TradeTheNews.com Weekly
Market Update: US/China trade talks push towards the finish line; Central Bank
Hawks have reason to hibernate
Fri, 22 Feb 2019 16:08 PM EST
Stocks spent much of the week on a continued upswing, largely on lingering
hopes for a breakthrough in US-China trade talks. By week's end, reports had
circulated that the two sides were drafting a six-point MOU related to key
structural issues after reaching a consensus on main topics in principal. Some
of those expectations were tempered by subsequent reports suggesting the two sides
remained far apart on intellectual property and other important structural
differences, but there was enough movement -- namely China’s commitment to
purchase $1.2T in US goods -- to discuss the planning of a potential summit in
late March. The Yuan moved up after Chinese officials reiterated that the
currency would not be used as a pawn in the trade debate. Ultimately President
Trump at an Oval Office meeting on Friday reiterated openness to extending the
March 1 China tariff deadline should progress continue to be made after the
Chinese Vice Premier Liu announced his delegation would be staying in DC for
two additional days of trade talks.
Oil prices continued upward to levels not seen since November even though US
domestic production reached 12M bpd for the first time. The Greenback edged
lower, which coincided with a further breakout in gold prices. Apr gold futures
crossed $1,340 for the first time since May 2018 before backing off late in the
week. Global Treasury yields largely stayed suppressed, with the US 10-year
ending back below 2.65% and the Bund staying below 10 bps. Wednesday’s FOMC
minutes and a slew of Fed speakers that followed affirmed the 'patient'
narrative has been adopted by a consensus and many view the balance sheet
unwind coming to an end sometime this year. Central bankers had little reason
to feel hawkish as continued sluggish economic readings were turned in by key
European and Asian economies while the US data softened notably, as well. For
the week the S&P rose 0.6%, the Dow added 0.6% and the NASDAQ gained 0.7%.
The focus was on more quarterly earnings in corporate news for this President’s
Day-shortened week. Walmart’s holiday quarter came in ahead of expectations on
both top and bottom line, as well as on same store sales, despite the poor Dec
sales data released by the Commerce Dept last week. Avis Budget lifted on an
earnings beat, helping Hertz shares, noting lower fleet costs and improved
pricing. Domino’s dropped on disappointing same store sales and margins hit by inflationary
pressures. Kraft Heinz fell precipitously after announcing a weak earnings
report that included news of an SEC investigation and a dividend cut.
Stamps.com market cap was nearly halved after it said it would discontinue its
exclusive partnership with USPS.
SUN 2/17
(CN) China Jan Vehicle Sales Y/Y: -15.8% v -13.0% prior (7th straight decline)
- Industry Association CAAM
TUES 2/19
*(UK) DEC AVERAGE WEEKLY EARNINGS 3M/Y: 3.4% V 3.5%E; WEEKLY EARNINGS (EX
BONUS) 3M/Y: 3.4% V 3.4%E
*(UK) JAN JOBLESS CLAIMS CHANGE: +14.2K V +20.8K PRIOR; CLAIMANT COUNT RATE:
2.8% V 2.8% PRIOR
*(DE) GERMANY FEB ZEW CURRENT SITUATION SURVEY: 15.0 V 20.0E; EXPECTATIONS
SURVEY:-13.4 % V -13.6E
(US) US Senator Bernie Sanders said he will run for President in 2020 - CNN
WMT Reports Q4 $1.41 adj v $1.33e, Rev $138.8B v $139.3Be; Raises Quarterly
dividend 1.9% to $0.53 from $0.52 (indicated yield 2.12%)
(US) FEB NAHB HOUSING MARKET INDEX: 62 V 59E
(CN) US officials reportedly seeking a stable yuan pledge as part of China
trade deal talks - press
WEDS 2/20
(CN) China Foreign Ministry Spokesperson Geng: Reiterates China does not engage
in competitive devaluation of its yuan currency (CNY), hopes the US does not
politicize currency issue
(US) Association of American Railroads weekly rail traffic report for week
ending Feb 16th: 523.9K, -3% y/y
(US) Special Counsel Mueller report may be finalized next week - CNN
*(US) FOMC MINUTES FROM JAN 30TH MEETING: MEMBERS NOTED THAT FINANCIAL
CONDITIONS HAD TIGHTENED SINCE SEPT AND GLOBAL GROWTH HAD MODERATED
(UK) PM May and EU's Juncker had a productive meeting; talks focused on
potential guarantees around Irish backstop - joint statement
*(CN) CHINA PBOC OFFERS CNY71.9B THROUGH PSL (PLEDGED SUPPLEMENTARY LENDING)
OPERATION V CNY60.5B PRIOR
THURS 2/21
DTE.DE Reports Q4 adj Net -€ 431M* v €1.3B y/y, Adj EBITDA €5.6B v €5.8Be, Rev
€20.3B v €19.9Be
BA.UK Reports FY18 adj EPS 42.9p v 42.1p y/y, adj EBITDA £1.93 v £1.97B y/y,
Rev £18.4B v £18.5B y/y
(FR) FRANCE FEB PRELIMINARY MANUFACTURING PMI: 51.4 V 51.0E (2nd straight
expansion)
*(DE) GERMANY FEB PRELIMINARY MANUFACTURING PMI: 47.6 V 49.8E (2nd straight
contraction and lowest since Dec 2012)
(EU) EURO ZONE FEB PRELIMINARY MANUFACTURING PMI: 49.2 V 50.3E (1st contraction
in 68 months and lowest since Jun 2013)
(UK) Govt official: Long way from getting what is needed on Irish backstop;
Brexit deal next week is unlikely (**Note: downplays recent optimism on talks)
*(US) FEB PHILADELPHIA FED BUSINESS OUTLOOK: -4.1 V +14.0E
*(US) FEB PRELIMINARY MARKIT MANUFACTURING PMI: 53.7 V 54.8E (lowest since Sep
2017)
*(US) JAN EXISTING HOME SALES: 4.94M V 5.00ME (lowest since Nov 2015)
F Ford is investigating US fuel economy and emissions compliance - press
BIDU Reports Q4 $1.92 v $1.69e, Rev $3.96B v $3.82Be
KHC Reports Q4 $0.84 v $0.93e, Rev $6.89B v $6.95Be; discloses SEC subpoena
related, recorded $25M increase to costs of products sold as a result
KHC Cuts dividend 36% to $0.40 from $0.625 (3.32% indicated yield); plans to
conduct additional divestitures to further deleveraging and reduce debt
STMP CEO: Have decided to discontinue our exclusive partnership with USPS as
our strategy
FRI 2/22
(DE) GERMANY Q4 FINAL GDP Q/Q: 0.0% V 0.0%E; Y/Y: 0.6% V 0.6%E
