TradeTheNews.com Weekly Market Update: French Election and Solid Earnings Restore Reflation Trade
Fri, 28 Apr 2017 16:08 PM EST
The week opened with a bang as markets breathed a sigh of relief that the polls accurately predicted Emmanuel Macron’s win in the first round of the French election, sparking a global scramble for risk assets. Global indices surged Monday and into Tuesday, Treasury yields moved up, and gold prices backed down from the $1,300 level. The VIX careened back down to briefly touch the lowest level since 2007 as traders unwound hedging trades from last week. The NASDAQ crossed above 6K for the first time ever, as the technology sector took center stage during earnings season, while other indices got back within striking distance of their all-time highs. For the week, the DJIA gained 1.9%, the S&P added 1.5%, and the Nasdaq rose 2.3%.
By Wednesday, focus shifted back to Washington DC, as speculation of a revived healthcare agreement picked up and the Trump administration unveiled an outline for its massive tax cut plans. But the winds coming from Washington were not entirely helpful to sentiment when the Trump administration repeatedly struck an aggressive posture on foreign trade, including setting tariffs on Canadian timber, initiating a trade investigation of the aluminum market, and a threat to withdraw from NAFTA. Equity trading leveled off into week's end, and Treasury yields made little headway to the upside.
In corporate news this week, tech names seemed to be the big winner on earnings boosted by the cloud. Amazon, Microsoft, and Alphabet all said that their cloud computing divisions were growing faster than their larger, mainline businesses, with Amazon notably making most of its profits from its AWS unit. Twitter reported a reassuring beat on its top and bottom line, as its user numbers spiked surprisingly, and the social media giant noted it’s seeing less abuse reported across the service. General Motors posted its highest profits since emerging from bankruptcy in 2009, thanks partly to an increase in North American sales, while Ford saw a 35% drop in profit due to the effects of recalls and rising material prices, and it warned about pricing falling for new and used cars. Caterpillar reported surprisingly strong results and raised guidance, but did caution that geopolitical and market uncertainty along with volatility in commodity prices continue to present risks for the rest of the year.
SUNDAY 4/23
BCR: BD to acquire Bard for $317.00/shr in cash and stock in a $24B deal
MONDAY 4/24
(DE) GERMANY APR IFO BUSINESS CLIMATE: 112.9 V 112.4E (highest since summer 2011); CURRENT ASSESSMENT: 121.1 V 119.2E
(UK) APR CBI INDUSTRIAL TRENDS TOTAL ORDERS: 4 V 6E
AA Reports Q1 $0.63 v $0.55e, R$2.7B v $2.97Be; Raises 17 demand outlook
(CA) US President Trump warns may put import tax on Canada dairy products - financial press
Hynix Semiconductor Reports Q1 Net KRW1.9T v KRW1.8Te; Op KRW2.5T v KRW2.4Te; Rev KRW6.3T v KRW6.0Te
TUESDAY 4/25
NOVN.CH Reports Q1 $1.13 v $1.10e, Core Op profit $3.01B v $3.26B y/y, R$11.54B v $11.6Be
SAP.DE Reports Q1 Non-IFRS Net €887M v €886Me, non-IFRS Op profit €1.20B v €1.23Be, Rev €5.29B v €5.18Be
