Friday, January 13, 2017

Trump Rally" Stalled…by Trump

TradeTheNews.com Weekly Market Update: "Trump Rally" Stalled…by Trump
Fri, 13 Jan 2017 16:11 PM EST

Traders took a more realistic look this week at the incoming US Administration after two months of stronger markets built on optimism about the unified Republican government. US stock markets seemed to digest the lack of further information about policy implementation at Trump's press conference on Wednesday. After hearing little in the way of details or impetus for fiscal stimulus measures, the market sold off, locking in profits and buying bonds. Trump did however, once again allude to a significant border tax which kept concerns of a looming trade war with China from abating. For the week, the DJIA lost % and the S&P edged down %, while Nasdaq rose %, marking new record highs.

The US dollar continued to retreat from its recent highs against most major currencies. Some strong GDP growth data helped currencies like the Euro and the Pound in particular. Emerging market currencies continued to feel the bite of possible trade barriers from the new Administration as the Mexican peso reached new lows against the US dollar, trading at 22.00 peso to the dollar at one point.

Gold stayed in rally mode for a third straight week as investors sought a safe haven given the sharp increase in stock prices and rise in US dollar. Over the last part of 2016 Gold lost 12.5% from July through December, making the precious metal attractive again. US bonds finished the week to the downside as stocks become more popular again and investors demanded higher yields for fixed income; the 10-Year Treasury yield rose 3bps on Friday.

Much of the corporate news this week revolved around pharma names. On Monday, Ariad Pharma was acquired by Takeda for $24/share in a ~$5.2B all-cash deal, and at the JPMorgan Health conference both Gilead and J&J management reiterated their commitment to pipeline-expanding M&A. President-elect Trump weighed in on the drug pricing debate, opining that the pharma industry is 'getting away with murder' and that it is time to change the medical bidding structure. US regulators turned their gaze towards Fiat Chrysler this week, with the EPA accusing the company of Clean Air violations over potential diesel cheating software, similar to Volkswagen's predicament; the DOJ and Congress are also reportedly considering looking into Fiat's marketing practices of diesel vehicles. And as the week came to a close, earnings season began to rear its head. Financial names Wells Fargo, JP Morgan and Bank of America announced mixed-to-OK results, as sector analysts wait to see precisely what deregulation orders will be issued by the Trump cabinet and as more interest rate hikes lay on the horizon.

SUN 1/8
(CN) CHINA DEC FOREIGN RESERVES: $3.011T V $3.052T PRIOR; (6th consecutive decline and lowest level in 6 years)
MCD: Citic confirms acquisition of controlling interest in McDonalds China assets in a deal valued at $2.1B

MONDAY 1/9
(EU) EURO ZONE JAN SENTIX INVESTOR CONFIDENCE: 18.2 V 12.8E (highest reading since Aug)
(EU) EURO ZONE NOV UNEMPLOYMENT RATE: 9.8% V 9.8%E (matches lowest level since Sept 2011)
ARIA: To be acquired by Takeda for $24/Shr in cash; valued at ~$5.2B
(US) Dec Labor Market Conditions Index Change: -0.3 v +2.1 m/m
ILMN: Says new 'NovaSeq' DNA sequencer will be able to sequence a human genome in one hour (vs current technology that takes over 24 hours) - JP Morgan conf comments
(CN) CHINA DEC CPI M/M: 0.2% V 0.1% PRIOR; Y/Y: 2.1% V 2.2%E
(CN) CHINA DEC PPI Y/Y: 5.5% V 4.6%E (4th straight positive print and highest level since Sept 2011)

TUESDAY 1/10
(CN) China Passenger Car Association (PCA): China Dec retail auto sales at 2.76M units, y/y: +17.1% v +19.8% prior; 2016 sales23.9M units, +15.9% y/y
2317.TW: Reports Dec Rev NT$449.6B, +9.8% y/y; 2016 Rev NT$4.36T, -2.8% y/y
(US) Atlanta Fed maintains Q4 GDP forecast at 2.9%, same as Jan 6th
(US) World Bank cuts 2017 and 2018 global growth forecasts; warns Trump tariff proposals could trigger protectionist retaliation - Global Economic Prospects report

