TradeTheNews.com Weekly Market Update: Trump Era Commences with the Dow Reaching 20,000
Fri, 27 Jan 2017 16:07 PM EST

US stock markets reached new all-time highs this week when the Dow broke the psychological barrier of 20K while digesting the opening salvos of a Trump administration. Investors quickly saw he means business regarding several of his campaign promises. A flurry of executive orders began with the reopening of the Keystone and Dakota pipelines, touting it as a move to create jobs. By Friday, a formal meeting with Mexico in Washington had been cancelled after the Administration warned of a potential 20% border tax if Mexico was unwilling to renegotiate NAFTA or discuss reimbursement for the construction of a boarder wall. The Peso came under pressure yet again, and worries of a looming trade war were creeping higher. Some of that was assuaged on Friday after President Trump and Mexico President Pena Nieto spoke by phone and each called it a productive conversation. Overall, stock markets seemed to pay little attention to global trade concerns outside of the US retailing sector, which lagged notably. The volatility index meandered lower, to levels not seen since 2014 and trading volumes were muted in a sign of investor complacency despite a steady flow of geopolitical and corporate headlines. For the week the Dow rose 1.3%, the S&P added 1% and the NASDAQ finished up just under 2%.

As earnings season got rolling, tech heavyweights took center stage. While eBay, VMware and Yahoo impressed the street, Alphabet, PayPal and Juniper came up short. Among other notable names reporting this week was McDonalds, who largely surpassed expectations on strength in international markets. Brinker got hit by weak numbers from Chili's and slashed its outlook. Lockheed beat on top and bottom lines; Northrop did, as well, but guided below expectations. Homebuilders had a strong week after DR Horton beat on earnings and reported a 15% increase in orders. Overall, managements appear to have remained cautious, hopeful the new administration and Congress will push through growth-spurring policies and reforms, but unwilling to forcefully factor that into forecasts at this point.

UK's PM May presented a bill to parliament on the intention to trigger Article 50 of the EU constitution, commencing the Brexit process. The bill was read in the House of Commons on Tuesday and will be voted on next week before being passed to the upper house. May and Trump met Friday at the White House for the first official visit by a foreign leader. Despite divergence on free trade between the two, May said the US and the UK would lead the world once more, maintaining that special relationship the two countries have enjoyed for decades. Both leaders affirmed their hope for a speedy, mutually beneficial bilateral trade deal in the wake of Brexit.

Bond prices came under some pressure almost worldwide as markets continued to assess the likelihood of faster Fed tightening and effects of fiscal stimulus in the US, while in the Euro area investors begin to weigh the risks of rising inflation in Germany in particular and the effects of QE program exit by the ECB. Japanese bonds were an exception, as the Bank of Japan surprised the market by increasing its bond buying program, sending rates lower again. German 10-year Bund yields rose 6bps to 0.48%, closing Thursday at the highest level in about one year , 10-year UST rose 5bps midweek to 2.52% before receding back below 2.5% to end the week.

MONDAY 1/23
005930.KR Reports Q4 Net KRW7.09T v KRW6.5Te; Op KRW9.2T v KRW8.7Te; Rev KRW53.3T v KRW52.8Te; To buy back KRW9.3T shares (3.5% of market cap)

TUESDAY 1/24
SAP.DE Reports Q4 Non-IFRS Net €1.82B v €1.67B y/y, Op profit €2.37B v €2.37Be, Rev €6.72B v €6.68Be
(CN) China PBoC conducts total CNY245.5B Medium-term Lending Facility (MLF); raises interest rate - financial press
(FR) FRANCE JAN PRELIMINARY MANUFACTURING PMI: 53.4 V 53.4E; (4th month of expansion)
(DE) GERMANY JAN PRELIMINARY MANUFACTURING PMI: 56.5 V 55.4E; (26th month of expansion and highest since Jan 2014 )
(EU) EURO ZONE JAN PRELIMINARY MANUFACTURING PMI: 55.1 V 54.8E ( 43rd month of expansion)
(UK) SUPREME COURT UPHOLDS EARLIER RULING ON ARTICLE 50 ; Parliament must vote to trigger article 50 (rejects Govt argument)
(TR) TURKEY CENTRAL BANK (CBRT) LEAVES BENCHMARK RATE UNCHANGED AT 8.00% (not expected); widens rate corridor
LMT Reports Q4 $3.25 v $3.04e, R$13.8B v $13.1Be
(ZA) SOUTH AFRICA CENTRAL BANK (SARB) LEAVES INTEREST RATE UNCHANGED AT 7.00%;; AS EXPECTED
(US) Jan Philadelphia Fed Non-Manufacturing General Business Conditions 37.7 v 19.5 m/m
(US) JAN PRELIMINARY MARKIT MANUFACTURING PMI: 55.1 V 54.5E; (highest since March 2015)
(US) DEC EXISTING HOME SALES: 5.49M V 5.51ME
(US) JAN RICHMOND FED MANUFACTURING INDEX: 12 V 7E
AA Reports Q4 $0.14 v $0.22e, R$2.54B v $2.21Be
BHP.AU Reports Q2 iron ore production 60Mt v 57.6Mt q/q v 59Me
TXN Reports Q4 $0.88 (adj) v $0.81e, R$3.41B v $3.31Be; names Brian Crutcher COO effective immediately
(US) NORTH AMERICA DEC SEMI BOOK/BILL RATIO: 1.06 V 0.96 PRIOR; Discontinues publishing monthly report
(AU) AUSTRALIA Q4 CONSUMER PRICES (CPI) Q/Q: 0.5% V 0.7%E; Y/Y: 1.5% (1-year high) V 1.6%E; TRIMMED MEAN Q/Q: 0.4% V 0.5%E ; Y/Y: 1.6% (5-year low) V 1.6%E

