TradeTheNews.com Weekly Market Update: Trump and Brexit Remain Center Stage
Fri, 20 Jan 2017 16:24 PM EST
President Trump was sworn in today and gave a speech that promised more jobs for Americans, 4% growth, a boost to infrastructure spending, and putting 'America first' in energy and foreign policy. The stock markets received the speech cautiously, dropping modestly in the immediate aftermath of his inauguration remarks. Overall, the reflation trade stayed on track as US Treasuries sold off, although the dollar continued to lose some ground against major currencies. The 30-Year yield rose 17bps over the week to close today at 3.06%, while the dollar index was down 0.2% on the week. Over the four session period, the DJIA lost 0.3%, the S&P slipped 0.2%, and the Nasdaq fell 0.3%.
The ECB’s scheduled policy meeting on Thursday was uneventful, with nothing new coming from President Draghi's press conference. The central bank confirmed its asset buying program will be adjusted from €80 billion to €60 billion starting in April, and Draghi continued to insist this does not constitute “tapering.” He also made clear that the ECB will be watching core inflation closely, as higher energy prices are distorting long-term trends, but noted underlying inflation pressures remain “subdued.” No mention was made in the presentation as to which bonds would be cut back when the reduction in the program kicks in for April.
British PM May outlined UK intentions and desires for Brexit, mainly confirming previous statements that the UK would seek to leave the single market, take back immigration control, as well as legislative sovereignty at all levels. After a string of positive economic data, UK Retail Sales released Friday showed a much sharper slowdown than expected; m/m retail sales were down 2% compared to forecasts of -0.1%. Some analysts are saying this may be only the beginning of more severe fallout from the Brexit as the invocation of Article 50 looms in March.
On the corporate front, financial names began the holiday-shortened week hurt by lower bond yields and a disappointing investor reaction to Morgan Stanley, Comerica and Goldman earnings, despite generally solid quarters. Industrials showed some strength this week following news that CP's CEO may pursue an activist role with other railroads and after solid earnings from Union Pacific. IBM beat consensus estimates, and positive comments from analysts lifted shares into the weekend.
SUNDAY 1/15
(UK) PM May to deliver a speech on Tuesday, Jan 17th calling for 'clean and hard Brexit' - UK press
LUX.IT Said to have reached €50B merger agreement with Essilor; deal to be announced before the market opens today - FT
MONDAY 1/16
(US) IMF UPDATES ITS WORK ECONOMIC OUTLOOK (WEO): Maintains 2017 and 2018 global growth forecasts
RIO.AU Reports Q4 global iron ore production 73.6Mt v 72.7Mte; shipments 87.7Mt v 86.8Mte, +1% y/y
TUESDAY 1/17
RAI BAT to acquire remaining stake for ~$59.64/shr valued at $49.4B
(UK) DEC CPI M/M: 0.5% V 0.3%E; Y/Y: 1.6% V 1.4%E; CPI CORE Y/Y: 1.6% V 1.4%E (highest annual reading since July 2014)
(UK) DEC PPI INPUT M/M: 1.8% V 2.4%E; Y/Y: 15.8% V 15.5%E
(DE) GERMANY JAN ZEW CURRENT SITUATION SURVEY: 77.3 V 65.0E; EXPECTATIONS SURVEY: 16.6 V 18.4E
(UK) PM May: UK is leaving EU; will seek the best deal possible; not seeking partial or associate membership of EU (in-line with speculation); will be compromises in Brexit - Brexit
(SA) Saudi Min Energy Min al Falih: Oil market strength could end OPEC deal in 6 months; if OPEC does not extend cuts, that is a bullish sign for oil
