the baseline forecast set in August
is realized. The renewed contrast between US policy tightening and European
easing led to the dollar strengthening substantially on Friday, particularly
against the pound sterling. WTI crude futures slid throughout the week,
dropping three bucks to around $43/bbl. Two major M&A deals in the
agriculture sector, an earnings miss by Oracle and increased guidance from
Intel provided the buzz in the corporate sector. The tech sector was also
bolstered by a surge in Apple shares driven by strong pre-orders for iPhone 7
at Sprint and T-Mobile. Equities were volatile but ended little changed: for
the week the DJIA gained 0.2%, the S&P500 added 0.5%, and the Nasdaq was
jumped 2.3%.
Agrium and Potash began a week replete with large-scale M&A activity by
announcing a $26B merger of equals on Monday morning. The all-stock combination
would partner Potash's crop nutrient production capacity with the farm retail
network of Agrium to form an integrated crop inputs platform. In another
agricultural mega-merger announcement, Germany's Bayer agreed to acquire
Monsanto with an improved $128/share cash offer after months of back-and-forth.
With a total value of $66B, the deal would be the largest all-cash deal on
record, a fact which has not gone unnoticed by regulators; Iowa Republican
Senator Grassley has already noted a Bayer-Monsanto merger would likely cause
concerns for US farmers. In another sign of a rebound in oil sector M&A,
Anadarko announced the acquisition of Freeport McMoran's deepwater Gulf of
Mexico assets for $2B, adding approximately 80K net BOE per day to Anadarko's
production, who aims to use the added revenue from the offshore wells to
accelerate its onshore development plans. And late in the week, Gilead
registered a $5B notes offering, leading investors to believe some future
acquisition plans could soon be set into motion.
In the only major corporate earnings release this week, Oracle reported a miss
on both profit and revenue in Q1, noting continued growth in its burgeoning
cloud business but a slowdown in traditional new software licenses. The tech
giant raised its SaaS/PaaS FY revenue growth outlook, but guided its overall
revenue below street consensus, sending shares lower. Intel, on the other hand,
raised its Q3 revenue guidance Friday, citing replenished PC supply chain
inventory and some signs of improving PC demand. Off-road vehicle manufacturer
Polaris cut its FY profit guidance on effects from the RZR Turbo product recall
that have become more expensive than previously anticipated.
MON 9/12
AGU.CA: To combine in merger of equals with Potash; To form new parent company
in all-stock deal with EV of $36B
(US) Fed Gov Brainard (FOMC voter, dove): urges continued prudence in
removing accommodation; more concerned about undershooting inflation
TUES 9/13
(DE) GERMANY AUG FINAL CPI M/M: 0.0% V 0.0%E; Y/Y: 0.4% V 0.4%E
IEA Monthly Report: Cuts 2016 global oil demand forecast by 100K bpd and by
200K in 2017
(UK) AUG CPI M/M: 0.3% V 0.4%E; Y/Y: 0.6% V 0.7%E; CPI CORE Y/Y: 1.3% V 1.4%E
(annual pace matches 21-month high)
(UK) AUG PPI INPUT M/M: 0.2% V 0.6%E; Y/Y: 7.6% V 8.1%E
(DE) GERMANY SEPT ZEW CURRENT SITUATION SURVEY: 55.1 V 56.0E; EXPECTATIONS
SURVEY: 0.5 V 2.5E
AAPL: T-Mobile says iPhone 7 and iPhone 7 Plus sales in pre orders were up
4x compared to the next most popular iPhone
(JP) BOJ to consider moving deeper into negative rates; may drop timing on
reaching 2% inflation target - Nikkei
WED 9/14
RMS.FR: Reports H1 Net €545M v €546Me, Op €827M v €818.5Me, Rev €2.44B v €2.44B
prelim
(UK) JULY AVERAGE WEEKLY EARNINGS 3M/Y: 2.3% V 2.1%E; WEEKLY EARNINGS 3M/Y (EX
BONUS): 2.1% V 2.2%E
(UK) AUG JOBLESS CLAIMS CHANGE: +2.4K V +1.8KE; CLAIMANT COUNT RATE: 2.2% V
2.2%E
(UK) JULY ILO UNEMPLOYMENT RATE 3M/3M: 4.9% V 4.9%E
(US) AUG IMPORT PRICE INDEX M/M: -0.2% V -0.1%E; Y/Y: -2.2% V -2.2%E
(AU) AUSTRALIA AUG EMPLOYMENT CHANGE: -3.9K (first decline in 6 months) V
+15.0KE; UNEMPLOYMENT RATE: 5.6% (3-year low) V 5.7%E
THURS 9/15
(CH) SNB LEAVES SIGHT DEPOSIT INTEREST RATE UNCHANGED AT -0.75%; AS EXPECTED
(UK) AUG RETAIL SALES (EX-AUTO FUEL) M/M: -0.3% V-0.7%E; Y/Y: 5.9% V 4.8%E
(UK) AUG RETAIL SALES (INCLUDING AUTO FUEL) M/M: -0.2%V -0.4%E; Y/Y: 6.2%V
5.4%E
(EU) EURO ZONE AUG CPI M/M: 0.1% V 0.1%E; Y/Y: 0.2% V 0.2%E; CPI CORE Y/Y: 0.8%
V 0.8%E
(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS
EXPECTED
(UK) BOE SEPT MINUTES: VOTED 9-0 TO LEAVE INTEREST RATES UNCHANGED AT 0.25%
(US) AUG ADVANCE RETAIL SALES M/M: -0.3% V -0.1%E; RETAIL SALES EX AUTO M/M:
-0.1% V +0.2%E
(US) AUG PPI FINAL DEMAND M/M: 0.0% V +0.1%E; Y/Y: 0.0% V +0.1%E
(US) SEPT PHILADELPHIA FED BUSINESS OUTLOOK: 12.8 V 1.0E (Highest since Feb
2015)
ORCL: Reports Q1 $0.55 v $0.58e, R$8.60B v $8.72Be
(US) NORTH AMERICA AUG SEMI BOOK/BILL RATIO: 1.03 V 1.05 prior
FRI 9/16
(RU) RUSSIA CENTRAL BANK (CBR) CUTS 1-WEEK AUCTION RATE BY 50BPS TO 10.00%; AS
EXPECTED
(US) AUG CPI M/M: 0.2% V 0.1%E; CPI EX FOOD AND ENERGY M/M: 0.3% V 0.2%E
INTC: Raises Q3 R$15.3-15.9B v $14.8Be (prior R$14.4-15.4B); cites
replenished PC supply chain inventory and improving PC demand
(US) SEPT PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 89.8 V 90.6E
(US) Fed reports Q2 Financial Accounts: Household Change in Net Worth: $1.075T
v $0.837T prior; Total household net worth: $89.1T v $88.1T q/q
