TradeTheNews.com Weekly
Market Update: Correction!
Fri, 09 Feb 2018 16:10 PM EST
Investors will remember this week for a longtime as the spike in volatility
that began late last week unmercifully tightened its grip on equity markets. On
Tuesday, the VIX surged above 50 on wordthat several highly leveraged
volatility ETFs and ETNS essentially blew up overnight. By mid-week stock
indices around the globe officially moved into correction territory (-10%)
despite little change to overall global economic sentiment. Bouts of intense
selling remained prevalent and all eyes were on theS&P's 200-day SMA
heading into Friday. US Treasury yields remained pinned at elevated levels, but
buyers generally came in when equities move significantly lower. The narrative
that higher interest rates were the catalyst that induced stock volatility
stayed engrained in many investors’ minds. The Bank of England added to the
hand-wringing by signaling the next BOE rate hike could come sooner than
expected which backed up against mediocre US Treasury auctions and the
wrangling over a $300B spending bill in Washington D.C. Overall though,the
volatility remained mostly an equity market story. The US dollar bounced
modestly but investors remained reluctant to forcefully push money into
traditional safe haven assets while some cracks emerged in other risk-tethered
asset classes. Commodities like copper and oil moved lower with WTI
crudetrading below $60 for the first time since late December. The high yield
bondETF (HYG) has made a steady move and now sits at the lowest levels since
lastNovember. For the week, the DJIA and S&P each lost5.2% and the Nasdaq
sank 5.1%.
Corporate news this week continued to be led byearnings reports. Big media
names Disney and Fox both reported better thanexpected results despite a
challenging advertising environment. Twitter andSnap shares saw big short
covering rallies as both social media firms beat quarterlyestimates and renewed
hopes that their user metrics can stabilize and grow. Nvidiaremained a star
performer in the chip sector, crushing Q4 estimates and guidingQ1 higher.
Amazon put on its disruptor hat again, announcing plans for 2-hourgrocery
deliveries from its recently acquired Whole Foods unit, and reportedly
preparing the launch of its own businessdelivery service "Shipping with
Amazon." Wynn shares rebounded briefly after its namesake founderresigned
amid sexual misconduct allegations. In M&A news, Broadcom raisedits bid for
Qualcomm to $82/share, but QCOM management quickly rejected therevised offer,
though reports indicate they did agree to meet with Broadcomearly next week for
talks.
SUNDAY FEB 4
(UK) UK Official: PM May has ruledout staying in customs union – press
MONDAY FEB 5
*(UK) JAN SERVICES PMI: 53.0 V54.1E (18th month of expansion but lowest since
Aug 2016)
*(EU) EURO ZONE FEB SENTIX INVESTORCONFIDENCE: 31.9 V 33.2E
QCOM Broadcom confirms raisingoffer to $82/shr (prior $70/shr offer was
rejected); Notes ~$121B offer is bestand final
*(US) JAN ISM NON-MANUFACTURINGCOMPOSITE: 59.9 V 56.7E
(US) Fed January senior loanofficer survey: banks expect tighter commercial
real estate lending and creditcard standards in 2018
*(AU) RBA LEAVES CASH RATE TARGETUNCHANGED AT 1.50%; AS EXPECTED
TUESDAY FEB 6
BP.UK Reports Q4 Adj Net (underlyingRC profit) $2.11B v $1.95Be, Total
Rev $70.0B v $52.1B y/y
GM Reports Q4 $1.65 v $1.34e,Rev $37.7B v $37.1Be
