TradeTheNews.com Weekly
Market Update: Trump to lean on CFIUS; European inflation gets back to ECB
target
Fri, 29 Jun 2018 16:08 PM EST
Markets chopped around this week as the quarter drew towards a close. Early on,
risk-off flows picked up momentum on concerns that the US would crack down
aggressively on Chinese investments in an attempt to curtail intellectual
property theft. Trade tensions were soothed modestly when the President said he
would use the CFIUS mechanism to protect US technology rather than introduce a
new set of laws to go after transgressors, at least for now. Nevertheless, the
Chinese Yuan repeatedly made new yearly lows against the Dollar after the PBOC
announced an RRR cut on Sunday, leading some to speculate Chinese officials
were OK with a weakening currency, illustrating devaluation remains part of
their arsenal in any trade war.
By Friday, stocks were swinging back up, led by a rebound in Europe. European
flash CPI topped the ECB target of 2% for the first time in more than a year,
and EU leaders reached a modest agreement on immigration. US core PCE data also
matched the Federal Reserve’s target for the first time since 2012. Treasury
markets continued to flash warning signs, though, as flattening in the US yield
curve continued to ever-precarious levels, keeping the pressure on banks until
the CCAR results on Thursday night sparked a relief rally. High yield fixed
income also slipped, pushing ETF barometers back towards key support levels for
the year. The crude rally continued largely unabated to probe fresh highs going
back to 2015, helped by reports that the US was leaning heavily on nations to
comply with Iranian sanctions. The Greenback moved up for much of the week as
emerging market currencies stayed volatile, and investors continued to place
bets predicated on expected divergent central banks paths. For the week the
S&P fell 1.3%, the Dow lost 1.3% and the NASDAQ dropped 2.4%.
In corporate news this week, the Nasdaq saw bouts of weakness amid some quarter
end profit-taking in the FANG names as investors weighed potential upcoming
trade and foreign investment hurdles. Harley Davidson was the target of Pres
Trump’s ire after announcing plans to shift production of some motorcycles to
the EU to avoid tariffs. Amazon made another foray into the drug sector with
the acquisition of Pillpack, sending shares of drugstore names tumbling. Nike
surged higher after topping expectations and raising its annual sales growth
forecasts. ConAgra announced the acquisition of Pinnacle Foods in a $10.9B
cash-and-stock deal, aiming to boost its foothold in the snack and frozen food markets.
SUNDAY 6/24
Bank for International Settlements Annual Economic Report: Banks may be
disguising their borrowings in a way similar to that used by Lehman Brothers
Holdings, with debt ratios falling within limits imposed by regulators just
four times a year; warns on protectionist measures
(CN) China PBOC cuts Reserve Ratio Requirement (RRR) for some banks by 50bps,
effective July 5th; (3rd targeted cut this year) as a result releasing CNY700B
v CNY400Be in liquidity (as speculated)
MONDAY 6/25
*(DE) GERMANY JUN IFO BUSINESS CLIMATE: 101.8 V 101.8E; CURRENT ASSESSMENT:
105.1 V 105.6E; Expectations Survey: 98.6 v 98.0e
HOG Plans to shift production of motorcycles with EU destinations away from US
to avoid tariffs, expects tariffs will result in an incremental cost of ~$2.2K
per average motorcycle exported from the US to the EU - filing
(US) MAY NEW HOME SALES: 689K V 667KE
(US) JUN DALLAS FED MANUFACTURING ACTIVITY: 36.5 V 23.0E
(CN) China President Xi reportedly told various CEOs last week that Beijing
plans to strike back against punitive American tariffs; says "In our
culture we punch back" - press
(US) White House Trade Adviser Navarro: we have no plans to impose investment
restrictions; today's market selloff is a large overreaction - CNBC interview
TUESDAY 6/26
LEN Reports Q2 $1.58 v $0.45e, Rev $5.46B v $5.23Be
GE Confirms Healthcare to become standalone company; to focus on Aviation,
Power and Renewable Energy - Investor day
HOG (US) President Trump tweets "Early this year Harley-Davidson said they
would move much of their plant operations in Kansas City to Thailand. That was
long before Tariffs were announced. Hence, they were just using Tariffs/Trade
War as an excuse. Shows how unbalanced & unfair trade is, but we will fix
it....
