Markets worked
through a heavy news weak in relatively decent form. The push and pull of peak
earnings season came against a backdrop of key central banks meetings and the
escalating trade dispute between the US and China. US corporations continued to
generally beat Q2 expectations by a significant margin, but managements
remained reticent to offer overly aggressive outlooks due to rising cost
inputs, the stronger US dollar and ongoing uncertainty surrounding trade. For
the week the S&P500 gained 0.8%, the DJIA edged up less than 0.1%, and the
Nasdaq rose nearly 1%.
On Tuesday the BOJ offered up its first ever forward guidance which resulted in volatility in the JGB market, and eventually higher interest rates globally. Wednesday’s FOMC statement left the door wide open for two more rate hikes this year, while the BOE raised rates for just the second time this decade. By midweek, expectations were growing that the Trump administration was set to make an announcement to put further pressure on China by ratcheting up tariffs on another $200B in Chinese goods. The Yuan dropped to new lows and the Chinese stock market came under renewed pressure. The Greenback was also helped by another string of solid US economic data resulting in the Atlanta Fed taking up its US Q3 GDP forecast to as high as 5%(later trimmed to 4.4% on Friday), while most major European PMIs missed expectations. Friday’s July jobs growth came in below forecast but June numbers were revised higher. The report did little to change market expectations surrounding tepid wage growth and was somewhat overshadowed by China's announcement of plans to retaliate against the Trump administration’s latest tariff threats.
In terms of corporate news this week, the focus remained on earnings. Apple reached the $1T market cap level on the back of a strong profit beat in a quarter which saw its average selling price for iPhones jump. Tesla rallied after promising a profitable second half, and shares were further boosted when a contrite CEO Musk apologized for past behavior during the earnings call. Wynn and MGM fell on continued softness in casino earnings reports, while Caesars management said to expect weakness in Las Vegas programming in July and August. Chipotle lost some of last week’s gains on the latest report regarding food-related illnesses at a store in Ohio. CBS opened marginally lower on Friday after an earnings conference call that steered clear of addressing sexual misconduct claims against CEO Les Moonves.
MON 7/30
HEIA.NL Reports H1 Net €1.08B v €1.04B y/y, Op €1.75B v €1.81B y/y, Rev €10.8B v €10.3B y/y
(JP) BOJ AGAIN CONDUCTS FIXED-RATE JGB PURCHASE OPERATION FOR an unlimited amount of 5-10-YR JGBs at 0.10% (3rd operation within the past week)
(EU) EURO ZONE JULY BUSINESS CLIMATE INDICATOR: 1.29 V 1.35E; CONSUMER CONFIDENCE (FINAL): -0.6 V -0.6E
*(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL €6.0B VS. €4.50-6.0B INDICATED RANGE IN 5-YEAR AND 10-YEAR BTP BONDS
CAT Reports Q2 $2.97 v $2.66e, Rev $14.0B v $13.8Be; To raise prices
(DE) GERMANY JULY CPI M/M: 0.3% V 0.4%E; Y/Y: 2.0% V 2.1%E
*(US) JUN PENDING HOME SALES M/M: 0.9% V 0.2%E; Y/Y: -4.0% V -2.8% PRIOR (6th straight month of y/y declines)
*(US) JULY DALLAS FED MANUFACTURING ACTIVITY: 32.3 V 30.0E
CAT Feel good about business, taking orders for delivery well into 2019 - earnings call
(KR) South Korea Jun Industrial Production M/M: -0.6% v -0.9%e; M/My: -0.4% v 0.7%e
