Fri, 05 May 2017 16:12 PM EST
The week opened on a sleepy note, with many markets outside the US closed for the Mayday holiday. Washington DC stayed on the front lines, as White House administration officials continued to push the President's agenda. Congress came together and reached a tentative deal on a $1.1T omnibus spending bill to fund the govt through Sept 30th. By Thursday, House Republicans finally pushed through its bill repealing and replacing the Affordable Care Act as had been promised repeatedly during the election. European politics also may have aided sentiment after the final French presidential debate ahead of Sunday's runoff appeared to solidify the prospects for an Emmanual Macron victory.
The US economic data generally came in a bit softer than expected and lagged that of what we saw of out of Europe and Asia. The Euro moved up to a 5-month high, while the Dollar gained ground against the Yen, reaching a 1-month high. Wednesday's FOMC statement and Friday's jobs report largely affirmed the notion the Fed can and will stay on a path of gradually raising interest rates. Futures markets have continued to price in two more hikes this year, most likely starting in June. A chorus of Fed officials vocalized that same belief in speeches on Friday, as well. Assuming the French election goes as planned, ECB officials also hinted that they could steer the market towards their plans to withdraw stimulus in the near future. Treasury yields drifted higher following Wednesday's FOMC statement.
Commodities saw a wave of selling throughout much of the week that temporarily spooked equity markets. WTI crude prices dropped below the Nov low of $45.90 Wednesday to trade at levels not seen since last summer. The selling was exacerbated by technical levels but largely attributed to lingering concerns about steadily increasing NA supply and lackluster demand growth. Cooper, iron ore, and aluminum also declined, hurt by reports that the Chinese continue to crack down on a host of financing vehicles. Prices appeared to have stabilized late in the week, potentially helped by readthroughs from Q1 earnings season. A third of the S&P reported this week and executives from across an array of sectors talked confidently about growth they were seeing across both business lines and geographies. Many even talked about their belief that they can raise prices to offset input costs and painted an even more encouraging picture than the economic data has shown. For the week the Dow added 0.3%, S&P gained 0.6% and the NASDAQ rose 0.9%.
In corporate news this week, Apple shares were hit after disclosing some iPhone sales softness in its quarterly results, but the tech giant pared its losses as the market digested CEO Cook’s defense that it is likely just a pause in purchases while customers gear up to buy the new phone launching this fall. Tesla reported its revenue doubled y/y on record deliveries, but posted a larger loss than anticipated, and the automaker expressed some worry that the cheaper Model 3 model may be eating into sales of the pricier Model S. Facebook beat on the top and bottom line as its ad revenue jumped 51% y/y, and the social media behemoth told investors it will use GAAP figures instead of non-GAAP from now on so that it can include stock-based compensation in its calculations.
SUNDAY 4/30
04/30 (US) Congress negotiators from both parties said to have reached a tentative deal on $1.1T omnibus spending bill to fund the govt through Sept 30th - financial press
MONDAY 5/1
(HK) Macau Apr Gaming Rev MOP20.2B v MOP21.23B prior; +16.3% y/y v 14.0%e
05/01 *(US) MAR PCE DEFLATOR M/M: -0.2% V -0.2%E; Y/Y: 1.8% V 1.9%E
(US) MAR PERSONAL INCOME: 0.2% V 0.3%E; PERSONAL SPENDING: 0.0% V 0.2%E
*(US) MAR PCE CORE M/M: -0.1% V -0.1%E; Y/Y: 1.6% V 1.6%E
(US) APR FINAL MARKIT MANUFACTURING PMI: 52.8 V 52.8E (lowest since Sept)
*(US) APR ISM MANUFACTURING: 54.8 V 56.5E; PRICES PAID: 68.5 V 67.5E
(US) Atlanta Fed forecasts initial Q2 GDP growth at 4.3%
*(CN) CHINA APR CAIXIN PMI MANUFACTURING: 50.3 V 51.3E; 7-month low; 10th straight month of expansion
TUESDAY 5/2
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50% (AS EXPECTED)
BP.UK Reports Q1 adj Net $1.45B v $1.21Be, Underlying replacement cost profit $1.51B v $0.5B y/y, Total Rev $56.4B v $53.5Be
*(DE) GERMANY APR FINAL MANUFACTURING PMI: 58.2 V 58.2E (confirms its 29th month of expansion)
*(UK) APR PMI MANUFACTURING: 57.3 V 54.0E (9th month of expansion and highest since Apr 2014)
(EU) EURO ZONE MAR UNEMPLOYMENT RATE: 9.5% V 9.4%E (matches lowest level since 2009)
MRK Reports Q1 $0.88 v $0.83e, R$9.43B v $9.29Be
(CZ) Czech PM Sobotka: To submit government resignation to President and possible prepare for early election
(US) Pres Trump tweets: "Our country needs a good 'shutdown' in September to fix mess!"
