TradeTheNews.com Weekly
Market Update: FOMC Charts 2017 Course, Trump Administration Fills In
Fri, 16 Dec 2016 16:13 PM EST
The week opened with US stock markets riding at fresh all-time highs ahead an
all but certain FOMC rate hike. Global economic readings continued to improve
led by better than expected readings in the US which only solidified Fed
expectations, as well as kept upward pressure on interest rates and the Dollar.
Though the 25 basis point hike was widely telegraphed, markets still spent much
of the latter half of the week calibrating to what it heard from Chair Yellen
in the FOMC statement and her press conference. Most FOMC members now expect
three rate hikes in 2017 from two previously. By emphasizing she never favored
running high pressure economy some perceived the news was ultimately a bit more
hawkish then what markets were expecting. The Dollar Index extended to fresh 14
year highs and the US 10-year yield topped 2.6% while stocks sold off into
Wednesday's close as aggressively as we had seen since the Nov election. Buyers
though quickly returned when concerns surrounding the rising US dollar and
higher interest rates were pushed aside by another round of accelerating
economic data and performance chasing into years end. Friday's options
expiration saw generally muted trade as Treasury prices stabilized and the
Dollar rally lost momentum. The Euro closed the week at the lowest levels seen
in more than 13-years and gold prices finished below $1150 for the first time
since February. For the week the Dow rose 0.4%, while the S&P and NASDQ
finished marginally lower.
In corporate news, Donald Trump again took center stage to start the week,
tweeting on Monday that Lockheed's F-35 costs were 'out of control' and he
planned to save 'billions' from the aircraft program, sending LMT down 4%. In
less contentious fashion, Trump met midweek with prominent tech leaders,
promising he's here to help the industry and will make trade deals 'fair.' Also
on the regulatory front, gaming names were boosted this week when the Japanese
parliament gave final passage to its casino bill, setting the stage for
potentially large-scale investment into Japanese casinos in the coming decade.
Shares of General Motors and Ford took a hit Wednesday when a Chinese official
said the government was considering penalties on an unnamed US automaker for
monopolistic behavior. Many key names reported or held Analyst Days as well
this week: Athena Heath shares surged on its initial 2017 outlook, where it
guided strong bookings and revenue growth. Adobe reported a strong finish to
FY16 but its guidance came in slightly below consensus due to FX headwinds.
In M&A news, the long-running Viacom-CBS merger saga came to an abrupt end
when Shari Redstone on Monday called off the deal, choosing instead to support
CEO Bakish's plans to turn Viacom around. In addition, Sumner Redstone
announced he would no longer vote in Viacom board meetings and would step down
from board in Feb. Rupert Murdoch's 21st Century Fox agreed to a £10.75/shr bid
for European TV provider Sky, taking advantage of the weaker pound to grow
Fox's global media reach. And foreign press reports of a Kraft Heinz bid for
Mondelez were denied by the company, but a New York Post report indicated
Brazil's 3G Capital may be raising funds to pursue Mondelez.