(KR) North Korea said to have built new missiles after summit with Trump - press
*(JP) JAPAN JUN JOBLESS RATE: 2.4% V 2.3%E; (first rise since Feb)
005930.KR Reports final Q2 (KRW) Net 11.0T v 11.1Te, Op 14.9T v 14.8T prelim, Rev 58.5T v 58.0T prelim
*(CN) CHINA JULY OFFICIAL GOVT MANUFACTURING PMI: 51.2 V 51.3E (lowest since Feb)
TUES 7/31
STAN.UK Reports H1 Pretax $2.35B v $2.30Be, Adj Op Rev $7.65B v $7.69Be
CSGN.CH Reports Q2 (CHF) Net 647M v 694M y/y, adj Pretax 1.05B v 1.06Be, Rev 5.60B v 5.35Be
SAN.FR Reports Q2 Business EPS €1.25 v €1.20e, Business Net €1.56B v €1.70B y/y, Rev €8.18B v €8.38Be
BP.UK Reports Q2 Adj Net (underlying RC profit) $2.82B v $2.66Be, Total Rev $76.9B v $57.4B y/y
(JP) BOJ Gov Kuroda: Introduced forward guidance to increase commitment on price target; stronger framework aimed at hitting the 2% price target asap - post rate decision press conference
*(DE) GERMANY JULY NET UNEMPLOYMENT CHANGE: -6K V -10KE; UNEMPLOYMENT CLAIMS RATE: 5.2% V 5.2%E
*(EU) EURO ZONE Q2 ADVANCE GDP Q/Q: 0.3% V 0.4%E; Y/Y: 2.1% V 2.2%E
*(CN) US AND CHINA REPORTEDLY TO MEET TO RESTART TALKS REGARDING TRADE - press
FB (US) Facebook has identified a coordinated political influence campaign on its platform, using fake accounts and pages seeking to influence the 2018 US election - NYT
(US) Nevada reports Jun casino gaming Rev $933.0M, +4.2% y/y; Las Vegas strip Rev $523.9M, +5.4% y/y
(US) Atlanta Fed forecasts initial Q3 GDP growth at 4.7%
AAPL Reports Q3 $2.34 v $2.17e, Rev $53B v $52.4Be
BIDU Reports Q2 $3.18 v $2.63e, Rev $3.93B v $4.01Be
WEDS 8/1
(HK) Macau July Gaming Rev MOP25.3B v MOP22.5B prior, Y/Y: 10.3% v 11.5%e (3rd consecutive miss on estimates)
MT.NL Reports Q2 $1.84 v $1.30 y/y, EBITDA $3.07B v $2.85Be, Rev $20.0B v $19.9Be
BA.UK Reports H1 Underlying EPS 14.8p v 17.9p y/y, EBITA £874M v £848Me, Rev £8.82B v £8.83Be
RIO.AU Reports H1 Underlying Net $4.42B v $4.6Be; underlying EBITDA $9.2B v $9.6Be; Rev $19.9B v $21.1Be; Adds $1.0B to share buyback program
VOW3.DE Reports Q2 adj Net €3.31B v €3.10B y/y, Op €5.58B v €4.97Be, Rev €61.1B v €62.1Be
*(IN) INDIA CENTRAL BANK (RBI) RAISES REPURCHASE RATE BY 25BPS TO 6.50%; AS EXPECTED
CG To purchase 19.9% of reinsurer DSA from AIG and enter into a strategic asset management relationship with DSA Re
(US) JULY ADP EMPLOYMENT CHANGE: +219K V +186KE; Zandi sees no tariff impact "yet"
(US) Conference Board July Total online job ads 4.65M v 4.48M m/m v 4.61M y/y; New ads 1.89M v 1.90M m/m v 1.90M y/y
*(US) DOE CRUDE: +3.8M V -2ME; GASOLINE: -2.5M V -2ME; DISTILLATE: +3.0M V +0.5ME
Fidelity announces plans to reduce mutual fund fees
(TR) US reportedly readying list of economic sanctions against Turkey over detained US pastor - press
(US) Atlanta Fed raises Q3 GDP forecast to 5.0% from 4.7% prior
(US) Reportedly Trump administration will confirm taking $200B China tariffs rate up to 25% later today - press
ESRX Icahn reportedly has sizable Cigna stake and is likely to urge shareholders to vote against proposed Express Scripts takeover - press
TSLA Reports Q2 -$3.06 v -$2.76e, Rev $4.0B v $3.79Be
*(BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC TARGET RATE UNCHANGED AT 6.50%; AS EXPECTED
THUR 8/2
GLE.FR Reports Q2 adj Net €1.16B v €1.0Be, Op €1.88B v €1.29B y/y, Rev €6.45B v €6.16Be
SIE.DE Reports Q3 Net €1.21B v €1.41B y/y, Industrial Business profit €2.21B v €2.27Be, Rev €20.5B v €20.8Be; affirms FY outlook
