Friday, January 26, 2018

FX Faux Pas at Davos Doesn’t Deter Risk-on Behavior

TradeTheNews.com Weekly Market Update: FX Faux Pas at Davos Doesn’t Deter Risk-on Behavior
Fri, 26 Jan 2018 16:03 PM EST

US indices finished out the week on yet another positive note pressing new highs. Markets barely took note of Monday’s announcement that President Trump was going to move forward and slap tariffs on Chinese solar panels and South Korean washing machines. By Friday, Trump's official Davos remarks were reserved and generally well received. The first look at Q4 GDP missed expectations, but a closer look suggested surging domestic demand was offset by a wider trade deficit and an unexpectedly sharp slowdown in inventory investment. Corporate sentiment was buoyed by the sagging Greenback and earnings season. Q4 earnings announcements added to the momentum as a host of key managements significantly raised financial projections while offering forecasts that include increased capital spending. For the week the S&P500 rose 2.2%, the DJIA added 2.1%, and the Nasdaq gained 2.3%.

Heading into Thursday’s ECB meeting the dollar stayed under pressure helped by comments from the US Treasury Secretary. Mr. Mnuchin didn’t do Mario Draghi any favors when it was reported he noted a weaker dollar was good for US trade. Despite US officials walking back the Mnuchin comments, the Greenback remained confined near the lowest levels since late 2014. Rates moved up after the ECB met and Draghi indicated the council has become increasingly confident inflation will move back to target while not changing the language around Euro volatility despite the recent surge to 1.24. US Treasury yields followed European rates higher helping the 10-year close above 2.65% for the first time since 2014. WTI crude continued to bump up against 2.5 year highs as well, coinciding with another bump up in the US rig count.

Markets digested a slew of quarterly reports this week as earnings season got into full swing. Cruise stocks rallied on a Royal Caribbean earnings beat, boosted by higher on-board spending. Netflix crossed the $100B market cap level after reporting revenue above consensus and seeing a stronger than anticipated influx of net new customers. Intel shares ripped to an 18-year high after an earnings beat and a capex boost. Airline names descended after United announced plans to match low fares and expand capacity. Celgene confirmed it would acquire Juno for $9B at $87/share in order to become a preeminent cellular immunotherapy company. Wynn Resorts fell 10% Friday after the Wall Street Journal reported dozens of allegations of sexual misconduct over decades against its namesake CEO.


SUNDAY 1/21
(DE) Germany Social Democrats (SPD, center-left) votes to support the opening of formal coalition talks with Chancellor Merkel’s conservative bloc; ends four-months of political stalemate

MONDAY 1/22
UBSG.CH Reports Q4 (CHF) Net -2.22B* v -2.15Be, adj Op 1.22B v 1.00B y/y, Rev 7.12B v 7.12Be; Plans CHF2B buyback; Creates unified Global Wealth Management division
(US) Senate Democrats reportedly ready to make deal on govt funding in exchange for DACA vote promise - Talking Points Memo
NFLX Reports Q4 $0.41 v $0.41e, Rev $3.29B v $3.28Be
President Trump approves tariff recommendations on imported large residential washing machines and imported solarcells and modules - financial press
(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED

TUESDAY 1/23
CA.FR Confirms 2022 Ambition: invest €2.8B in digital by 2022, cut 2,400 jobs (20% of workforce)
066570.KR Reports FY17 (KRW) Net 1.87T v 126.3B y/y, Op 2.47T v 1.34T y/y, Rev 61.4T v 55.4T y/y
(DE) GERMANY JAN ZEW CURRENT SITUATION SURVEY: 95.2 *(record high) V 89.6E; EXPECTATIONS SURVEY: 20.4 V 17.7E
(US) JAN RICHMOND FED MANUFACTURING INDEX: 14 V 19E
CRM CEO: economic freight train remains on the track; CEOs are bullish - Davos comments
TXN Reports Q4 $1.09*(ex $0.75 tax expense) v $1.09e, Rev $3.75B v $3.73Be

