Earnings Season Shakes Up Big Tech; Data Strengthens Euro

TradeTheNews.com Weekly Market Update:  Earnings Season Shakes Up Big Tech; Data Strengthens Euro
Fri, 28 Jul 2017 16:10 PM EST

Despite an extremely eventful week of news flow, the S&P finished largely flat, with volatility retrenching to the lowest levels in more than two decades before bouncing. Outside of latest failure on healthcare reform in Washington DC, most of the fireworks occurred in the NASDAQ, which remained prone to market moving swings emanating out from the mega-cap ‘FANG’ names. Q2 earnings season hit its high watermark on Thursday with a deluge of European and US corporate reports. European economic data continued to largely overshadow that of the US, and combined with a perceived relatively dovish FOMC statement, both perpetuated an emerging narrative that the ECB will look to play catch-up by joining the Fed in commencing and exit from QE in the second half. To that end, the Dollar index dropped to the lowest level since April 2016, with the Euro briefly trading above the 2015 high. Rates moved up on a global basis, helped by an early move into risk assets after the IMF raised its China growth outlook on Sunday. Copper broke out to the best levels since early 2015. Oil prices pressed higher, helped by continued drawdowns in stockpiles, with Brent gaining a foothold above $50 for the first time since late May. For the week the S&P500 was about flat, the DJIA added 1.2%, and the Nasdaq lost 0.2%.

In corporate news, as earnings season shifted into top gear, a few of the high-flying names sold off on decent earnings, having been seemingly priced to perfection. Investors in tech took profits off the table this week despite strong earnings reports from Alphabet and Facebook. Twitter plunged after reporting flat monthly active user growth, while Amazon was hit by a big earnings miss. Roughly three-quarters of earnings reports beat on the top line, which is higher than normal, but this occurred amid disturbing macro trends continuing to eat away at many brick-and-mortar companies. A notable example was Starbucks, which saw its shares drop 10% after earnings. In addition to issuing cautious financial guidance, Starbucks reported slowing growth in membership for its rewards card program and announced it would close all of its nearly 400 Teavana retail stores. Meanwhile, cigarette makers got rolled on Friday as the FDA announced plans for a ‘dialogue’ about lowering nicotine to non-addictive levelsin tobacco products.On the M&A front, Michael Kors announced it would acquire accessory fashion house Jimmy Choo for nearly $1.2B, and Scripps reportedly came to agreement with Discovery on an offer to be acquired for at least $90/share, mostly in cash.


SUNDAY 7/23
(HK) Hong Kong Monetary Authority (HKMA) said to have checked property developers' loans
IMF updates its World Economic Outlook (WEO): Maintains both 2017 and 2018 global GDP growth forecasts

MONDAY 7/24
*(FR) FRANCE JULY PRELIMINARY MANUFACTURING PMI: 55.4 V 54.6E (9th month of expansion and highest since Apr 2011)
*(DE) GERMANY JULY PRELIMINARY MANUFACTURING PMI: 58.3 V 59.2E (32nd month of expansion)
*(EU) EURO ZONE JULY PRELIMINARY MANUFACTURING PMI: 56.8 V 57.2E (48th month of expansion)
(US) JULY PRELIMINARY MARKIT MANUFACTURING PMI: 53.2 V 52.3E (highest since March)
(US) JUN EXISTING HOME SALES: 5.52M V 5.57ME
GOOGL Reports Q2 $8.90* v $8.15e, Rev $26.0B* (includes $5.09B in TAC) v $25.6Be
000660.KR Reports Q2 (KRW) Net 2.47T v 2.32Te; Op 3.05T v 2.93Te; Rev 6.69T v 6.82Te