GAM.CH Fund boards suspend dealing in unconstrained/absolute return bond funds; notes high level of redemptions
*(UK) BOE RAISES INTEREST RATES BY 25BPS TO 0.75%; AS EXPECTED (2nd hike over the past decade)
(UK) BANK OF ENGLAND (BOE) QUARTERLY INFLATION REPORT (QIR)
(UK) BOE Gov Carney:Need a modest tightening of monetary policy; reiterates that limited and gradual hike will be needed - post rate decision press conference
AAPL Tests $207.04, becomes first publicly listed US company valued at $1 trillion
FRI 8/3
ACA.FR Reports Q2 Net €1.44B v €1.02Be; Rev €8.40B v €7.94B y/y
RBS.UK Reports Q2 Net £96M v £792M y/y, adj Op £613M v £1.24B y/y, Rev £3.40B v £3.30B y/y
*(UK) JULY SERVICES PMI: 53.5 V 54.7E (24th month of expansion)
(CN) China PBoC adjusts the Reserve Requirement on FX Forwards trading from 0% (nil) to 20%
*(CN) CHINA COMMERCE MINISTRY (MOFCOM) RELEASES PROPOSED RETALIATION TO US TARIFF THREAT; to levy differentiated tariffs (import tax) on ~$60B in US goods
*(US) JULY CHANGE IN NONFARM PAYROLLS: +157K V +193KE
(CN) White House Econ Adviser Kudlow: tariff response from China today is not tit-for-tat; China should not underestimate Pres Trump on trade policy
*(US) JULY FINAL MARKIT SERVICES PMI: 56.0 V 56.2E
*(US) JULY ISM NON-MANUFACTURING COMPOSITE: 55.7 V 58.6E
(CN) China to propose 25% tariff on US LNG - press
(CN) China proposed 25% tariff list includes US copper ore and concentrate, lithium carbonate
(US) Atlanta Fed cuts Q3 GDP forecast to 4.4% from 5.0% prior
On Tuesday the BOJ offered up its first ever forward guidance which resulted in volatility in the JGB market, and eventually higher interest rates globally. Wednesday’s FOMC statement left the door wide open for two more rate hikes this year, while the BOE raised rates for just the second time this decade. By midweek, expectations were growing that the Trump administration was set to make an announcement to put further pressure on China by ratcheting up tariffs on another $200B in Chinese goods. The Yuan dropped to new lows and the Chinese stock market came under renewed pressure. The Greenback was also helped by another string of solid US economic data resulting in the Atlanta Fed taking up its US Q3 GDP forecast to as high as 5%(later trimmed to 4.4% on Friday), while most major European PMIs missed expectations. Friday’s July jobs growth came in below forecast but June numbers were revised higher. The report did little to change market expectations surrounding tepid wage growth and was somewhat overshadowed by China's announcement of plans to retaliate against the Trump administration’s latest tariff threats.
In terms of corporate news this week, the focus remained on earnings. Apple reached the $1T market cap level on the back of a strong profit beat in a quarter which saw its average selling price for iPhones jump. Tesla rallied after promising a profitable second half, and shares were further boosted when a contrite CEO Musk apologized for past behavior during the earnings call. Wynn and MGM fell on continued softness in casino earnings reports, while Caesars management said to expect weakness in Las Vegas programming in July and August. Chipotle lost some of last week’s gains on the latest report regarding food-related illnesses at a store in Ohio. CBS opened marginally lower on Friday after an earnings conference call that steered clear of addressing sexual misconduct claims against CEO Les Moonves.