SUNDAY 12/11
BA: Boeing and Iran Air announce agreement for 80 airplanes with estimated
value of $16.6B
MONDAY 12/12
Four major cities (Paris, Mexico City, Madrid and Athens) move to ban diesel
vehicles by 2025 (update)
(CN) China Association of Automobile (CAAM) Nov Vehicle Sales y/y: 2.59M units,
+16.6% v +18.7% prior; YTD: 24.9M units, +14.1% v +3.3% y/y - CAAM
*(CN) CHINA NOV INDUSTRIAL PRODUCTION Y/Y: 6.2% (3-month high) V 6.1%E; YTD
Y/Y: 6.0% V 6.0%E
*(CN) CHINA NOV RETAIL SALES Y/Y: 10.8% (11-month high) V 10.2%E; YTD Y/Y:
10.4% V 10.3%E
TUESDAY 12/13
*(UK) NOV CPI M/M: 0.2% V 0.2%E; Y/Y: 1.2% (highest since summer 2014) V 1.1%E;
CPI CORE Y/Y: 1.4% V 1.3%E
*(UK) NOV PPI INPUT M/M: -1.1% V -0.5%E; Y/Y: 12.9% V 13.5%E
*(DE) GERMANY DEC ZEW CURRENT SITUATION: 63.5 V 59.0E; EXPECTATIONS SURVEY:
13.8 V 14.0E
(US) Both UPS and Fedex said to be struggling to keep up with record holiday
shipping demand - financial press
*(US) NOV IMPORT PRICE INDEX M/M: -0.3% V -0.4%E; Y/Y: -0.1% V 0.0%E
*(CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT
3.50%; AS EXPECTED
*(JP) JAPAN Q4 TANKAN LARGE MANUFACTURING INDEX: 10 (1-year high) V 10E;
MANUFACTURERS OUTLOOK: 8 (1-year high) V 9E; ALL-INDUSTRY CAPEX: 5.5%
(3-quarter low) V 6.1%E
(CN) NDRC to penalize an un-named US automaker for monopoly - China Daily
WEDNESDAY 12/14
(CN) China end of Nov Yuan forex positions CNY22.3T, lower by CNY382.7B m/m
(Largest monthly drop this year and marks the 13th consecutive month of
decline)
*(UK) OCT AVERAGE WEEKLY EARNINGS 3M/Y: 2.5% V 2.3%E; WEEKLY EARNINGS (EX
BONUS) 3M/Y: 2.6% V 2.6%E
*(UK) NOV JOBLESS CLAIMS CHANGE: +2.4K V +6.5KE; CLAIMANT COUNT RATE: 2.3% V
2.3%E
*(UK) OCT ILO UNEMPLOYMENT RATE 3M/3M: 4.8% V 4.8%E
*(US) NOV ADVANCE RETAIL SALES M/M: 0.1% V 0.3%E; RETAIL SALES EX AUTO M/M:
0.2% V 0.4%E
*(US) NOV PPI FINAL DEMAND M/M: 0.4% V 0.1%E; Y/Y: 1.3% V 0.9%E
*(US) NOV INDUSTRIAL PRODUCTION M/M: -0.4% V -0.3%E; CAPACITY UTILIZATION:
75.0% V 75.1%E
(US) Atlanta Fed cuts Q4 GDP forecast to 2.4% from 2.6% on Dec 9th
(US) US govt reportedly files first criminal charges in generic drug price
fixing investigation - press
(US) Association of American Railroads weekly rail traffic report for week
ending Dec 10th: 538.9K carloads and intermodal units, -1.1% y/y
*(US) FOMC RAISES FED FUNDS TARGET RANGE 25BPS TO 0.50-0.75% (AS EXPECTED);
Average Fed official looking for three hikes in 2017
*(US) FOMC UPDATED ECONOMIC FORECAST FOR DEC MEETING
MDLZ: Kraft Heinz said to consider acquiring Mondelez; Berkshire, Lemann may
join acquisition - Swiss press
YHOO: Identifies data security issues concerning certain Yahoo user accounts;
believes 3rd party stole data from 1B user accounts in Aug 2013
