TradeTheNews.com Weekly
Market Update: Markets salivate over US tax breaks; Fed tightens, while other
major central banks on hold
Fri, 15 Dec 2017 16:09 PM EST
US stock markets looked to finish the week at all-time highs once again despite
lingering concerns around handful of Republican Senators’ willingness to
support the final terms of the tax bill. Friday’s rally, fueled by options
expiration and an S&P rebalance, was largely predicated on the belief the
Republicans will ultimately prove to be successful in pushing a tax cut package
through Congress next week. The economic data remained robust supporting the
FOMC’s decision to raise rates on Wednesday, as was expected. Thursday’s
stronger than expected retail sales numbers had economists revising Q4 GDP
expectations higher into the mid 3% range. A host of other key central banks
met as well, largely matching market expectations by indicating they were
staying the course on stimulus. European officials pushed to ball forward in
terms of Brexit, but a high profile political defeat for PM May only solidified
expectations that round two of the negotiations will be even more complicated.
US Treasury note sales were met with healthy demand ahead the Fed meeting but
rates still rose relative to Europe’s, while the US yield curve continued to
flatten, led by better buying at the long end. The 5-30 year yield-spread
narrowed to under 55 basis points for the first time since 2007. The Dollar
index finished largely flat, helped by firming late in the week and weakness in
the Pound, in particular. Bitcoin mania spread as a host of other
cryptocurrencies saw eye popping gains after bitcoin futures trade commenced on
the CBOE on Sunday. Natural gas prices remained under significant pressure
despite a cold blast into the Northeast US and an explosion at Austria’s
largest gas hub. WTI crude oil prices remained within striking distance of the
recent highs, while Brent touched levels not see in more than 2-years after the
North Seas Forties pipeline was shut for immediate repairs to fix a growing
crack. For the week the DJIA gained 1.3%, the S&P500 rose 0.9%, and the
Nasdaq added 1.4%.
This week in corporate news, Disney confirmed it would acquire 21st Century Fox
assets in at $52B deal. Bitcoin-tied stocks saw their momentum continue, with
many of the small cap companies associated to cryptocurrencies moving higher
still this week. Boeing climbed on its annual capital returns announcement.
Mattel lowered its expectations and announced a high yield offering to replace
its revolving credit facility. Caterpillar shares hit an all-time high and
powered the Dow on Wednesday after disclosing a 26% rise in total machine sales
in its latest monthly dealer statistics. Teva confirmed a reorganization plan
that cuts its Israeli workforce in half and closes an R&D center in
Netanya. Oracle shares dropped on a disappointing forecast for Q3 cloud
services.
SUNDAY 12/10
XBT Bitcoin futures open at $15,000 on CBOE
MAERSKB.DK CCO: Global freight rates will be ‘fragile’ going into 2018, warned
on softer demand
MONDAY 12/11
MAT Guides FY17 Gross Rev to decline by at least mid to high single digits y/y;
updates cost reduction plans - filing
12/11 (US) New York Mayor de Blasio: earlier explosion in NYC subway was
terrorist attack; there are no known, credible or specific threats to NYC right
now
TUESDAY 12/12
(UK) Ineos issues update on North Sea Forties Pipeline (450K bpd): Says the
pipeline is now closed down for additional inspections, no timeframe yet for