AXP To launch new Amazon cobrand card to enhance how small businesses buy
*(US) JUN RICHMOND FED MANUFACTURING INDEX: 20 V 15E
(US) Supreme Court upholds Trump travel ban by 5-4 vote - press
(CA) Canada govt reportedly readying steel quotas and tariffs on China and
other countries - press
(US) S&P affirms United States sovereign rating at AA+: Outlook stable
WEDNESDAY 6/27
INTC New CPU release delay may reduce global notebook shipments - Digitimes
PF Confirms to be acquired by Conagra in a $10.9B cash and stock deal
(CZ) CZECH CENTRAL BANK (CNB) RAISES 2-WEEK REPURCHASE RATE BY 25BPS TO 1.00%;
NOT EXPECTED
(US) Official: President Trump seeks to maintain investment environment open in
the US, to use CFIUS to respond to China technology theft - closed door
conference call (in-line with recent speculation)
(US) MAY PRELIMINARY DURABLE GOODS ORDERS: -0.6% V -1.0%E; DURABLES EX
TRANSPORTATION: -0.3% V +0.5%E
(US) MAY PENDING HOME SALES M/M: -0.5% V +0.5%E; Y/Y: -2.8% V +0.4% PRIOR
(US) Atlanta Fed cuts Q2 GDP forecast to 4.5% from 4.7% prior
(US) Association of American Railroads weekly rail traffic report for week
ending June 23rd: 557.3K, +3.7% y/y
(US) Justice Kennedy to retire from US Supreme Court - press
BBBY Reports Q1 $0.32 v $0.31e, Rev $2.75B v $2.75Be
(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED
AT 1.75%, AS EXPECTED
THURSDAY 6/28
AMZN Announces new offering that helps entrepreneurs build their own companies
delivering Amazon packages
(EU) EURO ZONE JUN BUSINESS CLIMATE INDICATOR: 1.39 V 1.40E; CONSUMER
CONFIDENCE (FINAL): -0.5 V -0.5E
(DE) GERMANY JUN PRELIMINARY CPI M/M:0.1 % V 0.1%E; Y/Y: 2.1% V 2.1%E
*(DE) GERMANY JUN PRELIMINARY CPI M/M:0.1 % V 0.1%E; Y/Y: 2.1% V 2.1%E
(US) Q1 FINAL GDP PRICE INDEX: 2.2% V 1.9%E; CORE PCE Q/Q: 2.3% V 2.3% PRELIM
*(US) Q1 FINAL GDP ANNUALIZED Q/Q: 2.0% V 2.2%E; PERSONAL CONSUMPTION: 0.9% V
1.0%E
AMZN To buy PillPack, an online pharmacy that offers pre-sorted doses of
medications and home delivery
(CN) China state planner issued special management measures list for foreign
investment access, effective July 28th - press
(US) State Dept says it will work with countries who buy Iranian oil on case by
case basis; may not reach zero imports - CNBC
(US) White House Chief of Staff Kelly reportedly expected to leave position
this summer - press
NKE Reports Q4 $0.69 v $0.64e, Rev $9.79B v $9.39Be; authorizes new 4-year,
$15B program to repurchase Class B shares (13% of market cap)
DBK.DE Fed objects to capital plan for Deutsche Bank US unit due to qualitative
concerns
(US) FEDERAL RESERVE COMPREHENSIVE CAPITAL ANALYSIS AND REVIEW (CCAR): 34 OF 35
CAPITAL PLANS APPROVED
NKE CEO: Raises forecast for annual sales growth at high single digits (prior
mid to high single digits) - earnings call comments
FRIDAY 6/29
Xiaomi Corp [1810.HK] IPO said to price at HK$17/share (low-end of range),
raising ~$4.7B (implied valuation ~$48.0B) - financial press
(DE) GERMANY JUN UNEMPLOYMENT CHANGE: -15K V -8KE; UNEMPLOYMENT CLAIMS RATE:
5.2% V 5.2%E
(US) Nevada reports May casino gaming Rev $1.04B, +5.3% y/y; Las Vegas strip
Rev $904.6M, +5.1% y/y
(US) JUN FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 98.2 V 99.0E (largely due to
tariff concerns)
(US) Atlanta Fed cuts Q2 GDP forecast to 3.8% from 4.5% prior
AAPL Reportedly to rebuild its Maps product; to compile new maps from its own
data - tech blog
