Thursday, April 13, 2017

Risk Assets Fall Out of Favor During Holiday Shortened Week

TradeTheNews.com Weekly Market Update: Risk Assets Fall Out of Favor During Holiday Shortened Week
Thu, 13 Apr 2017 16:03 PM EST

Investors' risk appetite faded this week. Traders didn't necessarily attribute the change in sentiment to one headline; re-positioning ahead of Q2 earnings season and the French election, enhanced geopolitical concerns surrounding North Korea and Syria, combined with waning confidence in Washington DC's ability to deliver on promised economic reforms remained underlying themes. Volumes were noticeably muted, with the Easter calendar providing a bit of a lull in terms of both trader participation and likely catalysts. Against that backdrop the VIX jumped more than 20% touching levels not seen since the US election. For the week the Dow finished down 1%, the S&P lost 1.1%, and the NASDAQ slipped 1.2%.

Treasuries rallied throughout the week, and stocks fell out of favor. Today the US 10-year note yield fell to its lowest level this year at 2.21% before closing slightly higher. Medium term notes and long bonds auctioned over the week also saw average yields decline significantly from previous tenders. Gold and the Yen were also in high demand as alternative havens to fixed income. Gold moved up to levels not seen since November rising 2.6% over the week. The Yen surged to highest level against the US dollar since the November election after President Trump commented he was concerned about the Greenback getting too strong globally.

In corporate news for this shortened week, AT&T announced Monday it would acquire Straight Path for $95.63/share in a $1.6B all-stock deal. The telecom giant is aiming to strengthen its 5G service potential, as Straight Path is one of the largest holders of 28 GHz and 39 GHz millimeter wave spectrum, bands which have received FCC approval to carry 5G. AT&T and other telecoms, acquired additional spectrum for their 5G build out via a $20B FCC-run auction on Thursday. T-mobile spent just under $8B to capture about 45% of the low band spectrum being sold off by broadcasters. Swift Transportation acquired Knight Transportation in an all-stock transaction that will create the industry's largest full truckload company, with a combined EV of $6B. The deal would be the largest in the trucking sector since the $3B Con-way/XPO merger in 2015. Tesla may soon be supplying those truckers with autonomous semi-trucks, announcing that it will unveil its version of the big rig in September. Tesla also hit a financial milestone this week, surpassing General Motors in market cap to become the most valuable U.S. automaker. Late in the week, steel stocks were pressured after the US Commerce Department imposed preliminary duties on South Korean steel that were lower than had been anticipated.

SUNDAY APRIL 9TH
04/09 (HK) Macau’s biggest junket operator Suncity reports 1st half of March was +40% y/y

MONDAY APRIL 10th
(FR) BANK OF FRANCE MAR BUSINESS SENTIMENT: 103 V 104E
(EU) EURO ZONE APR SENTIX INVESTOR CONFIDENCE: 23.9 V 21.0E
Gartner: Cuts 2017 global IT spending forecast +1.4% y/y (prior 2.7%)
STRP To be acquired by AT&T for $95.63/shr in $1.6B all-stock deal
(US) Mar Labor Market Conditions Index Change: 0.4 v 1.0e
(US) Fed Chair Yellen: US economy now is pretty healthy - comments in Michigan

TUESDAY APRIL 11TH
(UK) MAR CPI M/M: 0.4% V 0.3%E; Y/Y: 2.3% V 2.3%E; CPI CORE Y/Y: 1.8% V 1.9%E
(DE) GERMANY APR ZEW CURRENT SITUATION SURVEY: 80.1 V 77.5E; EXPECTATIONS SURVEY: 19.5 V 14.8E
(SA) Saudi Arabia said to push for extension of OPEC production cuts - press
(CN) CHINA MAR CPI M/M: -0.3% (2nd straight decline) v -0.2% PRIOR; Y/Y: 0.9% V 1.0%E
(CN) CHINA MAR PPI Y/Y: 7.6% V 7.5%E; 7th consecutive increase
(KR) US Commerce Dept found South Korean steel producers have been dumping tubular steel, imposes preliminary duties of 2.76% to 24.9%

WEDNESDAY APRIL 12TH
TSCO.UK Reports FY16/17 adj PBT £729M v £335M y/y, adj Op £1.28B v £1.26Be, Rev (Inc Fuel) £55.9B v £55.7Be
(UK) FEB AVERAGE WEEKLY EARNINGS 3M/Y: 2.3% V 2.2%E; WEEKLY EARNINGS (EX BONUS) 3M/Y: 2.2% V 2.1%E
(UK) FEB ILO UNEMPLOYMENT RATE 3M/3M: 4.7% V 4.7%E
(UK) MAR JOBLESS CLAIMS CHANGE: +25.5K V -6.1K PRIOR; CLAIMANT COUNT RATE: 2.2% V 2.1% PRIOR
OPEC MONTHLY REPORT: OPEC oil production at 31.928M bpd, -153K bpd m/m
DAL Reports Q1 $0.77 v $0.73e, R$9.15B v $9.16Be
(US) MAR IMPORT PRICE INDEX M/M: -0.2% V -0.2%E; Y/Y: 4.2% V 4.0%E
(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 0.50%; AS EXPECTED
(US) Association of American Railroads weekly rail traffic report for week ending April 8th: 513.0K carloads and intermodal units, +7.1% y/y (13th straight week of gains)
(US) Pres Trump: US dollar is getting too strong; Will not label China a currency manipulator - press interview

THURSDAY APRIL 13th
CA.FR Reports Q1 Rev €21.3B v €21.3Be
JP Morgan Reports Q1 $1.65 v $1.51e, R$25.6B (managed) v $24.6Be; core loans +9% y/y, +1% q/q
Citigroup Reports Q1 $1.35 v $1.24e, R$18.1B v $17.8Be
(US) MAR PPI FINAL DEMAND M/M: -0.1% V 0.0%E; Y/Y: 2.3% V 2.4%E
(US) APR PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 98 V 96.5E
(US) Forces in Afghanistan struck ISIS tunnels with "the mother of all bombs", largest conventional bomb ever used by the US military – press
(US) FCC announces preliminary results of $19.8B spectrum auction; largest winners include T-Mobile, Dish, Comcast, U.S. Cellular
TSLA Elon Musk tweets: "Tesla Semi truck unveil set for September."