TradeTheNews.com Weekly
Market Update: Risk appetite not dampened by delays for Brexit and trade deals,
or by Boeing crash
Fri, 15 Mar 2019 16:15 PM EST
The bulls retook control this week sending stock markets to the highest levels
of the year. The S&P finally found the legs to climb back above 2815 area,
a level that has served as repeated resistance going back to the stock market's
break last fall. It was hard to pinpoint the underlying factors for this
week’s rally, as there really wasn’t much to get excited about on either the
trade or Brexit fronts. Despite repeated assurances from the White House,
reports suggested that a final trade deal with China is still weeks away, if at
all. Meanwhile, PM May suffered a series of defeats on her EU separation
proposal, but markets saw the silver lining as the Parliament voted to forbid a
‘no deal’ Brexit and to delay the Brexit date from March 29th until June 30th
(though the EU27 still must unanimously approve the extension).
Economic data remained spotty with continued softness in Chinese figures
garnering significant attention once again. US January new home sales
decelerated and an early March US manufacturing reading touched the lowest
level in two years. The soft data helped keep the pressure on Treasury yields.
US rates moved back to the lowest levels of the year with the 10-year testing
below 2.6% on Friday. Helping end the week on a positive note, the February
Jolts jobs openings data hit a record high for the second month in a row. WTI
crude broke out new highs for the year trading back to levels not seen since
November alongside the renewed momentum in stocks.
Corporate headlines didn’t appear to provide much of a tailwind either. Boeing
was mired in negative headlines after the troubling crash of an Ethiopian
Airlines 737 MAX 8 last weekend. The crash was eerily similar to the Lion Air crash
from late last year suggesting a software malfunction potentially resulted in
another catastrophe for the company’s new workhorse aircraft. After pressure
from civil authorities around the world the FAA followed suit and grounded all
737 MAX planes indefinitely. Boeing shares served a significant anchor for the
Dow through much of the week. For the week, the DJIA gained 1.6%, the S&P
jumped 2.9%, and the Nasdaq surged 3.8%.
In other corporate news this week, the board of Deutsche Bank reportedly agreed
to explore a potential merger with Commerzbank, merely awaiting the nod from
German Chancellor Merkel. Nvidia agreed to acquire Mellanox Technologies for
$6.9B -- its biggest ever purchase -- in order to increase its capacity for
chip production for data centers. In a bumpy week for Facebook, federal
prosecutors were said to launch a criminal probe into the company’s data deals
that it made with large tech companies, and long-time executive and Chief
Product Officer Chris Cox departed over disagreements about product direction.
Smith & Nephew announced it would buy Osiris Therapeutics for $660M in a
bolt-on acquisition to enhance its strength in the regenerative medicine
market. Steel producer Nucor cut its Q1 guidance due to a drop in steel mills profit
and some shipment delays, but the company said it was encouraged by the impact
of recent price increases.
SUNDAY 3/10
03/10 BA Ethiopian Airlines flying a new Boeing 737 Max, crashes shortly after
takeoff, killing 157 people (2nd crash of the new 737 Max recently)
MONDAY 3/11
BA Exec: investigation is in its early stages; engaged customers and regulators
on concerns they may have
(US) Atlanta Fed cuts Q1 GDP forecast to 0.2% from 0.5%
(EU) EU Juncker/ PM May joint statement: UK committed to finding an alternative
arrangement to the backstop by the end of 2020
TUESDAY 3/12
*(UK) ATTORNEY GENERAL COX LEGAL ADVICE ON REVISED BACKSTOP: Believe the joint
instrument has binding legal effect as a document; reduces risk of being
trapped in backstop
*(US) FEB CPI M/M: 0.2% V 0.2%E; CPI (EX-FOOD/ENERGY) M/M: 0.1% V 0.2%E; CPI
NSA: 252.776 V 252.812E
*(UK) PM MAY'S REVISED BREXIT DEAL REJECTED BY PARLIAMENT BY 391-242 VOTE
WEDNESDAY 3/13
*(US) FEB PPI FINAL DEMAND M/M: 0.1% V 0.2%E; Y/Y: 1.9% V 1.9%E
BA Pres Trump confirms US to ground 737 MAX 8 and MAX 9 aircraft effective
immediately - press
*(CN) CHINA FEB INDUSTRIAL PRODUCTION YTD Y/Y: 5.3% V 5.6%E (slowest pace since
early 2002)
*(UK) UK PARLIAMENT REJECTS NO-DEAL BREXIT IN ANY SCENARIO IN 312-308 VOTE, in
a defeat for PM May
THURSDAY 3/14
*(DE) GERMANY FEB FINAL CPI M/M: 0.4% V 0.5%E; Y/Y: 1.5% V 1.6%E
(US) China-US trade meeting between Trump and Xi to sign an potential agreement
to end their trade war not likely until April at the earliest - financial press
GE Guides initial FY19 Adj $0.50-0.60 v $0.65e, Industrial Segment Organic Rev
to grow low to mid single digits, Adj Industrial FCF -$2.0B to $0B - Management
Outlook Call
*(US) JAN NEW HOME SALES: 607K V 622KE
*(UK) PARLIAMENT PASSES GOVT MOTION TO EXTEND ARTICLE 50: delaying the Brexit
date from March 29th until June 30th
ORCL Reports Q3 $0.87 v $0.84e, Rev $9.62B v $9.61Be; Raises dividend 26% to
$0.24 from $0.19 (indicated yield 1.81%)
US President Trump: We'll have 'news' on China trade deal in the next 3-4 weeks
(CN) China Premier Li: China economy faces new downward pressure; won't let
growth slide out of reasonable range; 6.6% growth [in 2018] was hard-won; To
cut VAT April 1st
(NK) North Korea Dep Foreign Min: No intention to yield to US demands; North
Korea said to mull suspending denuclearization talks with US, according to
Russia Media
(NK) North Korea: Says Leader Kim Jong Un rethinking launching and test
moratorium - Russian press
FRIDAY 3/15
UBSG.CH Publishes FY18 Annual Report: Adjusts final FY18 Net $4.52B v $4.90B
prelim v $969M y/y, Op $5.99B v $6.37B prelim v $5.35B y/y, Op Income $30.2B v
$29.6B y/y
*(US) MAR EMPIRE MANUFACTURING: 3.7 V 10.0E (lowest since May 2017)
*(US) FEB INDUSTRIAL PRODUCTION M/M: 0.1% V 0.4%E; CAPACITY UTILIZATION: 78.2%
V 78.5%E
*(US) MAR PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 97.8 V 95.7E
*(US) JAN JOLTS JOB OPENINGS: 7.58M V 7.225ME (record high, second month in a
row)
(US) New York Fed Nowcast: maintains Q1 forecast at 1.4%; maintains Q2 forecast
at 1.5%
GOOGL State Attorneys General reportedly taking preliminary steps towards
investigation into Google practices - press