(FR) FRANCE APR BUSINESS CONFIDENCE: 104 V 104E; MANUFACTURING CONFIDENCE: 108 V 105E
LMT Reports Q1 $2.61 v $2.76e, R$11.1B v $11.3Be
CAT Reports Q1 $1.28 v $0.62e, R$9.8B v $9.36Be
FCX Reports Q1 $0.15 adj v $0.17e, R$3.34B v $3.52Be
(US) Apr Philadelphia Fed Non-Manufacturing General Regional Business Conditions: 30.1 v 35.4 prior
(US) APR RICHMOND FED MANUFACTURING INDEX: 20 V 16E
(US) MAR NEW HOME SALES: 621K V 584KE
(US) APR CONSUMER CONFIDENCE: 120.3 V 122.5E
(US) Goldman Sachs chief economist Hatzius: not expecting US to reach 3% GDP growth in 2017 or 2018
TXN Reports Q1 $0.97 v $0.83e, R$3.40B v $3.30Be
(US) Trump administration drops support for border adjustment tax (BAT) on imports - NYT
BHP.AU Reports Q3 iron ore production 54.0Mt v 57.0Mte; Updates on US shale asset sale
(AU) AUSTRALIA Q1 CONSUMER PRICES (CPI) Q/Q: 0.5% V 0.6%E; Y/Y: 2.1% (highest since Q2 of 2014) V 2.2%E; TRIMMED MEAN Q/Q: 0.5% V 0.5%E ; Y/Y: 1.9% (5-quarter high) V 1.8%E
WEDNESDAY 4/26
SAN.ES Reports Q1 Net €1.87B v €1.73Be, Rev €12.0B v €11.1B q/q
CSGN.CH Reports Q1 Net CHF596M v CHF336.1Me, Pretax profit CHF889M v CHF648Me, Rev CHF5.5B v CHF5.39Be; Announces CHF4B rights offering, to retain full ownership of Swiss Bank
(FR) FRANCE APR CONSUMER CONFIDENCE: 100 V 100E
STAN.UK Reports Q1 Adj Pretax profit $1.05B v $850Me, Op Income $3.61B v $3.64Be
TWTR Reports Q1 $0.11 v $0.02e, R$548M v $512Me; DAU +14% y/y, +11% q/q
(TR) TURKEY CENTRAL BANK (CBRT) LEAVES BENCHMARK REPURCHASE RATE UNCHANGED AT 8.00%; AS EXPECTED
(US) Freedom Caucus says group is now in support of House Obamacare replacement bill following modifications - press
(US) Association of American Railroads weekly rail traffic report for week ending April 22nd: 515.1K carloads and intermodal units, +4.7% y/y (15th straight week of gains)
(US) White House econ adviser Cohn: look forward to working with House and Senate on tax proposal in weeks ahead; in agreement on the core principles
(US) White House: President Trump agrees to not terminate NAFTA at this time after conversations with Mexico's Nieto and Canada's Trudeau
(JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10% AND 10-YEAR JGB YIELD TARGET AT AROUND 0.0%; AS EXPECTED
THURSDAY 4/27
AIR.FR Reports Q1 Adj EBIT €240M v €326Me, Rev €13.0B v €12.2B y/y
BAS.DE Reports Q1 EPS €1.97 v €1.81e, EBIT (before items) €2.46B v €2.38Be, Rev €16.9B v €15.7Be
ROG.CH Reports Q1 Rev CHF12.9B v CHF12.7Be
NOK1V.FI Reports Q1 adj Net €203M v €164Me, adj Op €341M v €329.5Me, Rev €5.39B v €5.28e
DBK.DE Reports Q1 Net €575M v €475Me, Pretax €878M v €579M y/y, Rev €7.34B v €8.07B y/y
BAYN.DE Reports Q1 Net profit €2.08B (adj) v €1.51M y/y, EBITDA adj €3.89B v €3.67Be, Rev €13.2B v €12.7Be; CFO Johannes Dietch to leave company effective end of May, 2018
ORA.FR Reports Q1 EBITDA €2.60B v €2.55B y/y, Rev €10.1B v €9.99B y/y
(DE) GERMANY APR GFK CONSUMER CONFIDENCE: 10.2 V 9.9E (matches highest level since Oct 2001)
RMS.FR Reports Q1 Rev €1.35B v €1.32Be
AZN.UK Reports Q1 Core EPS $0.99 v $0.82e, Rev $5.41B v $5.41Be
LLOY.UK Reports Q1 PBT £1.30B v £654M y/y, Underlying profit £2.08B v £1.96Be, Total Income £4.41B v £4.38B y/y
(DE) GERMANY APR CPI SAXONY M/M: -0.1% V +0.2% PRIOR; Y/Y: 2.1% V 1.8% PRIOR
