TradeTheNews.com Weekly
Market Update: Fed Chair Spooks Already Fragile Markets Fearing a Slowdown
Fri, 21 Dec 2018 16:06 PM EST
The quarter and year drew mercifully towards a close in what was another
bruising week for investors. Concerns surrounding global growth heading into
2019 lingered amid heightened speculation on just how much the US Fed would
incorporate those worries into their rate policy statement on Wednesday.
Another string of weak economic readings, particularly in core Europe and
China, along with some deceleration evident in the US economy only exacerbated
that trepidation and manifested itself in downward moves for global equities
and commodities, most notably continued pressure on crude oil prices.
Wednesday’s FOMC statement failed to meet mounting dovish expectations and
Chairman Powell’s press conference delivery further underwhelmed those same
investors. The Chairman emphasized the Fed would remain data dependent into
2019 and at this point most FOMC members now forecast two hikes next year
rather than three given the strength of the US economy. Dovish tweaks to the
statement language and the press conference itself did nothing to change
sentiment and investors resumed selling stocks. US indices plumbed through the
February lows, the NASDAQ officially fell into bear market territory, and the
Transports careened lower, further worrying Dow theorists. Dysfunction in
Washington DC didn’t help either as the President and Congress veered towards a
government shutdown as the two sides fought over funding for the Mexico border
wall. Gold prices rose above the 200 day moving average and the VIX jumped
above 30 for the first time since February. The S&P500 had its worst week
since 2011, falling 7.1% and the Russell 2000 was down 8.2%. The DJIA and
Nasdaq had their worst week since 2008, plunging 6.9% and 8.4%, respectively.
In corporate news this week, Nike jumped after reporting results, noting strong
online growth and rising women’s sportswear apparel sales. FedEx crystalized
concerns about international growth and shares came under pressure after
slashing its forecast, saying its international business had weakened as global
trade decelerates. Pfizer and Glaxo announced they would combine their consumer
businesses, creating an over-the-counter-drug monolith. Qualcomm won a ruling
against Apple in a Munich Court that would ban the sale of some iPhone models
in Germany — this coming after a judge had granted preliminary injunctions
against Apple in China last week. Jack in the Box announced it was exploring
strategic alternatives and has spoken with potential buyers, though no
timelines for a deal are known. The Malaysian government lodged criminal
charges against Goldman Sachs and said it would seek $7.5B in damages from the
American bank over allegedly fraudulent dealings with the state development
fund 1MDB.
MONDAY 12/17
*(US) DEC EMPIRE MANUFACTURING: 10.9 V 20.0E (lowest since May 2017)
*(US) DEC NAHB HOUSING MARKET INDEX: 56 V 60E
WTI crude futures settle at $49.88/bbl, settling below $50 for the first time
since Oct 2017
ORCL Reports Q2 $0.80 v $0.78e, Rev $9.56B v $9.53Be
JNJ Announces $5B share repurchase program (1% of market cap); affirms FY18
$8.13-8.18 v $8.16e, Rev $81-81.4B v $81.3Be
TUESDAY 12/18
*(DE) GERMANY DEC IFO BUSINESS CLIMATE: 101.0 V 101.7E; CURRENT ASSESSMENT:
104.7 V 105.0E
(SA) Saudi Arabia 2019 budget: Forecasts 2019 GDP growth at 2.6% vs. 2.3% this
year - financial press
*(US) NOV HOUSING STARTS: 1.26M V 1.228ME; BUILDING PERMITS: 1.33M V 1.260ME
MU Reports Q1 $2.97 v $2.93e, Rev $7.91B v $8.03Be
FDX Reports Q2 $4.03 v $4.06e, Rev $17.8B v $17.7Be; initiates voluntary
employee buyout program
WEDNESDAY 12/19
GSK.UK Reached agreement with Pfizer Inc to combine their consumer health
businesses into a new world-leading JV (Pfizer to receive 32% equity stake of
JV)
(TH) THAILAND CENTRAL BANK (BOT) RAISES BENCHMARK INTEREST RATE BY 25BPS TO
1.75%; AS EXPECTED
(SA) Saudi Oil Min Al-Falih: Current oil price not reflected in fundamentals;
will achieve oil market balance in 2019
(US) DOE CRUDE: -0.5M V -3ME; GASOLINE: +1.8M V +1ME; DISTILLATE: -4.2M V
+0.5ME
(US) Association of American Railroads weekly rail traffic report for week
ending Dec 15th: 569K, +3.9% y/y
*(US) FOMC RAISES TARGET RANGE BY 25BPS TO 2.25-2.50%; AS EXPECTED
*(US) FOMC SUMMARY OF ECONOMIC PROJECTIONS (DEC) FOR SEPT MEETING (V. SEPT)
*(US) Fed Chair Powell: inflation has come in a touch lower than we expected,
gives FOMC the ability to be patient going forward - Q&A FOMC press conf
THURSDAY 12/20
(ID) INDONESIA CENTRAL BANK (BI) LEAVES 7-DAY REVERSE REPO UNCHANGED AT 6.00%;
AS EXPECTED
(SE) SWEDEN CENTRAL BANK (RIKSBANK) RAISES REPO RATE BY 25BPS TO -0.25%; NOT
EXPECTED
(UK) NOV RETAIL SALES (EX AUTO/FUEL) M/M: 1.2% V 0.2%E; Y/Y: 3.8% V 2.3%E
(UK) BANK OF ENGLAND (BOE) DEC MINUTES: Voted 9-0 to leave Interest rates
unchanged
QCOM Wins injunction against Apple in Munich Court; Can ban the sale of some
iPhone models in Germany - press
(US) DEC PHILADELPHIA FED BUSINESS OUTLOOK: 9.4 V 15.0E
(CN) Reportedly US and over a dozen allies plan to openly accuse China about
its economic espionage activities - Washington Post
(SA) Saudi Arabia reportedly to cut production more than initially expected as
part of OPEC agreement; to cut 3% of collective output from 2.5% initially
announced - press
Nasdaq Composite now 20% off record high set in Aug, entering a bear market
NKE Reports Q2 $0.52 v $0.45e, Rev $9.37B v $9.16Be
(US) Pres Trump in tweet announces Defense Sec Mattis will be retiring at end
of Feb; replacement to be named 'shortly'
FRIDAY 12/21
(CN) China State Council guideline on implementing Central Economic Work
Conference Report: Reiterates to enact a proactive fiscal policy; modifies its
monetary policy stance to neutral for 2019 - financial press
(UK) Q3 FINAL GDP Q/Q: 0.6% V 0.6%E; Y/Y: 1.5% V 1.5%E
(US) US President Trump Tweets: Senator Mitch McConnell should fight for the
Wall and Border Security as hard as he fought for anything. He will need
Democrat votes, but as shown in the House, good things happen. If enough Dems
don’t vote, it will be a Democrat Shutdown! House Republicans were great yesterday!
*(US) Q3 FINAL GDP ANNUALIZED Q/Q: 3.4% V 3.5%E; PERSONAL CONSUMPTION: 3.5% V
3.6%E
*(US) NOV PRELIMINARY DURABLE GOODS ORDERS: 0.8% V 1.6%E; DURABLES
EX-TRANSPORTATION: -0.3% V +0.3%E
*(US) NOV PERSONAL INCOME: 0.2% V 0.3%E; PERSONAL SPENDING: 0.4% V 0.3%E
(US) Fed's Williams (moderate, voter): the important message is that the
economy is very strong; listening to markets closely - CNBC interview
(US) Pres Trump: chances are pretty good there will be a shutdown; totally
prepared for a very long shutdown
