TradeTheNews.com Weekly
Market Update: Strong Dollar and Risk-On Sentiment Persist
Fri, 10 Aug 2018 16:07 PM EST
US stock momentum built for much of this week as investors looked past the US
China trade spat to push indices within striking distance of the all-time highs
made earlier this year. The NASADAQ led with that index posting a string of 8
straight daily rises before Friday. Oil began the week bid as traders looked to
handicap the most recent round of Iran sanctions that took effect at midnight
on Monday. Rates drifted sideways most of the week despite a record amount of
issuance from the US Treasury helped by relatively benign US inflation
readings. The Greenback strengthened against a broad array of currencies. Trade
worries held back the Yuan, Italian budget negotiations caused some
consternation around the Euro, emerging market currencies were dogged by
geopolitics (Lira, Ruble), and the Pound remained beholden to Brexit concerns.
By Friday, the plunge in the Turkish Lira had accelerated leading some in
Europe worry about potential contagion risks for the European banks. That
narrative resulted in a flight from risk including global stocks while buoying
bond prices. For the week the S&P500 slipped 0.3% and the DJIA fell 0.6%,
while the Nasdaq rose 0.3%.
As earnings season began to wind down this week, Snap shares took a hit after
it reported a miss on its daily active user count, though a Saudi prince’s
investment in the company helped later bolster the stock. On Tuesday it was
revealed that Saudi money also flowed in to Tesla, whose CEO pushed shares even
higher with a tweet that created an uproar as Musk pondered a going private
transaction. Dropbox slipped after announcing the departure of its COO, and
Pepsi shares fell after its long-time CEO Indra Nooyi announced she would be
retiring in October. Elsewhere, some commodity intensive firms shared concerns
about tariff impacts, notably Ford which said steel and aluminum duties have
become a significant headwind. On the M&A front, uncertainty rose regarding
Linde and Praxair’s merger as US regulators made potentially overly burdensome
divestment demands. Rite Aid and Albertsons agreed to call off their merger
after pushback from investors. Tribune terminated its $3.9B merger deal with
Sinclair due to FCC opposition. Australia’s Amcor announced it would acquire
American rival Bemis in a move to create a global leader in packaging.
SUN 8/5
LIN.DE Linde: increased requirements for the merger clearances are likely to
exceed a threshold for merger clearances previously agreed between Linde and
Praxair
MON 8/6
*(EU) EURO ZONE AUG SENTIX INVESTOR CONFIDENCE: 14.7 V 13.4E
FAST Reports July Net Sales $411.6M, +17.6% y/y
PEP CEO Indra Nooyi to step down effective Oct 3rd; 22yr veteran Ramon Laguarta
(54) named new CEO
BMS To be acquired by Amcor for $57.75/shr in all-stock deal valued at $6.8B;
combined company to list on NYSE, ASX
(IR) Trump administration official: first batch of US sanctions against Iran
will go into force at midnight Tuesday
TUES 8/7
DPW.DE Reports Q2 Net €516M v €602M y/y, EBIT €747M v €841M y/y, Rev €15.0B v
€15.0Be
(US) White House officials sought to reassure tech industry representatives at
a private meeting last week that the Trump administration's pugnacious trade
policies will ultimately aid their businesses - Axios
TSLA Saudi Arabia sovereign wealth fund reportedly has built a $2B stake - FT
TSLA *CEO Musk tweets: Considering taking Tesla private at $420/shr; funding
secured
*(US) JUN CONSUMER CREDIT: $10.2B V $15.0BE
DIS Reports Q3 $1.87 v $1.97e, Rev $15.2B v $15.5Be
(CN) US Trade Rep Lighthizer: Trump administration has finalized the second
tranche of $16B tariffs on Chinese products (in addition to the initial $34B in
tariffs implements last month on July 6th) - press
SNAP Reports Q2 -$0.14 v -$0.17e, Rev $262.3M v $248Me; Daily active users
(DAUs) 188M, -2% q/q; Prince Alwaleed tweets that he has invested $250M to take
a 2.3% stake
(CN) China State Planner (NDRC): To use monetary policy including targeted RRR
cuts to support debt to equity swaps
*(CN) CHINA JULY TRADE BALANCE (CNY): 176.9B V 227.1BE
(CN) CHINA JULY TRADE BALANCE:$28.1B V $38.9BE
WED 8/8
005930.KR Announces investment plan worth KRW180T over 3-years that includes
CAPEX and R&D
(IT) Italy PM Conte: Budget will be serious, rigorous and courageous, will
contain a package of 'realistic' reforms
(CN) China Commerce Ministry confirms retaliatory tariff on $16B of US goods to
take effect on Aug 23rd, reiterates stance that it was forced to retaliate
NYT Reports Q2 $0.17 v $0.18 y/y, Rev $414.6M v $407.1M y/y
*(US) DOE CRUDE: -1.4M V -2.5ME; GASOLINE: +2.9M V -1.5ME; DISTILLATE: +1.2M V
0ME
Ford Exec: steel & aluminum tariffs have become a significant headwind, but
Ford will not pass on the higher commodity costs to customers - press
RAD Agrees to terminate $24B merger with Albertsons
THURS 8/9
941.HK Reports H1 (CNY) Net 65.6B v 63.4Be; EBITDA 145.9B v 146Be; Rev 391.8B v
385Be
TKA.DE Reports Q3 Net -€131M v -€251M y/y, adj EBIT €332M v €438Me, Rev €11.12B
v €10.9Be
DTE.DE Reports Q2 adj Net €1.24B v €1.37Be, adj EBITDA €5.93B v €5.84Be, Rev
€18.4B v €18.6Be
US Postal Office reports Q3 net loss $1.5B, Rev $17.1B, +2.4% y/y
(US) JULY PPI FINAL DEMAND M/M: 0.0% V 0.2%E; Y/Y: 3.3% V 3.4%E
(US) Atlanta Fed cuts Q3 GDP forecast to 4.3% from 4.4% prior
TRCO Confirms to terminate merger agreement with Sinclair Broadcast Group,
Inc.; files lawsuit for breach of contract
(JP) JAPAN Q2 PRELIMINARY GDP Q/Q: 0.5% V 0.3%E; ANNUALIZED Q/Q: 1.9% V 1.4%E
FRI 8/10
(EU) ECB Single Supervisory Mechanism (SSM) said to be concerned about the
exposures that Unicredit, BNP Paribas, and BBVA have to Turkey - FT
(RU) Russia PM Medvedev: Moscow would consider it "economic war" if
US imposes ban on banks or use of particular currency
*(UK) Q2 PRELIMINARY GDP Q/Q: 0.4% V 0.4%E; Y/Y: 1.3% V 1.3%E (annual pace moves
off recent 5-year lows)
*(UK) JUN INDUSTRIAL PRODUCTION M/M: 0.4% V 0.3%E; Y/Y: 1.1% V 1.0%E
(TR) Turkey President Erdogan: Converting FX to TRY currency (Lira) would be
the nation's best response in economic war; the USD dollar and other things
cannot block our path
*(US) JULY CPI M/M: 0.2% V 0.2%E; CPI EX FOOD AND ENERGY M/M: 0.2% V 0.2%E
*(CA) CANADA JULY NET CHANGE IN EMPLOYMENT: +54.1K V +17.0KE; UNEMPLOYMENT
RATE: 5.8% V 5.9%E
(TR) Pres Trump tweets: have authorized doubling steel & aluminum tariffs
against Turkey to 50% and 20%
