TradeTheNews.com Weekly
Market Update: Fed’s Powell “put” the market at ease amid G20 trade discussions
Fri, 30 Nov 2018 16:05 PM EST
Investors had a host of issues to chew on this week, but ultimately the Fed
Chairman’s speech on Wednesday moved the needle ahead of the weekend G20
meeting. Powell softened his comments on the whereabouts of the ‘neutral’ rate
from Oct 3rd that many believed was a major catalyst for the recent US stock
market correction. By acknowledging rates were “just below” the range that most
Fed members viewed as neutral he appeared to offer investors an early Christmas
gift by leaving the door open to backing away from some or even all of the
Fed’s projected 2019 rate hikes. The economic numbers largely supported the
dovish tilt as US data softened, oil prices plunged further, key inflation
readings stayed subdued, and overseas growth signals remained worrisome.
Risk assets held the post-Powell gains heading into the G20 meeting on Friday.
Expectations grew for the Xi/Trump summit as even some of the White House’s
most ardent China hawks suggested something was likely to come of the meeting.
Market expectations seemed to coalesce around the notion the two sides could
zero in on a deal to de-escalate the trade dispute, involving the US delaying
implementation of further tariffs in return for China policy modifications on
farm and energy product restrictions. US Treasury yields fell and the curve
flattened, rekindling fears of a potential curve inversion when the 2-year and
5-year yields converged to within a few basis points on Friday. For the week,
the S&500 gained 4.8%, the DJIA rose 5.1%, and the Nasdaq added 5.6%.
GM’s announcement of a major restructuring headlined the corporate news this
week. Citing shifting consumer tastes in automobiles, GM announced it would
cease operations at three plants in the US and Canada and cut thousands of jobs
with the expectation of saving billions of dollars in costs and capex. The US
and Canada governments expressed displeasure at the move and President Trump
said he would look at clawing back GM subsidies and bailout costs. United
Technologies completed its acquisition of Rockwell Collins and confirmed the
next step in its plans, splitting the conglomerate into three more focused
entities. In a reversal from the consumer optimism surrounding the Black Friday
weekend, Tiffany shook high end retailers with a subpar earnings report and a
cut to its same store sales guidance for the fiscal year. Meanwhile, Salesforce
reinvigorated trading in tech growth names with an impressive Q3 report. The
week closed out with a report of a database breach at Marriott that may have
exposed the personal information of half a billion customers over the last 4
years, sending the hotel’s shares down more than five percent.
MONDAY 11/26
(IT) Italy ruling coalition said to be discussing lowering 2019 budget deficit
to GDP target from 2.4% to 2.0-2.1% - press
*(DE) GERMANY NOV IFO BUSINESS CLIMATE: 102.0 V 102.3E; CURRENT ASSESSMENT:
105.4 V 105.3E
GM Reportedly to cut car production in North America, will stop building some
car models; to announce significant job cuts in N.A. among salaried and
executive workers - press
GM Confirms accelerates transformation; cuts production from 5 plants; to take
charge of $3.0-3.8B
(US) NOV DALLAS FED MANUFACTURING ACTIVITY: 17.6 V 24.5E
(US) Pres Trump: not happy with GM's decision to cut auto production; expects
GM will put something else in Ohio; the country has done a lot for GM
UTX Confirms to Separate Into Three Independent Companies; Completes
Acquisition of Rockwell Collins; affirms dividend of $0.735 post split; Cuts
