TradeTheNews.com Weekly
Market Update: Stocks shrug off biblical floods and North Korean hostility,
helped by weaker US dollar
Fri, 01 Sep 2017 16:10 PM EST
Stock markets moved higher this week in continued thin, late summer trading
conditions. Investors once again quickly looked past the concerning escalation
of hostility by the North Korean regime, and catastrophic floods in the Houston
area brought about by the historic rains of Hurricane Harvey. A narrative
emerged that politicians in Washington would be more likely to come together
and pass legislation in order to support Texas in its hour of need, rather than
bicker over raising the debt ceiling when they return to work next week.
Wednesday, the President kicked off what is expected to be an all-out press to
get major tax reform signed into law by the end of the year at a address in
Missouri. By Friday reports circulated that Trump was going to request $5.9B in
Harvey aid while also pulling back on a threat of a forced government shutdown
over border wall funding. Major US indices rose back to within striking
distance of all time highs, lead by the NASDAQ, while the VIX fell 10% to sit
just above 10 once again. For the week the S&P rose 1.4%, the Dow added
0.8% and the NASDAQ gained 2.7%.
The US Dollar fell to fresh two-year lows, leading to a print above 1.20 in the
Euro which rekindled speculation the ECB could hold back when they lay out
expected plans to start moving away from QE. The economic data remained solid,
headlined by a Q2 GDP print of 3% and a host of robust manufacturing PMIs,
while inflation readings remained soft but within recent ranges. Friday's jobs
report caused a little bit of indigestion when most components came in below
expectations. The markets response though quickly indicated few were expecting
the Aug data to have a material impact on the Fed’s economic outlook. Metals
markets moved to fresh multi-year highs, in many cases helped by the softer
Greenback and healthy growth prospects. Energy markets were pushed around by
refinery/pipeline outages resulting from flooding in Texas and Louisiana.
Gasoline futures rose on expected shortages in refined product coming to
markets east of the Rockies, while crude prices remained heavy on the notion
that a crude glut would grow as Permian and Eagle Ford shale oil would have to
find storage until flows into key Gulf refineries could be reopened.
In corporate news, the week started off with the announcement that Gilead would
acquire Kite Pharma for $180/shr in an $11B deal to bolster its cancer
treatment portfolio. Best Buy posted a solid earnings report and raised its
revenue outlook, but shares fell after it warned that the bounce in margins seen
this period would moderate in coming quarters. Building material names were
buoyed for the week on predicted upcoming reconstruction funds for the Texas
region post-Hurricane Harvey.
MONDAY 8/28
*(EU) EURO ZONE JULY M3 MONEY SUPPLY Y/Y: 4.5% V 4.9%E
(JP) JAPAN GOVT ISSUES WARNING TO PEOPLE IN NORTHERN PART OF COUNTRY OVER
POSSIBLE INCOMING MISSILE LAUNCHED FROM NORTH KOREA - Japan press
TUESDAY 8/29
(DE) GERMANY SEPT GFK CONSUMER CONFIDENCE: 10.9 V 10.8E (highest since Oct
2001)
(FR) FRANCE Q2 PRELIMINARY GDP Q/Q: 0.5% V 0.5%E; Y/Y: 1.7% V 1.8%E
BBY Reports Q2 $0.69 v $0.63e, Rev $8.94B v $8.66Be
(US) AUG CONSUMER CONFIDENCE: 122.9 V 120.7E
(KR) UN Security Council: Condemned North Korea's firing of a ballistic missile
over Japan as an "outrageous" act and demanded that Pyongyang not
launch any more missiles and abandon all nuclear weapons and programs
WEDNESDAY 8/30
1398.HK Reports H1 (CNY) Net 153B v 153Be, Net Interest Income 250.9B
3988.HK Reports H1 (CNY) Net 103.7B v 94.7Be, Total Op Income 248.4B v 262.6B
y/y
(EU) EURO ZONE AUG BUSINESS CLIMATE INDICATOR: 1.09 V 1.05E; FINAL CONSUMER
CONFIDENCE: -1.5 V -1.5E
939.HK Reports H1 (CNY) Net 138.3B v 133.4B y/y; Op Income 303.1B v 295.7B y/y
(DE) GERMANY AUG PRELIMINARY CPI M/M: 0.1% V 0.1%E; Y/Y: 1.8% V 1.8%E
(US) AUG ADP EMPLOYMENT CHANGE: +237K V +185KE
(US) Q2 PRELIMINARY GDP PRICE INDEX: 1.0% V 1.0%E; CORE PCE Q/Q: 0.9% V 0.9%E
(US) Q2 PRELIMINARY GDP ANNUALIZED (2nd reading) Q/Q: 3.0% V 2.7%E; PERSONAL
CONSUMPTION: 3.3% V 3.0%E
(US) President Trump tweets: "The US has been talking to North Korea, and
paying them extortion money, for 25 years. Talking is not the answer!"
