TradeTheNews.com Weekly
Market Update: Relief rally continues, fueled by trade hopes and early earnings
reports
Sat, 19 Jan 2019 15:46 PM EST
The 2019 recovery in equity markets continued this week and upside momentum
accelerated into the long holiday weekend for the US markets. Major US indices
retook their 50-day moving averages, which has been an overhead resistance
level for months. Investors looked past the ongoing US government shutdown
which saw the vitriol between the President and top Democrats ratcheted up
considerably. Choosing instead to focus on reports that US and Chinese
officials were exploring new avenues that could ultimately lead to some sort of
trade détente. Earnings season commenced in earnest and initial trading has
suggested the heavy discounting seen in equity valuations late last year may
have already priced in slower earnings growth and rising uncertainties facing
corporations in 2019. Oil prices continued to recoup a portion of their Q4
losses, showing particular strength late in the week. Dr copper rose back above
its 50-day moving average for the first time since early December. Both
commodities were helped by the improving narrative around US/China trade as
well as growing speculation Chinese officials will provide further fiscal, and
perhaps monetary policy stimulus to stem weakening growth. For the week, the
S&P rose 2.9%, the DJIA added 3%, and the Nasdaq gained 2.7%.
This week in corporate news, major banking names reported earnings, with all
firms noting sharp reductions in their bond-trading revenues. Morgan Stanley
bore the brunt of the drop, as its fixed-income division posted its worst
quarterly results in three years. Bank of America reported beats on both top
and bottom line, while Goldman saw solid gains in its investing and lending
unit. Netflix shares lost a little ground after reporting a Q4 miss on its
revenue, but the company noted solid subscriber growth numbers ahead of an
anticipated price increase this year. Miner Newmont scooped up its smaller
rival Goldcorp in a $10B deal that would form the world’s largest gold
producer. Fiserv announced it would acquire First Data in a $22B all-stock deal
in one of the largest acquisitions ever in the fintech sector. PG&E filed
notice for bankruptcy protection as it potentially faces over $30B in wildfire
damage liabilities, though holder Blue Mountain argued the filing decision was
too hasty. Tesla announced it would reduce its full-time staff by 7% in order
to cut costs to produce the Model 3 more inexpensively.
SUNDAY 1/13
*(CN) CHINA 2018 TRADE BALANCE: $351.8B v $422.5B y/y
*(CN) CHINA DEC TRADE BALANCE: $57.1B V $51.6BE (largest surplus since 2015)
*(CN) CHINA DEC TRADE BALANCE (CNY-TERMS) 394.9B V 345.0BE
MONDAY 1/14
(CN) China Dec vehicle sales y/y: -13% v -13.9% prior; 2018 vehicle sales -2.8%
y/y (1st annual drop since 1990) - Industry Association CAAM
GG To combine with Newmont in all-stock deal valued at $10B
PCG Confirms to file for Chapter 11 bankruptcy
C Reports Q4 $1.61 v $1.55e, Rev $17.1B v $17.5Be
TUESDAY 1/15
(IT) Italy Debt Agency (Tesoro) opens book to sell EUR-denominated Mar 2035 BTP
bonds via syndicate; guidance seen +20-22bps to mid-swaps
JPM Reports Q4 $1.98 v $2.20e, Managed Rev $26.8B v $26.7Be
DAL Reports Q4 $1.30 v $1.27e, Rev $10.7B v $10.8Be
*(US) JAN EMPIRE MANUFACTURING: 3.9 V 10.0E (Lowest since May 2017)
*(US) DEC PPI FINAL DEMAND M/M: -0.2% V -0.1%E; Y/Y: 2.5% V 2.5%E
NFLX Reportedly raising its prices in the US by 13-18% for 58M subscribers -
press
