TradeTheNews.com Weekly
Market Update: Specter of US government shutdown overshadows bull run
Fri, 19 Jan 2018 16:07 PM EST
US stocks extended their climb, powering through 26K on the Dow and 2,800 on
the S&P for the very first time. Trading resumed following the MLK break
with a key reversal in US equity indices which spawned some hope for the bears,
but as has been seen so often markets sprang back to new all-time highs within
24 hours. Economic data faded into the background while corporate headlines
came into focus. Earnings season picked up in intensity while preannouncements
dotted the landscape. Though it is early in the year, it has become
increasingly clear that analysts have more work to do to reconcile their
estimates for corporation earnings impacted by the tax reform package passed
late last year. For their part, firms continued to release details on how they
intend to put the expected tax windfalls to work for both investors and
employees. By Friday, even the real threat of a US government shutdown did
little to dent the momentum. For the week the S&P500 gained 0.9%, while the
DJIA and Nasdaq each added 1%.
The US dollar stayed under siege with a dysfunctional Washington DC doing no
favors for the Greenback. Rates moved up led by the bellwether 10-year yield
testing what many view as the key post-election high of 2.65%. Nevertheless the
Euro made another run at 1.23 as some analysts tweaked their rate hike calendar
forward ahead of next week’s ECB meeting. WTI crude prices continued to
consolidate above $60/bbl. Both the IEA and OPEC hiked their forecasts for
non-OPEC supply significantly, indicating that they expect rising oil prices to
result in a surge of US production. Doctor copper fell to the 38% fiboncacci
retracement level from the Dec break above $3.25.
In corporate news this week, earnings season kicked off as major financial
companies began to report. Bank of America shares dropped after notching a
revenue miss, while Goldman fell on disclosure of its first quarterly earnings
loss since 2011. IBM reported some encouraging top-line numbers, but reduced
margins and reported zero growth in its cognitive solutions sector. CSX
reported a larger than anticipated revenue miss as service issues led to some
lost business. Schlumberger traded lower on Friday despite beating Q4 forecasts
and offering upbeat management commentary. GE shares saw its worst five-day
decline in 9 years after the company announced $6.2B in charges and a rigorous
review of strategic alternatives.
SUNDAY 1/14
(DE) Germany Social Democrats in Saxony-Anhalt state said to reject proposed
German coalition with Merkel's party - German press
MONDAY 1/15
CLLN.UK To enter compulsory liquidation with immediate effect (in-line with
recent speculation)
RIO.AU Reports Q4 Pilbara iron ore shipments 90.0Mt v 89.7Mte v 87.7Mt y/y;
Pilbara iron ore production 87.9Mt, +3% y/y
TUESDAY 1/16
(US) US lawmakers are said to be advising US companies that ties to Huawei or
China Mobile could hurt their ability to do business with the US government –
financial press
GE Provides update on insurance review: Sees $6.2B charge in Q4; suspend
dividend for foreseeable future
C Reports Q4 $1.20 (adj) v $1.19e, Rev $17.3B v $17.1Be
(US) JAN EMPIRE MANUFACTURING: 17.7 V 19.0E
CSX Reports Q4 $0.64 v $0.56e, Rev $2.86B v $2.88Be
WEDNESDAY 1/17
(US) President Trump could release infrastructure plan on Jan 30th - financial
press
BAC Reports Q4 adj $0.47 v $0.44e, Adj Rev $21.4B* v $21.3Be
GS Reports Q4 adj $5.68* v $4.90e, Rev $7.83B v $7.63Be
*(US) DEC INDUSTRIAL PRODUCTION M/M: 0.9% V 0.5%E; CAPACITY UTILIZATION: 77.9%
V 77.4%E
(CA) BANK OF CANADA (BOC) RAISES INTEREST RATE DECISION BY 25BPS TO 1.25%; AS
EXPECTED
(US) Sen Maj Leader McConnell: not ready to move ahead yet on long-term
spending bill; currently working on temporary solution to avoid govt shutdown
(US) Treasury Undersec. Mandelker: Virtual currencies are an evolving threat;
examining 100 registered digital currency providers - Senate testimony
CA.FR Reports Q4 Rev €23.3B, +2.3% y/y
(US) Association of American Railroads weekly rail traffic report for week
ending Jan 13th: 511.9K carloads and intermodal units, +0.5% y/y
AAPL Highlights Apple's contributions to US economy over next 5 years as a
result of investments and US tax reform; sees $30B in capex and creation of 20K
jobs in the US
(US) FEDERAL RESERVE BEIGE BOOK: TIGHT LABOR MARKETS ACROSS US AS WAGE GAINS
REMAIN MODEST
(US) President Trump: Declines to confirm reports US is considering possible
preemptive strike on North Korea - press interview
(UK) House of Commons approves the EU Withdrawal Bill in 3rd reading (as
expected)
(US) NOV TOTAL NET TIC FLOWS: $33.8B V $152.9B PRIOR; NET LONG-TERM TIC FLOWS:
$57.5B V $26.2B PRIOR
AA Reports Q4 $1.04 v $1.23e, Rev $3.17B v $3.29Be
*(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.50%; AS
EXPECTED
(CN) CHINA NOV PROPERTY PRICES M/M: RISES IN 57 OUT OF 70 CITIES V 50 PRIOR;
Y/Y RISES IN 61 OUT OF 70 CITIES V 59 PRIOR
THURSDAY 1/18
(CN) CHINA Q4 GDP Q/Q: 1.6% V 1.7%E; Y/Y: 6.8% V 6.7%E
(TR) TURKEY CENTRAL BANK (CBRT) LEAVES BENCHMARK REPURCHASE RATE UNCHANGED AT
8.00%; AS EXPECTED
(ZA) SOUTH AFRICA CENTRAL BANK (SARB) LEAVES INTEREST RATES UNCHANGED AT 6.75%;
AS EXPECTED
(US) DEC HOUSING STARTS: 1.19M V 1.28ME; BUILDING PERMITS: 1.30M V 1.30ME
(US) PHILADELPHIA FED BUSINESS OUTLOOK: 22.2 V 25.0E
Early weakness in generic pharma names attributed to NY Times report that some
hospitals plan to create a nonprofit generic drug company
BAS.DE Reports prelim FY17 Net €6.1B v €4.1B y/y, EBIT €8.3B v €7.9Be, +32%
y/y, Rev €64.5B v €57.6B y/y
(BR) Brazil govt reportedly considering voting on pension reform bill after
election - press
(US) Sen Maj Leader McConnell (R-KY) reportedly is planning for a govt shutdown
- Politico
Tier 1 Firm does not believe reported hospital plan for generic nonprofit is a
major threat to generic players
CP Reports Q4 C$3.22 v C$3.20e, Rev C$1.71B v C$1.69Be
IBM Reports Q4 $5.18 v $5.17e, Rev $22.5B v $22.0Be
FRIDAY 1/19
CPR.UK Trading Update: Total Group Sales -2.3% Cuts FY profit guidance to range
of £2.0-6.0M
(UK) DEC RETAIL SALES (EX-AUTO/FUEL) M/M: -1.6% V -1.0%E (biggest decline since
Jun 2016); Y/Y: 1.3% V 2.6%E
SLB Reports Q4 adj $0.48 v $0.44e, Rev $8.18B v $8.12Be; Oil market now in
balance
SNP Reports FY17 oil production 238.5Mt, +1.26% y/y
(US) JAN PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 94.4 V 97.0E
(US) Weekly Baker Hughes US Rig Count: 936 v 939 w/w (-0.3%)