*(AU) AUSTRALIA NOV EMPLOYMENT CHANGE: +39.1K (1-year high) V +17.5KE;
UNEMPLOYMENT RATE: 5.7% V 5.6%E
*(KR) BANK OF KOREA (BOK) LEAVES INTEREST RATE UNCHANGED AT 1.25%; AS EXPECTED
(6th consecutive month of holding rates)
THURSDAY 12/15
*(FR) FRANCE DEC PRELIMINARY MANUFACTURING PMI: 53.5 V 51.8E (3rd month of
expansion and highest since May 2011)
*(CH) SWISS NATIONAL BANK (SNB) LEAVES SIGHT DEPOSIT INTEREST RATE UNCHANGED AT
-0.75%; AS EXPECTED
*(DE) GERMANY DEC PRELIMINARY MANUFACTURING PMI: 55.5 V 54.5E (25th month of
expansion)
*(EU) EURO ZONE DEC PRELIMINARY MANUFACTURING PMI: 54.9 V 53.7E (42nd month of
expansion and fastest pace since April 2011)
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS EXPECTED;
maintains rate path
*(UK) NOV RETAIL SALES EX-AUTO/FUEL M/M: 0.5% V 0.0%E; Y/Y: 6.6% V 6.0%E
*(UK) NOV RETAIL SALES (INCLUDING AUTO/FUEL) M/M: 0.2% V 0.0%E; Y/Y: 5.9% V
5.9%E
EUR/USD: *EURO MOVES BELOW $1.0460 FOR ITS LOWEST LEVEL SINCE JAN 2003
*(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS
EXPECTED
*(UK) BOE DEC MINUTES: VOTED 9-0 (UNANIMOUS) TO LEAVE POLICY UNCHANGED AT 0.25%
*(US) INITIAL JOBLESS CLAIMS: 254K V 255KE; CONTINUING CLAIMS: 2.02M V 2.00ME
*(US) NOV CPI M/M: 0.2% V 0.2%E; CPI EX FOOD AND ENERGY M/M: 0.2% V 0.2%E; CPI
INDEX NSA: 241.353 V 241.413E
*(US) DEC EMPIRE MANUFACTURING: 9.0 V 4.0E
*(US) DEC PHILADELPHIA FED BUSINESS OUTLOOK: 21.5 V 9.1E (highest since Nov
2014)
*(US) DEC PRELIMINARY MARKIT MANUFACTURING PMI: 54.2 V 54.5E (highest since
March 2015)
*(US) DEC NAHB HOUSING MARKET INDEX: 70 V 63E (largest one month gain in 20
years)
*(MX) MEXICO CENTRAL BANK (BANXICO) RAISES OVERNIGHT RATE BY 50BPS TO 5.75%;
MORE THAN EXPECTED
*(US) OCT TOTAL NET TIC FLOWS: +$18.8B V -$152.9B PRIOR; NET LONG-TERM TIC
FLOWS: +$9.4B V -$26.2B PRIOR
ORCL: Reports Q2 $0.61 v $0.61e, R$9.07B v $9.11Be
*(PE) PERU CENTRAL BANK (BCRP) LEAVES REFERENCE RATE UNCHANGED AT 4.25%; AS
EXPECTED
*(US) NORTH AMERICA NOV SEMI BOOK/BILL RATIO: 0.96 V 0.91 PRIOR; 2nd straight
month below parity
FRIDAY
*(EU) EURO ZONE NOV CPI M/M: -0.1% V -0.1%E; Y/Y (FINAL): 0.6% V 0.6%E; CPI
CORE Y/Y (FINAL): 0.8% V 0.8%E
*(RU) RUSSIA CENTRAL BANK (CBR) LEAVES 1-WEEK AUCTION RATE UNCHANGED AT 10.00%;
AS EXPECTED
*(UK) DEC CBI INDUSTRIAL TRENDS TOTAL ORDERS: 0 (nil) V -5E
*(US) NOV HOUSING STARTS: 1.09M V 1.230ME; BUILDING PERMITS: 1.20M V 1.240ME
(US) Atlanta Fed raises Q4 GDP forecast to 2.6% from 2.4% on Dec 14th
(CN) China Navy reportedly seizes unmanned underwater US Navy vehicle in South
China Sea international waters - press
(US) Weekly Baker Hughes US Rig Count: 637 v 624 w/w (+2.1%) (5th straight
weekly increase)
(US) Fed's Bullard (FOMC voter, Dovish): in a revision to policy view, now sees
an additional rate hike in 2017