AAPL Reports Q2 $2.10 v $2.02e, R$52.9B v $52.6Be; raises dividend 10.5% to $0.63 from $0.57 (indicated yield 1.71%); increases buyback program by $35B (4.4% of market cap) to $210B
WEDNESDAY 5/3
BNP.FR Reports Q1 Net €1.89B v €1.81B y/y, Rev €11.3B v €10.8B y/y
(UK) EU said to have raised Brexit bill to an upfront payment between €91-113B over 10 years would net to ~€55bn-€75B as Britain received share of EU spending and repaid loans - financial press
(DE) GERMANY APR UNEMPLOYMENT CHANGE: -15K V -11KE; UNEMPLOYMENT RATE: 5.8% V 5.8%E
(EU) EURO ZONE Q1 ADVANCE GDP Q/Q: 0.5% V 0.5%E; Y/Y: 1.7% V 1.7%E
(US) APR ADP EMPLOYMENT CHANGE: +177K V +175KE (lowest since Oct)
NYT Reports Q1 $0.11 v $0.06e, R$398.8M v $385Me; Digital subscribers surge
(US) APR FINAL MARKIT SERVICES PMI: 53.1 V 52.5E
(US) Puerto Rico Gov announces restructuring of $70B debt; to advance plan for bankruptcy-like case - press
(IR) Iran reportedly attempts missile launch from a mini submarine, 14 days prior to Sanctions trigger
(US) FOMC HOLDS TARGET RATE RANGE AT 0.75-1.00%, AS EXPECTED; GROWTH SLOWDOWN IN Q1 IS LIKELY TO BE TRANSITORY; EXPECTS ECONOMY TO WARRANT GRADUAL RATE HIKES
(US) Association of American Railroads weekly rail traffic report for week ending April 29th: 527.8K carloads and intermodal units, +5.1% y/y (16th straight week of gains)
TSLA Reports Q1 -$1.33 v -$0.55e, R$2.70B v $2.56Be
FB Reports Q1 $1.04 v $1.10e, R$8.03B v $7.85Be
(AU) AUSTRALIA MAR TRADE BALANCE (A$): +3.1B V +3.3BE (5th consecutive surplus)
(CN) CHINA APR CAIXIN PMI SERVICES: 51.5 V 52.2 PRIOR; 4th month of sequential decline and weakest level since May 2016
THURSDAY 5/4
HSBA.UK Reports Q1 Pretax profit (adj) $5.94B v $5.3Be, Underlying Rev $12.8B v $12.5B y/y
CARLB.DK Reports Q1 (DKK) Rev 13.7B v 13.4Be
SIE.DE Reports Q1 Net profit €1.45B v €1.44Be, Industrial Business profit €2.49B v €2.12Be, Rev €20.2B v €19.7Be
GLE.FR Reports Q1 Net €747M* v €863.2Me, Op €1.20B v €1.37B y/y, Rev €6.47B v €6.18Be
ABI.BE Reports Q1 $0.74 v $1.00e, EBITDA $4.49B v $4.90Be, R$12.9B v $12.9Be
BMW.DE Reports Q1 Net €2.15B v €1.64B y/y, EBIT €2.65B v €2.65B prelim, Rev €23.45B v €23.4B prelim; affirms forecast
RDSA.NL Reports Q1 adj Profit $3.75B v $3.01Be, Basic CCS EPS $0.41 v $0.13 y/y, R$71.8B v $64.8B y/y
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS EXPECTED
USCR Reports Q1 $0.42 v $0.17e, R$299.1M v $282Me
FAST Reports Apr Net Sales $343.8M, +3.7% y/y
(CZ) CZECH CENTRAL BANK (CNB) LEAVES REPURCHASE RATE UNCHANGED AT 0.05%; AS EXPECTED
*(US) Q1 PRELIMINARY NONFARM PRODUCTIVITY: -0.6% V -0.1%E; LABOR COSTS: +3.0% V 2.7%E
(BR) Brazil Apr PMI Services: 50.3 v 47.7 prior (1st expansion in 26 months)
*(US) MAR FINAL DURABLE GOODS ORDERS: 0.9% V 0.7%E; DURABLES EX TRANSPORTATION: 0.0% V -0.2% PRELIM
WTI Crude breaks Nov low below $46.00 (lowest level since April 2016)
(US) Atlanta Fed cuts Q2 GDP to 4.2% from 4.3% on 5/1
(US) House of Representatives passes ACHA Obamacare healthcare replacement bill
IBM Buffett said to have sold 33% of IBM stake in Q1 and Q2, but has stopped selling shares - CNBC
(HK) HONG KONG APR COMPOSITE PMI: 51.1 V 49.9 PRIOR; 1st expansion in 4 months, 3-year high
