TradeTheNews.com Weekly
Market Update: Markets don’t see any reason why they would(n’t) rally
Fri, 20 Jul 2018 16:04 PM EST
US stocks and the dollar rose in tandem for much of the first half of the week.
President Trump’s widely criticized performance at a press conference with
President Putin on Monday and the subsequent walk back of comments by the White
House on Tuesday had little apparent effect on market psychology. The S&P
500 pushed back above the 2,800 level, clearing a resistance level that has
been in place since trade war rhetoric fired up in February. The Dollar index
pressed up against one year highs. US economic data continued to outperform
that of Europe and elsewhere leading some to place bets predicated on
‘divergent’ central bank policies and the relative outperformance in the
States. The US yield curve remained pinned at the flattest levels in more than
a decade as the 2-10 year spread dipped below 25 basis points. Trade concerns
persisted with the US administration ratcheting up rhetoric directed at Chinese
President Xi in particular, and European trading partners in general. Copper
dropped below a key technical level and the Chinese Yuan and stock market
weakness persisted in the wake of the ongoing trade rift. Crude prices dropped
early on before leveling off after weekly EIA inventory data revealed US crude
production crossed the 11M bpd threshold for the first time ever.
President Trump’s remarks on the Federal Reserve, rates and the dollar opened
the door for a trend reversal on Thursday. The greenback came off recent highs
when Trump indicated he wasn’t a fan of the Fed path of rate rises, in
particular how it pushed the dollar higher offsetting some the fiscal and
structural measures his administration has championed to enhance economic
growth. By Friday, rates lifted and the US yield curve steepened while the
greenback continued to soften. US indices continued to edge higher looking past
the blustery trade talk and lingering geopolitical concerns in Europe. Equity
markets lost steam by mid-week and ended flat: the S&P was unchanged, the
DJIA gained 0.2%, and the Nasdaq slipped 0.1%. Dow Theorists took heart that
the Transports surged nearly 2% this week.
Second quarter earnings have been solid so far, but among the marquee names
this week, results were decidedly mixed. Netflix started the week off on a sour
note, with subpar subscriber numbers and weak guidance, but the market shook it
off as company-specific. Microsoft kept its share price rising by notching a
strong quarter, highlighting double digit growth in its Azure and Intelligent
Cloud business lines. After last Friday’s banking sector reports were not well
received, Goldman Sachs and Bank of America put a better foot forward this
week, beating estimates on the top and bottom line, and Goldman also solidified
its succession plan. In Europe, Deutsche Bank also put up good quarterly
numbers, quieting some critics for the time being. Shares of Alcoa fell more
than 10% after it drastically cut its FY18 EBITDA forecast. Alphabet shares
lingered near all-time highs ahead of next week’s earnings despite the EU
issuing a record $5B fine against Google for abuse of its dominance in the
Android OS.
MON 7/16
DBK.DE Reports Q2 prelim Net €400M v €159Me, IBIT €700M v €321Me, Rev
€6.6B v €6.4Be
BAC Reports Q2 $0.63 v $0.57e, Rev $22.6B v $22.5Be
(RU) Russia President Putin: Time has come for substantive bilateral talks -