(US) Sen Grassley (R-IA): US Trade Rep Lighthizer told me he saw little
progress in last week's talks with China on structural issues and IP
protections
WEDNESDAY 1/16
(TR) TURKEY CENTRAL BANK (CBRT) LEAVES ONE-WEEK REPO RATE UNCHANGED AT 24.00%;
AS EXPECTED
F Reports prelim Q4 $0.30 v $0.33e, FY18 $1.30 v $1.35e, Rev $160.3B; CFO sees
potential for improving metrics in 2019 - DB auto conf
BAC Reports Q4 $0.70 v $0.63e, Rev $22.7B v $22.2Be
FDC To combine with Fiserv for ~$22.74/shr in all stock transaction valued at
$22B (0.303 shares per share)
GS Reports Q4 $6.04 v $5.37e, Rev $8.08B v $7.90Be
(US) JAN NAHB HOUSING MARKET INDEX: 58 V 56E
*(US) DOE CRUDE: -2.7M V -2ME; GASOLINE: +7.5M V +2.5ME; DISTILLATE: +3M V +1ME
(US) Atlanta Fed maintains Q4 GDP forecast at 2.8%
(UK) EU officials reportedly considering plans to delay Brexit until 2020 after
Germany and France have indicated willingness to extend talks - UK's Times
*(US) FEDERAL RESERVE BEIGE BOOK: ECONOMIC ACTIVITY EXPANDED IN MOST OF THE US,
WITH 8 OF 12 DISTRICTS REPORTING MODEST TO MODERATE GROWTH
*(UK) PM MAY SURVIVES 'NO-CONFIDENCE' VOTE IN PARLIAMENT (as expected); Vote
325 for May and 306 against
(US) Association of American Railroads weekly rail traffic report for week
ending Jan 12th: 555.1K, +8.4% y/y
CSX Reports Q4 $1.01 v $1.01e, Rev $3.14B v $3.13Be; authorizes $5B share
buyback (9% of market cap)
AA Reports Q4 $0.66 v $0.32e, Rev $3.34B v $3.35Be
AAPL Reportedly planning to reducing hiring in some divisions (unclear which
yet) as iPhone sales slow - press citing his meeting with employees
THURSDAY 1/17
2330.TW Reports Q4 (NT$) Net 99.9B v 99.1Be; Op 107.1B v 108Be; Rev 289.8B,
+4.4% y/y
GLE.FR Announces Q4 performance impacted by disposals and a challenging
environment in global capital markets
(HK) Jiayuan International [2768.HK] has declined by over 70%; US dollar
denominated (USD) bonds due 2020 trade at record low
*(EU) EURO ZONE DEC FINAL CPI Y/Y: 1.6% V 1.6%E; CPI CORE Y/Y: 1.0% V 1.0%E
(Headline CPI back below the ECB target for 1st time in 7 months)
*(US) JAN PHILADELPHIA FED BUSINESS OUTLOOK: 17.0 V 9.5E
(CN) Treasury Sec Mnuchin said to support lifting China trade tariffs to break
stalemate and calm markets, but Trade Rep Lighthizer is pushing back against
easing tariffs - press
NFLX Reports Q4 $0.30 v $0.24e, Rev $4.19B v $4.21Be
RIO.AU Reports Q4 Pilbara Iron Ore production 86.6 Mt, -1% y/y; Shipments 87.4
Mt v Mte v 90.0Mt y/y
(HK) Jiayuan International [2768.HK] rebounds over 30% on today's session amid
report of note repayment; Sunshine 100 [2608.HK] rises over 39%
(US) US President Trump said to have told his attorney Cohen to lie to Congress
about Moscow tower project - Buzzfeed
FRIDAY 1/18
TSLA Reports prelim Q4 GAAP profit lower q/q; To cut full time positions by 7%
along with a production increase aimed at getting Model 3 starting price to
$35K - Tesla blog
*(UK) DEC RETAIL SALES (EX AUTO/FUEL) M/M: -1.3% V -0.8%E; Y/Y: 2.6% V 3.8%E
TIF Reports Holiday SSS -2% (two months ended Dec 31st)
SLB Reports Q4 $0.36 v $0.36e, Rev $8.18B v $8.06Be
STT Reports Q4 $1.68 v $1.71e, Rev $2.99B v $2.98Be; Initiated new $350M
Expense Savings Program; Cuts senior management stuff by 1.5K positions (15% of
total)
*(US) DEC INDUSTRIAL PRODUCTION M/M: 0.3% V 0.2%E; CAPACITY UTILIZATION: 78.7%
V 78.5%E
*(US) JAN PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 90.7 V 96.8E (lowest
since Oct 2016)
(CN) China reportedly offered a 6-year $1T import boost at Jan talks in order
to eliminate US trade imbalances; US trade officials said to be skeptical