*(US) DEC TRADE BALANCE: -$53.1B V-$52.1BE (widest deficit since Oct 2008)
(US) Atlanta Fed cuts Q1 GDPestimate to 4.0% from 5.4% on Feb 1st
(US) Pres Trump: if we don't getrid of immigration loopholes, 'let's have a
shutdown'
DIS Reports Q1 $1.89 v $1.62e,Rev $15.4B v $15.2Be
WYNN Steve Wynn has resigned as CEOand Chairman; promotes Matt Maddox
CEO and Boone Wayson Chairman; effectiveimmediately
(CN) China banks have raisedmortgage rates in several cities - Chinese press
(CN) China banks have raisedmortgage rates in several cities - Chinese press
WEDNESDAY FEB 7
CARLB.DK Reports FY17 (DKK)adj EBIT 4.93B v 4.48B y/y, Rev 61.8B v
62.3Be; Raises dividend 60% to DKK16/shr
RIO.AU Reports FY17 Net $8.76B v$4.6B y/y; EBITDA $18.6B v $5.1B y/y; Rev
$41.9B v $33.8B y/y; Announces $1.0Bbuyback
*(IN) INDIA CENTRAL BANK (RBI)LEAVES REPURCHASE RATE UNCHANGED AT 6.00%; AS
EXPECTED
*(DE) GERMANY SELLS €2.492B VS.€3.0B INDICATED IN 0.5% FEB 2028 BUNDS; AVG
YIELD: 0.69% V 0.54% PRIOR;BID-TO-COVER: 1.5X V 1.1X PRIOR
(US) Association of AmericanRailroads weekly rail traffic report for week
ending Feb 3rd: 548K carloads andintermodal units, +2.5% y/y
(US) White House aide: we have cometo agreement on 2-year budget deal
(agreement includes $300B boosts to defenseand non-defense spending)
*(NZ) NEW ZEALAND CENTRAL BANK(RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED
AT 1.75%; AS EXPECTED;maintains policy path outlook
*(US) DEC CONSUMER CREDIT: $18.4B V$20.0BE
*(BR) BRAZIL CENTRAL BANK (BCB)CUTS SELIC RATE BY 25BPS TO 6.75%; AS EXPECTED
(11th straight cut in thecurrent easing cycle)
TSLA Reports Q4 -$3.04 v -$3.19e,Rev $3.29B v $3.30Be
ORLY Founder to step down as CEO,to remain on Board; Greg Johnson to be
named CEO, effective May 8th
*(CN) CHINA JAN TRADE BALANCE(CNY): 135.8B V 330.0BE
*(CN) CHINA JAN TRADE BALANCE(USD): $20.3B V $54.7BE
THURSDAY FEB 8
AMZN Announces 2 two-hour deliveryfrom Whole Foods Market with plans to
expand across US in 2018
GLE.FR Reports Q4 adjNet €877M v €1.16By/y, Op €830M v €1.25B y/y, Rev
€6.23Bv €5.86Be
TWTR Reports Q4 $0.19 v $0.14e,Rev $732M v $690Me(first quarterly
profit)
*(UK) BANK OF ENGLAND (BOE)QUARTERLY INFLATION REPORT(QIR)
*(UK) BANK OF ENGLAND (BOE) LEAVESINTEREST RATES UNCHANGED AT 0.50%; AS
EXPECTED
*(UK) BOE FEB MINUTES: VOTED 9-0 TOLEAVE INTEREST RATES UNCHANGED AT 0.50%;
hints might need earlier rate hikes
GWR Guides initial FY18 EPS$3.70-3.90 v $3.83e; R$2.36-2.42B v $2.32Be -
Investor call
NYT Reports Q4 $0.39 v $0.30e, Rev $455.3M v $439.7M y/y
NVDA Reports Q4 $1.72 v $1.16e,Rev $2.91B v $2.67Be
FRIDAY FEB 9
*(FR) FRANCE DEC INDUSTRIALPRODUCTION M/M: 0.5% V 0.1%E; Y/Y: 4.5% V 3.5%E
*(UK) DEC INDUSTRIAL PRODUCTIONM/M: -1.3% V -0.9%E; Y/Y: 0.0% V 0.3%E
(US) House approves stopgapspending bill (as expected); paves way to reopen the
government (measure sentto Pres Trump)
(EU) EU chief Brexit negotiator Barnier: Have yet to be update onthe UK's
future relationship plan; transparency is important in negotiations; Transition
is NOT agiven if disagreements persist; substantial differences remain on terms
AMZN Reportedly preparing to launchbusiness delivery service
"Shipping with Amazon" (SWA) – press
(US) Weekly Baker Hughes US Rig Count: 975 v 946 w/w (+3.1%) (most rigsadded in
a week since Jan 2017); US oil rig count: 791 v 765 w/w (+3.4%)(highest oil rig
count since April 2015)
S&P500 cash tests 200 day SMA at 2,538.90 (11.7% off of Jan 26 closing
high)