MON 7/30
HEIA.NL Reports H1 Net €1.08B v €1.04B y/y, Op €1.75B v €1.81B y/y, Rev €10.8B v €10.3B y/y
(JP) BOJ AGAIN CONDUCTS FIXED-RATE JGB PURCHASE OPERATION FOR an unlimited amount of 5-10-YR JGBs at 0.10% (3rd operation within the past week)
(EU) EURO ZONE JULY BUSINESS CLIMATE INDICATOR: 1.29 V 1.35E; CONSUMER CONFIDENCE (FINAL): -0.6 V -0.6E
*(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL €6.0B VS. €4.50-6.0B INDICATED RANGE IN 5-YEAR AND 10-YEAR BTP BONDS
CAT Reports Q2 $2.97 v $2.66e, Rev $14.0B v $13.8Be; To raise prices
(DE) GERMANY JULY CPI M/M: 0.3% V 0.4%E; Y/Y: 2.0% V 2.1%E
*(US) JUN PENDING HOME SALES M/M: 0.9% V 0.2%E; Y/Y: -4.0% V -2.8% PRIOR (6th straight month of y/y declines)
*(US) JULY DALLAS FED MANUFACTURING ACTIVITY: 32.3 V 30.0E
CAT Feel good about business, taking orders for delivery well into 2019 - earnings call
(KR) South Korea Jun Industrial Production M/M: -0.6% v -0.9%e; M/My: -0.4% v 0.7%e
(KR) North Korea said to have built new missiles after summit with Trump - press
*(JP) JAPAN JUN JOBLESS RATE: 2.4% V 2.3%E; (first rise since Feb)
005930.KR Reports final Q2 (KRW) Net 11.0T v 11.1Te, Op 14.9T v 14.8T prelim, Rev 58.5T v 58.0T prelim
*(CN) CHINA JULY OFFICIAL GOVT MANUFACTURING PMI: 51.2 V 51.3E (lowest since Feb)
TUES 7/31
STAN.UK Reports H1 Pretax $2.35B v $2.30Be, Adj Op Rev $7.65B v $7.69Be
CSGN.CH Reports Q2 (CHF) Net 647M v 694M y/y, adj Pretax 1.05B v 1.06Be, Rev 5.60B v 5.35Be
SAN.FR Reports Q2 Business EPS €1.25 v €1.20e, Business Net €1.56B v €1.70B y/y, Rev €8.18B v €8.38Be
BP.UK Reports Q2 Adj Net (underlying RC profit) $2.82B v $2.66Be, Total Rev $76.9B v $57.4B y/y
(JP) BOJ Gov Kuroda: Introduced forward guidance to increase commitment on price target; stronger framework aimed at hitting the 2% price target asap - post rate decision press conference
*(DE) GERMANY JULY NET UNEMPLOYMENT CHANGE: -6K V -10KE; UNEMPLOYMENT CLAIMS RATE: 5.2% V 5.2%E
*(EU) EURO ZONE Q2 ADVANCE GDP Q/Q: 0.3% V 0.4%E; Y/Y: 2.1% V 2.2%E
*(CN) US AND CHINA REPORTEDLY TO MEET TO RESTART TALKS REGARDING TRADE - press
FB (US) Facebook has identified a coordinated political influence campaign on its platform, using fake accounts and pages seeking to influence the 2018 US election - NYT
(US) Nevada reports Jun casino gaming Rev $933.0M, +4.2% y/y; Las Vegas strip Rev $523.9M, +5.4% y/y
(US) Atlanta Fed forecasts initial Q3 GDP growth at 4.7%
AAPL Reports Q3 $2.34 v $2.17e, Rev $53B v $52.4Be
BIDU Reports Q2 $3.18 v $2.63e, Rev $3.93B v $4.01Be
WEDS 8/1
(HK) Macau July Gaming Rev MOP25.3B v MOP22.5B prior, Y/Y: 10.3% v 11.5%e (3rd consecutive miss on estimates)
MT.NL Reports Q2 $1.84 v $1.30 y/y, EBITDA $3.07B v $2.85Be, Rev $20.0B v $19.9Be
BA.UK Reports H1 Underlying EPS 14.8p v 17.9p y/y, EBITA £874M v £848Me, Rev £8.82B v £8.83Be
RIO.AU Reports H1 Underlying Net $4.42B v $4.6Be; underlying EBITDA $9.2B v $9.6Be; Rev $19.9B v $21.1Be; Adds $1.0B to share buyback program