(US) JAN EMPIRE MANUFACTURING: 6.5 V 8.5E
(CN) CHINA DEC PROPERTY PRICES M/M: RISE IN 46 OUT OF 70 CITIES VS 55 PRIOR; Y/Y: RISE IN 65 OUT OF 70 CITIES V 65 PRIOR
WEDNESDAY 1/18
ASML.NL Reports Q4 Net €524M v €416Me, Rev €1.91B v €1.77Be; Board to propose FY16 dividend at €1.20/shr from €1.05/shr in FY15
BRBY.UK Reports Q3 Retail rev £735M v £721Me; SSS +3% v +1.4%e
(UK) NOV AVERAGE WEEKLY EARNINGS 3M/Y: 2.8% V 2.6%E (highest since Sept 2015) ; WEEKLY EARNINGS (EX BONUS) 3M/Y: 2.7% V 2.6%E
(UK) NOV ILO UNEMPLOYMENT RATE 3M/3M: 4.8% V 4.8%E
(UK) DEC JOBLESS CLAIMS CHANGE: -10.1K V +5.0KE; CLAIMANT COUNT RATE: 2.3% V 2.3%E
(EU) EURO ZONE DEC CPI M/M: 0.5% V 0.5%E; Y/Y (FINAL): 1.1% V 1.1%E; CPI CORE Y/Y: 0.9% V 0.9%E
GS Reports Q4 $5.08 v $4.76e, R$8.17B v $7.43Be
C Reports Q4 $1.14 v $1.11e, R$17.0B v $17.0Be
(US) DEC CPI M/M: 0.3% V 0.3%E; CPI EX FOOD AND ENERGY M/M: 0.2% V 0.2%E; CPI INDEX NSA: 241.432 V 241.508E
(US) DEC INDUSTRIAL PRODUCTION M/M: 0.8% V 0.6%E; CAPACITY UTILIZATION: 75.5% V 75.4%E
(CA) BANK OF CANADA (BOC) LEFT INTEREST RATES UNCHANGED AT 0.50%; AS EXPECTED
(US) JAN NAHB HOUSING MARKET INDEX: 67 V 69E
(US) Association of American Railroads weekly rail traffic report for week ending Jan 14th: 516.2K carloads and intermodal units, +2% y/y
(US) Fed Chair Yellen: next rate hike will depend on economy over coming months
(US) NOV TOTAL NET TIC FLOWS: $23.7B V $18.8B PRIOR; NET LONG-TERM TIC FLOWS: $30.8B V $9.4B PRIOR
CP Reports Q4 C$3.04 v C$2.72 y/y, Rev C$1.64B v C$1.69B y/y; CEO Hunter Harrison to retire early to 'pursue opportunities involving other Class 1 Railroads'
(AU) AUSTRALIA DEC EMPLOYMENT CHANGE: +13.5K (3rd straight increase) V +10.0KE; UNEMPLOYMENT RATE: 5.8% (6-month high) V 5.7%E
THURSDAY 1/19
CA.FR Reports Q4 Rev €23.4B v €23.3Be
(MY) MALAYSIA CENTRAL BANK (BNM) LEAVES OVERNIGHT POLICY RATE (OPR) UNCHANGED AT 3.00%; AS EXPECTED
(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
*(US) INITIAL JOBLESS CLAIMS: 234K V 252KE; CONTINUING CLAIMS: 2.05M V 2.08ME
(US) DEC HOUSING STARTS: 1.226M V 1.188ME; BUILDING PERMITS: 1.210M V 1.225ME
(US) JAN PHILADELPHIA FED BUSINESS OUTLOOK: 23.6 V 15.3E
(EU) ECB's Draghi: Reiterates view that interest rates to stay low or lower for extended period - prepared remarks
(EU) ECB's Draghi: Have not discussed reducing stimulus at today's meeting (no tapering); inflation has to be sustained for the whole Euro Area - Q&A
(US) Atlanta Fed maintains Q4 GDP forecast at 2.8%, same as 1/13
*(US) DOE CRUDE: +2.3M V 0ME; GASOLINE: +6.0M V +1.5ME; DISTILLATE: -1.0M V 0ME
U.S. 5-YEAR TIPS BREAKEVEN RATE HITS 1.96 PCT, HIGHEST SINCE AUGUST 2014
(CL) CHILE CENTRAL BANK (BCCH) CUTS OVERNIGHT RATE TARGET BY 25BPS TO 3.25%; AS EXPECTED
IBM Reports Q4 $5.01 v $4.89e, R$21.8B v $21.6Be
(US) Fed Chair Yellen: sees inflation to rise to 2% over next couple of years; monetary policy stance remains modestly accommodative
(CN) CHINA DEC INDUSTRIAL PRODUCTION Y/Y: 6.0% (5-month low) V 6.1%E; 2016: 6.0% V 6.0%E
(CN) CHINA DEC RETAIL SALES Y/Y: 10.9% (1-year high) V 10.7%E; 2016: 10.4% V 10.4%E
(CN) CHINA DEC FIXED ASSETS EX RURAL YTD Y/Y: 8.1% (4-month low) V 8.3%E
(CN) CHINA Q4 GDP Q/Q: 1.7% V 1.7%E; Y/Y: 6.8% V 6.7%E (highest annual reading in 1-year)
FRIDAY 1/20
(UK) DEC RETAIL SALES (EX-AUTO/FUEL) M/M: -2.0% V -0.4%E; Y/Y: 4.9% V 7.5%E
(UK) DEC RETAIL SALES (INCLUDING AUTO/ FUEL) M/M: -1.9% V -0.1%E; Y/Y: 4.3% V 7.2%E
SLB Reports Q4 $0.27 v $0.27e, R$7.11B v $7.10Be
(US) President Trump administration updates WhiteHouse.gov website to highlight key issues and goals, starting with 'America First' foreign policy and energy policy
