TradeTheNews.com Weekly
Market Update: Markets and Firms Respond Favorably to US Tax Cuts and Hawkish
ECB
Fri, 12 Jan 2018 16:09 PM EST
The rally in stocks extended into yet another week with 2018 looking very much
like most of 2017 thus far. The NASDAQ and banks led early on, before cyclical
groups like retailers and small caps took the lead as the week wore on. WTI
crude prices probed fresh 2.5 year highs into the mid-$60 range while Brent
approached $70/bbl. The energy complex saw a breakout to the upside with stock
prices significantly outperforming the gains in oil. Utilities, REITS and other
bond proxies lagged that of the overall market as rising Treasury yields served
as a headwind. For the week the DJIA gained 2%, the S&P500 added
1.6%, and the Nasdaq rose 1.8%.
Rates moved up globally helped by a hawkish take of the latest ECB minutes,
continued robust economic data including rising CPI figures, and upbeat
corporate sentiment predicated on the anticipated effects of fiscal stimulus.
The US 2-year Treasury yield crossed above the 2% mark for the first time since
2008 while German rates rose to levels not seen in months. Dollar weakness
extended into another week, in part on the belief robust overseas growth will
result in more aggressive policy from those central banks in an attempt to play
catch up with the US Fed. There were some gyrations in the Mexican peso and
Canadian dollar on reports that the Trump Administration may be moving closer
to giving formal notice on dissolving the NAFTA agreement. The Euro rallied to
a 3-year high with dealers citing building technical momentum for the move
above 1.21. Cable climbed to levels not seen since late 2016 in the days
following the Brexit vote. The exuberance for cryptocurrencies hit an air
pocket after reports circulated that China and South Korea were drawing up
plans to shackle trade on exchanges there.
In corporate news, the week was dominated by reports of holiday sales figures
from some key retailers and the start of the Q4 earnings season. Big box
retailer Target announced holiday SSS rose 3.4%, leading it to raise Q4
earnings guidance. Nordstrom reported holiday sales up a more modest 1.2% and
narrowed guidance, but there was also a report that the controlling family has
resumed efforts to take the company private. JP Morgan kicked off the earnings
season for banks with a strong beat on the top and bottom lines. CEO Jamie
Dimon made positive comments about the credit environment and said that tax
reform will be positive for the country. Walmart joined the growing number of
Fortune 500 companies announcing one-time bonuses and a higher minimum wage for
new employees in response to the US corporate tax cut.
SUNDAY 1/7
(CN) China Dec Foreign Reserves: $3.140T v $3.127Te (highest since Sept 2016,
11th consecutive gain, biggest gain since July)
MONDAY 1/8
066570.KR Reports prelim Q4 (KRW) Op profit 366.8B v 464Be; Rev 16.97T v
16.3Te
*(EU) EURO ZONE JAN SENTIX INVESTOR CONFIDENCE: 32.9 V 31.3E
*(EU) EURO ZONE DEC BUSINESS CLIMATE INDICATOR: 1.66 (record high) V 1.50E;
CONSUMER CONFIDENCE (FINAL): 0.5 V 0.5E
GPRO Reportedly has hired advisers to consider sale – CNBC
(US) Special Counsel Mueller reportedly likely to interview Pres Trump as part
of Russia investigation in next few weeks - Wash Post
*(US) NOV CONSUMER CREDIT: $28.0B V $18.0BE (largest gain in 16 years); Total
consumer credit annual rate +8.8% (Fastest pace in over two years)
TUESDAY 1/9
TGT Reports Nov/Dec SSS +3.4%; Raises Q4 $1.30-1.40 v $1.22e, SSS ~+3.4%
(prior $1.05-1.25, SSS 0-2%)
INTC Microsoft spokesperson: chip flaw patch may significantly slow some
servers; greatest impact on corporate data services – press
JWN Reports Nov/Dec combined net sales +2.5% y/y, SSS +1.2% y/y
DPZ CEO Patrick Doyle plans to leave company in June; Richard Allison
named CEO; Russell Weiner as COO; effective June 30th
WEDNESDAY 1/10
*(FR) FRANCE NOV INDUSTRIAL PRODUCTION M/M: -0.5% V -0.5%E; Y/Y: 2.5% V 2.6%E
*(UK) NOV INDUSTRIAL PRODUCTION M/M: 0.4% V 0.4%E; Y/Y: 2.5% V 1.8%E
(CN) China Officials: Said to view treasuries as less attractive; Recommends
slowing or halting Treasury buying
*(US) DEC IMPORT PRICE INDEX M/M: 0.1% V 0.4%E; Y/Y: 3.0% V 3.1%E
NVDA Announces world’s first functionally safe AI self-driving platform
(US) Association of American Railroads weekly rail traffic report for week
ending Jan 6th: 415.9K carloads and intermodal units, -4.6% y/y
(CA) Canada officials reportedly increasingly convinced Pres Trump will soon
announce a withdrawal from NAFTA – press
*(CN) CHINA FX REGULATOR SAFE: REPORT THAT CHINA IS CONSIDERING REDUCING OR
STOPPING PURCHASES OF US TREASURIES COULD BE BASED ON WRONG INFORMATION -
financial press
THURSDAY 1/11
TSCO.UK Reports Q3 UK LFL (ex-fuel, ex VAT) 2.3% v 2.4%e; Christmas
Trading period UK SSS ex fuel and ex vat +1.9%
DAL Reports Q4 $0.96 v $0.89e, Rev $10.2B v $10.2Be
WMT To raise U.S. wages, provide $1,000 bonus and expand hourly
maternity and parental leave
*(US) DEC PPI FINAL DEMAND M/M: -0.1% V +0.2%E; Y/Y: 2.6% V 3.0%E
*(US) TREASURY'S $12B 30-YEAR BOND REOPENING DRAWS 2.867%; BID-TO-COVER RATIO:
2.74 V 2.53 PRIOR AND 2.33 AVG OVER THE LAST 8 SALES (highest BTC since Dec
2014)
AMD Spokesperson: chip vulnerabilities are applicable to AMD processors;
two exploits uncovered apply to AMD chips – press
(US) US Commerce Sec Ross: Submitted results of probe into national security
impact of steel imports to President Trump
*(CN) CHINA 2017 TRADE BALANCE (CNY): +2.87T V +3.35T Y/Y
*(CN) CHINA DEC TRADE BALANCE ($): 54.7B V 37.0BE (highest monthly surplus
since Jan 2016*)
*(CN) CHINA DEC TRADE BALANCE (CNY) 362.0B V 235.2BE
FRIDAY 1/12
(DE) German coalition negotiations said to have achieved a breakthrough; still
working on a final deal - financial press
JPM Reports Q4 adj $1.76 v $1.69e, Rev $25.5B v $25.0Be
*(US) DEC ADVANCE RETAIL SALES M/M: 0.4% V 0.5%E; RETAIL SALES EX AUTO M/M:
0.4% V 0.3%E
*(US) DEC CPI M/M: 0.1% V 0.1%E; CPI EX FOOD AND ENERGY M/M: 0.3% V 0.2%E; CPI
NSA: 246.524 V 246.372E
JWN Reportedly family members will resume efforts to take company
private later this year - CNBC