TUESDAY 7/25
(FR) FRANCE JULY BUSINESS CONFIDENCE: 108 V 106E; MANUFACTURING CONFIDENCE: 109 V 108E
(DE) GERMANY JULY IFO BUSINESS CLIMATE: 116.0 V 114.9E (post-German reunification high); CURRENT ASSESSMENT: 125.4 V 123.8E
(UK) JULY CBI INDUSTRIAL TRENDS TOTAL ORDERS: 10 V 12E
C Targets 2020 EPS CAGR 15-20%, Rev CAGR 3%+/-, ROTCE ~11%; ROTCE ex-DTA around 13% - comments ahead of analyst day
GM Reports Q2 $1.89 v $1.72e, Net Rev $37.0B v $37.4B y/y
CAT Reports Q2 $1.49 v $1.26e, Rev $11.3B v $10.9Be
GM Exec: Will cut Q3 and Q4 North America production by 150K vehicles compared to H1 - media call
FCX Reports Q2 $0.17 v $0.20e, Rev $3.71B v $3.68Be
C CEO: Believe have crossed inflection point on path to growth and stronger returns - analyst day
(US) JULY RICHMOND FED MANUFACTURING INDEX: 14 V 7E
*(US) JULY CONSUMER CONFIDENCE: 121.1 V 116.5E
(US) Senate has sufficient votes to approve motion to proceed on GOP healthcare legislation
TXN Reports Q2 $1.03 v $0.95e, Rev $3.69B v $3.55Be
(US) Pres Trump: steel dumping measures are coming 'fairly soon'; steel tariffs may be waiting until we finish up health care, taxes and infrastructure - financial press interview (update)
(AU) AUSTRALIA Q2 CONSUMER PRICES (CPI) Q/Q: 0.2% V 0.4%E; Y/Y: 1.9% V 2.2%E; TRIMMED MEAN Q/Q: 0.5% V 0.5%E ; Y/Y: 1.8% V 1.8%E

WEDNESDAY 7/26
PTR Guides H1 (CNY) Net 9-11B v 528M y/y
(UK) Q2 ADVANCE GDP Q/Q: 0.3% V 0.3%E; Y/Y: 1.7% V 1.7%E
F Reports Q2 $0.56 v $0.44e, Rev $39.9B v $37.9Be
*(US) JUN NEW HOME SALES: 610K V 615KE
(US) Association of American Railroads weekly rail traffic report for week ending July 22nd: 534.2K carloads and intermodal units, +1.1% y/y (28th straight week of gains)
*(US) FOMC HOLDS TARGET RATE RANGE AT 1.00-1.25%, AS EXPECTED; BALANCE SHEET UNWIND TO START 'RELATIVELY SOON'
FB Reports Q2 $1.32 v $1.14e, Rev $9.32B v $9.17Be
*(BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 100BPS TO 9.25%; AS EXPECTED
005930.KR Reports final Q2 (KRW) Net 10.8T v 9.8Te; Op 14.07T v 14.0T prelim; Rev 61.0T v 60.0T prelim; to buy back KRW1.67T of shares

THURS 7/27
ROG.CH Reports 1H (CHF) Net 5.58B v 5.47B y/y; Core Op 10.1B v 9.86Be, Rev 26.3B v 26.1Be
BAS.DE Reports Q2 EPS €1.63 v €1.19 y/y, EBIT (before items) €2.25B v €2.20Be, Rev €16.3B v €16.3Be
NOK1V.FI Reports Q2 adj Net €441M v €171M y/y, adj Op €574M v €460Me, Rev €5.63B v €5.62Be
MT.NL Reports Q2 Net $1.32B v $1.11B y/y, EBITDA $2.11B v $2.20Be, R$17.2B v $16.9Be
ABI.BE Reports Q2 $0.95 adj v $1.14e, EBITDA $5.35B v $5.28Be, R$14.2B v $14.5Be
AIR.FR Reports Q2 EPS €1.16 v €0.76e; Adj EBIT €859M v €878Me, Rev €15.72B v €15.99Be
ORA.FR Reports Q2 EBITDA €3.38B v €3.3Be, Rev €10.21B v €10.1Be
BAYN.DE Reports Q2 Net €1.22B (adj) v €1.38B y/y, EBITDA adj €3.06B v €2.99Be, Rev €12.2B v €12.6Be
BN.FR Reports H1 Net €1.05B v €935M y/y, Op Profit €1.72B v €1.48B y/y, Rev €12.13B v €11.1B y/y
SU.FR Reports H1 adj EBITA €1.72B v €1.67Be; Rev €12.17B v €12.2Be
(DE) AUG GFK CONSUMER CONFIDENCE: 10.8 V 10.6E (highest since Oct 2001)
RDSA.NL Reports Q2 adj Profit $3.71B v $3.36Be, basic CCS EPS $0.44 v $0.40e, Rev $72.1B v $58.4B y/y
AZN.UK Reports Q2 Core EPS $ 0.87 v $0.80e, Rev $5.05B v $5.00Be
LLOY.UK Reports Q2 PBT £2.41B v £1.98Be, Underlying profit £4.9B v £4.16B y/y, Total Income £9.30B v £8.87B y/y
DGE.UK Reports FY17 EPS 108.5p v 89.4p y/y, EBIT £3.60B v £3.60Be, Rev £12.1B v £11.96Be; Approves £1.5B sharebuyback; Raises final dividend 5% to 62.2p/shr
(EU) EURO ZONE JUN M3 MONEY SUPPLY Y/Y:5.0 % V 5.0%E
POT Reports Q2 $0.16 adj* v $0.17e, Rev $1.12B v $936Me
DOW Reports Q2 $1.08 v $1.01e, Rev $13.8B v $13.7Be
*(TR) TURKEY CENTRAL BANK (CBRT) LEAVES BENCHMARK REPURCHASE UNCHANGED AT 8.00%; AS EXPECTED
TWTR Reports Q2 $0.08 v $0.05e, Rev $573.9M v $537Me
UPS Reports Q2 $1.58 v $1.47e, Rev $15.8.B v $15.5Be
(UK) BOE names David Ramsden as Dep Gov for Markets and Banking
NESN.CH Exec:Seeing week consumer environment in NA and Europe - analyst call
*(US) JUN PRELIMINARY DURABLE GOODS ORDERS: 6.5% V 3.7%E; DURABLES EX TRANSPORTATION: 0.2% V 0.4%E
NYT Reports Q2 $0.18 v $0.13e, Rev $407.1M v $394Me
(US) Atlanta Fed raises Q2 GDP to 2.8% from 2.5% on 7/19
AMZN Reports Q2 $0.40 v $1.40e, Rev $38.0B v $37.2Be
BIDU Reports Q2 $2.36 adj v $1.42e, Rev $3.08B v $2.78Be
SBUX Cuts FY17 $2.05-2.06 adj v $2.10e, Rev to low end of 8-10% y/y, implies low end of R$23-23.4B v $22.7Be (prior 2.08-2.12, Rev +8-10%) - earnings call
(US) US House Speaker Ryan: Prepared to go to conference on healthcare bill; Senate must vote first on any conference agreement produced
(CN) China banks said to be increasing rates on mortgages - Economic Information Daily