(NZ) NEW ZEALAND Q2 INFLATION EXPECTATION SURVEY: 2-YEAR INFLATION EXPECTATION 2.17% (highest since Q3 of 2014) V 1.92% PRIOR
FRIDAY 5/5
(CZ) Czech PM Sobotka changes mind and will NOT submit his resignation (withdraws offer); proposes to dismiss his finance minister
(US) APR UNEMPLOYMENT RATE: 4.4% V 4.6%E (lowest since May 2007)
(CA) CANADA APR NET CHANGE IN EMPLOYMENT: 3.2K V +10.0KE; UNEMPLOYMENT RATE: 6.5% V 6.7%E
(US) APR CHANGE IN NONFARM PAYROLLS: +211K V+190KE
(US) APR AVERAGE HOURLY EARNINGS M/M: 0.3% V 0.3%E; Y/Y: 2.5% V 2.7%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
(US) New York Fed Nowcast: cuts Q2 GDP forecast to 1.8% from 2.3% from 4/28
The week opened on a sleepy note, with many markets outside the US closed for the Mayday holiday. Washington DC stayed on the front lines, as White House administration officials continued to push the President's agenda. Congress came together and reached a tentative deal on a $1.1T omnibus spending bill to fund the govt through Sept 30th. By Thursday, House Republicans finally pushed through its bill repealing and replacing the Affordable Care Act as had been promised repeatedly during the election. European politics also may have aided sentiment after the final French presidential debate ahead of Sunday's runoff appeared to solidify the prospects for an Emmanual Macron victory.
The US economic data generally came in a bit softer than expected and lagged that of what we saw of out of Europe and Asia. The Euro moved up to a 5-month high, while the Dollar gained ground against the Yen, reaching a 1-month high. Wednesday's FOMC statement and Friday's jobs report largely affirmed the notion the Fed can and will stay on a path of gradually raising interest rates. Futures markets have continued to price in two more hikes this year, most likely starting in June. A chorus of Fed officials vocalized that same belief in speeches on Friday, as well. Assuming the French election goes as planned, ECB officials also hinted that they could steer the market towards their plans to withdraw stimulus in the near future. Treasury yields drifted higher following Wednesday's FOMC statement.
Commodities saw a wave of selling throughout much of the week that temporarily spooked equity markets. WTI crude prices dropped below the Nov low of $45.90 Wednesday to trade at levels not seen since last summer. The selling was exacerbated by technical levels but largely attributed to lingering concerns about steadily increasing NA supply and lackluster demand growth. Cooper, iron ore, and aluminum also declined, hurt by reports that the Chinese continue to crack down on a host of financing vehicles. Prices appeared to have stabilized late in the week, potentially helped by readthroughs from Q1 earnings season. A third of the S&P reported this week and executives from across an array of sectors talked confidently about growth they were seeing across both business lines and geographies. Many even talked about their belief that they can raise prices to offset input costs and painted an even more encouraging picture than the economic data has shown. For the week the Dow added 0.3%, S&P gained 0.6% and the NASDAQ rose 0.9%.
