TradeTheNews.com Weekly
Market Update: Brexit Talks Push Past Border Issue; Tech and Bitcoin Gyrations
Distract Traders
Fri, 08 Dec 2017 16:09 PM EST
US stock indices finally encountered some turbulence this week, though Monday
did once again see another round of fresh highs. Rotational flows evident last
week carried over early on, playing a significant role as high growth sectors,
namely technology, experienced considerable relative selling. The high beta
FANG names traded down 5% or more for the recent highs while the NASDAQ
composite fell almost 3% from the top before buyers stepped in and shares
recovered into week’s end. Some noted the parabolic rise in bitcoin, which at
one point neared 19K, as potential culprit that could have been sucking oxygen
away from equities. In Washington, Republicans pressed onward with efforts to
reconcile the House and Senate tax bills and remain hopeful that legislation
can reach the President’s desk by Christmas. Friday delivered the November
employment report which offered little in way of surprises. The labor market
continued to expand but the tightening slack remains slow to manifest in rising
wages. Treasury yields drifted higher after the jobs report in a week that saw
the benchmark spread narrow to 51 bps at one point. For the week the DJIA and
S&P500 each added 0.4%, while the Nasdaq slipped 0.1%.
Back and forth surrounding the ongoing Brexit negotiations played the dominate
role in FX trading this week. Disagreements surrounding the Irish border issue
spurred some speculation that Prime Minister May’s eroding support could result
in a leadership changed as early as next year. Those fears were temporarily
allayed by a late week breakthrough in the talks that appears to have the
support of factions on both sides of the border going into the EU leaders’
summit next week. The Pound stayed in a downward trend though, as focus now shifts
towards what could be even tougher talks in phase two of the Brexit process.
In corporate news this week, reports indicated Disney is nearing a deal to
acquire 21st Century Fox’s non-core assets, which could be accompanied by an
agreement for Disney CEO Bob Iger to stay on past 2019 in order to facilitate a
the integration of Fox divisions. CVS agreed on a $207/share asking price to
acquire Aetna, valuing it at $77B, in a deal that would put a pharmacy, an
insurer, and a PBM all under one roof. United Health's Optum unit announced it
would acquire DaVita’s Medical Group division for $4.9B in cash, as DaVita
pivots its focus to the kidney care sector. Lululemon shares are up 13% on the
week after reporting a beat on its top and bottom line and boosting its
outlook. GE announced it would cut 12K jobs from its power GE Division, mostly
affecting professional and production workers based outside of the US, as the
company struggles with a downturn in the gas and coal power markets. Teva is
reportedly considering cutting 18% of its global workforce as it tries to pare
$2B in expenses.
SUNDAY 12/3
AET Confirms to be acquired by CVS for $207/shr ($145/shr cash and 0.8378 in
CVS shr) for ~$69B
MONDAY 12/4
(EU) EURO ZONE DEC SENTIX INVESTOR CONFIDENCE: 31.1 V 33.4E
(EU) Portugal Fin Min Mario Centeno wins Eurogroup chairmanship race; term
starts in Jan - press
5401.JP To reduce orders accepted for steel pipes by 20-30% as production
cannot keep up with the increase in demand from large-scale projects ahead of
the 2020 Tokyo Olympics
*(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT
1.50%; AS EXPECTED (16th consecutive hold in the current easing cycle)
Roark Capital reportedly raising $2B to acquire additional restaurant chains -
Axios
TUESDAY 12/5
(UK) NOV SERVICES PMI: 53.8 V 55.0E (16th month of expansion)
(PL) POLAND CENTRAL BANK (NBP) LEAVES BASE RATE UNCHANGED AT 1.50%; AS EXPECTED
(UK) DUP party leader Foster: Believes that DUP remains far away from a border
agreement - financial press
(US) OCT TRADE BALANCE: -$48.7B V -$47.5BE
(US) Atlanta Fed cuts Q4 GDP estimate to 3.2% from 3.5% on 12/1
(CN) US Commerce Dept to collect duties up to 265.79% on China origin steel
imported from Vietnam
WEDNESDAY 12/6
(IN) INDIA CENTRAL BANK (RBI) LEAVES REPURCHASE RATE UNCHANGED AT 6.00%; AS
EXPECTED
FAST Reports Nov Rev $365.5M, +15.4% y/y
(US) NOV ADP EMPLOYMENT CHANGE: +190K V +190KE
(US) Q3 FINAL NONFARM PRODUCTIVITY: 3.0% V 3.3%E; UNIT LABOR COSTS: -0.2% V
+0.2%E
(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 1.00%; AS EXPECTED
(US) Association of American Railroads weekly rail traffic report for week
ending Dec 2nd: 572.8K carloads and intermodal units, +3.5% y/y
(US) Sen Franken (D-MN) said to plan announcement tomorrow following
resignation calls from nearly a dozen Democratic Senate colleagues - press
(US) President Trump: recognizes Jerusalem as Israel's capital (as expected);
believes it's in the best interests of the US and the pursuit of peace between
Israelis and Palestinians
(BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC RATE TARGET BY 50BPS TO 7.00%; AS
EXPECTED
THURSDAY 12/7
(CN) CHINA NOV FOREIGN RESERVES: $3.119T V $3.124TE (10th straight month of
increases)
(EU) EURO ZONE Q3 FINAL GDP Q/Q: 0.6% V 0.6%E; Y/Y: 2.6% V 2.5%E
GE GE Power division cuts 12K jobs (18% of of Workforce)
(UK) Sticking point in Brexit talks on European Court of Justice is said to
have been resolved - press
(EU) ECB's Draghi: confirms Basel III is completed; it's a great day and a
major milestone
(US) Fed reports Q3 Financial Accounts: Household Change in Net Worth: $1.742T
v $1.698T prior
(US) Trump admin reportedly preparing infrastructure plan announcement in Jan -
press
(US) Senate passes stopgap spending measure that will keep the govt funded
through Dec 22nd; vote 81 to 14
(JP) JAPAN Q3 FINAL GDP Q/Q: 0.6% V 0.4%E; ANNUALIZED SA Q/Q: 2.5% V 1.5%E;
NOMINAL Q/Q: 0.8% V 0.7%E
(CN) CHINA NOV TRADE BALANCE (CNY-DENOMINATED): 263.6B V 240.8BE
(CN) CHINA NOV TRADE BALANCE: $40.2B V $35.0BE
FRIDAY 12/8
(EU) EU Commission : Reaches breakthrough in Brexit negotiations; ready for
second phase of negotiations
(FR) FRANCE OCT INDUSTRIAL PRODUCTION M/M: +1.9% V -0.1%E; Y/Y: 5.5% V 2.9%E
(UK) OCT INDUSTRIAL PRODUCTION M/M: 0.0% V 0.0%E; Y/Y: 3.6% V 3.5%E
(US) NOV AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 2.5% V 2.7%E; AVERAGE
WEEKLY HOURS: 34.5 V 34.4E
(US) NOV CHANGE IN NONFARM PAYROLLS: +228K V +195KE
(US) DEC PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 96.8 V 99.0E
WFC Pres Trump tweets: "Fines and penalties against Wells Fargo Bank for
their bad acts against their customers and others will not be droppe... but
will be pursued and, if anything, substantially increased. I will cut Regs but
make penalties severe when caught cheating!"
(US) Atlanta Fed cuts Q4 GDP estimate to 2.9% from 3.2% on 12/5
