TradeTheNews.com Weekly
Market Update: Downside Risks Continue to Overshadow More Dovish Central Banks
Fri, 14 Dec 2018 16:19 PM EST
It was another eventful week, particularly for equity traders, as significant
intra-day swings were prevalent throughout most of the week’s trading sessions.
Ultimately global growth worries overshadowed a better tone on the trade front
and another dovish turn by a major Central Bank. The S&P slipped through
the October low for the first time on Monday after UK Prime Minister May pulled
the Brexit vote and a Chinese court ordered an immediate ban on import and sale
of certain iPhone models. Midweek saw stock futures trade up sharply before the
opening bell, spurred by reports suggesting US/China trade talks were beginning
to get traction in right direction. President Trump even went as far as to say
he could consider intervening into the Huawei CFO saga as part of a broader
trade deal with China. The positive effects were short lived though, as each
day selling pressure returned and indices retraced much of the pre-market gains
by days end. By Friday, a Chinese announcement that it would temporary ease
auto tariffs had almost no beneficial effect on markets.
Wednesday evening UK PM May narrowly survived her party’s confidence vote, but
it provided little clarity on Brexit, as she sought “assurances” from Brussels
on the backstop plan. Thursday the ECB met and, as expected, confirmed the end
of QE while outlining an indefinite reinvestment process. ECB President Draghi
also acknowledged a slight downgrade to growth prospects, suggesting that any
rate hikes remain uncertain and are likely a ways away. The Dovish tilt had
diminishing effects on investor sentiment just as the Fed’s walk back for 2019
rates did last month. By Friday, stock markets were rolling over once again as
global data continued to deteriorate and flash warning signs. Core EU PMI
figures missed expectations, highlighted by the French manufacturing reading
falling into contraction territory. Italy and EU crawled towards some kind of
agreement on the 2019 budget as speculation grew in a host of EU capitals
elections might not be that far off. China retail sales figures grew at the
slowest pace since 2003 and the US President kept up the pressure suggesting
the weakening Chinese economy was the direct result of US tariffs and that it
could ultimately push China into a comprehensive deal. Global growth/risk
barometers remained at warning levels. WTI crude stayed heavy holding just
above $50/bbl, the US 10-year yield still has a 2.8% handle and the Dollar
index surpassed the November high, briefly touching the highest level in more
than a year. Interestingly, the Russel 2000 continued to underperform despite
US economic data that continues to outperform on a relative basis. In another
volatile week of trading, the S&P fell 1.25%, the DJIA lost 1.2%, and the
Nasdaq dropped 0.8%.
In corporate news this week, e-commerce platform Travelport was taken private
by Siris Capital in a $4B deal following efforts by activist Elliott Management
to push for strategic alternatives. Apple announced it would update its iOS 12
software to circumvent a ban in China of certain iPhone models after Qualcomm
won a patent infringement case. GoPro said it planned to move US-bound camera
production out of China due to tariff concerns. Costco shares dropped on weaker
than expected earnings and lower gross margins y/y. Reports indicated that the
German government had intensified its planning for a possible merger between
the troubled Deutsche Bank and Commerzbank. On Friday, Johnson & Johnson
shares plunged after a Reuters investigation found evidence that the company
may have known about asbestos contamination in its baby powder for decades and
failed to inform the FDA.
MONDAY 12/10
*(EU) EURO ZONE DEC SENTIX INVESTOR CONFIDENCE: -0.3 V +8.3E (lowest since Dec
2014)
TVPT Confirms to be acquired by affiliates of Siris Capital Group, LLC and
Evergreen Coast Capital for $15.75/shr in cash valued at $4.4B
*(UK) PM MAY SAID TO CANCEL PLANNED TUESDAY'S MEANINGFUL VOTE IN PARLIAMENT -
financial press
(IN) India Central Bank (RBI) Gov Patel steps down citing personal reasons;
effective immediately - financial press