WEDS 1/25
005380.KR Reports Q4 Net KRW1.0T v KRW1.4Te; Op KRW1.02T v KRW1.5Te; Rev KRW24.5T v KRW24.6Te
SAN.ES Reports Q4 Net €1.60B v €1.48Be, Rev €11.1B v €11.1B q/q
NOVN.CH Reports Q4 $1.12 v $1.03e, Core Op profit $3.01B v $3.06B y/y, R$12.3B v $12.40Be; Announces $5B sharebuyback (3% of market cap)
(DE) GERMANY JAN IFO BUSINESS CLIMATE: 109.8 V 111.3E; CURRENT ASSESSMENT: 116.9 V 117.0E
(UK) JAN CBI INDUSTRIAL TRENDS TOTAL ORDERS: 5 V 2E
FCX Reports Q4 $0.25 adj v $0.32e, R$4.38B v $4.06Be
(US) DOE CRUDE: +2.8M V +2ME; GASOLINE: +6.8M V +0.5ME; DISTILLATE: +0.1M V -1ME
(US) Association of American Railroads weekly rail traffic report for week ending Jan 21st: 530.3K carloads and intermodal units, +8.1% y/y
(MX) President Trump: Mexico wall construction will start in months; reiterates taxpayers will be reimbursed at a later date - ABC taped interview (to air tonight)
(US) White House spokesman: administration will create more detention space along US border; Trump to sign two executive orders on immigration
(NZ) NEW ZEALAND Q4 CPI Q/Q: 0.4% V 0.3%E; Y/Y: 1.3% (2-year high) V 1.2%E
000660.KR Reports Q4 Net KRW1.63T v KRW1.1Te; Op net KRW1.54T v KRW1.3Te; Rev KRW5.36T v KRW5Te

THURS 1/26
UNA.NL Reports FY16 Core EPS €1.82 v €1.72 y/y; Op €7.80B v €7.52B y/y, Rev €52.7B v €53.3B y/y
(DE) FEB GFK CONSUMER CONFIDENCE: 10.2 V 10.0E;(matches highest reading since Oct 2001)
DGE.UK Reports H1 Adj Op Profit GBP;2.07B v GBP;2.02Be, Net Rev GBP;6.42B v GBP;6.42Be
(UK) Q4 ADVANCE GDP Q/Q: 0.6% V 0.5%E; Y/Y: 2.2% V 2.1%E (matches lowest annual pace since Q1 2013)
POT Reports Q4 $0.07 v $0.09e, R$1.06B v $1.03Be
DOW Reports Q4 $0.99 v $0.88e, R$13.0B v $12.5Be
F Reports Q4 $0.30 v $0.35e, R$38.7B v $35.6Be
(UK) Brexit Min Davis submits draft Article 50 bill to Parliament to trigger Brexit (in-line with press speculation)
(US) INITIAL JOBLESS CLAIMS: 259K V 247KE; CONTINUING CLAIMS: 2.10MM V 2.04ME
(US) JAN PRELIMINARY MARKIT SERVICES PMI: 55.1 V 54.4E; (highest since Nov 2015)
(US) Atlanta Fed raises final Q4 GDP forecast to 2.9% from 2.8% on 1/19
(US) White House Press Sec: would implement 20% border tax on imports from Mexico to pay for border wall
(US) House Speaker Ryan (R-WI): Dodd-Frank law is a top GOP target; could consider action on Dodd-Frank as early as late spring - press
INTC Reports Q4 $0.79 v $0.76e, R$16.4B v $15.8Be
GOOGL Reports Q4 $9.36 v $9.63e, R$26.0B (includes $4.85B TAC) v $25.2Be
MSFT Reports Q2 $0.83 v $0.79e, R$26.1B (adj) v $25.2Be

FRI 1/27
UBSN.CH Reports Q4 Net CHF738M v CHF339Me, Adj Pretax profit CHF1.11B v CHF754M y/y, Adj Op Rev CHF6.94B v CHF6.85B y/y
BOK.UK To merge into Tesco for 205.3p/shr in cash and shares; deal valued at GBP;3.7B
(EU) EURO ZONE DEC M3 MONEY SUPPLY Y/Y: 5.0% V 4.9%E
(US) Q4 ADVANCE GDP PRICE INDEX: 2.1% V 2.1%E; CORE PCE Q/Q: 1.3% V 1.3%E
(US) Q4 ADVANCE GDP ANNUALIZED Q/Q: 1.9% V 2.2%E; PERSONAL CONSUMPTION: 2.5% V 2.5%E
(US) DEC PRELIMINARY DURABLE GOODS ORDERS: -0.4% V 2.5%E; DURABLES EX TRANSPORTATION: 0.5% V 0.5%E
(US) JAN FINAL MICHIGAN CONFIDENCE: 98.5 V 98.1E