TradeTheNews.com Weekly
Market Update: OPEC Cuts; Fed on Track to Hike
Fri, 02 Dec 2016 16:11 PM EST
Markets entered the week focused on Vienna, and growing doubts about whether
OPEC and in turn non-OPEC producers could come to an accord. Ultimately the
Saudis appeared to blink and an agreement was reached that would cut production
by 1.2M bpd to 32.5M bpd as laid out in September's tentative framework in
Algiers. Crude prices moved up into the closed door meeting on Wednesday and
ended the week up 10% from the lows. The US oil patch saw a dramatic rally with
some shale names jumping more than 20%. The 6-month production cut that goes
into effect with the New Year is seen as a potential boon for well capitalized
US producers who will not be participating in any quotas.
Global economic data continued to paint a solid picture heading into the final
month of the year, particularly here in the US. November manufacturing readings
largely topped estimates while new orders saw growth. Friday's Labor Department
report saw several surprises in the details but the bottom line did not differ
greatly from expectations. Job growth was steady, labor market slack continues
to diminish, and the case for a December rate hike remains intact.
US Treasury yields hit fresh highs mid-week propelled by a continuation of the
post-election reflation trade and the surge in oil prices. After making a run
at 2.5% in the benchmark 10-year yield, Treasury prices were firming into the
jobs numbers on Friday. Yields moved down despite the lowest print in the
unemployment rate since 2007. The Dollar index drifted back below 101, but as
with most asset classes, price action remains well within recent ranges and
suggests post-election trends remain entrenched. Overall, stocks trended lower
for the first time since the US election, and for the week the S&P500
dropped 1.1% and the Nasdaq fell 2.7%, while the DJIA eked out a 0.1% gain.
In corporate news, Caterpillar threw some dirt on the rotation into the
infrastructure play, cautioning that FY17 analyst earnings consensus is overly
optimistic given the expected headwinds. Starbucks shares took a hit after CEO
Howard Schultz said he would cede the CEO role to his lieutenant Kevin Johnson
in April. Luxury retailer Tiffany Co. blew out expectations for Q3, but merely
affirmed FY16 guidance in part due to the drag on sales at its New York
flagship store caused by security cordon around the adjacent Trump Tower.
MONDAY 11/28
STAN.UK: Reportedly set to unveil wider global job cuts as early as this week -
financial press
*(EU) EURO ZONE OCT M3 MONEY SUPPLY Y/Y: 4.4% V 5.0%E
TUESDAY 11/29
*(EU) EURO ZONE NOV BUSINESS CLIMATE INDICATOR: 0.42 V 0.60E; CONSUMER
CONFIDENCE (FINAL): -6.1 V -6.1E
(IT) ECB ready to temporarily step up purchases of Italian government bonds if
Dec 4th Referendum drives up borrowing costs- financial press
*(DE) GERMANY NOV PRELIMINARY CPI M/M: 0.1% V 0.1%E; Y/Y: 0.8% V 0.8%E
*(US) Q3 PRELIMINARY GDP PRICE INDEX: 1.4% V 1.5%E; CORE PCE Q/Q: 1.7% V 1.7%E
