Friday, August 4, 2017

Dollar Weakens Again, Then Reverses After Strong Jobs Report; Earnings Remain Solid

TradeTheNews.com Weekly Market Update:  Dollar Weakens Again, Then Reverses After Strong Jobs Report; Earnings Remain Solid
Fri, 04 Aug 2017 16:03 PM EST

The Dow and the S&P spent much of the week chopping wood at or just below all-time highs, while -- similar to July’s action -- the Transports, Russel 2000 and Nasdaq languish behind. Earnings season made the turn and the back nine revealed similar corporate themes to what has been seen prior. More firms have been beating top line growth expectations, and managements remain upbeat on second half growth even if it is becoming more difficult to squeeze out further margin improvement.

The greenback also served as a tailwind with the Dollar Index falling to fresh 14-month lows led by broad strength in the Euro. Rates dipped led by Treasury yields as the data continued fall in line with a goldilocks scenario: Strong enough growth to support a healthy employment market and rising equity valuations, but benign enough inflation readings allow central banks remain on extremely gradual paths toward normalizing policy. Similar to last week’s ECB policy statement, the BOE announcement on Thursday surprised markets to some degree by revealing an unwillingness of a majority of policy makers to change course yet on rates. Friday’s stronger than expected July US jobs print did little to change the overall narrative but it did produce a bounce in the greenback. Gold prices came off $1,275 while crude oil prices have consolidated the recent run up to $50. For the week the DJIA gained 1.2%, the S&P500 added 0.2%, and the Nasdaq slipped 0.4%.

In corporate news this week, Yelp and Grubhub shares surged after announcing a new tie-up that would see Grubhub acquire the Eat24 business and see Yelp integrate online ordering onto its platform. Discovery confirmed it would acquire Scripps for $14.6B in cash and stock to form a television content behemoth that would potentially control 20% of the ad-supported pay TV audience in the US. Apple shares ran up on a top and bottom line earnings beat that noted strong service revenue growth ahead of the iPhone 8 launch. Tesla charged up 6% post earnings and after CEO Elon Musk commented that there is no doubt they will reach 10K/units week production goals by the end of next year. Sprint shares rallied on raised guidance and renewed M&A hopes. And auto makers moved lower on weaker than expected July sales reports.

SUNDAY 7/30
(CN) CHINA JULY MANUFACTURING PMI (Govt Official): 51.4 V 51.5E (12th month of expansion)

MONDAY 7/31
HEIA.NL Reports H1 Net €1.04B v €1.03Be, Op €1.81B v €1.76Be, Rev €10.5B v €10.5Be
SAN.FR Reports Q2 Business EPS €1.35 v €1.31e, Business Net €1.70B v €1.55B y/y, Rev €8.66B v €8.14B y/y
(EU) EURO ZONE JULY ADVANCE CPI ESTIMATE Y/Y: 1.3% V 1.3%E; CPI CORE Y/Y: 1.2% V 1.1%E
(EU) EURO ZONE JUN UNEMPLOYMENT RATE: 9.1% V 9.2%E (lowest level since 2009)
(EU) EU Commission said to consider measures in draft policy proposal dated July 10th which would allow banks to temporarily stop withdrawals to prevent bank runs - financial press (UPDATE)
SNI To be acquired by Discovery Comms for $90/shr valued at $14.6B, inline w speculation last week(s)
(US) JULY CHICAGO PURCHASING MANAGER: 58.9 V 60.0E
(US) JUN PENDING HOME SALES M/M: 1.5% V 1.0%E; Y/Y: 0.7% V 0.5% PRIOR
(US) Fed Q2 senior loan officer survey: demand for commercial and industrial loans weakened in Q2, demand for residential real estate loans grew in Q2
(US) President Trump reportedly removes Anthony Scaramucci from Communications Director position at the request of new White House Chief of Staff Kelly - press

TUESDAY 8/1
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50%; AS EXPECTED
(HK) Macau July Gaming Rev MOP23.0B v MOP19.99B prior; 29.2% y/y v 22.8%e
(IN) INDIA JULY MANUFACTURING PMI: 47.9 V 50.9 PRIOR 1st contraction in 7 months and (lowest since Feb 2009)
BP.UK Reports Q2 Net $144M v -$1.42B y/y, Underlying replacement cost profit $684M v $518Me, Total Rev $57.4B v $47.3B y/y
(DE) GERMANY JULY NET UNEMPLOYMENT CHANGE: -9K V -5KE; UNEMPLOYMENT RATE: 5.7% V 5.7%E
(DE) GERMANY JULY FINAL MANUFACTURING PMI: 58.1 V 58.3E (confirms 32nd month of expansion)
(UK) PMI JULY PMI MANUFACTURING: 55.1 V 54.5E (12th month of expansion)
(EU) EURO ZONE Q2 ADVANCE GDP Q/Q: 0.6% V 0.6%E; Y/Y: 2.1% V 2.1%E
(US) JUN PERSONAL INCOME: 0.0% V 0.4%E; PERSONAL SPENDING: 0.1% V 0.1%E
(US) JUN PCE CORE M/M: 0.1% V 0.1%E; Y/Y: 1.5% V 1.4%E
(US) JUN PCE DEFLATOR M/M: 0.0% V 0.0%E; Y/Y: 1.4% V 1.3%E
(US) S&P announces companies with multiple share classes will no longer be able to join S&P 500 index; existing constituents will be able to remain - press
GM Reports July US sales -15% y/y, 226.1K units v 238.5Ke; Expect H2 to be stronger than H1
AAPL Reports Q3 $1.67 v $1.57e, Rev $45.4B v $44.7Be
(HK) Hong Kong Chief Exec Lam: H1 property prices +9.3% y/y; to set up panel to discuss land supply

