Friday, March 1, 2019

Markets pause as Brexit and China trade negotiations go into overtime

TradeTheNews.com Weekly Market Update: Markets pause as Brexit and China trade negotiations go into overtime
Fri, 01 Mar 2019 16:09 PM EST

Equity markets took a breather on fairly low volatility despite another heavy week of corporate earnings to be digested. Potential progress on some global issues hit snags as President Trump cut short his Hanoi summit without reaching any new agreement with North Korea, and as PM May reportedly conceded that the Brexit will have to be delayed from March 29 even if the Parliament supports her plan later this month. Washington was gripped by Congressional testimony from former Trump fixer Michael Cohen, as well as hearings with Fed Chair Powell and US Trade Rep Lighthizer who agreed that the economy looks healthy and would be helped by a resolution to trade tensions.

The dollar index dipped mid-week but basically ended flat, while the British pound was strong through most of the week as fears of a ‘no deal’ Brexit receded. WTI crude futures moved sideways until Friday when they dipped 2.5% following disappointing US manufacturing and consumer confidence indicators, and a tepid first look at Q1 GDP from Atlanta and New York Fed officials. The week was capped off with a risk-on rally sparked by some better than expected data out of China and Europe, and on reports that the White House is seeking to reach an endgame in China trade talks within weeks. For the week, the S&P gained 0.4% and closed above 2,800 for the first time since November 8, while the DJIA was flat, and the Nasdaq rose 0.9%.

In corporate news this week, some key earnings emerged from the retail space. JCPenney shares lifted after posting stronger than anticipated earnings and laying out a plan to shutter some stores. L Brands tumbled after missing on earnings and guiding a disappointing FY19 EPS number. Macy’s Q4 beat on the top and bottom line and the company announced it would trim 100 management positions and cut $100M in annual costs. Gap Inc. notched a profit beat and announced plans to spin off its Old Navy division to separate into two independent publicly traded companies. A spate of M&A deals hit the corporate news space this week. Roche boosted its gene therapy portfolio with its acquisition of Spark Therapeutics for $4.3B. GE sold off its life sciences business to Danaher for $21.4B. eBay initiated a strategic review of its asset portfolio amid pressure from investors. The grocery store sector slumped on Friday after a report that Amazon is reportedly launching a new line of grocery stores with a lower price point than its Whole Foods division. Shares of Tesla sold off sharply after the car company made good on its long-promised $35K price point for a pared down version of the Model 3 sedan.

SUNDAY, FEB 24
(UK) PM May said to be considering plan that would delay Brexit by 2-months; rules out meaningful vote on EU withdrawal in Commons this week - Telegraph

MONDAY, FEB 25
ONCE To be acquired by Roche for $114.50/share in cash valued at $4.8B
GE Danaher to acquire the biopharma business of General Electric Life Sciences for $21.4B
*(US) FEB DALLAS FED MANUFACTURING ACTIVITY INDEX: 13.1 V 4.7E
(US) Atlanta Fed raises Q4 GDP forecast to 1.9% from 1.4%
TSLA SEC said to ask judge to hold Musk in contempt for violating deal, cites Feb 19th Tweet by Musk regarding production - US financial press

TUESDAY, FEB 26
BAS.DE Reports Q4 adj Net €348M v €502Me, Adj EBIT €630M v €552Me, Rev €15.6B v €15.1Be; raises dividend
*(DE) GERMANY MAR GFK CONSUMER CONFIDENCE: 10.8 V 10.8 PRIOR
HD Reports Q4 $2.09 v $2.16e, Rev $26.5B v $26.6Be; Announces $15.0B share buyback; Raises Quarterly dividend 32% to $1.36 from $1.03 (indicated yield 2.86%)
M Reports Q4 $2.73 v $2.51e, Rev $8.46B v $8.46Be; launches restructuring program to fund reinvestment in the business; streamlines management structure
*(US) DEC HOUSING STARTS: 1.078M V 1.256ME (lowest since Sept 2016); BUILDING PERMITS: 1.326M V 1.290ME
*(US) FEB RICHMOND FED MANUFACTURING INDEX: 16 V 5E
*(US) FEB CONSUMER CONFIDENCE: 131.4 V 124.9E