QCOM Court orders immediate ban on import, sale, offers for sale of Iphone 7,
Iphone 8 plus, Iphone 8, Iphone 8 plus and Iphone X in China
*(US) OCT JOLTS JOB OPENINGS: 7.079M V 7.100ME
(UK) PM May: confirms she will delay Parliamentary meaningful vote on Brexit;
there is broad support for aspects of the deal, the Backstop is creating
concerns
TUESDAY 12/11
(UK) NOV JOBLESS CLAIMS CHANGE: +21.9K V +23.2K PRIOR; CLAIMANT COUNT RATE:
2.8% V 2.7% PRIOR
(UK) Oct Average Weekly Earnings 3M/Y: 3.3% v 3.0%e; Weekly Earnings (ex Bonus)
3M/Y: 3.3% v 3.2%e
(DE) GERMANY DEC ZEW CURRENT SITUATION SURVEY: 45.3 V 55.0E; EXPECTATIONS
SURVEY: -17.5 V -25.0E
(CN) Reportedly China is signaling it could cut tariffs on U.S. cars - press
(US) NOV PPI FINAL DEMAND M/M: 0.1% V 0.0%E; Y/Y: 2.5% V 2.5%E
(UK) Senior govt source: expect confidence vote on PM May imminently; threshold
of 48 letters has been reached to trigger a vote - Buzzfeed
(US) President Trump: Release of Huawei CFO Meng could be part of broader trade
deal with China, could intervene in the Huawei case if it aids China trade
deal; Would be 'foolish' for US Fed to raise rates at next week's meeting (Dec
18-19th)
WEDNESDAY 12/12
CSGN.CH Affirms FY19 RoTE 10-11%; To buy back shares of up to CHF3B in 2019,
2020 (17.5% of market cap); on track to complete 3-yr restructuring - Investor
Day
(UK) LEADERSHIP CONTEST SAID TO HAVE BEEN TRIGGERED - press
(IT) Italy Govt said to propose 2.0% budget deficit to GDP target in revised
2019 budget - financial press
(CN) China reportedly preparing to replace "Made in China 2025" plan;
revised plan would downplay China's efforts to expand its manufacturing
dominance - press
*(US) DOE CRUDE: -1.2M V -3ME; GASOLINE: +2.1M V +2ME; DISTILLATE: -1.5M V
+1.5ME
(IT) Italy PM Conte: New budget deficit proposal of 2.04% in 2019 does not
betray Italians
*(UK) PM MAY SURVIVES THE CONSERVATIVE PART CONFIDENCE VOTE (as expected)
THURSDAY 12/13
*(PH) PHILIPPINES CENTRAL BANK (BSP) LEAVES OVERNIGHT BORROWING RATE UNCHANGED
AT 4.75%; AS EXPECTED
AAPL Said to build new $1B campus in Austin; establish new sites and add jobs
across the US - press
*(CH) SNB LEAVES SIGHT DEPOSIT RATE UNCHANGED AT -0.75%; AS EXPECTED
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.75%; AS
EXPECTED
(TR) TURKEY CENTRAL BANK (CBRT) LEAVES 1-WEEK REPO RATE AT 24.00%; AS EXPECTED
(EU) ECB’s Draghi: Reaffirms guidance on rates; confirms reinvestment on QE
program; reiterates that significant monetary stimulus still needed - Prepared
remarks
(EU) ECB sources: Policymakers debated modifying the balance of risk assessment
to highlight downside risks - press
COST Reports Q1 $1.73 v $1.62e, Rev $35.1B v $34.6Be
*(JP) JAPAN Q4 TANKAN LARGE MANUFACTURING INDEX: 19 V 18E; OUTLOOK: 15 V 17E
(weakens for first time in 3 quarters); LARGE ALL INDUSTRY CAPEX: 14.3% V
12.8%E
*(CN) CHINA NOV INDUSTRIAL PRODUCTION Y/Y: 5.4% V 5.9%E (matches slowest growth
rate since early 2016)
*(CN) CHINA NOV RETAIL SALES Y/Y: 8.1% V 8.8%E (slowest growth since 2003)
(CN) China National Bureau of Statistics (NBS) Official: Nov industrial
production was impacted by the auto and electronics sectors; China 2019
economic growth target should reflect goal of doubling GDP by 2020 from 2010
AAPL China Unit: To publish iPhone software update early next week to resolve
any possible concerns about compliance with court order
FRIDAY 12/14
(US) Lipper: US-based money market funds had inflows of $81B in most recent
weekly period (largest inflows since the early 1990s), US-based stock funds had
$46.0B in outflows (largest since the early 1990s) - US financial press
(FR) FRANCE DEC PRELIMINARY MANUFACTURING PMI: 49.7 V 50.7E (1st contraction in
27 months, lowest since Sept 2016)
*(DE) GERMANY DEC PRELIMINARY MANUFACTURING PMI: 51.5 V 51.7E (48th month of
expansion but lowest since Mar 2016)
(EU) EURO ZONE DEC PRELIMINARY MANUFACTURING PMI: 51.4 V 51.8E (66th month of
expansion but lowest since Feb 2016)
(US) Nov Industrial Production M/M: 0.6% v 0.3%e; Capacity Utilization: 78.5% v
78.6%e
JNJ Reportedly J&J was aware of asbestos issues for years regarding talc
baby powder and failed to tell FDA – press
*(US) DEC PRELIMINARY MARKIT MANUFACTURING PMI: 53.9 V 55.0E (lowest since Nov
2017)