Helsinki Trump-Putin Summit
*(US) JULY EMPIRE MANUFACTURING: 22.6 V 20.0E
*IMF updates its World Economic Outlook (WEO): maintains global 2018, 2019
growth estimate at 3.9%; cuts EU and Latin America forecasts
(US) Atlanta Fed raises Q2 GDP forecast to 4.5% from 3.9% prior
NFLX Reports Q2 $0.85 v $0.79e, Rev $3.91B v $3.94Be; misses net adds
forecast
TUES 7/17
*(UK) MAY AVERAGE WEEKLY EARNINGS 3M/Y: 2.5% V 2.5%E; WEEKLY EARNINGS (EX
BONUS) 3M/Y: 2.7% V 2.7%E
*(UK) JUN JOBLESS CLAIMS CHANGE: +7.8K V -7.7K PRIOR; CLAIMANT COUNT RATE: 2.5%
V 2.5% PRIOR
BTC/USD Coinbase reportedly receives approval from SEC and FINRA to list
digital coins considered to be securities – press
GS Reports Q2 $5.98 v $4.67e, Rev $9.40B v $8.71Be; Confirms David
Solomon as the new CEO & Chairman on Oct 1st
*(US) JUN INDUSTRIAL PRODUCTION M/M: 0.6% V 0.5%E CAPACITY UTILIZATION: 78.0% V
78.3%E
(US) Fed Chair Powell Congressional testimony: aware of risks of raising rates
too fast or too slow
(EU) European Union reportedly exploring talks with President Trump on reducing
car tariffs – press
CSX Reports Q2 $1.01 (GAAP) v $0.86e, Rev $3.10B v $2.99Be
SAH Reports preliminary Q2 $0.37-0.41 v $0.48e; Cuts FY18 outlook on
margin pressure in key brands expected to last into Q3
BRK.A Amends Share Repurchase Program: Under the amendment repurchases
can be made at any time that Buffett and Vice Chairman Munger believe that the
repurchase price is below the intrinsic value of the company
BHP.AU Reports Q4 Waio iron ore production 72.0Mt v 70.0Mt y/y;
attributable iron ore production 63.6Mt v 60.3Mte v 60.0Mt y/y
WED 7/18
*(UK) JUN CPI M/M: 0.0% V 0.2%E; Y/Y: 2.4% V 2.6%E; CPI CORE Y/Y: 1.9% V 2.1%E
GOOGL EU confirms €4.34B fine on unfair dominance of Android OS
*(US) JUN HOUSING STARTS: 1.173M V 1.320ME; BUILDING PERMITS: 1.273M V 1.330ME
*(US) DOE CRUDE: +5.8M V -3.5ME; GASOLINE: -3.2M V -0.5ME; DISTILLATE: -0.3M V
+1ME; US production reaches 11M bpd for first time in history
CP Reports Q2 C$3.16 adj v C$3.18e, Rev C$1.75B v C$1.76Be
IBM Reports Q2 $3.08 v $3.03e, Rev $20.0B v $19.6Be
AA Reports Q2 $1.52 v $1.33e, Rev $3.58B v $3.56Be
*(AU) AUSTRALIA JUN EMPLOYMENT CHANGE: +50.9K V +16.5KE
THRS 7/19
SAP.DE Reports Q2 Non-IFRS Net €1.17B v €1.12B y/y, non-IFRS Op €1.64B v
€1.63Be, Rev €6.01B v €5.9Be
UNA.NL Reports H1 Net €3.24B v €3.32B y/y, Rev €26.4B v €26.6Be
(US) EU to consider tariffs on coal, pharmaceuticals, chemistry goods if US
implements plans for levies on cars - financial press
*(UK) JUN RETAIL SALES (EX AUTO/FUEL) M/M: -0.6% V +0.1%E; Y/Y: 3.0% V 3.7%E
*(US) JULY PHILADELPHIA FED BUSINESS OUTLOOK: 25.7 V 21.5E
FOXA Comcast confirms will not pursure FOX assets, and will focus on Sky
offer
*(US) Pres Trump: Not happy about interest rates going up at the Fed; Strong
dollar puts the US at a disadvantage
MSFT Reports Q4 $1.13 adj v $1.07e, Rev $30.1B v $29.2Be
*(JP) JAPAN JUN NATIONAL CPI Y/Y: 0.7% V 0.8%E; CPI EX FRESH FOOD (CORE): 0.8%
V 0.8%E (first rise since Feb)
USD/CNY *(CN) CHINA PBOC SET YUAN REFERENCE RATE AT 6.7671 V 6.7066
PRIOR (7th straight weaker yuan fix, weakest fix since July 14, 2017)
FRI 7/20
(US) President Trump: Repeats we are being taken advantage of on trade; remain
ready to put tariffs on $500B of Chinese imports
GE Reports Q2 $0.19 v $0.18e, Rev $30.1B v $29.8Be
(US) White House official: President Trump worries that the Fed will raise
rates two more times this year - CNBC
