Friday, June 23, 2017

Negotiations on Brexit and Senate Healthcare Bill Begin; Market Reaction Mixed

TradeTheNews.com Weekly Market Update: Negotiations on Brexit and Senate Healthcare Bill Begin; Market Reaction Mixed
Fri, 23 Jun 2017 16:03 PM EST

The markets had a mixed week, with the S&P and Dow ending about flat while the Nasdaq lifted nearly 2%, boosted by the best week for biotech and hospitals since the election, as the Republican Obamacare replacement bill hit some legislative snags in the Senate. US new and existing home sales data was a bright spot, coming in higher than expected and with record high home prices in May. Also the 34 largest financial institutions monitored by the Fed all passed their annual stress tests. Oil price declines dragged the energy sector to its worst week since February, with crude finishing lower for a fifth consecutive week and WTI closing at a 10-month low on Wednesday. Small-cap stocks gained Friday for the third time this week, and the Russell 2000 pared earlier losses to close the week almost flat amid the annual reconstitution of the Russell US Indexes. Despite higher volumes in the Nasdaq, volatility remained muted, with the VIX hitting a four-day low on Friday. For the week, the S&P rose 0.2%, the DJIA gained less than 0.1%, and the Nasdaq added 1.8%.

On the political front, Senate Republicans unveiled their ACA replacement bill on Thursday, but several members of the GOP caucus expressed reservations that it didn't go far enough, while others were concerned with what they saw as overly harsh cuts to Medicaid. The Senate majority leader is pushing for a quick vote, but can’t get the bill passed if he loses more than two Republican votes. Markets seemed to anticipate the status quo going forward, sending the S&P healthcare sector to its biggest weekly gain since late last year. Across the pond, the UK government remains in a state of flux, as Prime Minister May's Tory Party has yet to broker a deal with Northern Ireland's Democratic Unionist Party, despite Conservative Party sources many times indicating a deal would be announced soon. Amid the inter-party wrangling, PM May began Brexit divorce negotiations with her EU partners and laid out her proposal on citizens' rights post-Brexit, which German Chancellor Merkel deemed 'a good start' but noted there are many issues still to resolve. In France, President Macron’s upstart En Marche party won a large majority in National Assembly elections, endorsing his centrist reform platform.

In corporate news, MSCI announced it will include China A shares in its Emerging Markets Index next year, a landmark moment in Beijing's long-fought endeavor to draw international funds to its shores, and the news sent Chinese stocks to an 18-month high. Lennar shares hit a 52-week high after the homebuilder posted an earnings and revenue beat, riding the wave of surging prices and accelerating home sales. American Airlines announced it received a notice from Qatar Airways advising the stateside carrier of its intent to acquire up to a 10% stake. American executives were unenthused by the 'puzzling' offer.


SUNDAY 6/18
(CN) CHINA MAY PROPERTY PRICES M/M: RISE IN 56 OUT OF 70 CITIES VS 58 PRIOR; Y/Y: RISE IN 69 OUT OF 70 CITIES V 69 PRIOR
(FR) President Macron’s "En Marche" party (with centrist ally) said to take 361 out of the 577 seats in the National Assembly following 2nd round of parliamentary elections

MONDAY 6/19
(US) Fed’s Dudley (dove, FOMC voter): Confident that the current expansion has quite a long way to go; generally pleased with US economy
UPS Establishes new surge pricing surcharge for Nov-Dec residential, large packages and packages over maximum limits
(UK) UK and EU agree on terms of reference for Brexit talks - joint statement following first day of official discussions

TUESDAY 6/20
LEN Reports Q2 $0.91 v $0.78e, Rev $3.26B v $2.89Be
FDX Reports Q4 $4.25 v $3.89e, Rev $15.7B v $15.6Be
(CN) MSCI will include China A shares in Emerging Markets Index; sees adding 222 China A large cap stocks - press

WEDNESDAY 6/21
(US) MAY EXISTING HOME SALES: 5.62M V 5.55ME
(US) Association of American Railroads weekly rail traffic report for week ending June 17th: 543.2K carloads and intermodal units, +5.2% y/y (23nd straight week of gains)
IBB Biotech names break out to levels not seen since 2015
ORCL Reports Q4 $0.89 v $0.79e, Rev $10.9B v $10.5Be
(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 1.75%; AS EXPECTED
(US) Discussion draft of Senate healthcare bill reportedly is largely similar to the House bill, but would link insurance subsidies to age and cuts Medicaid expansion more gradually - Wash Post
HCG.CA Berkshire Hathaway to invest up to C$400M (42% of market cap) in Common Equity and provide new C$2B Credit Facility; Berkshire acquires 16M shares, representing 19.99% stake

THURSDAY 6/22
WANDA.IPO Dalian Wanda: operations are sound, refutes earlier speculation banks are dumping Wanda bonds
(FR) FRANCE JUN BUSINESS CONFIDENCE: 106 V 105E; MANUFACTURING CONFIDENCE: 108 V 109E
(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS EXPECTED
(PH) PHILIPPINES CENTRAL BANK (BSP) LEAVES OVERNIGHT BORROWING RATE UNCHANGED AT 3.00%; AS EXPECTED
(TW) TAIWAN CENTRAL BANK (CBC) LEAVES BENCHMARK INTEREST RATE UNCHANGED AT 1.375%; AS EXPECTED
(UK) JUN CBI INDUSTRIAL TRENDS TOTAL ORDERS: 16 V 7E
AAL Received an unsolicited notice from Qatar Airways indicating intention to make a significant investment of ~10%
(US) MAY LEADING INDEX: 0.3% V 0.3%E
(MX) MEXICO CENTRAL BANK (BANXICO) RAISES OVERNIGHT RATE BY 25BPS TO 7.00%; AS EXPECTED
BBBY Reports Q1 $0.58 adj v $0.66e, Rev $2.74B v $2.80Be
FED BANK STRESS TEST RESULTS: ALL 34 BANKS EXCEED MINIMUM CAPITAL REQUIREMENTS
(JP) JAPAN JUNE PRELIMINARY PMI MANUFACTURING: 52.0 V 53.1 PRIOR; 9th straight month of expansion; 6-month low

FRIDAY
(FR) FRANCE JUN PRELIMINARY MANUFACTURING PMI: 55.0 V 54.0E (9th month of expansion)
(DE) GERMANY JUN PRELIMINARY MANUFACTURING PMI: 59.3 V 59.0E (31st month of expansion)
(EU) EURO ZONE JUN PRELIMINARY MANUFACTURING PMI: 57.3 V 56.8E (47th month of expansion)
(US) JUN PRELIMINARY MARKIT MANUFACTURING PMI: 52.1 V 53.0E
(US) MAY NEW HOME SALES: 610K V 590KE