WEDNESDAY 1/11
(UK) NOV INDUSTRIAL PRODUCTION M/M: 2.1% V 1.0%E; Y/Y: 2.0% V 0.7%E
(UK) NOV MANUFACTURING PRODUCTION M/M: 1.3% V 0.5%E; Y/Y: 1.2% V 0.4%E
(PL) POLAND CENTRAL BANK (NBP) LEAVES BASE RATE UNCHANGED AT 1.50%; AS EXPECTED
GBP/USD: Cable falls to lowest levels since Oct Brexit vote
(US) DOE CRUDE: +4.1M V +0.5ME; GASOLINE: +5.0M V +1.5ME; DISTILLATE: +8.4M V +0.5ME
(US) President-elect Trump: will be big news in next few weeks about other companies bringing jobs to the US - news conf in New York
IBB: Drops to session lows on Trump comments
(US) Association of American Railroads weekly rail traffic report for week ending Jan 7th: 441.4K carloads and intermodal units, -11.4% y/y
(BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 75BPS TO 13.00%; MORE THAN EXPECTED (Largest cut since Apr 2012)

THURSDAY 1/12
TSCO.UK: Reports Q3 UK LFL (ex-fuel, ex VAT) 1.8% v 1.7%e
DEB.UK: Reports Q1 LFL +3.5%
(DE) Germany 2016 asylum seekers 280K v 890K y/y
(CN) CHINA DEC M2 MONEY SUPPLY Y/Y: 11.3% V 11.4%E (5-month low)
Gartner Says Worldwide Semiconductor capital spending seen +2.9% in 2017
(US) Fed's Bullard (FOMC non-voter, Dovish): rates went up in response to election, but now the Trump administration will have to deliver - CNBC
(US) INITIAL JOBLESS CLAIMS: 247K V 255KE; CONTINUING CLAIMS: 2.087M V 2.09ME
(US) DEC IMPORT PRICE INDEX M/M: 0.4% V 0.7%E; Y/Y: 1.8% V 1.8%E
HES: Guides FY17 E&P capital budget $2.25B v $1.9B y/y, +18% y/y; Guides 2017 net production ex Libya 300-310K boed v 315-325K boed y/y
FCAU: EPA to charge that Fiat Chrysler used diesel emissions cheating software in 100K vehicles sold in the US since 2014 - press
(PE) PERU CENTRAL BANK (BRCP) LEAVES REFERENCE RATE UNCHANGED AT 4.25% (as expected)
APC: Announces sale of Eagleford Shale assets for $2.3B
(US) Fed Chair Yellen: Economy doing quite well; Inflation has picked up from low level, close to 2% target; Labor market generally strong and wage growth picking up
(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.25%; AS EXPECTED
(CN) CHINA DEC TRADE BALANCE (CNY-TERMS): 275B V 344.5BE (9-month low)

FRIDAY 1/13
BAC: Reports Q4 $0.40 v $0.38e, R$20.0B v $20.6Be; Increases stock buyback for H1 by $1.8B to $4.3B (total 1.9% of market cap)
JPM: Reports Q4 $1.71 (includes tax benefit) v $1.42e, R$23.4B v $23.2Be
(US) DEC ADVANCE RETAIL SALES M/M: 0.6% V 0.7%E; RETAIL SALES EX AUTO M/M: 0.2% V 0.5%E
(US) DEC PPI FINAL DEMAND M/M: 0.3% V 0.3%E; Y/Y: 1.6% V 1.6%E
(US) JAN PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 98.1 V 98.5E
(US) Atlanta Fed cuts Q4 GDP forecast to 2.8% from 2.9% on 1/10
(UK) PM May's Article 50 plans reportedly might be delayed for months due to Northern Ireland Assembly turmoil - British press
(US) Weekly Baker Hughes US Rig Count: 659 v 665 w/w (-0.9%) (first decline in 9 weeks)
DBRS DOWNGRADES ITALY SOVEREIGN RATING TO BBB (HIGH) FROM A (LOW); STABLE TREND