VOW3.DE Reports Q2 adj Net €3.31B v €3.10B y/y, Op €5.58B v €4.97Be, Rev €61.1B v €62.1Be
*(IN) INDIA CENTRAL BANK (RBI) RAISES REPURCHASE RATE BY 25BPS TO 6.50%; AS EXPECTED
CG To purchase 19.9% of reinsurer DSA from AIG and enter into a strategic asset management relationship with DSA Re
(US) JULY ADP EMPLOYMENT CHANGE: +219K V +186KE; Zandi sees no tariff impact "yet"
(US) Conference Board July Total online job ads 4.65M v 4.48M m/m v 4.61M y/y; New ads 1.89M v 1.90M m/m v 1.90M y/y
*(US) DOE CRUDE: +3.8M V -2ME; GASOLINE: -2.5M V -2ME; DISTILLATE: +3.0M V +0.5ME
Fidelity announces plans to reduce mutual fund fees
(TR) US reportedly readying list of economic sanctions against Turkey over detained US pastor - press
(US) Atlanta Fed raises Q3 GDP forecast to 5.0% from 4.7% prior
(US) Reportedly Trump administration will confirm taking $200B China tariffs rate up to 25% later today - press
ESRX Icahn reportedly has sizable Cigna stake and is likely to urge shareholders to vote against proposed Express Scripts takeover - press
TSLA Reports Q2 -$3.06 v -$2.76e, Rev $4.0B v $3.79Be
*(BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC TARGET RATE UNCHANGED AT 6.50%; AS EXPECTED
THUR 8/2
GLE.FR Reports Q2 adj Net €1.16B v €1.0Be, Op €1.88B v €1.29B y/y, Rev €6.45B v €6.16Be
SIE.DE Reports Q3 Net €1.21B v €1.41B y/y, Industrial Business profit €2.21B v €2.27Be, Rev €20.5B v €20.8Be; affirms FY outlook
GAM.CH Fund boards suspend dealing in unconstrained/absolute return bond funds; notes high level of redemptions
*(UK) BOE RAISES INTEREST RATES BY 25BPS TO 0.75%; AS EXPECTED (2nd hike over the past decade)
(UK) BANK OF ENGLAND (BOE) QUARTERLY INFLATION REPORT (QIR)
(UK) BOE Gov Carney:Need a modest tightening of monetary policy; reiterates that limited and gradual hike will be needed - post rate decision press conference
AAPL Tests $207.04, becomes first publicly listed US company valued at $1 trillion
FRI 8/3
ACA.FR Reports Q2 Net €1.44B v €1.02Be; Rev €8.40B v €7.94B y/y
RBS.UK Reports Q2 Net £96M v £792M y/y, adj Op £613M v £1.24B y/y, Rev £3.40B v £3.30B y/y
*(UK) JULY SERVICES PMI: 53.5 V 54.7E (24th month of expansion)
(CN) China PBoC adjusts the Reserve Requirement on FX Forwards trading from 0% (nil) to 20%
*(CN) CHINA COMMERCE MINISTRY (MOFCOM) RELEASES PROPOSED RETALIATION TO US TARIFF THREAT; to levy differentiated tariffs (import tax) on ~$60B in US goods
*(US) JULY CHANGE IN NONFARM PAYROLLS: +157K V +193KE
(CN) White House Econ Adviser Kudlow: tariff response from China today is not tit-for-tat; China should not underestimate Pres Trump on trade policy
*(US) JULY FINAL MARKIT SERVICES PMI: 56.0 V 56.2E
*(US) JULY ISM NON-MANUFACTURING COMPOSITE: 55.7 V 58.6E
(CN) China to propose 25% tariff on US LNG - press
(CN) China proposed 25% tariff list includes US copper ore and concentrate, lithium carbonate
(US) Atlanta Fed cuts Q3 GDP forecast to 4.4% from 5.0% prior