FRI 7/28
(US) Senate votes on amendment to healthcare bill; lacks vote on Skinny repeal plan - financial press
BNP.FR Reports Q2 Net €2.4B v €1.91Be, Rev €10.9B v €11.3B y/y
*(FR) FRANCE Q2 ADVANCE GDP Q/Q: 0.5% V 0.5%E; Y/Y: 1.8% V 1.6%E
BARC.UK Reports Q2 adj net £354M v £803M y/y, adj pretax £1.4B* v £1.2Be, Core Net rev £5.1B v £5.23Be
(FR) FRANCE JULY PRELIMINARY CPI M/M: -0.3% V -0.4%E; Y/Y: 0.7% V 0.7%E
(DE) GERMANY JULY CPI SAXONY M/M: 0.3% V 0.2% PRIOR; Y/Y: 1.7% V 1.7% PRIOR
(DE) GERMANY JULY CPI NORTH RHINE WESTPHALIA M/M: 0.4% V 0.1% PRIOR; Y/Y: 1.8% V 1.6% PRIOR
*(EU) EURO ZONE JULY BUSINESS CLIMATE INDICATOR: 1.05 V 1.14E; CONSUMER CONFIDENCE: -1.7 V -1.7E
(DE) GERMANY JULY PRELIMINARY CPI M/M: 0.4% V 0.2%E; Y/Y: 1.7% V 1.5%E
(RU) RUSSIA CENTRAL BANK (CBR) LEAVES 1-WEEK AUCTION RATE UNCHANGED AT 9.00%; AS EXPECTED
MRK Reports Q2 $1.01 v $0.87e, Rev $9.93B v $9.79Be; Cyber attack from June still impacting operations
*(US) Q2 EMPLOYMENT COST INDEX (ECI): 0.5% V 0.6%E
(US) Q2 ADVANCE GDP ANNUALIZED Q/Q: 2.6% V 2.7%E; PERSONAL CONSUMPTION: 2.8% V 2.8%E
*(US) Q2 ADVANCE GDP PRICE INDEX: 1.0% V 1.3%E; CORE PCE Q/Q: 0.9% V 0.7%E
(US) FDA plans to begin dialogue about lowering nicotine levels in combustible cigarettes to non-addictive levels; new enforcements to also affect newly-regulated tobacco products such as cigars and e-cigarettes
*(US) JULY FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 93.4 V 93.2E
(US) New York Fed Nowcast: raises Q2 GDP forecast to 2.1% from 2.0% on 7/21; cuts Q3 GDP forecast to 1.9% from 2.0% on 7/21
(US) Weekly Baker Hughes US Rig Count: 958 v 950 w/w (+0.8% w/w)
(KR) US military spokesman: Joint Chiefs and head of Pacific Command spoke to South Korean counterparts, discussed military response optionsto North Korea ICBM test