WEDNESDAY, FEB 27
RIO.AU Reports FY18 underlying Net $8.81B v $8.63B y/y; EBITDA $18.1B v $18.6B y/y; Rev $40.5B v $41.9B y/y; declares $4.0B special dividend
TSLA CEO Elon Musk tweets: Thursday 2pm. California. Some Tesla news
*(EU) EURO ZONE FEB BUSINESS CLIMATE INDICATOR: 0.69 V 0.66E; CONSUMER CONFIDENCE (FINAL): -7.4 V -7.4E
LOW Reports Q4 $0.80 v $0.80e, Rev $15.6B v $15.7Be
(US) President Trump and North Korea leader Kim meet in Hanoi; Kim says have "overcome obstacles" since last meeting
BBY Reports Q4 $2.72 v $2.57e, Rev $14.8B v $14.7Be; Raises Quarterly dividend 11.1% to $0.50 from $0.45 (indicated yield 3.32%)
*(US) DEC FINAL DURABLE GOODS ORDERS: 1.2% V 1.2% PRELIM; DURABLES EX TRANSPORTATION: 0.1% V 0.1% PRELIM
(US) Association of American Railroads weekly rail traffic report for week ending Feb 23rd: 522.6K, -1.1% y/y
CELG Wellington Management does not support Bristol-Myers Squibb’s acquisition of Celgene
*(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.75%; AS EXPECTED

THURSDAY, FEB 28
ABI.BE Reports Q4 $0.80 v $0.90e, Rev $14.3B v $13.9Be
(KR) White House: Hanoi Summit ends, no agreement reached but talks constructive ; US and North Korea teams to meet in future
*(FR) FRANCE FEB PRELIMINARY CPI M/M: 0.0% V 0.4%E; Y/Y: 1.3% V 1.5%E
*(DE) GERMANY FEB CPI SAXONY M/M: +0.3% V -1.0% PRIOR; Y/Y: 1.4% V 1.4% PRIOR
(DE) GERMANY FEB PRELIMINARY CPI M/M: 0.5% V 0.4%E; Y/Y: 1.6% V 1.5%E
*(US) Q4 ADVANCE GDP PRICE INDEX : 1.8% V 1.7%E; CORE PCE Q/Q: 1.7% V 1.6%E
(US) Q4 ADVANCE GDP ANNUALIZED Q/Q: 2.6% V 2.2%E; PERSONAL CONSUMPTION: 2.8% V 3.0%E
(US) Nevada reports Jan casino gaming Rev $984.5M, -3% y/y; Las Vegas strip Rev $532.2M, -4% y/y
GPS Reports Q4 $0.72 v $0.68e, Rev $4.62B v $4.71Be; to spin off Old Navy; to close 230 stores over next 2 years
TLSA Confirms Model 3 with a 220 mile range will now price as low as $35K

FRIDAY, MARCH 1
(CN) US officials said to be preparing a final trade deal that President Trump and his Chinese counterpart Xi Jinping could sign in weeks - financial press
*(ES) SPAIN FEB MANUFACTURING PMI: 49.9 V 51.7E (first contraction in 64 months; lowest since Nov 2013)
*(DE) GERMANY FEB UNEMPLOYMENT CHANGE: -21K V -5KE; UNEMPLOYMENT CLAIMS RATE: 5.0% V 5.0%E
*(UK) FEB PMI MANUFACTURING: 52.0 V 52.0E (31st month of expansion)
*(EU) EURO ZONE JAN UNEMPLOYMENT RATE: 7.8% V 7.9%E (matches lowest level since Dec 2008)
*(EU) EURO ZONE FEB ADVANCE CPI ESTIMATE Y/Y: 1.5% V 1.5%E; CPI CORE Y/Y: 1.0% V 1.1%E
*(US) JAN PERSONAL INCOME: -0.1% V +0.3%E
*(US) FEB FINAL MARKIT MANUFACTURING PMI: 53.0 V 53.7E (lowest since Aug 2017)
*(UK) FEB PMI MANUFACTURING: 52.0 V 52.0E (31st month of expansion)
*(US) FEB ISM MANUFACTURING: 54.2 V 55.8E; PRICES PAID: 49.4 V 51.8E (lowest manufacturing PMI since Nov 2016)
(US) New York Fed Nowcast: cuts Q1 forecast to 0.9% from 1.2%
(US) Atlanta Fed forecasts initial Q1 GDP growth at 0.3%
AMZN Reportedly readying to launch new grocery store chain at a lower price point than Whole Foods - press
(UK) EU's Barnier: we are ready to give Britain further guarantees that Irish backstop is only temporary - German press