TradeTheNews.com Weekly
Market Update: Fed and BOE Get More Hawkish; Retail Stunned by Amazon
Swallowing Whole Foods
Fri, 16 Jun 2017 16:04 PM EST
Global stock markets drifted higher during the first few trading sessions this
week, shaking off fallout from the UK elections and lingering volatility in
high-profile NASDAQ stocks. Even a horrific shooting at a congressional
baseball practice on Wednesday did little to sway sentiment. US Treasury
markets continued to march to their own beat, and yields touched the lowest
levels since November after May CPI data was softer than expected. The soft
data did little to sway the Fed though, who later that day raised rates and
outlined a plan to begin shrinking its balance sheet sometime later this year.
In her press conference Chair Yellen stressed she still held a high degree of
confidence inflation readings would turn back higher towards the Fed target
which will enable the continued normalization of policy. Rates bottomed and the
Greenback firmed, a move that was aided by better than expected manufacturing
data. The Bank of England leaned more hawkish than expected, disclosing two
more dissenters joined the ranks of MPC members pushing for a cutback in
stimulus when they met on Thursday.
Crude markets remained under pressure as faith in global oil markets coming
into balance this year appears to be waning. Both the monthly OPEC and IEA
reports forecast increased supply, accompanied with stable demand. Brent prices
briefly dropped below the May low, while WTI stopped just above it. With that,
the energy complex served as anchor for the S&P for much of the week. Banks
and financials moved up into the Fed meeting. On Friday, equity markets were
roiled by Amazon's surprise purchase of Whole Foods, putting pressure of a host
of sectors tied to the supermarket space. For the week the DJIA gained 0.5%,
the S&P500 added less than 0.1%, and the Nasdaq lost 0.9%.
In corporate news, GE started off the week with the announcement that longtime
CEO Jeff Immelt would be stepping down to be succeeded by current healthcare
division president John Flannery. Flannery is best known for overseeing a
turnaround at GE’s $18B healthcare unit. Nike shares slipped Thursday after
announcing a company reorganization and 2% workforce reduction. Booz Allen
Hamilton shares plunged following their disclosure of a DOJ civil and criminal
probe into cost accounting practices. Kroger dropped on a disappointing cut to
FY guidance and a weak earnings report, with executives citing commodity cost
deflation and intense price pressures in the quarter. And Amazon finished off the
week with the bombshell $13.7B deal to acquire Whole Foods for $42/share in
cash, signaling in a grand way the e-commerce behemoth’s entrance into the
$300B grocery market and sending ripples throughout an array of sectors.
MONDAY JUNE 12
(FR) BANK OF FRANCE MAY BUSINESS SENTIMENT: 105 V 105E
GE Names John Flannery (55) Chairman and CEO; effective Aug 1st; Affirms FY17
forecast
(IN) INDIA MAY CPI Y/Y: 2.2% V 2.4%E (record low reading)
(CA) BOC's Wilkins: Bank of Canada to assess whether reduced stimulus is needed
(CN) China Ministry of Industry and Information Technology(MIIT) releases
latest draft on New energy vehicle (NEV) credit policy/quota for comment
TUESDAY JUNE 13
(UK) MAY CPI M/M: 0.3% V 0.2%E; Y/Y: 2.9% V 2.7%E; CPI CORE Y/Y: 2.6% V 2.3%E
(DE) GERMANY JUN ZEW CURRENT SITUATION SURVEY: 88.0 V 85.0E; EXPECTATION
SURVEY: 18.6 V 21.7E
(US) MAY PPI FINAL DEMAND M/M: 0.0% V 0.0%E; Y/Y: 2.4% V 2.3%E
(CN) China Finance Ministry (MOF) announced plan to issue CNY2.0B in
USD-denominated bonds (China’s first USD-denominated bond sale since 2004) –
financial press (Update)
*(CN) CHINA MAY RETAIL SALES Y/Y: 10.7% V 10.7%E; YTD Y/Y: 10.3% V 10.3%E
(CN) CHINA MAY INDUSTRIAL PRODUCTION Y/Y: 6.5% V 6.4%E; YTD Y/Y: 6.7% V 6.6%E
(CN) CHINA MAY FIXED ASSETS EX RURAL YTD Y/Y: 8.6% (4-month low) V 8.8%E
WEDNESDAY JUNE 14
(UK) APR AVERAGE WEEKLY EARNINGS 3M/Y: 2.1% V 2.4%E; WEEKLY EARNINGS (EX BONUS)
3M/Y: 1.7% V 2.0%E (5th straight slowing of data to it lowest pace in two
