Sunday, September 9, 2018

Tech slides amid concerns over tariffs and regulation, dampening another strong jobs report Weekly Market Update: Tech slides amid concerns over tariffs and regulation, dampening another strong jobs report
Fri, 07 Sep 2018 16:08 PM EST

Trading resumed with indices under modest pressure due to lingering uncertainty surrounding trade and continued volatility in emerging market FX. Tuesday saw US August ISM manufacturing data come in at the strongest level in more than a decade. NASDAQ volumes picked up notably mid-week, boosted by intensifying selling pressure in large cap tech. Sharp reversals in several high beta tech groups that surged so aggressively in recent weeks saw reversals coinciding with social media executives being grilled on Capitol Hill. Oil prices moved up ahead of Tropical Storm Gordons landfall in the Gulf and then edged lower.

Investors continued to await a decision by the Trump administration on potentially moving ahead with tariffs on an additional $200B in Chinese products along with some kind resolution to the Canada NAFTA negotiations. Simultaneously, the President was forced to deal with another barrage of press reports indicating his leadership style continues to create anxiety in the West Wing. Friday saw the August payrolls report top estimates while wages grew at 2.9% y/y. That wage figure matched the January 2018 reading which sparked a move higher in rates and a spike in volatility earlier this year. Rates moved up again with Treasury yields lifting to the highest level in about a month, but the overall stock market reaction appeared subdued. The Dollar also firmed except against the Pound. Cable gained on multiple reports of potential thawing around some key Brexit negotiating themes. For the week, the S&P fell 1%, the DJIA slipped 0.2%, and the Nasdaq tumbled 2.6%, suffering its biggest weekly decline since late March.

In corporate news, top tech executives were in the hot seat this week. Twitter’s CEO Dorsey and Facebook’s COO Sandberg were called before Congress to discuss privacy and censorship issues. Tesla shares dropped as much as 10% on Friday in response to video of CEO Musk smoking pot during a podcast interview, followed closely by the resignation of his Chief Accounting Officer. Costco kept the positive news for retailers going with a report of an 8% surge in August same store sales.

MON 9/3

TUES 9/4
*(ZA) SOUTH AFRICA Q2 GDP ANNUALIZED Q/Q: -0.7% V +0.6%E; Y/Y: 0.4% V 1.0%E (moves into recession for 1st time since 2009)
*(US) AUG FINAL MARKIT MANUFACTURING PMI: 54.7 V 54.5E (lowest since Nov 2017)
AMZN Tests $2,050.27, becomes second publicly listed US company valued at $1 trillion

WED 9/5
BAYN.DE Reports Q2 adj €1.54 v €1.64e, adj EBITDA €2.34B v €2.45Be, Rev €9.5B v €9.3Be; Completes Monsanto acquistion
*(UK) AUG SERVICES PMI: 54.3 V 53.9E (25th month of expansion)
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATE UNCHANGED AT 1.50%; AS EXPECTED; Recent data reinforced view that higher rates would be warranted
(US) Conference Board Aug Total online job ads 4.61M v 4.65M m/m v 4.52M y/y; New ads 1.74M v 1.89M m/m v 1.90M y/y
(US) Dept of Justice to convene meeting to discuss 'growing concern' that social media companies are stifling the exchange of ideas and may be hurting competition - press
(KR) South Korea Official: North and South Korea to hold summit on Sept 18-20 in North Korea; said North Korea leader Kim said he wanted to realize denuclearization during US President Trump's first term, noted he no longer intends to test long-range missile

THRS 9/6
*(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT -0.50; AS EXPECTED (pushes back 1st potential rate hike to Dec or Feb)
*(US) DOE CRUDE: -4.3M V -2ME; GASOLINE: +1.8M V -1ME; DISTILLATE: +3.1M V +0.5ME
(JP) Pres Trump reportedly hinted in press interview that trade fight with Japan may be next on agenda - CNBC
COST Reports August SSS (ex gas) +8.0%, US SSS (ex gas) +8.9%

FRI 9/7
*(EU) EURO ZONE Q2 FINAL GDP Q/Q: 0.4% V 0.4%E; Y/Y: 2.1% V 2.2%E
(UK) EU's Barnier said to be open to other backstops for Irish border and simplify checks- Transcript release by UK govt of Sept 3rd meeting
TSLA Chief Accounting Officer Morton resigns, effective immediately (resigns after one month in the job)