Markets Made Queasy by Mounting White House Chaos and Spain Terror Attack

TradeTheNews.com Weekly Market Update: Markets Made Queasy by Mounting White House Chaos and Spain Terror Attack
Fri, 18 Aug 2017 16:18 PM EST

The week began in the fog of the latest Trump controversy, as voices from all sides chastised the President for not denouncing white supremacy more forcefully after the terrible events in Virginia last weekend. Markets didn’t really seem to notice though, as seemingly insatiable demand for higher yielding, higher profile bond offerings including those from Tesla and Amazon resulted in a bounce back in equity markets. The VIX dropped back sharply yet again as the “fire and fury” volatility of last week quickly dissipated. Market perceptions began to shift again after Tuesday’s angry press conference during which the President doubled down on what most perceived as highly divisive and inflammatory rhetoric in the wake of the disturbing images out of Charlottesville. By Wednesday, White House advisory councils that included some of the most prominent and influential US business leaders had agreed to disband in attempt to distance themselves from Trump. Thursday saw concerns that the President’s window to reach tax reform had already closed, which were exacerbated by rumors that White House economic adviser Gary Cohn was set to resign. Risk-averse flows picked up momentum after details of another disturbing terrorist ramming attack trickled out from Barcelona, Spain. Friday saw stock indices test below last Thursday’s low and US Treasury yields also reach the lowest levels since June before news broke that the White House had decided to relieve advisor Bannon from his role, stabilizing risk sentiment.

The US economic data largely surpassed expectations throughout the week, helping the Greenback consolidate the post July jobs report move for much of the first half of the week. Wednesday’s Fed minutes and Thursday’s ECB minutes were both greeted as somewhat dovish and lowered expectations heading into Jackson Hole next week. Gold, which saw prices test $1,300 for the third time this year, the Japanese Yen and the Swiss Franc all benefited from risk averse trading flows. Crude futures rallied on Friday, recouping nearly all the week’s losses, helped by a decline in the Baker Hughes rig count. The NASDAQ registered its fourth straight down week, while the small cap Russel 2000 has now dropped more than 6% from the recent high. For the week, the DJIA fell 0.8%, the S&P500 lost 0.7%, and the Nasdaq slipped 0.6%.

In corporate news this week, the focus was on retailer results as earnings season wound down. Target was boosted after reporting an increase in traffic and raising its guidance, while Dick’s shares fell on an earnings miss and increased promotional activity. Foot Locker lowered its outlook on poor results due to a shift in the retail landscape, and Limited Brands missed on same store comps and cut its full year guidance as Victoria's Secret continued to struggle. Alibaba shares lifted following a big earnings beat, boosted by steady growth in its e-commerce revenue. Amazon shares were hit after President Trump tweeted that the internet giant is “doing great damage to tax-paying retailers.”

SUNDAY 8/13
(HK) Hong Kong Financial Services Chief Chan: No plan to ease anti-property cooling steps
(CN) CHINA JUL INDUSTRIAL PRODUCTION Y/Y: 6.4% V 7.1%E; YTD Y/Y: 6.8% V 6.9%E

MONDAY 8/14
(IN) INDIA JULY CPI Y/Y: 2.4% V 2.1%E
(CN) China National Energy Administration (NEA): China Jul power consumption: 607.2B KWH, +9.9% y/y (4th consecutive rise)

TUESDAY 8/15
(CN) PBOC Adviser Sheng Songcheng: Cut of RRR is not in line with China's policy, more likely to use SLF, MLF and PSL
(DE) GERMANY Q2 PRELIMINARY GDP Q/Q: 0.6% V 0.7%E; Y/Y: 2.1% V 1.9%E; GDP NSA Y/Y: 0.8% V 0.6%E
(CN) CHINA JULY NEW YUAN LOANS (CNY): 825.5B V 800BE
(UK) JULY CPI M/M: -0.1% V 0.0%E; Y/Y: 2.6% V 2.7%E; CPI CORE Y/Y: 2.4% V 2.5%E
HD Reports Q2 $2.25 v $2.21e, Rev $28.1B v $27.8Be
(US) JULY ADVANCE RETAIL SALES M/M: 0.6% V 0.3%E; RETAIL SALES EX AUTO M/M: 0.5% V 0.3%E
(US) JULY IMPORT PRICE INDEX M/M: 0.1% V 0.1%E; Y/Y: 1.5% V 1.5%E
(US) AUG EMPIRE MANUFACTURING: 25.2 V 10.0E (highest since Sept 2014)
(US) AUG NAHB HOUSING MARKET INDEX: 68 V 64E (3 month high)
AMZN Launches $16B seven-part debt offering (upsized from around $15B) - press
(US) JUN TOTAL NET TIC FLOWS: $7.7B V $57.3B PRIOR; NET LONG-TERM TIC FLOWS: $34.4B V $91.9B PRIOR
(BR) Brazil Govt confirms to increase 2017 and 2018 fiscal deficit targets to BRL159B (from deficits of BRL139B and BRL129B respecitvely) citing decline in government revenues.