In corporate news this week, Apple shares were hit after disclosing some iPhone sales softness in its quarterly results, but the tech giant pared its losses as the market digested CEO Cook’s defense that it is likely just a pause in purchases while customers gear up to buy the new phone launching this fall. Tesla reported its revenue doubled y/y on record deliveries, but posted a larger loss than anticipated, and the automaker expressed some worry that the cheaper Model 3 model may be eating into sales of the pricier Model S. Facebook beat on the top and bottom line as its ad revenue jumped 51% y/y, and the social media behemoth told investors it will use GAAP figures instead of non-GAAP from now on so that it can include stock-based compensation in its calculations.
SUNDAY 4/30
04/30 (US) Congress negotiators from both parties said to have reached a tentative deal on $1.1T omnibus spending bill to fund the govt through Sept 30th - financial press
MONDAY 5/1
(HK) Macau Apr Gaming Rev MOP20.2B v MOP21.23B prior; +16.3% y/y v 14.0%e
05/01 *(US) MAR PCE DEFLATOR M/M: -0.2% V -0.2%E; Y/Y: 1.8% V 1.9%E
(US) MAR PERSONAL INCOME: 0.2% V 0.3%E; PERSONAL SPENDING: 0.0% V 0.2%E
*(US) MAR PCE CORE M/M: -0.1% V -0.1%E; Y/Y: 1.6% V 1.6%E
(US) APR FINAL MARKIT MANUFACTURING PMI: 52.8 V 52.8E (lowest since Sept)
*(US) APR ISM MANUFACTURING: 54.8 V 56.5E; PRICES PAID: 68.5 V 67.5E
(US) Atlanta Fed forecasts initial Q2 GDP growth at 4.3%
*(CN) CHINA APR CAIXIN PMI MANUFACTURING: 50.3 V 51.3E; 7-month low; 10th straight month of expansion
TUESDAY 5/2
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50% (AS EXPECTED)
BP.UK Reports Q1 adj Net $1.45B v $1.21Be, Underlying replacement cost profit $1.51B v $0.5B y/y, Total Rev $56.4B v $53.5Be
*(DE) GERMANY APR FINAL MANUFACTURING PMI: 58.2 V 58.2E (confirms its 29th month of expansion)
*(UK) APR PMI MANUFACTURING: 57.3 V 54.0E (9th month of expansion and highest since Apr 2014)
(EU) EURO ZONE MAR UNEMPLOYMENT RATE: 9.5% V 9.4%E (matches lowest level since 2009)
MRK Reports Q1 $0.88 v $0.83e, R$9.43B v $9.29Be
(CZ) Czech PM Sobotka: To submit government resignation to President and possible prepare for early election
(US) Pres Trump tweets: "Our country needs a good 'shutdown' in September to fix mess!"
AAPL Reports Q2 $2.10 v $2.02e, R$52.9B v $52.6Be; raises dividend 10.5% to $0.63 from $0.57 (indicated yield 1.71%); increases buyback program by $35B (4.4% of market cap) to $210B
WEDNESDAY 5/3
BNP.FR Reports Q1 Net €1.89B v €1.81B y/y, Rev €11.3B v €10.8B y/y
(UK) EU said to have raised Brexit bill to an upfront payment between €91-113B over 10 years would net to ~€55bn-€75B as Britain received share of EU spending and repaid loans - financial press
(DE) GERMANY APR UNEMPLOYMENT CHANGE: -15K V -11KE; UNEMPLOYMENT RATE: 5.8% V 5.8%E
(EU) EURO ZONE Q1 ADVANCE GDP Q/Q: 0.5% V 0.5%E; Y/Y: 1.7% V 1.7%E
(US) APR ADP EMPLOYMENT CHANGE: +177K V +175KE (lowest since Oct)
NYT Reports Q1 $0.11 v $0.06e, R$398.8M v $385Me; Digital subscribers surge
(US) APR FINAL MARKIT SERVICES PMI: 53.1 V 52.5E
