TradeTheNews.com Weekly
Market Update: Post-Election Reflation Trade Continues
Fri, 18 Nov 2016 16:04 PM EST
The post US election money flows largely extended into a second week, but
moderation was seen across various sectors and asset classes. The Trump
reflation trade continued to push interest rates higher and was aided by
economic data and Federal Reserve commentary that essentially clinched a rate
hike is coming at next month's monetary policy meeting. Outside of the chatter
surrounding the President-elect's rumored cabinet picks, the question markets
shifted most of their focus onto was just how many more hikes could follow in
2017. Against that backdrop the US benchmark 10-year yield rose above 2.3% for
the first time since ealry 2015. The spread over the comparable German 10-year
yield widened to levels not seen since the late 1980's. The US Dollar continued
to surge, particularly against emerging market currencies, including another 1%
move against the Chinese Yuan this week. Currency traders prepared for seasonal
FX liquidity to ebb which could allow for further aggressive moves. The Euro is
within striking distance of the post financial crisis low of 1.0460 and after
that potentially parity. Japan's Nikkei touched a fresh 10-month high powered
by the USD/JPY which rose to a level not seen since June. WTI crude futures
bounced 6% off a Monday low to surpass $46 as producers met in Doha on Friday
and by most accounts remained adamant an output deal will be reached by the
November 30th meeting.
The Dow Jones Industrial average largely traded sideways, consolidating the
outsized move into banks and financials since the election. Transports have
traded up 15 of the last 18 sessions, emboldening bullishness by Dow theorists.
The rotation into small caps continued, exhibited by the Russell 2000 which
bumped up against lifetime highs at 1313. The NASDAQ saw money slosh back to
many of the large cap tech names that so severely underperformed in the wake of
the Trump victory and thus the overall index played a bit of catch up. The
S&P encountered some resistance just below new all-time highs as traders
try to handicap just how much and how fast Trump's pro-growth agenda can be
enacted. Corporate bond issuance picked up to the most active levels in a
couple weeks spurred by the move up in rates along with the calendar. For the
week, the DJIA gained 0.1%, the S&P500 rose 0.8%, and the Nasdaq added
1.6%.
The last of the major quarterly earnings reports continued to paint a mixed
picture. Cisco Systems reported solid results but shares dropped 5% after
guiding next quarter down on lower spending by service provider customers.
Shares of Home Depot and Lowe's fell after their earnings reports and Lowe's
cuts its guidance for the year. Discount retailer TJX beat expectations and
raised guidance, sending shares to their best level in two months. On the
M&A front, Samsung jumped into the automotive technology segment with the
$8 billion acquisition of Harman International.
SUNDAY 11/13
(JP) JAPAN Q3 PRELIMINARY GDP Q/Q: 0.5% (matches 6-quarter high) V 0.2%E;
ANNUALIZED GDP Q/Q: 2.2% (6-quarter high) V 0.8%E
MONDAY 11/14
HAR: To be acquired by Samsung Electronics for $112/shr cash; deal valued at
$8.0B
(RU) Kremlin spokesperson: Russia President Putin and President-elect Trump
