TradeTheNews.com Weekly Market Update: Risk-On Returns as Leaders Jawbone Reform Efforts
Fri, 21 Apr 2017 16:04 PM EST
Trading resumed this week with investors looking to add back some of the risk taken out of their portfolios ahead of the long Easter break. A lack of escalation surrounding the Korean Peninsula and renewed hopes of forthcoming Congressional reform legislation spurred some early buying in equities and helped put a floor in bond yields. The IMF modestly raised its global growth outlook for 2017 to 3.5% as G20 finance ministers and central bankers met in Washington and produced mostly upbeat commentary about diminishing risks. The surprise move by UK PM May to call snap elections and the impending French election kept sentiment muted. Cable moved up roughly 2.5% and held most of those gains after the election announcement. For the week the DJIA rose 0.5%, the S&P gained 0.9%, and the Nasdaq added 1.8%.
US economic readings retreated from the recent higher levels and largely came up short of expectations. Overseas data, with the exception of the UK, revealed some relative strength which helped pressure the US Dollar Index to the its lowest levels in nearly a month. US Treasury yields hovered near their lowest levels since November and gold prices made a run at $1,300 early on before consolidating. On Friday, WTI crude slipped back below the $50 mark to levels not seen since March on what traders largely attributed to technical selling pressures. Regardless, US rig counts and total NA production continued to rise, overshadowing reports that OPEC is likely headed towards a six month extension of coordinated production cuts.
In corporate news this week, earnings season commenced with some big financial names. Goldman disappointed investors with a first quarter sales and earnings miss, sending the stock on its biggest one-day post-earnings selloff since going public in 1999. Morgan Stanley delivered a rebuke to its rival’s quarter, reporting a Q1 beat on both top and bottom lines, helped by a boost in bond trading revenue following the Fed's interest rate hike. Bank of America reported solid results, but they, along with several regional banks, exhibited slower loan growth in the quarter. American Express led the Dow higher on Thursday after its earnings beat indicated it might be finding ways to overcome last year’s Costco portfolio loss. In tech names, Netflix beat on earnings but missed on revenues, as streaming net new additions came in below management’s own guidance. IBM revenues came in below expectations, but its CFO said that was mostly due to increasing forex headwinds, and the hardware giant affirmed its full year outlook. On Friday Honeywell and Visa put up outstanding quarters yet again leading to new 52-week highs while GE meandered lower after missing quarterly cash flow projections.
SUNDAY 4/16
(TR) Turkey passes referendum on changing the constitution to replace its parliamentary system with the executive presidency with 51.5% v 48.7%; opposition to challenge result
(CN) CHINA Q1 GDP Y/Y: 6.9% V 6.8%E (fastest growth since the third quarter of 2015)
(CN) CHINA MAR RETAIL SALES Y/Y: 10.9% (3-month high) V 9.7%E; YTD Y/Y: 10.0% V 9.6%E
(CN) CHINA MAR INDUSTRIAL PRODUCTION Y/Y: 7.6% (highest since Dec 2014) V 6.3%E; YTD 6.8% V 6.3%E
(CN) CHINA MAR FIXED ASSETS EX RURAL YTD Y/Y: 9.2% (10-month high) V 8.8%E
MONDAY 4/17
US Federal Communications Commission (FCC) reportedly considering lifting a ban on telecoms companies engaging in merger talks - financial press
