TradeTheNews.com Weekly
Market Update: Trade Tensions Escalate; Central Bank Decisions Strengthen
Greenback
Fri, 15 Jun 2018 16:06 PM EST
A turbulent week was bookended by trade war concerns: a contentious G7 meeting
last weekend ended with Canadian PM Trudeau promising to meet US tariffs with
an equivalent response, and then on Friday the US administration slapped $50B
in new tariffs on China. The Chinese government retaliated in kind and the US
has reportedly identified another $100B in tariffs, threatening to set off
tit-for-tat tariffs. Markets were more pleased that the nuclear summit in
Singapore apparently went smoothly, with President Trump hailing his new strong
personal relationship with North Korea’s Kim.
Central bank divergence became more pronounced as the Fed moved rates up
another 25 basis points, while the ECB further delayed its first rate hike. The
yield curve flattened further after the Fed move, as the policy statement
dropped its forward guidance and as Chairman Powell spent a lot of time
discussing the potential for inflation to spend some time above the 2% target.
The euro tumbled on Thursday in the wake of the ECB announcement that rates
would stay at zero at least until the summer of next year, which overshadowed a
concurrent announcement that the QE program will be tapered in Q4. Meanwhile
emerging markets remained troubled, emblemized by the Argentine peso hitting
fresh record lows despite a $50B credit agreement signed with the IMF last
week. Commodity price weakness accelerated through the end of the week, as
crude tumbled 3% and copper fell more than 2% on Friday. For the week the DJIA
dropped 0.9%, the S&P500 was flat, while the Nasdaq gained 1.3%.
In corporate news this week, the Time Warner-AT&T merger received
long-sought-after approval from a federal judge, and the two completed their
transaction on Friday after the DOJ said it would not seek a stay of the
ruling. Seeing an all-clear signal from the court decision, Comcast made its
anticipated proposal to acquire Twenty-First Century Fox assets in an all-cash
$35/share deal, in a play to outbid Disney. Construction materials firm USG
accepted a $7B bid from a German construction company after several months of
talks involving shareholder Warren Buffett. Tesla announced 3K layoffs, about
9% of its workforce, largely directed at the company’s salaried employees and
avoiding cuts to those in the production process.
SUN 6/10
(CH) SWITZERLAND VOLLGELD REFERENDUM RESULTS: VOTERS REJECT MOTION TO ABOLISH
TRADITIONAL BANK LENDING AND ALLOW ONLY MONEY CREATED BY THE SNB (as expected)
TUES 6/12
(KR) Trump/Kim Document: US and North Korea commit to working towards complete
denuclearization of the Korean peninsula
(UK) APR AVERAGE WEEKLY EARNINGS 3M/Y: 2.5% V 2.5%E; WEEKLY EARNINGS (EX BONUS)
3M/Y: 2.8% V 2.9%E
(UK) MAY JOBLESS CLAIMS CHANGE: -7.7K V +28.2K PRIOR; CLAIMANT COUNT RATE: 2.5%
V 2.5% PRIOR
(UK) APR ILO UNEMPLOYMENT RATE: 4.2% V 4.2%E
(DE) GERMANY JUN ZEW CURRENT SITUATION: 80.6 V 85.0E; EXPECTATIONS SURVEY:
-16.1 V -14.0E
(US) MAY CPI M/M: 0.2% V 0.2%E; CPI EX FOOD AND ENERGY M/M: 0.2% V 0.2%E; CPI
NSA: 251.588 V 251.570E
TSLA Plans to cut 9% of total workforce as part of reorganization plan (cuts
could amount to about 3,000 employees)
TWX *US JUDGE RULES AT&T/TWX MERGER CAN GO FORWARD; IMPOSES NO CONDITIONS
ON THE MERGER - PRESS
WEDS 6/13
(UK) MAY CPI M/M: 0.4% V 0.4%E; Y/Y: 2.4% V 2.4%E; CPI CORE Y/Y: 2.1% v 2.1%E
(matches the lowest annual pace in a year)
(US) MAY PPI FINAL DEMAND M/M: 0.5% V 0.3%E; Y/Y: 3.1% V 2.8%E
CAT Reports May dealer statistics: Total Machines +24% y/y
(US) Association of American Railroads weekly rail traffic report for week
ending June 9th: 561.1K, +4.2% y/y
(US) FOMC UPDATED ECONOMIC FORECAST FOR JUNE MEETING (V. MAR): now forecasts 4
rate hikes in 2018
(US) US govt reportedly readying a specific list of goods from China that will
be subject to tariffs on Friday - press
FOXA Comcast makes all-cash $35/shr proposal to acquire Twenty-First Century
Fox after spinoff of "New Fox", values 21CF at $65B
THURS 6/14
(UK) MAY RETAIL SALES (EX AUTO/FUEL) M/M: 1.3% V 0.3%E; Y/Y: 4.4% V 2.5%E
(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%, AS EXPECTED
(EU) ECB REVISES QE BOND BUYING PROGRAM: QE to be reduced to €15B/month from
Oct until Dec
Euro gives back initial taper gains as traders focus on ECB announcement that
rates to be held steady until at least summer 2019
(EU) ECB's Draghi: Decision was unanimous; did not discuss when to raise
interest rates - Q&A
(KR) US govt official: major military exercises on Korean peninsula have been
'suspended indefinitely' - press
(US) Atlanta Fed raises Q2 GDP forecast to 4.8% from 4.6% prior
(CN) White House said to put tariffs on a smaller list of 800 to 900 products
from China tomorrow (trimmed from original list of 1,300 products) - CNBC
AT&T reaches deal with US govt on merger with Time Warner; DOJ will not
seek a stay in merger; deal removes 6-day waiting period to close merger -
press
(MX) Mexico govt said to consider possible tariffs on US corn and soybean
imports if trade conflict escalates - press
FRI 6/15
TSCO.UK Reports Q1 UK LFL (ex VAT, ex-fuel) +2.1% v +1.9%e
US ANNOUNCES TARGET LIST OF CHINESE GOODS; to pursue more tariffs if China
retaliates in imposing new tariffs or take punitive action against American
companies
(CN) US said to be nearing completion of a 2nd tariff list comprising of $100B
in Chinese goods, subject to same hearing conditions of approx 60 days -
financial press
(US) JUN EMPIRE MANUFACTURING: 25.0 V 18.8E
(US) MAY INDUSTRIAL PRODUCTION M/M: -0.1% V +0.2%E; CAPACITY UTILIZATION: 77.9%
V 78.1%E
(US) JUN PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 99.3 V 98.5E
(CN) China govt announces $50B in retaliatory tariffs on US goods,
implementation to start on July 6th - press