WEDNESDAY 8/2
GLE.FR Reports Q2 Net €1.06B v €1.06Be, Op €1.52B v €2.4B y/y, Adj Rev €5.20B v €5.50Be; to take additional €300M charge for disputes
BA.UK Reports H1 Underlying EPS 19.8p v 19.1pe, EBITA £945M v £849M y/y, Rev £9.57B v £8.71B y/y
RIO.UK Reports H1 Underlying profit $3.94B v $4.26Be, underlying EBITDA $9.04B v $5.37B y/y, Rev $19.3B v $15.5B y/y; Announces additional $1.0B share buyback; Raises dividend 144% to $1.10
STAN.UK Reports H1 adj pretax profit $1.92B v $1.81Be, op income $7.2B v $7.23Be; Declares no dividend
(IN) INDIA CENTRAL BANK (RBI) CUTS REPURCHASE RATE BY 25BPS TO 6.00%; AS EXPECTED
(US) JULY ADP EMPLOYMENT CHANGE: +178K V +190KE
(US) Association of American Railroads weekly rail traffic report for week ending July 29th: 550.4K carloads and intermodal units, +2.5% y/y (29th straight week of gains)
(RU) Russia PM Medvedev: Trump signing new sanctions was tantamount to full-scale trade war; means an end to hopes for better ties with Trump administration
TSLA Reports Q2 -$1.33 v -$1.94e, Rev $2.79B v $2.55Be
(AU) AUSTRALIA JUN TRADE BALANCE (AUD): 856M V 1.8BE (8TH CONSECUTIVE SURPLUS)

THURSDAY 8/3
ACA.FR Reports Q2 Net €1.35B v €1.02Be; Rev €4.71B v €4.74B y/y
DTE.DE Reports Q2 adj Net €1.20B v €1.25Be, adj EBITA €5.94B v €5.81Be, Rev €18.9B v €18.7Be
SIE.DE Reports Q3 net profit €1.46B v €1.36Be, industrial business profit €2.25B v €2.33Be, Rev €21.4B v €21.8Be; Extends CEO Joe Kaeser contract to 2021
BMW.DE Reports Q2 Net €2.21B v €1.95B y/y, EBIT €2.93B v €2.81Be, Rev €25.8B v €25.9Be
(UK) BANK OF ENGLAND (BOE) QUARTERLY INFLATION REPORT (QIR)
(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS EXPECTED
(UK) BOE AUG MINUTES: VOTED 6-2 TO LEAVE INTEREST RATES UNCHANGED AT 0.25% (McCafferty and Saunders dissent)
(CZ) CZECH CENTRAL BANK (CNB) RAISES 2-WEEK REPURCHASE RATE BY 20BPS TO 0.25%; AS EXPECTED (1st rate hike since 2008)
TEVA CFO: expect generics drug price erosion to accelerate through rest of FY17 (expect high single digits) - earnings call comments
FDX Announces holiday season surcharge for oversized shipments (follows UPS surcharge)
(US) JULY FINAL MARKIT SERVICES PMI: 54.7 V 54.2E (Highest since Jan)
(US) JUN FINAL DURABLE GOODS ORDERS: 6.4% V 0.0%E; DURABLES EX TRANSPORTATION: 0.1% V 0.2% PRELIM
(US) SHRM Jul New-Hire Compensation Index (Services): 25.6% v 23.6% y/y (all time high)
(US) Atlanta Fed initial Q3 GDP estimate 4.0%
(AU) RBA QUARTERLY STATEMENT ON MONETARY POLICY: REITERATES RECENT AUD (A$) RISE HAD MODEST EFFECT ON GDP FORECASTS
YELP Grubhub to acquire Yelp's Eat24 business for $287.5M in cash; Yelp to integrate online ordering from all Grubhub restaurants

FRIDAY 8/4
RBS.UK Reports Q2 Net £680M v -£1.08B y/y, adj Op £1.69B v £1.04Be, Rev £3,71B v £3.00B y/y; Affirms will not make profit in FY17
FAST Reports July Net Sales $350.0M +12.9% y/y*
(US) JULY UNEMPLOYMENT RATE: 4.3% V 4.3%E
(US) JULY AVERAGE HOURLY EARNINGS M/M: 0.3% V 0.3%E; Y/Y: 2.5% V 2.4%E; AVERAGE WEEKLY HOURS: 34.5 V 34.5E
(CA) CANADA JULY NET CHANGE IN EMPLOYMENT: +10.9K V +12.5KE; UNEMPLOYMENT RATE: 6.3% V 6.5%E
(US) JUN TRADE BALANCE: -$43.6 V -$44.5BE
(US) JULY CHANGE IN NONFARM PAYROLLS: +209K V +180KE
(US) Atlanta Fed cuts Q3 GDP to 3.7% from 4.0% on 8/3
(US) Weekly Baker Hughes US Rig Count: 954 v 958 w/w (-0.4% w/w)