TradeTheNews.com Weekly
Market Update: Investor worries grow after Fed doubles down and data
disappoints
Fri, 22 Mar 2019 16:20 PM EST
US stock markets managed to scale the proverbial wall of worry for much of this
week, helped by another prod from the US Federal Reserve. CPI figures continued
to miss expectations here in the US and elsewhere, while global economic data
both here and abroad suggested deceleration. Brexit worries were dragged out as
PM May went to Brussels and appears to have at least secured a short-term
extension to this month’s deadline, but a resolution remains up in the air and
it is contingent on yet another round of vital votes in Parliament next week.
Friday saw key European manufacturing figures move further into contractionary
territory, suggesting Brexit and trade uncertainty has further pressured
economic growth there. Risk appetite dried up as investors looked to unload
assets while buying up government bonds in the final session of the week.
Stocks gave back all the post-FOMC meeting gains. Volatility picked up notably
after the yield on the US 3-month T-bill inverted by going above that of the US
10-year yield for the first time since 2007.
The Fed came out Wednesday with what was essentially a dovish double-down to
the pivot announced earlier this year. The FOMC dot plot went from a median of
two expected rate hikes this year to zero, while also announcing quantitative
tightening of the balance sheet would likely come to an end by September at a
size of ~$3.5T. In his press conference, Chairman Powell emphasized that risk
factors to growth, namely overseas, as well as inflation readings persistently
backing off from the Fed's 2% target make it the right time to be patient. He
further opined that patience means there is no need to rush to judgment, and it
may be some time before the outlook calls for a policy change. Rates fell
globally and the US Treasury yield curve flattened in the wake of the news. The
short end of the US curve further inverted and by Friday the German 10-year
bund yield dipped into negative territory for the first time since 2016. The
Greenback initially saw selling pressure in the wake of the Fed, but buyers
returned quickly, particularly against the Euro and emerging markets, most
notably Turkey. Crude briefly topped $60 helped by drawdowns in US stockpiles
before backing away from those 4-month highs on growth concerns. Gold moved to
a fresh 1-month high helped by the Fed, and the VIX shot up almost 20% on
Friday. For the week, the S&P dropped 0.8%, the Dow shed 1.3%, and the
Nasdaq lost 0.6%.
In corporate news this week, Boeing slipped further as questions about its MAX
737 aircraft mounted, as did scrutiny from regulators and Congress. FedEx
pressured the transports sector after releasing disappointing results and an
outlook that raised global growth concerns. Nike released underwhelming results
and noted it saw FX headwinds weighing on their growth in the near term. The
biotech space took a hit after Biogen and Eisai announced they were
discontinuing Phase 3 ENGAGE and EMERGE Trials of aducanumab in Alzheimer’s
Disease. Banks and financials fell sharply after a more dovish than anticipated
Fed announcement and as the spread between the 3-month Treasury bill yield and
the 10-year note yield dropped to the narrowest level seen since 2007.
MONDAY 3/18
LYFT Files to sell 30.7M IPO shares between $62.00 and $68.00 on NASDAQ - filing
(UK) Northern Ireland's DUP party spokesperson: DUP leader Foster has no
current plans to travel to London; Deputy Leader Dodds continues to lead talks
with govt
(UK) Parliament Speaker Bercow: PM May must change Brexit deal to hold third
'meaningful vote'; May CANNOT put the same Brexit deal to a third vote