CA.FR Reports H1 adj net €154.0M v €235.0M y/y, EBIT €621M v €675Me, Net Rev
€38.5B v €36.3B y/y
(US) Association of American Railroads weekly rail traffic report for week
ending Aug 26th: 551.8K carloads and intermodal units, +2.3% y/y (33rd straight
week of gains)
(US) Colonial Pipeline update: Main gasoline line from Gulf Coast to US
northeast to shut Thursday
(CN) CHINA AUG OFFICIAL GOVT MANUFACTURING PMI: 51.7 V 51.3E (13th month of
expansion)
(KR) BANK OF KOREA (BOK) LEAVES REPO RATE UNCHANGED AT 1.25%; AS EXPECTED (14th
straight pause in the current easing cycle)
COST Reports Aug Total SSS (ex gas) 5.9%; US SSS (ex gas) +6.1% v +3.9%e
THURSDAY 8/31
(FR) FRANCE AUG PRELIMINARY CPI M/M: 0.5% V 0.5%E; Y/Y: 0.9% V 0.9%E
(DE) GERMANY AUG NET UNEMPLOYMENT CHANGE: -5K V -6KE ; UNEMPLOYMENT RATE: 5.7%
V 5.7%E
(EU) EURO ZONE AUG ADVANCE CPI ESTIMATE Y/Y: 1.5% V 1.4%E; CPI CORE Y/Y: 1.2% V
1.2%E
(EU) EURO ZONE JULY UNEMPLOYMENT RATE: 9.1% V 9.1%E (matches lowest level from
Feb 2009)
EUR/USD (EU) Euro currency strength concerns said to be a growing concern among
ECB members thus raising the chance its asset purchases will be phased out only
slowly - financial press citing several sources familiar with discussions
(US) JULY PERSONAL INCOME: 0.4% V 0.3%E; PERSONAL SPENDING: 0.3% V 0.4%E
(US) JULY PCE DEFLATOR M/M: 0.1% V 0.1%E; Y/Y: 1.4% V 1.4%E
(US) JULY PCE CORE M/M: 0.1% V 0.1%E; Y/Y: 1.4% V 1.4%E
(US) AUG CHICAGO PURCHASING MANAGER: 58.9 V 58.5E
(US) JULY PENDING HOME SALES M/M: -0.8% V +0.3%E; Y/Y: -0.5% V +0.5%E
(US) Atlanta Fed cuts Q3 GDP to 3.3% from 3.4% on 8/25
(CN) CHINA AUG CAIXIN PMI MANUFACTURING 51.6 V 51.0E (Highest since Feb)
FRIDAY 9/1
(IN) INDIA AUG MANUFACTURING PMI: 51.2 V 47.9 PRIOR
(HK) Macau Aug Gaming Rev MOP22.7B, +20.4% y/y
(UK) AUG PMI MANUFACTURING: 56.9 V 55.0E (13th month of expansion)
(US) AUG UNEMPLOYMENT RATE: 4.4% V 4.3%E
(US) AUG AVERAGE HOURLY EARNINGS M/M: 0.1% V 0.2%E; Y/Y: 2.5% V 2.6%E; AVERAGE
WEEKLY HOURS: 34.4 V 34.5E
(US) AUG CHANGE IN NONFARM PAYROLLS: +156K V +180KE
(EU) ECB said to see chance of QE plan not fully ready until Dec - financial
press
GM Reports Aug US vehicle sales +7.5% y/y, at 275.6K units v 261.2Ke
