TradeTheNews.com Weekly
Market Update: Political Uncertainty and Weak Data Stall Markets
Fri, 16 Mar 2018 16:05 PM EST
Equity markets had a tough time getting out of their own way this week as
headlines coming out of Washington DC continued to keep investors unsettled.
The week began with news that the President blocked Broadcom from acquiring
Qualcomm on national security grounds, sending a chill over potential M&A
activity going forward. There was also another bout of turnover at the White
House as Trump finally sacked Secretary of State Rex Tillerson as it was long
speculated he would. The abrupt manner in which the firing transpired led to
litany of rumors handicapping the odds of more changes to the President’s inner
circle in the near future. Trump formally added Larry Kudlow to his economic
advisory council replacing Gary Cohen, but that failed to squelch trade war
worries on speculation that another round of broad ranging Chinese tariffs
could be announced as soon as next week. Adding to the geopolitical cocktail,
the poisoning of a former Russian spy in England was laid at the feet of
Russian President Putin by western intelligence agencies, leading to tit for
tat sanctions between the UK and Russia.
The economic data was generally unable to offset much of the uneasiness
emanating from geopolitics. European data, particularly out of Germany,
softened, while US retail sales and housing starts missed expectations, leading
many forecasters to revise their Q1 GDP estimates below 2%. Commentary from the
BOJ and ECB largely held the current line of thinking suggesting neither
Central Bank was rushing towards accelerating normalization time tables ahead
of the FOMC and its expected rate hike next week. Rates moved lower for much of
the week and yield curves flattened as the inflationary data held firm, keeping
upward pressure on short rates, while buying at the long end pushed those
yields lower. The US 2-10 year spread dipped back below 55 basis points
bringing into view the decade lows seen in January. For the week the S&P500
lost 1%, the DJIA fell 1.6%, and the Nasdaq dropped 1.3%.
In corporate news, the week started off with the announcement that President
Trump will block Broadcom’s attempted takeover of Qualcomm, citing national
security grounds, leading Broadcom to abandon its bid. Optical names saw some
strength Monday when Lumentum announced it would acquire Oclaro for $9.99/share
in a $1.8B deal. Master Limited Partnership names fell on Thursday after FERC
said it would no longer allow MLPs natural gas and oil pipelines to recover an
income tax allowance in their cost of service. Toys R Us confirmed it would
seek to wind down its US business and informed its 31K employees that it would
liquidate or close all of its 790 stores.
SUNDAY 3/11
(US) White House expected to later today make announcement related to gun
proposals – US press
MONDAY 3/12
QCOM White House announces President Trump will not allow Broadcom takeover of
Qualcomm - press
TUESDAY 3/13
VOW3.DE Reports FY17 Net €11.4B v €11.4B prelim , adj op €17.0B v €17.0B
prelim, Rev €230.7B v €230.7B prelim
HDS Reports Q4 $0.49 v $0.44e, Rev $1.18B v $1.16Be; Feb prelim net daily sales
+11.7%
*(US) FEB CPI M/M: 0.2% V 0.2%E; CPI EX FOOD AND ENERGY M/M: 0.2% V 0.2%E; CPI
NSA: 248.991 V 248.933E
*(US) Pres Trump has removed US Secretary of State Rex Tillerson; nominates current
CIA Director Mike Pompeo to be new Secretary of State - press
CAT Reports Feb dealer statistics: Total Machines +33% y/y
(US) Business Roundtable CEO Q1 Economic Outlook Index at 118.6 v 96.9 q/q
(highest level since 2002)
(BR) Reportedly Brazil is preparing response to US metals tariffs; tariffs
could threaten deal between Boeing and Embraer - press
(CN) Trump admin reportedly considering imposing $60B in tariffs on Chinese
goods - press (earlier reports said Trump wanted over $30B in tariffs)
WEDNESDAY 3/14
(US) JAN ADVANCE RETAIL SALES M/M: -0.1% V +0.3%E; RETAIL SALES EX AUTO M/M:
0.2% V 0.4%E
(US) FEB PPI FINAL DEMAND M/M: 0.2% V 0.1%E; Y/Y: 2.8% V 2.8%E
(RU) UK PM May: Russia is yet to give satisfactory response to poisoning of
Russian agent; Russia's action must be met with a 'robust response'
THURSDAY 3/15
(CH) SWISS NATIONAL BANK (SNB) LEAVES SIGHT DEPOSIT INTEREST RATE UNCHANGED AT
-0.75%; AS EXPECTED
(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS
EXPECTED; brings forward its 1st potential rate hike
(US) MAR EMPIRE MANUFACTURING: 22.5 V 15.0E
(US) FEB IMPORT PRICE INDEX M/M: 0.4% V 0.2%E; Y/Y: 3.5% V 3.5%E
(US) INITIAL JOBLESS CLAIMS: 226K V 228KE; CONTINUING CLAIMS: 1.879M V 1.903ME
*(US) MAR PHILADELPHIA FED BUSINESS OUTLOOK 22.3 V 23.0E
(US) FERC to ban tax allowance cost recovery in master limited partnership
(MLP) pipeline rates
(US) Special Counsel Mueller subpoenas Trump Organization demanding documents
about Russia - NYT
(UK) UK and EU officials agree to take part in 'intensive talks' to resolve
Irish border issue - financial press
(US) JAN TOTAL NET TIC FLOWS: +$119.7B V -$122.5B PRIOR; NET LONG-TERM TIC
FLOWS: $62.1B V $23.3B PRIOR
*(CN) PBOC CONDUCTS 1-YEAR CNY327B MEDIUM TERM LENDING FACILITY (MLF) AT
UNCHANGED INTEREST RATE OF 3.25%
FRIDAY 3/16
(JP) Japan Lower and Upper Houses of Diet approve BoJ Gov Kuroda to additional
5-year term; also approve Amamiya and Wakatabe as Dep Governors
SHL.DE IPO opens for trade at €29.10/shr; IPO Price €28/shr
TIF Reports Q4 $1.67 v $1.63e, Rev $1.33B v $1.30Be
*(US) FEB HOUSING STARTS: 1.24M V 1.29ME; BUILDING PERMITS: 1.30M V 1.32ME
*(US) FEB INDUSTRIAL PRODUCTION M/M: 1.1% V 0.4%E; CAPACITY UTILIZATION: 78.1%
V 77.7%E
*(US) MAR PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 102.0 V 99.3E
ZS IPO opens for trade at $27.50; priced at $16/shr