(UK) EU to formally agree on Brexit delay this week potentially until July 1st
- Guardian
TUESDAY 3/19
*(UK) FEB JOBLESS CLAIMS CHANGE: +27.0K V +15.7K PRIOR CLAIMANT COUNT RATE:
2.9% V 2.8% PRIOR
(UK) JAN AVERAGE WEEKLY EARNINGS 3M/Y: 3.4% V 3.2%E; WEEKLY EARNINGS (EX-BONUS)
3M/Y: 3.4% V 3.4%E
*(DE) GERMANY MAR ZEW CURRENT SITUATION: 11.1 V 13.0E; EXPECTATIONS SURVEY:
-3.6 V -11.0E
(CN) China said to be considering excluding 737 Max aircraft from US trade deal
- press
*(US) JAN FINAL DURABLE GOODS ORDERS: 0.3% V 0.4%E; DURABLES
(EX-TRANSPORTATION): -0.2% V -0.1% PRELIM
(CN) Some US officials reportedly see China walking back trade offers; some
officials said to see China moves as normal part of the process - press
FDX Reports Q3 $3.03 v $3.10e, Rev $17.0B v $17.6Be
WEDNESDAY 3/20
WP Becomes first card acquirer to enable Amazon Pay
(US) Association of American Railroads weekly rail traffic report for week
ending Mar 16th: 501K, -6.8% y/y (has fallen for 5 consecutive weeks)
(US) Pres Trump: We are talking about leaving tariffs on China for a long
period of time to ensure China complies with the trade deal
*(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 2.25-2.50%; SIGNALS NO HIKES
THIS YEAR AND ONE RATE HIKE IN 2020
*(US) FED: Balance Sheet Normalization Plans: to slow reduction of holdings
starting in May and conclude run off in Sept
(UK) PM May: UK will not leave EU on time on March 20th as previously expected;
not ready to delay Brexit any further than June 30th
MU Reports Q2 $1.71 v $1.73e, Rev $5.84B v $5.92Be
THURSDAY 3/21
941.HK Reports FY18 (CNY) Net 117.8B v 114.3B y/y, EBITDA 275.5B v 270.4B y/y;
Rev 736.8B v 741B y/y
*(CH) SNB LEAVES SIGHT DEPOSIT RATE UNCHANGED AT -0.75%; AS EXPECTED
700.HK Reports Q4 (CNY) Net 14.2B v 17.6Be, Adj EBITDA 29.7B v 29.6B y/y, Rev
84.9B v 83.4Be
*(NO) NORWAY CENTRAL BANK (NORGES) RAISES DEPOSIT RATES BY 25BPS TO 1.00%; AS
EXPECTED
*(UK) FEB RETAIL SALES (EX AUTO/FUEL) M/M 0.2% V -0.4%E; Y/Y: 3.8% V 3.5%E
BIIB Biogen and Eisai to discontinue Phase 3 ENGAGE and EMERGE Trials of
aducanumab in Alzheimer’s Disease; futility analysis suggests primary endpoint
unlikely to be met, EVOLVE Phase 2 safety study and LT extension of PRIME
Phase1b study of aducanumab also to be discontinued
*(UK) BOE LEAVES INTEREST RATES UNCHANGED AT 0.75%; AS EXPECTED
*(UK) BANK OF ENGLAND (BOE) MAR MINUTES: Voted 9-0 to leave rates unchanged
(BR) Former Brazil President Temer arrested as part of 'Carwash' probe - Brazil
press
FB Reportedly stored hundreds of millions of user passwords in plain text for
years - Krebs on Security
NKE Reports Q3 $0.68 v $0.63e, Rev $9.61B v $9.54Be
(EU) EU Tusk on Leader Summit draft conclusions: EU can agree on Brexit
extension until May 22nd with extension conditional on Withdrawal Agreement
approved by UK parliament during week of Mar 25th (next week)
FRIDAY 3/22
CSGN.CH Publishes FY18 Annual Report: Reports final FY18 (CHF) Net +2.02B v
-983M y/y, Rev 21.6B v 21.8B y/y
(FR) FRANCE MAR PRELIMINARY MANUFACTURING PMI: 49.8 V 51.4E (back into
contraction for 1st time in 3 months)
(DE) GERMANY MAR PRELIMINARY MANUFACTURING PMI: 44.7 V 48.0E; (3rd straight
contraction)
*(EU) EUROZONE MAR PRELIMINARY MANUFACTURING PMI: 47.6 V 49.5E (2nd straight
contraction and lowest since Apr 2013)
(DE) GERMAN 10-YEAR BUND YIELD MOVES INTO NEGATIVE TERRITORY
(CN) US President Trump: Reiterates deal with China coming along very well;
will probably happen and getting very close - TV interview
(RU) RUSSIA CENTRAL BANK (CBR) LEAVES KEY 1-WEEK AUCTION RATE UNCHANGED AT
7.75%; AS EXPECTED
TIF Reports Q4 $1.60* adj v $1.60e, Rev $1.32B v $1.34Be
(US) MAR PRELIMINARY MARKIT MANUFACTURING PMI: 52.5 V 53.5E
*(US) FEB EXISTING HOME SALES: 5.51M V 5.10ME