TIF: Reports Q3 $0.76 v $0.67e, R$949M v $923Me
*(US) Q3 PRELIMINARY GDP ANNUALIZED Q/Q: 3.2% V 3.0%E; PERSONAL CONSUMPTION:
2.8% V 2.3%E
(IR) Iran Oil Min Zanganeh: Iran will NOT cut oil production
*(US) NOV CONSUMER CONFIDENCE: 107.1 V 101.5E (highest since July 2007)
WEDNESDAY 11/30
*(EU) EURO ZONE NOV ADVANCE CPI ESTIMATE Y/Y: 0.6% V 0.6%E (Highest level since
Apr 2014); CPI CORE Y/Y: 0.8% V 0.8%E
*(IN) INDIA Q3 GDP Y/Y: 7.3% V 7.5%E
*(US) NOV ADP EMPLOYMENT CHANGE: +216K V +170KE
*(US) OCT PCE CORE M/M: 0.1% V 0.1%E; Y/Y: 1.7% V 1.7%E
*(US) OCT PCE DEFLATOR M/M: 0.2% V 0.3%E; Y/Y: 1.4% V 1.5%E
*(US) OCT PERSONAL INCOME: 0.6% V 0.4%E; PERSONAL SPENDING: 0.3% V 0.5%E
*(US) NOV CHICAGO PURCHASING MANAGER: 57.6 V 52.5E (highest since Jan 2015)
(US) Atlanta Fed GDPNow: cuts Q4 GDP forecast to 2.4% from 3.6% on Nov 23rd
*OPEC Ministers comment after meeting concludes: confirms cutting output to
32.5M bpd, 6 month agreement starts in Jan and could extend it another 6 months
at May meeting; seeks 600K bpd in cuts from non-OPEC producers
*(BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 25BPS TO 13.75%; AS
EXPECTED
*(AU) AUSTRALIA Q3 PRIVATE CAPITAL EXPENDITURE (CAPEX) Q/Q: -4.0% V -3.0%E
*(CN) CHINA NOV MANUFACTURING PMI (Gov't official): 51.7 V 51.0E (4th
consecutive expansion and highest since July 2014)
*(CN) CHINA NOV CAIXIN PMI MANUFACTURING: 50.9 V 51.0E; 5th consecutive
expansion
(HK) Macau Nov Casino Rev 18.8B Patacas v 18.4B m/m, +14.4% y/y (4th
consecutive increase, largest gain since Feb 2014) v 8.8% prior
THURSDAY 12/1
GLEN.UK: Trading update: Raises FY16 Marketing EBIT at upper end of $2.5-2.7B;
Guides initial FY17 illustrative cash flow $6.5B, EBITDA $14.0B; Cuts Long-term
EBIT $2.2-3.2B (prior $2.7-3.7B)
*(UK) NOV PMI MANUFACTURING: 53.4 V 54.4E (4th month of expansion)
*(EU) EURO ZONE OCT UNEMPLOYMENT RATE: 9.8% V 10.0%E (lowest since Sept 2011)
*(US) INITIAL JOBLESS CLAIMS: 268K V 253KE; CONTINUING CLAIMS: 2.08M V 2.03ME
*(US) NOV FINAL MARKIT MANUFACTURING PMI: 54.1 V 53.9E (highest since Oct 2015)
*(US) NOV ISM MANUFACTURING: 53.2 V 52.5E; PRICES PAID: 54.5 V 54.5E
CAT: Guides FY17 R$38B v $38.1Be, sees FY17 EPS $3.25 consensus ex
restructuring as too optimistic considering expected headwinds (Zack's FY17
consensus estimates is $3.36e) - investor presentation
(US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 2.9% from 2.4% on Nov 30th
SBUX: *CEO Howard Schultz to step down, to become exec Chairman; COO Kevin
Johnson to take over as CEO; effective April 3, 2017
FRIDAY 12/2
*(US) NOV UNEMPLOYMENT RATE: 4.6% V 4.9%E (lowest since 2007)
*(US) NOV CHANGE IN NONFARM PAYROLLS: +178K V +180KE
*(US) NOV AVERAGE HOURLY EARNINGS M/M: -0.1% V +0.2%E; Y/Y: 2.5% V 2.8%E;
AVERAGE WEEKLY HOURS: 34.4 V 34.4E
*(CA) CANADA NOV NET CHANGE IN EMPLOYMENT: +10.7K V -15.0KE; UNEMPLOYMENT RATE:
6.8% V 7.0%E
DAL: Reports Nov Load factor 85% v 84.1% y/y; Affirms Q4 metrics guidance
(US) CMS report: 2015 US health care spending +5.8% y/y to $3.2T
