TradeTheNews.com Weekly
Market Update: Markets Sanguine on Strong US Jobs Data, Cooling Trade Rhetoric,
and North Korean Overture
Fri, 09 Mar 2018 16:05 PM EST
It was another eventful week for US markets culminating in a goldilocks Feb
employment report that catalyzed investors’ willingness to move into risk
assets, namely stocks. Stocks indices were already moving higher Monday on
indications the President was walking back some of the tough trade rhetoric
aimed at North American neighbors last week. By Thursday his decision to exempt
both Canada and Mexico from the hotly debated steel and aluminum tariffs
breathed a sense of relief into overall sentiment and offset protectionist
concerns that had been exacerbated by the Tuesday announcement that Gary Cohn
was leaving the White House. The BOJ and ECB held policy meetings this week and
each central bank avoided spooking markets by indicating improving growth and
inflation prospects have not yet moved up their timetables for removing
accommodation.
Friday’s February employment report was the catalyst that accelerated equity
markets, sending the NASDAQ composite back to all-time highs. The economy
generated more than 300K job gains last month with a large boost from the
retailing segment, but also showed solid gains across most sectors. The
participation rate moved up three-tenths of a percent while the unemployment
rate held steady at 4.1% as more people came off the sidelines to look for work.
Wage gains moderated including a January revision lower, quelling some concerns
about overheating, but total hours improved. The overall tone of the report was
decidedly positive, giving the Fed plenty of scope for tightening this month
even though the softness in wages suggested there is no particular urgency
about doing so. Treasury yields rose modestly but still have not closed above
2.9% on a weekly basis since 2014. The Peso and Loonie rose late in the week
basking in the President's decision to exempt them from steel and aluminum
tariffs while the Yen softened on the surprise news that President Trump
accepted an offer to meet with North Korea's Kim Jong Un. Doctor copper neared
the February low before the move into risk assets pushed up a host of
commodities late in the week. For the week the S&P500 gained 3.5%, the DJIA
added 3.3%, and the Nasdaq climbed 4.2%.
In corporate news this week, Nordstrom shares were volatile on Monday after the
board rejected an initial $50/share offer from the founding family and a
subsequent report that said that the family was having trouble raising funds
for an improved bid. Amazon was reported to be in early-stage discussions to
offer a checking-account-like product with JP Morgan, aiming to reach new
customers and to potentially shake up the financial industry. Shares of big box
retailer Target slipped after it saw expenses rise and margins get squeezed in
the fourth quarter. Reports that Toys R Us may liquidate its US operations
weighed on toy-makers Hasbro and Mattel. Express Scripts confirmed it would be
acquired by Cigna in a cash and stock deal worth $67B, as the healthcare
industry continues its wave of consolidations.
SUNDAY 3/4
(CN) China Premier Li: Set 2018 GDP growth target around 6.5% (compared to 6.9%
growth rate in 2017; as speculated); Leaves CPI at ~3%, to maintain 'prudent
and neutral' monetary policy and 'proactive' fiscal policy in 2018 - China
National People's Congress
MONDAY 3/5
*(EU) EURO ZONE MAR SENTIX INVESTOR CONFIDENCE: 24.0 V 30.9E
(UK) FEB SERVICES PMI: 54.5 V 53.3E (19th month of expansion)
AMZN Reportedly in talks with JPMorgan over checking accounts (targeting
younger customers and those without bank accounts) - press
(US) FEB ISM NON-MANUFACTURING COMPOSITE: 59.5 V 59.0E
JWN Special Committee announces receipt and rejection of $50/shr
indicative proposal from Nordstrom family; price proposed is inadequate
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT
1.50%; AS EXPECTED
TUESDAY 3/6
(KR) North and South Korea to hold 3rd summit in late April at the border;
