TradeTheNews.com Weekly
Market Update: North Korea Summit Sidetracked; Euro Fate Back on the Radar
Fri, 25 May 2018 16:04 PM EST
- Investors opened the week bidding up risk assets on news that the Trump
administration had at least for now, put on hold $150B in tariffs aimed at
Chinese goods. The positive vibes were short lived though. Wednesday the
administration revealed they were studying a plan for new tariffs on imported
vehicles, based on national security grounds that could run as high as 25%.
Then the next day Trump disclosed he had notified North Korean officials that
the June summit was off for now, sparking speculation that China hawks would
use the setback as ammunition to take a harder line in ongoing trade
negotiations. Wednesday’s FOMC minutes were viewed in a more dovish light than
many had expected and that along with the consternation surrounding geopolitics
resulted in a significant decline in US Treasury yields sending the 10-year
back below 3%. By Thursday risk off flows had gained momentum as uneasiness
surrounding the incoming populist government in Italy continued to send Italian
bond yields higher. By Friday the contagion had spread to Spain as questions
around PM Rojoy’s government sent spreads to German government bond yields to
some the widest levels seen since the European debt crisis early this decade.
The Euro dropped below 1.17 for the first time since Dec. Crude prices were
slammed late in the week, falling 4% on Friday alone, as oil producers all but
confirmed they were likely to allow production rates to rise next month when
they meet in order to keep markets balanced. For the week the S&P rose
0.3%, the Dow added 0.2% and the NASDAQ was up more than 1%.
- In corporate news this week, Wabtec rose on plans to merge with GE’s
Transportation unit, in a deal valued at $11B. Comcast shares fell after
confirming it was readying a bid to rival Disney's for Fox assets. Micron
surged towards all-time highs on a buyback announcement and a guidance raise.
In the retail space, Tiffany beat consensus and reported 9% America comp sales
growth; Best Buy shares were hurt by lackluster guidance; L Brands fell on a
disappointing outlook; and Gap missed on its bottom line. Deutsche Bank said it
planned to cut back its US and CEMEA equities groups, with overall job
reductions that could reach 10,000 positions. Foreign automakers were weighed
down by reports that the White House was looking into new tariffs on imported
vehicles. And Fiat Chrysler dropped on Friday after announcing a 4.8M vehicle
recall in the US due to malfunctions with its cruise-control software.
SUNDAY 5/20
(US) Treasury Sec Mnuchin: planned tariffs on Chinese steel and aluminum, as
well as $150 billion worth of other Chinese goods, would be put on hold as
talks with China proceed - press
(US) Treasury Sec Mnuchin: President Trump is more interested in striking a
good deal with Canada and Mexico than quickly finishing NAFTA talks in order to
get a vote from Congress this year - press
MONDAY 5/21
WAB Confirms to merge with GE transportation in deal valued at $11.1B; To
receive $2.9B in cash upfront
(TW) Chipmakers expected to raise prices for 8NM process - Digitimes
TUESDAY 5/22
(CN) China Govt plans to cut the import duty on cars from 25% to 15%, effective
July 1st - financial press
(US) MAY RICHMOND FED MANUFACTURING INDEX: 16 V 10E
(CN) Treasury Sec Mnuchin: steel and aluminum tariffs will remain in force
against China - remarks in congressional hearing
FB CEO: Facebook is ready to make significant investments to keep people safe;
improvements will significantly impact profitability - remarks to EU
(CN) President Trump: not pleased with how trade talks went with China; talks
were a start but am not satisfied
(US) FDA Commissioner Gottlieb: FDA could allow for easier path for gene
therapy approval; first focus to be on hemophilia products in pipeline
Reportedly OPEC may consider raising production at the June meeting to offset