(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT -0.50%; AS EXPECTED
(SE) SWEDEN CENTRAL BANK (RIKSBANK) AMENDS QE BOND BUYING SCHEME; extends QE by SEK15B during H2 of 2017
(EU) EURO ZONE APR BUSINESS CLIMATE INDICATOR: 1.09 V 0.82E; CONSUMER CONFIDENCE (FINAL): -3.6 V -3.6E
(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL €5.25B VS. €4.25-5.25B INDICATED RANGE IN 5-YEAR AND 10-YEAR BTP BONDS
POT Reports Q1 $0.18 v $0.10e, R$1.11B v $928Me
DOW Reports Q1 $1.04 v $0.99e, R$13.2B v $12.4Be
F Reports Q1 $0.39 v $0.34e, R$39.1B v $34.7Be
(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
UPS Reports Q1 $1.32 v $1.30e, R$15.3B v $15.2Be
(DE) GERMANY APR PRELIMINARY CPI M/M: 0.0% V -0.1%E; Y/Y: 2.0% V 1.9%E
(US) MAR PRELIMINARY DURABLE GOODS ORDERS: 0.7% V 1.3%E; DURABLES EX-TRANSPORTATION:-0.2 % V +0.4%E
(EU) ECB chief Draghi: Reiterates forward guidance that rates to stay low or lower for an extended period beyond the end of QE until ECB sees a sustain pick up in inflation - Prepared remarks
(EU) ECB chief Draghi: Things are going better but did not discuss any exit strategy at today's meeting- Q&A
(US) Atlanta Fed cuts Q1 GDP to 0.2% from 0.5% on 4/18
AMZN Reports Q1 $1.48 v $1.03e, R$35.7B v $35.4Be
GOOGL Reports Q1 $7.73 v $7.48e, R$24.8B (includes $4.6B TAC) v $19.7Be
INTC Reports Q1 $0.66 v $0.65e, R$14.8B v $14.8Be; approves $10B increase to buyback program (5.7% of market cap)
MSFT Reports Q3 $0.73 v $0.69e, R$22.1B v $23.6Be
BIDU Reports Q1 $1.00 v $0.85e, R$2.45B v $2.32Be; CFO to step down, effective on appointment of successor
(JP) JAPAN MAR JOBLESS RATE: 2.8% V 2.9%E (matches lowest rate since Jun 1994)
(US) President Trump: North Korea is my biggest worry; Would love to resolve situation diplomatically, but it's "very difficult" - press interview
FRIDAY 4/28
UBSN.CH Reports Q1 Net CHF1.27B v CHF953Me, Adj Pretax profit CHF1.93B v CHF1.37B y/y, Adj Op Rev CHF7.53B v CHF7.06B y/y
(FR) FRANCE Q1 ADVANCE GDP Q/Q: 0.3% V 0.4%E; Y/Y: 0.8% V 0.9%E
SAN.FR Reports Q1 Business EPS €1.42 v €1.26e, Business Op €2.44B v €2.12B y/y, Rev €8.65B v €8.38Be
(UK) APR NATIONWIDE HOUSE PRICES M/M: -0.4% V +0.1%E; Y/Y: 2.6% V 3.3%E
RBS.UK Reports Q1 Net profit £259M v loss £968M y/y, adj Op £1.37B v £931M y/y, Rev £3.21B v £3.06B y/y
BARC.UK Reports Q1 Net £190M* v £433M y/y, adj Pretax £1.68B v £793M y/y, Core Net Rev £5.82B v £5.04B y/y
(FR) FRANCE APR PRELIMINARY CPI M/M: 0.1% V 0.1%E; Y/Y: 1.2% V 1.2%E
(EU) EURO ZONE MAR M3 MONEY SUPPLY Y/Y: 5.3% V 4.7%E
(UK) Q1 ADVANCE GDP Q/Q: 0.3% V 0.4%E; Y/Y: 2.1% V 2.2%E
(EU) EURO ZONE APR ADVANCE CPI ESTIMATE Y/Y: 1.9% V 1.8%E (returns to ECB target); CPI CORE Y/Y: 1.2% V 1.0%E (highest level since mid-2013)
GM Reports Q1 $1.70 v $1.45e, R$41.2B v $40.3Be
(US) Q1 EMPLOYMENT COST INDEX (ECI): 0.8% V 0.6%E
(US) Q1 ADVANCE GDP ANNUALIZED Q/Q: 0.7% V 1.0%E; PERSONAL CONSUMPTION: 0.3% V 0.9%E
(US) Q1 Advance GDP Price Index: 2.3% v 2.0%e; Core PCE Q/Q: 2.0% v 2.0%e
(US) APR CHICAGO PURCHASING MANAGER: 58.3 V 56.2E
(US) APR FINAL MICHIGAN CONFIDENCE: 97.0 V 98.0E
(US) New York Fed Nowcast: maintains Q1 GDP forecast at 2.7%, unchanged from 4/21; raises Q2 GDP forecast to 2.3% from 2.1% from 4/21