(US) Puerto Rico Gov announces restructuring of $70B debt; to advance plan for bankruptcy-like case - press
(IR) Iran reportedly attempts missile launch from a mini submarine, 14 days prior to Sanctions trigger
(US) FOMC HOLDS TARGET RATE RANGE AT 0.75-1.00%, AS EXPECTED; GROWTH SLOWDOWN IN Q1 IS LIKELY TO BE TRANSITORY; EXPECTS ECONOMY TO WARRANT GRADUAL RATE HIKES
(US) Association of American Railroads weekly rail traffic report for week ending April 29th: 527.8K carloads and intermodal units, +5.1% y/y (16th straight week of gains)
TSLA Reports Q1 -$1.33 v -$0.55e, R$2.70B v $2.56Be
FB Reports Q1 $1.04 v $1.10e, R$8.03B v $7.85Be
(AU) AUSTRALIA MAR TRADE BALANCE (A$): +3.1B V +3.3BE (5th consecutive surplus)
(CN) CHINA APR CAIXIN PMI SERVICES: 51.5 V 52.2 PRIOR; 4th month of sequential decline and weakest level since May 2016
THURSDAY 5/4
HSBA.UK Reports Q1 Pretax profit (adj) $5.94B v $5.3Be, Underlying Rev $12.8B v $12.5B y/y
CARLB.DK Reports Q1 (DKK) Rev 13.7B v 13.4Be
SIE.DE Reports Q1 Net profit €1.45B v €1.44Be, Industrial Business profit €2.49B v €2.12Be, Rev €20.2B v €19.7Be
GLE.FR Reports Q1 Net €747M* v €863.2Me, Op €1.20B v €1.37B y/y, Rev €6.47B v €6.18Be
ABI.BE Reports Q1 $0.74 v $1.00e, EBITDA $4.49B v $4.90Be, R$12.9B v $12.9Be
BMW.DE Reports Q1 Net €2.15B v €1.64B y/y, EBIT €2.65B v €2.65B prelim, Rev €23.45B v €23.4B prelim; affirms forecast
RDSA.NL Reports Q1 adj Profit $3.75B v $3.01Be, Basic CCS EPS $0.41 v $0.13 y/y, R$71.8B v $64.8B y/y
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS EXPECTED
USCR Reports Q1 $0.42 v $0.17e, R$299.1M v $282Me
FAST Reports Apr Net Sales $343.8M, +3.7% y/y
(CZ) CZECH CENTRAL BANK (CNB) LEAVES REPURCHASE RATE UNCHANGED AT 0.05%; AS EXPECTED
*(US) Q1 PRELIMINARY NONFARM PRODUCTIVITY: -0.6% V -0.1%E; LABOR COSTS: +3.0% V 2.7%E
(BR) Brazil Apr PMI Services: 50.3 v 47.7 prior (1st expansion in 26 months)
*(US) MAR FINAL DURABLE GOODS ORDERS: 0.9% V 0.7%E; DURABLES EX TRANSPORTATION: 0.0% V -0.2% PRELIM
WTI Crude breaks Nov low below $46.00 (lowest level since April 2016)
(US) Atlanta Fed cuts Q2 GDP to 4.2% from 4.3% on 5/1
(US) House of Representatives passes ACHA Obamacare healthcare replacement bill
IBM Buffett said to have sold 33% of IBM stake in Q1 and Q2, but has stopped selling shares - CNBC
(HK) HONG KONG APR COMPOSITE PMI: 51.1 V 49.9 PRIOR; 1st expansion in 4 months, 3-year high
(NZ) NEW ZEALAND Q2 INFLATION EXPECTATION SURVEY: 2-YEAR INFLATION EXPECTATION 2.17% (highest since Q3 of 2014) V 1.92% PRIOR
FRIDAY 5/5
(CZ) Czech PM Sobotka changes mind and will NOT submit his resignation (withdraws offer); proposes to dismiss his finance minister
(US) APR UNEMPLOYMENT RATE: 4.4% V 4.6%E (lowest since May 2007)
(CA) CANADA APR NET CHANGE IN EMPLOYMENT: 3.2K V +10.0KE; UNEMPLOYMENT RATE: 6.5% V 6.7%E
(US) APR CHANGE IN NONFARM PAYROLLS: +211K V+190KE
(US) APR AVERAGE HOURLY EARNINGS M/M: 0.3% V 0.3%E; Y/Y: 2.5% V 2.7%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
(US) New York Fed Nowcast: cuts Q2 GDP forecast to 1.8% from 2.3% from 4/28