years)
*(UK) MAY JOBLESS CLAIMS CHANGE: +7.3K V +22.0K PRIOR; CLAIMANT COUNT RATE:
2.3% V 2.3%PRIOR
*(UK) APR ILO UNEMPLOYMENT RATE 3M/3M: 4.6% V 4.6%E
(IS) ICELAND CENTRAL BANK (SEDABANKI) CUTS 7-DAY TERM DEPOSIT RATE BY 25BPS TO
4.50%
(US) Reports of shooting at GOP congressional baseball practice in VA; suspect
believed to be in custody
(US) MAY ADVANCE RETAIL SALES M/M: -0.3% V 0.0%E; RETAIL SALES EX AUTO M/M:
-0.3% V 0.1%E
(US) MAY CPI M/M: -0.1% V 0.0%E (2nd negative reading in last 3 months); CPI EX
FOOD AND ENERGY M/M: 0.1% V 0.2%E; CPI INDEX NSA: 251.329 V 251.580E
(US) Atlanta Fed raises Q2 GDP to 3.2% from 3.0% on 6/9
(US) FOMC RAISES FED FUNDS TARGET RANGE 25BPS TO 1.00-1.25%(AS EXPECTED); CUT
TO REINVESTMENT STARTING THIS YEAR IS SEEN EXPANDING ON QUARTERLY BASIS UNTIL
IT REACHES $30M FOR TREASURIES AND $20B PER MONTH IN MORTAGAGE-BACKED
SECURITIES
(US) Fed Chair Yellen: economic growth appears to have rebounded after first
quarter slowdown - post rate decision conf
US Dollar firms as Yellen highlights "one off" catagories that have
pressured recent core inflation readings; Notes weakness in cellular phone
contracts and some prescription drugs
(US) Association of American Railroads weekly rail traffic report for week
ending June 10th: 545.3K carloads and intermodal units, +6.2% y/y (22nd
straight week of gains)
(AU) AUSTRALIA MAY EMPLOYMENT CHANGE: +42.0K (3rd straight increase) V +10.0KE;
UNEMPLOYMENT RATE: 5.5% (4-year low) V 5.7%E
THURSDAY JUNE 15
*(CH) SWISS NATIONAL BANK (SNB) LEAVES DEPOSIT INTEREST RATE UNCHANGED AT
-0.75%; AS EXPECTED
*(UK) MAY RETAIL SALES (EX AUTO FUEL) M/M: -1.6% V -1.0%E; Y/Y: 0.6% V 1.9%E
*(ID) INDONESIA CENTRAL BANK (BI) LEAVES REVERSE REPO RATE UNCHANGED AT 4.75%
(as expected)
(UK) BANK OF ENGLAND BANK (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS
EXPECTED
(UK) BOE MINUTES: VOTED 5 TO 3 TO LEAVE INTEREST RATES UNCHANGED
*(TR) TURKEY CENTRAL BANK (CBRT) LEAVES BENCHMARK REPURCHASE RATE UNCHANGED AT
8.00%; AS EXPECTED
(RU) Russia President Putin: No reason for US to tighten sanctions; not
considering US an enemy - Annual question and answer session
*(US) JUN EMPIRE MANUFACTURING: 19.8 V 5.0E
(US) MAY IMPORT PRICE INDEX M/M: -0.3% V -0.1%E; Y/Y: 2.1% V 2.9%
(US) JUN PHILADELPHIA FED BUSINESS OUTLOOK: 27.6 V 24.9E
(US) MAY INDUSTRIAL PRODUCTION M/M: 0.0% V 0.2%E; CAPACITY UTILIZATION: 76.6% V
76.8%E
(US) JUN NAHB HOUSING MARKET INDEX: 67 V 70E
BlackHat security conference in July 22-27 to demonstrate significant
compromises in major systems
(US) White House reportedly preparing an executive order on drug pricing; to
hold meetings with budget and health officials
(CN) Chinese banks said to have taken steps to limit Anbang exposure - press
(GR) Eurogroup's Dijsselbloem: we have achievements on all elements on Greece;
agreed on €8.5B loan to Greece
(US) APR TOTAL NET TIC FLOWS: $65.8B V $9.3B PRIOR; LONG-TERM TIC FLOWS: $1.8B
V $59.8B PRIOR
BAH Discloses civil and criminal investigation by Dept of Justice into cost
accounting practices - filing
(CN) PBOC to inject combined CNY290B v CNY150B prior in 7-day, 14-day and
28-day reverse repos
(JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS
EXPECTED; maintains its Economic Assessment
FRIDAY 6/16
TSCO.UK Reports Q1 UK LFL (ex VAT, ex-fuel) 2.3% v 1.9%e
- Group sales (ex VAT, ex-fuel, cc):1.0% v 1.6%e
(EU) EURO ZONE MAY CPI M/M: -0.1% V -0.1%E; Y/Y: 1.4% V 1.4%E; CPI CORE Y/Y:
0.9% V 0.9%E
(RU) RUSSIA CENTRAL BANK (CBR) CUTS KEY 1-WEEK AUCTION RATE BY 25BPS TO 9.00%;
AS EXPECTED
FCAU CEO: Q2 in line with expectations, Affirms FY17 outlook; Does not expect
Diesel issues in the US to impact 2018 targets
(US) MAY HOUSING STARTS: 1.09M V 1.22ME (lowest since Sept); BUILDING PERMITS:
1.17M V 1.25ME (lowest since Aug)
WFM Amazon to acquire Whole Foods Market for $42/shr in cash in $13.7B deal
*(US) JUN PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 94.5 V 97.0E
(US) Deputy AG Rosenstein reportedly indicates he may need to recuse himself
from Russia investigation - ABC News