agree on phone call that Russia-US relations are unsatisfactory, aim to
normalize relationship - Russia press
TUESDAY 11/15
(UK) Govt said to have no common Brexit strategy due to divisions within
Cabinet - financial press (DE) GERMANY Q3 PRELIMINARY GDP Q/Q: 0.2% V 0.3%E;
Y/Y: 1.7% V 1.8%E; GDP NSA Y/Y: 1.5% V 1.6%E
VOD.UK: Reports H1 EBITDA €7.91B v €8.04B y/y, Rev €27.1B v €28.2B y/y, Organic
Service Revenue Growth: +2.4% y/y
(UK) OCT PPI INPUT M/M: 4.6% V 2.0%E; Y/Y: 12.2% V 9.3%E
(EU) EURO ZONE Q3 PRELIMINARY GDP Q/Q: 0.3% V 0.3%E; Y/Y: 1.6% V 1.6%E (2nd
reading of data)
(DE) GERMANY NOV ZEW CURRENT SITUATION SURVEY: 58.8 V 61.6E; EXPECTATIONS
SURVEY: 13.8 V 8.1E
HD: Reports Q3 $1.60 v $1.58e, R$23.2B v $23.0Be
(US) OCT IMPORT PRICE INDEX M/M: 0.5% V 0.4%E; Y/Y: -0.2% V -0.3%E
(US) OCT ADVANCE RETAIL SALES M/M: 0.8% V 0.6%E ; RETAIL SALES EX AUTO M/M:
0.8% V 0.5%E
TJX: Reports Q3 $0.91 v $0.87e, R$8.29B v $8.27Be
(US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 3.3% from 3.1% on Nov 9th
WEDNESDAY 11/16
700.HK: Reports Q3 Net CNY10.6B v CNY10.7Be, Rev CNY40.4B v CNY26.6B y/y
(UK) SEPT ILO UNEMPLOYMENT RATE 3M/3M: 4.8% V 4.9%E
(UK) OCT JOBLESS CLAIMS CHANGE: 9.8K V +2.0KE; CLAIMANT COUNT RATE: 2.3% V
2.3%E
(US) OCT PPI FINAL DEMAND M/M: 0.0% V 0.3%E; Y/Y: 0.8% V 1.2%E
(US) OCT INDUSTRIAL PRODUCTION M/M: 0.0% V 0.2%E; CAPACITY UTILIZATION: 75.3% V
75.5%E
(US) NOV NAHB HOUSING MARKET INDEX: 63 V 63E
(US) Association of American Railroads weekly rail traffic report for week
ending Nov 12th: 541.1K carloads and intermodal units, -0.5% y/y
CSCO: Reports Q1 $0.61 v $0.59e, R$12.4B v $12.3Be
(JP) BOJ CONDUCTS FIXED-RATE JGB PURCHASE OPERATION (1st time under new policy
framework) FOR JGBs WITH 1-5 YEAR MATURITIES
THURSDAY 11/17
(ID) INDONESIA CENTRAL BANK (BI) LEAVES 7-DAY REVERSE REPO UNCHANGED AT 4.75%,
AS EXPECTED
(UK) OCT RETAIL SALES EX AUTO FUEL M/M: 2.0% V 0.4%E; Y/Y: 7.6% V 5.4%E
(UK) OCT RETAIL SALES INC AUTO FUEL M/M: 1.9% V 0.5%E; Y/Y: 7.4% V 5.3%E
(highest annual pace since 2002)
(EU) EURO ZONE OCT CPI M/M: 0.2% V 0.3%E; Y/Y (FINAL): 0.5% V 0.5%E; CPI CORE
Y/Y (FINAL): 0.8% V 0.8%E
BBY: Reports Q3 $0.62 v $0.47e, R$8.95B v $8.84Be
(US) OCT CPI M/M: 0.4% V 0.4%E; CPI EX FOOD AND ENERGY M/M: 0.1% V 0.2%E; CPI
NSA INDEX: 241.729 V 241.785E
(US) INITIAL JOBLESS CLAIMS: 235K (lowest since 1973) V 257KE; CONTINUING
CLAIMS: 1.98M V 2.03ME (lowest since 2000)
(US) OCT HOUSING STARTS: 1.323M V 1.156ME; BUILDING PERMITS: 1.229M V 1.193ME
(US) NOV PHILADELPHIA FED BUSINESS OUTLOOK: 7.6 V 7.8E
(US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 3.6% from 3.3% on Nov 15th
(MX) MEXICO CENTRAL BANK (BANXICO) RAISES OVERNIGHT RATE BY 50BPS TO 5.25%; AS
EXPECTED
(CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 3.50%;
AS EXPECTED
AMAT: Reports Q4 $0.66 v $0.66e, R$3.30B v $3.31Be
CRM: Reports Q3 $0.24 v $0.21e, R$2.14B v $2.12Be
GPS: Reports Q3 $0.60 v $0.59e, R$3.80B v $3.77Be
(CN) CHINA OCT PROPERTY PRICES M/M: RISE IN 62 OUT OF 70 CITIES VS 63 PRIOR;
Y/Y: RISE IN 65 OUT OF 70 CITIES V 64 PRIOR
FRIDAY 11/18
(IR) Iran OPEC Gov Kazempour: Remains optimistic for an OPEC deal after talks
with Russia
(IQ) Iraq Oil Min Luaibi: optimistic OPEC will clinch output deal; differences
are narrowing over OPEC output data - press
(US) New York Fed Nowcast: raises Q4 GDP forecast to 2.4% from 1.6% on 11/4