FY18 $7.10-7.20 v $7.27e (prior $7.20-7.30); Raises Rev $64.5-65.0B v $64.8Be
(prior $64.0-64.5B); Affirms organic Rev ~+6%
TUESDAY 11/27
(US) Fed Vice Chair Clarida (moderate, voter): Gradual rate hikes appropriate
as data shows way to neutral policy
(US) Nevada reports Oct casino gaming Rev $1.06B, +7.5% y/y; Las Vegas strip
Rev $593.4M, +12.2% y/y
(EU) Reportedly US President Trump to impose 25% tax on European carmakers next
week after G20 meeting - German press
*(US) NOV CONSUMER CONFIDENCE: 135.7 V 135.9E
GM Pres Trump expresses disappointment in GM, says he is studying cutting all
GM subsidies, including for electric cars
CRM Reports Q3 $0.61** v $0.50e, Rev $3.39B v $3.37Be
GSK Unilever reportedly in exclusive talks to acquire nutrition unit from
GlaxoSmithKline including Horlicks drink brand - FT
(CN) China Ambassador to US Cui: doesn't believe anyone in Beijing is thinking
seriously about pulling back from US Treasury debt market if trade disputes
worsen
WEDNESDAY 11/28
TIF Reports Q3 $0.77 v $0.76e, Rev $1.01B v $1.05Be
(US) Q3 PRELIMINARY GDP ANNUALIZED Q/Q: 3.5% V 3.5%E; PERSONAL CONSUMPTION:
3.6% V 3.9%E
(US) NOV RICHMOND FED MANUFACTURING INDEX: 14 V 15E
*(US) OCT NEW HOME SALES: 544K V 575KE
(US) Fed Financial Stability Report: large US banks are strongly capitalized;
business debt high relative to GDP
*(US) DOE CRUDE: +3.6M V +0.5ME; GASOLINE: -0.8M V 0ME; DISTILLATE: +2.6M V
-0.5ME
(US) FED'S POWELL: POLICY RATE IS 'JUST BELOW' ESTIMATES OF NEUTRAL; GREAT
DEAL TO LIKE ABOUT THE US ECONOMY - PREPARED REMARKS AT NY ECONOMIC CLUB
(US) Association of American Railroads weekly rail traffic report for week
ending Nov 24th: 470.9K, +3% y/y
(CN) US Trade Rep Lighthizer: China has yet to offer meaningful proposals;
Chinese policies on auto tariffs are egregious
THURSDAY 11/29
(IT) Italy PM Conte said to be seeking to cut budget deficit target to 2.2%;
'optimistic' country could avoid Excessive Debt Procedure - Stampa
(DE) GERMANY NOV UNEMPLOYMENT CHANGE: -16K V -10KE; UNEMPLOYMENT CLAIMS RATE:
5.0% V 5.1%E (fresh post German reunification record low)
(EU) EURO ZONE NOV BUSINESS CLIMATE INDICATOR: 1.09 V 0.96E; CONSUMER
CONFIDENCE: -3.9 V -3.9E
WTI crude trades below $50 mark for first time in more than 1-year
(US) OCT PERSONAL INCOME: 0.5% V 0.4%E; PERSONAL SPENDING: 0.6% V 0.4%E
(US) Former Pres Trump attorney Michael Cohen to plead guilty to making false
statements to congressional committees investigating Russian collusion - ABC
News
(US) Atlanta Fed raises Q4 GDP forecast to 2.6% from 2.5% prior
(CN) US and China reportedly considering deal to de-escalate trade disputes;
likely would focus on delaying US tariffs in return for China policy
modifications on farm and energy product restrictions - press
(US) FOMC MINUTES FROM NOV 8TH MEETING: ALMOST ALL SEE ANOTHER RATE INCREASE
WARRANTED 'FAIRLY SOON'; FUTURE POLICY STATEMENTS TO EMPHASIZE IMPORTANCE OF
INCOMING DATA
(CN) CHINA NOV MANUFACTURING PMI: 50.0 V 50.2E (lowest since July 2016);
NON-MANUFACTURING: 53.4 V 53.8E
(CN) China Finance Ministry (MOF): Confirms to adjust cross-border e-commerce
import tax from 2019; to raise the annual cross border quota for individuals to
CNY26K from CNY20K, effective Jan 1st 2019
FRIDAY 11/30
(EU) EURO ZONE NOV ADVANCE CPI ESTIMATE Y/Y: 2.0% V 2.0%E; CPI CORE Y/Y: 1.0% V
1.1%E
MAR Announces Starwood guest reservation database security incident involving
500M guests
(CN) China Director of International Affairs Wang Xiaolong: the points of
consensus between the US and China are rising, though some areas of
disagreement remain as trade talks continue - press
