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Weekly Market Update: Markets Blow Off Real and Geopolitical Storms, Still
Eying Tax Reform
Fri, 15 Sep 2017 16:12 PM EST
US stock markets forged ahead to fresh all-time highs this week as investors
maintained a healthy risk appetite despite a host of ongoing risks. Massive
Florida power outages following landfall from Hurricane Irma, fallout from the
unprecedented Equifax credit breach, more provocative actions from the North
Korean regime, and another terrorist attack in London did little to impede
sentiment. Washington taking further baby steps towards tax reform likely
offset some of those risks. The President's perceived willingness to reach
across the aisle on key issues like immigration spurred hopes for a tax deal,
while Republicans pledged to release a detailed reform package by the end of
the month. For the week, the the DJIA gained 2.2%, the S&P500 rose 1.6%, and
the Nasdaq added 1.4%.
Treasury yields moved up alongside three disappointing auctions and a host of
corporate supply announcements. Bond sellers appeared to be rewarded by a
hotter than expected US August CPI print, but despite a 15+ basis point move in
UST, yields remained at depressed levels. The Bank of England met and indicated
the recent data may force them to begin withdrawing accommodation faster than
the market currently anticipates despite the uncertainty surrounding Brexit
talks that are moving along at a glacial pace. Cable traded to the highest
levels since the days after last summer’s Brexit vote, while the Dollar index
tried to bottom along with the upswing in rates. Copper prices retreated some
7% from recent highs, helped by softer than expected Chinese industrial
production data.
The major corporate news this week came from Apple’s product event, where the
tech giant introduced its next-gen Apple Watch 3 with cellular capability and
confirmed the release of its premium iPhone X (‘ten’) product with improved
graphics and face ID technology. Oracle reported a Q1 beat on earnings and
cloud revenue, but shares fell after the company guided Q2 numbers below
consensus. Nordstrom shares popped this week on reports that the founding
family was moving closer to a going private deal. Steel producer Nucor guided
its Q3 earnings below Street estimates, noting import pressures have not
allowed pricing to keep pace with increasing raw material costs.
MON 9/11
(FR) BANK OF FRANCE AUG BUSINESS SENTIMENT: 104 V 106E
*(KR) UN SECURITY COUNCIL VOTES IN FAVOR OF INCREASING SANCTIONS AGAINST NORTH
KOREA; Sanctions now impact more than 90% of all reported exports
(UK) Parliament votes against opposition labor party attempt to block EU
withdrawal bill; passes first parliamentary hurdle
TUES 9/12
(UK) AUG CPI M/M: 0.6% V 0.5%E; Y/Y: 2.9% V 2.8%E; CPI CORE Y/Y: 2.7% V 2.5%E
(annual pace matches highest level since Jun 2013)
(IN) INDIA AUG CPI Y/Y: 3.4% V 3.2%E
(US) JULY JOLTS JOB OPENINGS: 6.17M V 6.00ME (record high)
JWN Nordstrom family reportedly nearing deal with PE firm to take company
private - CNBC
AAPL Introduces next gen Apple Watch 3 (available Sept 22): confirms it
includes built in cellular (untethered from iPhone); can receive calls on the
same number as your phone; Introduces iPhone 8 and 8 Plus (Prices start at $699
and $799, shipping Sept 22) - iPhone 8 event
WEDS 9/13
(UK) JULY AVERAGE WEEKLY EARNINGS 3M/Y: 2.1% V 2.3%E; WEEKLY EARNINGS EX BONUS
3M/Y: 2.1% V 2.2%E
(UK) AUG JOBLESS CLAIMS CHANGE: -2.8K V -2.9K PRIOR; CLAIMANT COUNT RATE: 2.3%
V 2.3% PRIOR
(UK) JULY ILO UNEMPLOYMENT RATE: 4.3% V 4.4%E (lowest level since 1975)
(US) AUG PPI FINAL DEMAND M/M: 0.2% V 0.3%E; Y/Y: 2.4% V 2.5%E
(US) Association of American Railroads weekly rail traffic report for week
ending Sep 9th: 486.5K carloads and intermodal units, +0.8% y/y
ARAMCO.IPO May delay IPO to 2019 - financial press
THURS 9/14
RMS.FR Reports H1 Net €605M v €603Me, Op profit €931.3M v €919Me, Rev €2.71B v
€2.44B y/y
(CH) SWISS NATIONAL BANK (SNB) LEAVES SIGHT DEPOSIT RATE UNCHANGED AT -0.75%;
AS EXPECTED
(UK) BOE LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS EXPECTED
(UK) BOE SEPT MINUTES: MPC VOTED 7-2 TO LEAVE INTEREST RATES UNCHANGED AT 0.25%
(TR) TURKEY CENTRAL BANK (CBRT) LEAVES BENCHMARK REPURCHASE RATE UNCHANGED AT
8.00%; AS EXPECTED
VZ CEO: We have moved on from looking at cable companies; Big content deal
coming by end of Sep - Goldman conf
(US) AUG CPI M/M: 0.4% V 0.3%E; CPI EX FOOD AND ENERGY M/M: 0.2% V 0.2%E; CPI
NSA: 245.519 V 245.350E
(UK) Bank of England's (BOE) Carney: May need to adjust BOE interest rate in
the coming months (in-line with Sept policy statement)
ORCL Reports Q1 $0.62 v $0.61e, Rev $9.21B v $9.02Be
*(CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT
2.50%; AS EXPECTED
(KR) North Korea fires a missile from Pyongyang towards the east, missile
passes over Japan - South Korea press
(KR) UN Security Council to meet at 3 pm EDT on Friday, Sept 15thregarding the
most recent North Korea missile test
FRI 9/15
*(CN) CHINA AUG NEW YUAN LOANS (CNY): 1.09T V 950.0BE
*(CN) CHINA AUG AGGREGATE FINANCING (CNY): 1.48T V 1.280TE
(UK) BOE’s Vlieghe (dove): May need to adjust BOE interest rate in the coming
months (in-line with MPC majority) - comments from London
(RU) RUSSIA CENTRAL BANK (CBR) CUTS 1-WEEK AUCTION RATE BY 50BPS TO 8.50%; AS
EXPECTED
*(US) AUG ADVANCE RETAIL SALES M/M: -0.2% V +0.1%E; RETAIL SALES EX AUTO M/M:
0.2% V 0.5%E
*(US) SEPT EMPIRE MANUFACTURING: 24.4 V 18.0E
(US) AUG INDUSTRIAL PRODUCTION M/M: -0.9% V +0.1%E; CAPACITY UTILIZATION: 76.1%
V 76.7%E
NUE Guides Q3 $0.75-0.80 v $1.06e
(US) SEPT PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 95.3 V 95.0E
(US) New York Fed Nowcast: cuts Q3 GDP forecast to 1.3% from 2.1% on 9/8; cuts
Q4 GDP forecast at 1.8% from 2.6% on 9/8
(US) Atlanta Fed cuts Q3 GDP to 2.2% from 3.0% on 9/6
(UK) Prime Min May: raising national threat level to 'critical' from 'severe';
category indicates a further attack may be imminent