North Korea said to be open to denuclearize if regime safety is guaranteed
TGT Reports Q4 $1.37 v $1.39e, Rev $22.8B v $22.5Be
(US) JAN FACTORY ORDERS: -1.4% V -1.4%E
(CN) China regulators confirm lowering bad loan coverage requirement - Chinese
press
(US) White House economic adviser Gary Cohn to resign (long speculated) - NYT
WEDNESDAY 3/7
DPW.DE Reports Q4 Net €837M v €841M y/y, EBIT €1.18B v €1.11B y/y, Rev €16.1B v
€16.2Be; Raises dividend 9.5% to €1.15/shr
(UK) FEB HALIFAX HOUSE PRICES M/M: 0.4% V 0.4%E; 3M/Y: 1.8% V 1.6%E (slowest
annual pace in 5 years)
(EU) EURO ZONE Q4 FINAL GDP Q/Q: 0.6% V 0.6%E; Y/Y: 2.7% V 2.7%E
(TR) TURKEY CENTRAL BANK (CBRT) LEAVES BENCHMARK REPURCHASE RATE UNCHANGED AT
8.00%; AS EXPECTED
(EU) EU Trade Min Malmstrom: Alarming that Trump is targeting allies with
tariffs; EU will react if US enacts steel tariffs
*(US) FEB ADP EMPLOYMENT CHANGE: +235K V +200KE
XOM Guides initial FY18 Capex $24B ,+9.1% y/y; FY19 $28B +17% y/y - analyst
meeting comments
(US) Q4 FINAL NONFARM PRODUCTIVITY: 0.0% V -0.1%E; UNIT LABOR COSTS: 2.5% V
2.1%E
(US) JAN TRADE BALANCE: -$56.6B V -$55.0BE (widest deficit since Oct 2008)
(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATE UNCHANGED AT 1.25%; AS EXPECTED
(US) Conference Board Feb Total online job ads 4.72M v 4.90M m/m v 4.55M y/y;
New ads 2.02M v 2.15M m/m v 1.95M y/y
(US) Atlanta Fed cuts Q1 GDP estimate to 2.8% from 3.5% on 3/1
(US) Association of American Railroads weekly rail traffic report for week
ending March 3rd: 544.2K, +5.8%
(US) FEDERAL RESERVE BEIGE BOOK: EMPLOYMENT GREW AT MODERATE PACE SINCE
PREVIOUS BEIGE BOOK
(US) White House spokesperson Sanders: there could be potential carve outs for
Canada and Mexico, and could extend to other countries as determined on a
national security basis
*(US) JAN CONSUMER CREDIT: $13.9B V $17.7BE
COST Reports Q2 $1.42* (ex $0.17 tax benefit) v $1.45e, Rev $33.0B v $32.7Be
(US) Lawmakers in Florida pass bill to raise legal age for buying rifles; The
bill also imposes a 3-day waiting period for all gun sales and permits the
arming of certain school personnel.
(CN) CHINA FEB TRADE BALANCE (CNY): +224.9B V -68.9BE
*(CN) CHINA FEB TRADE BALANCE (USD): +$33.7B V -$5.7BE
THURSDAY 3/8
ESRX Confirms to be acquired by Cigna in cash and stock deal worth $67B
(US) INITIAL JOBLESS CLAIMS: 231K V 220KE; CONTINUING CLAIMS: 1.870M V 1.92ME
(EU) ECB’s Draghi: Reinvestment will help to deliver the appropriate stance -
Prepared remarks
(EU) ECB’s Draghi: Decision on language regarding change on QE expansion was
unanimous; not much discussion on other policy shifts - Q&A
(US) Fed reports Q4 Financial Accounts: Household Change in Net Worth: $2.076T
v $1.645T prior
(US) Pres Trump steel and aluminum tariffs reportedly to take effect in 15
days, with Mexico and Canada exempted indefinitely - AP
(UK) UK govt officials reportedly don't see reaching a Brexit deal until next
year - press
Toys R Us reportedly may liquidate US operations - CNBC
(KR) North Korea Leader Kim Jong Un said to invite US President Trump to
meeting - Fox News
(KR) South Korea Envoy Chung-Eui-Yong: North Korea to 'refrain further missile
tests'; US President Trump and North Korea leader Kim Jong Un to meet by May
(CN) CHINA FEB M2 MONEY SUPPLY Y/Y: 8.8% V 8.7%E; M1 MONEY SUPPLY M1 Y/Y: 8.5%
V 11.0%E
*(CN) CHINA FEB CPI Y/Y: 2.9% V 2.5%E (highest reading since Dec 2013* but
attributed to Lunar New Year distortions)
*(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER)
UNCHANGED AT -0.10%; AS EXPECTED
FRIDAY 3/9
UBSG.CH Publishes FY17 Annual Report: Reports final FY17 (CHF) Net 1.05 v 3.2B
y/y (inc further CHF112M in provisions), Op 5.27B v 4.09B y/y, Op Income 29.1B
v 28.3B y/y
(JP) BOJ Gov Kuroda: Reiterates view that expects inflation to move towards the
2% target; to make adjustments as needed - post rate decision press conference
*(UK) JAN INDUSTRIAL PRODUCTION M/M: 1.3% V 1.5%E; Y/Y: 1.6% V 1.9%E
*(CA) CANADA FEB NET CHANGE IN EMPLOYMENT: 15.4K V +21.0KE; UNEMPLOYMENT RATE:
5.8% V 5.9%E
(US) FEB CHANGE IN NONFARM PAYROLLS: +313K V +205KE