production decline in Venezuela and Iran export disruptions due to US sanctions
- press
(US) President Trump said to aim for 10% cut in European steel and aluminum
exports to the US - press
WEDNESDAY 5/23
*(FR) FRANCE MAY PRELIMINARY MANUFACTURING PMI: 55.1 V 53.7E (20th month of
expansion)
*(DE) GERMANY MAY PRELIMINARY MANUFACTURING PMI: 56.8 V 57.9E (41st month of
expansion)
(EU) EURO ZONE MAY PRELIMINARY MANUFACTURING PMI: 55.5 V 56.1E (58th month of
expansion)
(UK) APR CPI M/M: 0.4% V 0.5%E; Y/Y: 2.4% V 2.5%E; CPI CORE Y/Y: 2.1% V 2.2%E
(lowest annual reading in a year)
TGT Reports Q1 $1.32 v $1.38e, Rev $16.8B v $16.5Be
TIF Reports Q1 $1.14 v $0.84e, Rev $1.03B v $961Me; Authorizes $1B share
repurchase program (7.8% of market cap)
(US) Casino workers union votes to authorize a strike at any time starting June
1st (first time in 3 decades)
(US) MAY PRELIMINARY MARKIT MANUFACTURING PMI: 56.6 V 56.5E (44-month high)
(US) APR NEW HOME SALES: 662K V 680KE
PPB.UK Announces combination of Betfair US with FanDuel; to contribute its
existing US assets along with $158M in cash
(TR) Turkey Central Bank held extraordinary rate meeting to evaluate
developments in recent period - press
(US) Association of American Railroads weekly rail traffic report for week
ending May 19th: 546.4K, +3.6% y/y
(TR) Turkey Central Bank (CBRT): raises Late Liquidity Window (LLW) by 300bps
to 16.50% (intra-meeting move)
(IR) Iran Supreme Leader announces 7 conditions for European nations if they
want Iran to remain in the nuclear accord
(US) US President Trump: Confirms has given Commerce Dept the order to consider
probe on auto imports under Section 232 review (as speculated)
*(KR) BANK OF KOREA (BOK) LEAVES REPO RATE UNCHANGED AT 1.50%; AS EXPECTED
THURSDAY 5/24
992.HK Reports Q4 Net $33M v $107M y/y, Rev $10.6B v $9.60B y/y
DB Finalizes equities business review; to reduce Equities Sales & Trading
business headcount by ~25% (total full-time positions to fall from over 97K to
well below 90K (over 7K in cuts, in-line with earlier reports)
(DE) GERMANY JUN GFK CONSUMER CONFIDENCE: 10.7 V 10.8E
*(DE) GERMANY Q1 FINAL GDP Q/Q: 0.3% V 0.3%E; Y/Y: 2.3% V 2.3%E; GDP NSA Y/Y:
1.6% V 1.6%E
(FR) FRANCE MAY BUSINESS CONFIDENCE 106 V 108E; MANUFACTURING CONFIDENCE: 109 V
108E
(US) Department of Justice (DOJ) said to weigh criminal probe of Bitcoin price
rigging - press
*(UK) APR RETAIL SALES (EX AUTO FUEL) M/M: 1.3% V 0.5%E; Y/Y: 1.5% V 0.1%E
(NK) North Korea said to have carried out the demolition of one of its nuclear
test sites - financial press
BBY Reports Q1 $0.82 v $0.75e, Rev $9.11B v $8.78Be
(US) INITIAL JOBLESS CLAIMS: 234K V 220KE; CONTINUING CLAIMS: 1.741M V 1.75ME
(KR) President Trump sends letter to North Korea's Kim: says inappropriate to
have June 12th summit at this time; looks forward very much to meeting some day
GPS Reports Q1 $0.42 v $0.45e, Rev $3.78B v $3.61Be; affirms FY18 guidance
(KR) North Korea Vice Foreign Min Kim Kye Gwan: Willing to talk with US at 'any
time'; no change in will to do the best for peace - KCNA
486.HK Says Oleg Deripaska resigns as non-executive board member; effective May
25 2018
FRIDAY 5/25
MAERSKB.DK Said to introduce 'emergency' bunker surcharge in order to deal with
the higher costs of marine fuel - FT
(ES) Spain Ciudadanos Party said to be willing to back a no-confidence measure
unless PM Rajoy calls for a snap election
(US) APR PRELIMINARY DURABLE GOODS ORDERS: -1.7% V -1.3%E; DURABLES EX
TRANSPORTATION: 0.9% V 0.5%E
FCAU To recall 4.8M vehicles in the US over software in powertrain control
modules; in certain vehicles drivers 'could be unable to cancel cruise-control'
(KR) Pres Trump: we'll see what happens about Korea summit after North Korea's
'nice statement'; summit could still be on for June 12th
(US) MAY FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 98.0 V 98.8E
763.HK Pres Trump reportedly has reached 'tentative deal' with China over ZTE -
Fox Business
(US) Atlanta Fed cuts Q2 GDP forecast to 4.0% from 4.1% prior
