TradeTheNews.com Weekly
Market Update: Risk-on rally resumes on technical strength and progress in
China trade talks
Fri, 15 Feb 2019 16:08 PM EST
This week’s trading was predominately focused on headlines out of Beijing.
Investor sentiment was buoyed by apparent progress made in trade talks
culminating in positive overtures from both President Trump and President Xi.
Enough progress was achieved to extend talks into next week with
representatives scheduled to meet in Washington D.C. Separately, President
Trump ultimately signed on to a border funding agreement hashed out on Capitol
Hill, avoiding another shutdown, but he also declared a national emergency
pledging to come up with roughly $8B in wall funding from various government
resources. Earnings season chugged along into the latter innings and overall
managements remained reluctant to go out on a limb in terms of FY19 forecasts
given macro uncertainties.
Treasury yields moved up during the first few trading sessions with the
positive trade vibes largely propelling risk-on flows out of bonds, only to
come under some modest pressure after a very poor, delayed December US retail
sales report. The largest monthly drop in that series going back to late 2009
resulted in economists substantially downgrading GDP forecasts. Overseas
economic data stayed generally squishy with the relative weakness allowing the
US dollar to firm up. The Dollar Index drifted up to retest the 97 mark and the
S&P climbed back above its 200-day moving average. WTI crude futures moved
up to the mid $50s area with both the Saudis and Russians jawboning prices by
alluding to the potential of a more formal OPEC+ production arrangement in the
future. For the week, the S&P gained 2.5%, the DJIA added 3.1%, and the
Nasdaq rose 2.4%.
In corporate news this week, Coca-Cola shares experienced their worse day in a
decade after the company guided slowing organic revenue and flat comparable
earnings in the coming year, affected by FX headwinds and structural items.
Investors reacted positively after Nvidia's FY forecasts came in better than
expected. Newell Brands’ outlook disappointed the market again, as the consumer
goods firm pointed to tariffs, commodity inflation, and FX volatility as
particular hurdles. EA surged after it announced its new ‘Apex Legends’
free-to-play game surpassed 25M users, growing faster than rival game Fortnite.
Toy makers Mattel and Hasbro saw shares slide sharply on Friday as they both
gave strategy updates that indicated they continue to struggle in the post-Toys
R Us world. Mortgage software developer Ellie Mae agreed to be acquired by PE
firm Thoma Bravo for $99/share in a $3.7B all-cash deal.
SUNDAY 2/10
(CN) China Minsheng Investment halts trading of bonds, volatility cited as 2020
CNY bonds traded near record low – US financial press
TUESDAY 2/12
TKA.DE Reports Q1 Net €136M v €81M y/y, Adj EBIT €333M v €227Me, Rev €9.74B v
€9.54B y/y
*(US) DEC JOLTS JOB OPENINGS: 7.335M V 6.846ME (record high)
(UK) PM May adviser Oliver Robbins reportedly was overheard saying that MPs
will be given choice between PM May's deal or lengthy delay to Brexit - ITV
News
(US) California Gov Newsom proposes a 'digital dividend' for state consumers
that would target large tech firms - press
*(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE UNCHANGED AT
1.75%; AS EXPECTED
(CN) China President Xi to meet with US trade delegation Friday including
Lighthizer and Mnuchin in Beijing - SCMP
WEDNESDAY 2/13
HEIA.NL Reports FY18 Net €2.42B v €2.34Be, Op €3.87B v €3.84Be, Rev €22.5B v
€21.9B y/y
*(US) JAN CPI M/M: 0.0% V 0.1%E; CPI (EX-FOOD/ENERGY) M/M: 0.2% V 0.2%E; CPI
NSA: 251.712 V 251.617E
*(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT -0.25%; AS
EXPECTED; maintains rate path outlook
DB1.DE Reports Q4 adj €1.25 v €1.25e, Adj EBITDA €419.9M v €338.3M y/y, Rev
€740.4M v €710Me
CTL Reports Q4 $0.37 v $0.36e, Rev $5.78B v $5.80Be; Cuts annual dividend 54%
to $1.00 from 2.16 (new implied yield 6.8%)
*(CN) CHINA JAN TRADE BALANCE: $39.2B V $34.3BE
THURSDAY 2/14
AIR.FR Reaches agreement with Emirates on A380 fleet, order reduced from 162 to
123; consequence of reduced order largely embedded in FY18 results, will stop
delivery of A380 in 2021
AIR.FR Reports FY18 Net €1.6B v €2.87B y/y, Adj EBIT €5.8B v €5.1Be, Rev €63.7B
v €67.0B y/y; raises 2018 dividend 10% to €1.65
ACA.FR Reports Q4 Net €1.01B v €795Me, Rev €4.85B v €4.80Be
CSGN.CH Reports Q4 (CHF) Net 292M v -2.13B y/y, adj Pretax 4.2B v 569M y/y, Rev
4.8B v 4.75Be
*(DE) GERMANY Q4 PRELIMINARY GDP Q/Q: 0.0% V 0.1%E; Y/Y: 0.6% V 0.7%E
KO Reports Q4 $0.43 v $0.43e, Rev $7.10B v $7.06Be
AZN.UK Reports Q4 Core EPS $1.58 v $1.48e, Rev $6.42B v $6.16Be
*(EU) EURO ZONE Q4 PRELIMINARY GDP Q/Q: 0.2% V 0.2%E; Y/Y: 1.2% V 1.2%E
*(US) JAN PPI FINAL DEMAND M/M: -0.1% V +0.1%E; Y/Y: 2.0% V 2.1%E
(CN) Reportedly US/China trade talks remain deadlocked as Beijing refuses to
eliminate coerced technology transfers or government subsidies to Chinese
companies - WSJ
(US) Atlanta Fed cuts Q4 GDP forecast to 1.5% from 2.7%
AMZN Amazon will NOT build second headquarters in New York City after
opposition; plans to move ahead with its Northern Virginia and Nashville
campuses
(US) White House Press Sec Sanders: confirms Pres Trump will sign govt funding
bill and declare a national emergency to build a border wall
AMAT Reports Q1 $0.81 v $0.79e, Rev $3.75B v $3.72Be
NVDA Reports Q4 $0.80 v $0.75e, Rev $2.21B v $2.37Be
FRIDAY 2/15
RBS.UK Reports Q4 Net +£436M v -£415M y/y, adj Op +£572M v -£583M y/y, Rev
£3.06B v £3.06B y/y
(CN) China President Xi meets with US trade delegation in Beijing (as
speculated)
(UK) JAN RETAIL SALES (EX-AUTO/FUEL) M/M: 1.2% V 0.2%E; Y/Y: 4.1% V 3.2%E
(CN) US-China trade talks to continue in Washington DC during the week of Feb
18th - press
*(US) FEB EMPIRE MANUFACTURING: 8.8 V 7.0E
(US) JAN INDUSTRIAL PRODUCTION M/M: -0.6% V 0.1%E; CAPACITY UTILIZATION: 78.2%
V 78.7%E
*(US) FEB PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 95.5 V 93.7E
(US) Pres Trump: China trade talks are going extremely well; we're a lot closer
than we ever were to have real trade deal with China; Confirms declaring
national emergency at the border - comments at White House
(US) New York Fed Nowcast: cuts Q4 forecast to 2.2% from 2.4%; cuts Q1 forecast
to 1.1% from 2.2%
MAT Guides FY19 gross sales flat y/y (cc); Q1 gross sales to be lower
y/y - Toy Fair presentation