WEDNESDAY 8/16
CARLB.DK Reports H1 (DKK) adj EBIT 4.13B v 3.85Be, Rev 31.8B v 32.2Be
MAERSKB.DK Reports Q2 Net -$264M v +$507Me, EBIT $302M v $896Me, R$9.6B v $9.6Be
*(TH) THAILAND CENTRAL BANK (BOT) LEAVES BENCHMARK INTEREST RATE UNCHANGED AT 1.50% (as expected)
(IT) ITALY Q2 PRELIMINARY GDP Q/Q: 0.4% V 0.4%E; Y/Y: 1.5% V 1.4%E
(UK) JUN AVERAGE WEEKLY EARNINGS 3M/Y: 2.1% V 1.8%E; WEEKLY EARNINGS EX BONUS 3M/Y: 2.1% V 2.0%E
(UK) JULY JOBLESS CLAIMS CHANGE: -4.2K V +3.5K PRIOR; CLAIMANT COUNT RATE: 2.3% V 2.3% PRIOR
(UK) JUN ILO UNEMPLOYMENT RATE: 4.4% V 4.5%E (lowest since 1975)
(EU) EURO ZONE Q2 PRELIMINARY GDP Q/Q: 0.6% V 0.6%E; Y/Y: 2.2% V 2.1%E
700.HK Reports Q2 (CNY) Net 18.2B v 13.5Be, Rev 56.6B v 52.9Be
TGT Reports Q2 $1.23 v $1.20e, Rev $16.4B v $16.2Be
(US) JULY HOUSING STARTS: 1.16M V 1.22ME; BUILDING PERMITS: 1.22M V 1.25ME
(US) Association of American Railroads weekly rail traffic report for week ending Aug 12th: 548.8K carloads and intermodal units, % y/y (31st straight week of gains)
(US) Trump Strategy and Policy Council reportedly to disband - press
(US) FOMC MINUTES FROM JUNE 14 MEETING: SEVERAL PARTICIPANTS READY TO MOVE ON BALANCE SHEET IN JULY; OTHERS SEEKING CONFIRMATION WEAK INFLATION IS TRANSITORY BEFORE NEXT HIKE
CSCO Reports Q4 $0.61 v $0.61e, Rev $12.1B v $12.1Be
TLS.AU Reports FY17 Net A$3.89B v A$3.82Be; EBITDA A$10.7B v A$10.5B y/y; Rev A$26.0B v A$26.7B y/y; Revises dividend policy to pay out of 70-90% of underlying earnings as of FY18 v ‘almost 100% of profits prior’; Guides FY18 dividend A$0.22 , -29% y/y (new implied yield ~5.5%) suspends dividend reinvestment plan
(AU) AUSTRALIA JULY EMPLOYMENT CHANGE: +27.9K V +20.0KE (5th straight increase); UNEMPLOYMENT RATE: 5.6% V 5.6%E

THURSDAY 8/17
(UK) JULY RETAIL SALES (EX AUTO/FUEL ) M/M: 0.5% V 0.1%E; Y/Y: 1.5% V 1.2%E
(EU) EURO ZONE JULY FINAL CPI Y/Y: 1.3% V 1.3%E ; CPI CORE Y/Y: 1.2% V 1.2%E
(EU) ECB ACCOUNT OF THE MONETARY POLICY MEETING (JULY MINUTES): Officials expressed concern over risk of Euro overshoot
(US) AUG PHILADELPHIA FED BUSINESS OUTLOOK: 18.9 V 18.0E (lowest since Nov)
(US) JULY INDUSTRIAL PRODUCTION M/M: 0.2% V 0.3%E; CAPACITY UTILIZATION: 76.7% V 76.7%E
(US) JULY LEADING INDEX: 0.3% V 0.3%E
AMAT Reports Q3 $0.86 v $0.83e, Rev $3.74B v $3.69Be
GPS Reports Q2 $0.68 v $0.52e, Rev $3.80B v $3.77Be
(CH) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 2.50%, AS EXPECTED
992.HK Reports Q1 Net loss $72M v profit $33Me; Rev $10.0B v $9.9Be
(CN) CHINA JUL PROPERTY PRICES M/M: RISE IN 56 OUT OF 70 CITES VS 60 PRIOR; Y/Y RISE IN 70 OUT OF 70 CITIES VS 70 PRIOR
(CN) Chinese Expert: US won’t win and cannot afford trade war against China - People’s Daily (Opinion piece)

FRIDAY 8/18
DE Reports Q3 $1.97 v $1.93e, Rev $6.83B v $6.88Be
(US) AUG PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 97.6 V 94.0E
(US) White House officials reportedly expect Trump adviser Bannon to be fired - Axios
(US) New York Fed Nowcast: raises Q3 GDP forecast to 2.1% from 2.0% on 8/11
(US) Weekly Baker Hughes US Rig Count: 946 v 949 w/w (-0.3% w/w)