WEDNESDAY 1/24
NOVN.CH Reports Q4 $1.21 v $1.16e, Rev $12.9B v $12.6Be
(FR) FRANCE JAN PRELIMINARY MANUFACTURING PMI: 58.1 V 58.6E (16th month of expansion)
(DE) GERMANY JAN PRELIMINARY MANUFACTURING PMI: 61.2 V 63.0E (37th month of expansion but moves off from record highs)
(EU) EURO ZONE JAN PRELIMINARY MANUFACTURING PMI: 59.6 V 60.3E (54th month of expansion but moves off from record high)
(UK) NOV AVERAGE WEEKLY EARNINGS 3M/Y: 2.5% V 2.5%E; WEEKLY EARNINGS (EX-BONUS) 3M/Y: 2.4% V 2.3%E
(UK) DEC JOBLESS CLAIMS CHANGE: +8.6K V +12.2K PRIOR; CLAIMANT COUNT RATE: 2.4% V 2.3% PRIOR
(UK) NOV ILO UNEMPLOYMENT RATE: 4.3% V 4.3%E
GE Reports Q4 adj $0.27 v $0.28e, Rev $31.4B v $32.7Be
CAT Reports Dec dealer statistics: Total Machines +34% y/y
(US) Association of American Railroads weekly rail traffic report for week ending Jan 20th: 508.2K carloads and intermodal units, -2.9% y/y
(BR) Third judge in case against former Brazil President Lula rejects defense's arguments against Judge Moro - press
F Reports Q4 $0.39 v $0.42e, Rev $41.3B v $37.2Be
000660.KR Reports Q4 (KRW) Net 3.22T v 3.4Te, Op 4.5T v 4.3Te; Rev 9.03T v 8.9Te
(KR) SOUTH KOREA Q4 PRELIMINARY GDP Q/Q: -0.2% V +0.1%E (first contraction since 2008); Y/Y: 3.0% V 3.4%E; 2017 GDP 3.1%

THURSDAY 1/25
(MY) MALAYSIA CENTRAL BANK (BNM) RAISES OVERNIGHT POLICY RATE BY 25BPS TO 3.25%; AS EXPECTED
(DE) GERMANY FEB GFK CONSUMER CONFIDENCE: 11.0 V 10.8E (highest reading since Oct 2001)
DGE.UK Reports H1 Adj Op £2.19B v £2.1Be, Net Rev £6.53B v £6.57Be
(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS EXPECTED
(DE) GERMANY JAN IFO BUSINESS CLIMATE: 117.6 V 117.0E (matches record high); CURRENT ASSESSMENT: 127.7 V 125.3E
CSIQ Received going private proposal; appoints special committee (no decision has been made)
CAT Reports Q4 $2.16 v $1.77e, Rev $12.9B v $11.9Be
*(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
FCX Reports Q4 $0.51 v $0.49e, Rev $5.04B v $4.81Be
(EU) ECB’s Draghi: Reiterated that Interest rates to remain at present level well past end of QE; favorable financing conditions were still needed - prepared remarks
(EU) ECB’s Draghi: ECB does not favor any country in its QE program; stock (not flows) is the only relevant metric to assess QE - Q&A
(US) DEC NEW HOME SALES: 625K V 675KE
(US) Atlanta Fed maintains Q4 GDP estimate at 3.4%, unchanged from Jan 18th
(US) President Trump: Thinks there's a good chance we'll be able to renegotiate NAFTA but we'll see what happens - CNBC interview excerpts
TSLA Employees say to expect further Model 3 delays due to inexperienced quality control operators and time-consuming manual assembly of batteries - CNBC
INTC Reports Q4 $1.08 v $0.86e, Rev $17.1B v $16.3Be; Raises FY18 capex plan materially; raises quarterly dividend by 10% to $0.30 from $0.2725 (2.65% yield)
(US) President Trump reportedly to support path to citizenship for ~1.8M DACA recipients and Dreamers in return for $25B fund for border wall and end to chain migration and visa lottery system - NBC News
VMW Dell Technologies said to examine strategic alternatives, including IPO or deal with VMWare - CNBC

FRIDAY 1/26
(UK) Q4 ADVANCE GDP Q/Q: 0.5% V 0.4%E; Y/Y: 1.5% V 1.4%E (slowest annual pace since 2012)
(US) Q4 ADVANCE GDP ANNUALIZED Q/Q: 2.6% V 3.0%E; PERSONAL CONSUMPTION: 3.8% V 3.7%
(US) Q4 ADVANCE GDP PRICE INDEX: 2.4% V 2.3%E; CORE PCE Q/Q: 1.9% V 1.9%E
(US) DEC PRELIMINARY DURABLE GOODS ORDERS: 2.9% V 0.8%E; DURABLES EX TRANSPORTATION: 0.6% V 0.6%E
WYNN Dozens of people make sexual misconduct allegations against CEO Steve Wynn - press
BBD.CA ITC rejects Boeing's injury claims in Bombardier dispute by 4-0 vote; throws out US duties on CSeries jets - press