(US) APR EMPIRE MANUFACTURING: 5.2 V 15.0E
(US) APR NAHB HOUSING MARKET INDEX: 68 V 70E
(US) FEB TOTAL NET TIC FLOWS: $19.3B V $121.2B PRIOR; NET LONG-TERM TIC FLOWS: $53.4B V $5.9B PRIOR
NFLX Reports Q1 $0.40 v $0.38e, R$2.64B v $2.64Be
UAL Reports Q1 $0.41 (adj) v $0.37e, R$8.42B v $8.36Be
(CN) CHINA MAR PROPERTY PRICES M/M: RISE IN 62 OUT OF 70 CITIES VS 56 PRIOR; Y/Y: RISE IN 68 OUT OF 70 CITIES V 67 PRIOR
(JP) Japan nominates Goshi Kataoka and Hitoshi Suzuki to BOJ board; will replace BOJ dissenters Sato and Kiuchi
TUESDAY 4/18
(UK) PM MAY STATEMENT: CALLS FOR GENERAL ELECTION JUNE 8TH (as speculated); needs a stronger mandate to negotiate Brexit with EU
BAC Reports Q1 $0.41 v $0.35e, R$22.2B v $21.5Be
GS Reports Q1 $5.15 v $5.38e, R$8.03B v $8.37Be; Increases dividend 15% to $0.75/shr (implied yield 1.3%); authorizes additional $50M share buyback (0.6% of market cap)
*IMF UPDATES WORLD ECONOMIC OUTLOOK (WEO): Raises 2017 global growth forecast from 3.4% to 3.5%
*(US) MAR HOUSING STARTS: 1.22M V 1.25ME; BUILDING PERMITS: 1.26M V 1.25ME
(US) MAR INDUSTRIAL PRODUCTION M/M: 0.5% V 0.4%E; CAPACITY UTILIZATION: 76.1% V 76.1%E
(US) Atlanta Fed maintains Q1 GDP at 0.5%, unchanged from 4/14
IBM Reports Q1 $2.38 v $2.34e, R$18.2B v $18.5Be
WEDNESDAY 4/19
(HK) Macau reports Easter Weekend visitors 427K, +5.6% y/y
ASML.NL Reports Q1 Net €452M v €403Me, Rev €1.94B v €1.82Be
BRBY.UK Reports H2 Rev £1.61B v £1.61Be; SSS +3% v +3.8%e
HEIA.NL Reports Q1 Net €293M v €265M y/y
(EU) EURO ZONE MAR CPI M/M: 0.8% V 0.8%E; Y/Y (FINAL READING): 1.5% V 1.5%E; CPI CORE Y/Y(FINAL READING): 0.7% V 0.7%E
(US) Association of American Railroads weekly rail traffic report for week ending April 15th: 519.3K carloads and intermodal units, +3.9% y/y (14th straight week of gains)
CP Reports Q1 C$2.50 adj v C$2.50 y/y, rev C$1.6B v C$1.59B y/y
CSX Reports Q1 $0.51 v $0.43e, R$2.87B v $2.73Be
RIO.AU Reports Q1 global iron ore production 66.2Mt, -2% y/y, -10% q/q; Shipments 80.8Mt, +11% y/y
THURSDAY 4/20
NESN.CH Reports Q1 Rev CHF21.0B v CHF21.3Be
SU.FR Reports Q1 Rev €5.84B v €5.84Be, organic sales 3.1% y/y
UNA.NL Reports Q1 Rev €13.3B v €13.2Be; raises dividend 12% to €0.3585/shr
BMW.DE Reports prelim Q1 PBT €3.0B v €2.37B y/y, EBIT €2.65B v €2.46B y/y, Rev €23.4B v €20.9B y/y
*(ID) INDONESIA CENTRAL BANK (BI) LEAVES 7-DAY REVERSE REPO RATE UNCHANGED AT 4.75%; AS EXPECTED (6th straight pause in current easing cycle)
(US) APR PHILADELPHIA FED BUSINESS OUTLOOK: 22.0 V 25.5E (lowest since Dec)
(US) MAR LEADING INDEX: 0.4% V 0.2%E
BN.FR Reports Q1 Rev €5.46B v €5.31B y/y; raises FY outlook
KND Reportedly considering sale of nursing division, but also getting M&A interest for the whole company - M&A blog
V Reports Q2 $0.86 v $0.79e, R$4.48B v $4.30Be; announces $5B buyback (2% of market cap)
(JP) JAPAN APR PRELIMINARY PMI MANUFACTURING: 52.8 V 52.4 PRIOR (8th month of expansion)
FRIDAY 4/21
(FR) FRANCE APR PRELIMINARY MANUFACTURING PMI: 55.1 V 53.1E (7th month of expansion and and highest since Apr 2011)
*(DE) GERMANY APR PRELIMINARY MANUFACTURING PMI: 58.2 V 58.0E (29th month of expansion)
(EU) EURO ZONE APR PRELIMINARY MANUFACTURING PMI: 56.8 V 56.0E (46th month of expansion and highest since Apr 2011)
(UK) MAR RETAIL SALES (EX AUTO FUEL) M/M: -1.5% V -0.5%E; Y/Y: 2.6% V 3.8%E
GE Reports Q1 $0.21 v $0.17e, R$27.7B v $26.4Be
SLB Reports Q1 $0.25 v $0.25e, R$6.89B v $7.01Be
(US) APR PRELIMINARY MARKIT MANUFACTURING PMI: 52.8 V 53.8E
(US) MAR EXISTING HOME SALES: 5.71M V 5.60ME