restart
(UK) NOV CPI M/M: 0.3% V 0.2%E; Y/Y: 3.1% V 3.0%E; CPI CORE Y/Y: 2.7% V 2.7%E
(highest annual pace since March 2012)
(US) NOV PPI FINAL DEMAND M/M: 0.4% V 0.3%E; Y/Y: 3.1% V 2.9%E
(US) GOP reportedly in talks to lower top income tax rate from 39.6% to 37% as
part of final tax bill - Wash Post
WEDNESDAY 12/13
(UK) OCT AVERAGE WEEKLY EARNINGS 3M/Y/Y: 2.5% V 2.5%E; WEEKLY EARNINGS (EX
BONUS) 3M/Y: 2.3% V 2.2%E
(UK) NOV JOBLESS CLAIMS CHANGE: +5.9K V +6.5K PRIOR; CLAIMANT COUNT RATE: 2.3%
V 2.3% PRIOR
(UK) OCT ILO UNEMPLOYMENT RATE: 4.3% V 4.2%E (matches low from 1975)
(US) NOV CPI M/M: 0.4% V 0.4%E; CPI EX FOOD AND ENERGY M/M: 0.1% V 0.2%E; CPI
INDEX NSA: 246.669 V 246.816E
CAT Reports Nov dealer statistics: Total Machines +26% y/y
TMUS Acquires TV tech firm Layer3 TV, Inc.; no terms disclosed; plans to launch
pay TV service in 2018
(US) House and Senate leaders said to have reached an agreement in principle on
tax reform bill - press
(US) FOMC RAISES TARGET RATE RANGE 25BPS TO 1.25-1.50% (AS EXPECTED)
(UK) UK govt loses vote on EU withdrawal bill amendment by 309-305; House of
Commons votes to give lawmakers final say on Brexit deal - press
(CN) PBOC RAISES INTEREST RATE ON REVERSE REPO AND MLF OPERATIONS BY 5BPS (move
follows the Fed move on rates earlier)
THURSDAY 12/14
(FR) FRANCE DEC PRELIMINARY MANUFACTURING PMI: 59.3 V 57.2E (15th month of
expansion and highest since Sept 2000)
(PH) PHILIPPINES CENTRAL BANK (BSP) LEAVES OVERNIGHT BORROWING RATE UNCHANGED
AT 3.00%; AS EXPECTED
(CH) SNB LEAVES SIGHT DEPOSIT INTEREST RATE UNCHANGED AT -0.75%; AS EXPECTED
(DE) GERMANY DEC PRELIMINARY MANUFACTURING PMI: 63.3 V 62.0E (37th month of
expansion and a record high)
(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50; AS
EXPECTED (brings forward its 1st planned rate hike)
(EU) EURO ZONE DEC PRELIMINARY MANUFACTURING PMI: 60.6 V 59.7E (53rd month of
expansion and record high)
(TR) TURKEY CENTRAL BANK (CBRT) LEAVES BENCHMARK REPURCHASE RATE UNCHANGED AT
8.00%; AS EXPECTED
(UK) BOE VOTED 9-0 TO LEAVE INTEREST RATES UNCHANGED AT 0.50%
(EU) ECB LEAVES MAIN REFINANCING RATE UNCHANGED AT 0.00; AS EXPECTED
(US) NOV ADVANCE RETAIL SALES M/M: 0.8% V 0.3%E; RETAIL SALES EX AUTO M/M: 1.0%
V 0.6%E
(US) NOV IMPORT PRICE INDEX M/M: 0.7% V 0.7%E; Y/Y: 3.1% V 3.2%E
(EU) ECB Draghi: Reiterates that interest rates to remain at present level well
past end of QE; favorable financing conditions still needed - Prepared remarks
(US) Atlanta Fed raises Q4 GDP estimate to 3.3% from 2.9% on 12/8
(US) Speaker of House Ryan (R-WI) considering retiring from Congress after 2018
- Politico
(US) FCC VOTES TO REPEAL NET NEUTRALITY RULES IN 3-2 VOTE (AS EXPECTED)
(MX) MEXICO CENTRAL BANK (BANXICO) RAISES OVERNIGHT RATE BY 25BPS TO 7.25%; AS
EXPECTED
ORCL Reports Q2 $0.70 v $0.68e, Rev $9.63B v $9.56Be; raises share repurchases
by $12B (6% of market cap)
(CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT TARGET RATE UNCHANGED AT 2.50%;
AS EXPECTED
COST Reports Q1 $1.45 v $1.35e, Rev $32B v $31.5Be
FRIDAY 12/15
SIE.DE Guides initial FY18 R&D expenditures €5.6B v €5.2B y/y - analyst day
(RU) RUSSIA CENTRAL BANK (CBR) CUTS 1-WEEK AUCTION RATE BY 50BPS TO 7.75%;
MORE-THAN-EXPECTED
(UK) EU Tusk's: EU leaders formally declare that sufficient progress has been
made in Brexit talks to advance into phase 2; approve the start of Brexit
transition talks (as expected)
(US) DEC EMPIRE MANUFACTURING: 18.0 V 18.8E (lowest since July)
(US) NOV INDUSTRIAL PRODUCTION M/M: 0.2% V 0.3%E; CAPACITY UTILIZATION: 77.1% V
77.2%E
