TradeTheNews.com Weekly
Market Update: Improving Chinese data and M&A help week finish on positive
note
Fri, 12 Apr 2019 16:09 PM EST
Markets commenced trade this week on a cautious note. The US administration
threatened a new round of tariffs on European products in retaliation for what
officials viewed as unfair subsidies to Boeing competitor Airbus. EU officials
noted they were reviewing potential retaliatory tariffs while simultaneously
meeting holding high level meetings with Chinese trade officials. Brexit
negotiations dragged on in London with few signs that Labour and the PM’s
government were finding new grounds of compromise. PM May was able to convince
EU officials at a Wednesday summit meeting to extend a Brexit deadline by 6
months, putting the ball back into the UK’s court. The PM and MPs now have
until the end of next month to reach some kind of agreement on leaving the Union
or be required to participate in EU elections. Wednesday also saw the ECB meet
and, as expected, hold rates and current expectations for forward guidance.
Draghi also noted they were still analyzing TLTRs and tiering and would provide
further commentary in the future. Rates stayed relatively heavy and stock
volumes overall remained muted as trading held within a bit of a holding
pattern ahead of Q1 earnings season. For the week the Dow was essentially flat,
S&P and NASDQ rose ~0.5%.
Late in the week, the tenor shifted as risk appetite expanded around improving
global economic data. Chinese trade and lending data in particular provided a
jolt, alongside some improving figures out of Europe. Friday saw Chevron reach
a deal to acquire Anadarko, reportedly beating out Occidental Petroleum,
stoking animal spirits further. Unwinding of safe haven flows pushed money away
from government bonds and rotated into commodities and equities. The US 10-year
and European government bond yields tracked to the highest levels in about a
month. WTI crude traded back to the highs of the year before backing off. For
the week
In corporate news, Boeing announced a plan to cut its 737 MAX production by 19%
this year amid ongoing safety concerns, sending shares of its suppliers and
industrials lower. Reports indicated Third Point had built an activist stake in
Sony and is seeking a management review of several divisions across the
company. Levi’s rallied after notching a profit in Q1 as part of its first
post-IPO earnings report. Tesla shares dropped on a report that they along with
Panasonic are freezing plans to expand the capacity of their EV battery plant
Gigafactory 1. Disney soared to a record high after announcing details of its
OTT plans, which included readying the November launch of its Disney Plus
streaming platform at a $6.99/mo price point. Early Friday, Chevron said it
would acquire Anadarko Petroleum in a blockbuster $33B cash-and-stock deal, a
transaction that would expand Chevron’s U.S. shale oil and gas portfolio and
value Anadarko at $65/shr.
MONDAY APRIL 8
*(EU) EURO ZONE APR SENTIX INVESTOR CONFIDENCE: -0.3 V -2.0E
SNE Reportedly Third Point (Loeb) has built an activist stake in Sony - press
(US) Atlanta Fed raises Q1 GDP forecast to 2.3% v 2.1% prior
(US) US Trade Representative (USTR) proposes tariffs to counter EU aircraft
subsidies, releases for public comment a prelim list of EU products to be
covered by additional duties, USTR estimates the harm from the EU subsidies of
$11B/year
TUESDAY APRIL 9
(UK) German Chancellor Merkel said to be willing to put a five year time limit
on the Northern Ireland backstop - BBC reporter
(US) President Trump tweets: "The World Trade Organization finds that the
European Union subsidies to Airbus has adversely impacted the United States,
which will now put Tariffs on $11 Billion of EU products! The EU has taken
advantage of the U.S. on trade for many years. It will soon stop!"
(IT) Italy Govt reportedly cuts 2019 GDP growth forecast from 1.0% to 0.1% (as
speculated); raises budget deficit target from 2.0% to 2.5% - draft document
*IMF UPDATES ITS WORLD ECONOMIC OUTLOOK (WEO): Cuts Global GDP growth forecast
from 3.5% to 3.3% (lowest level since financial crisis)
*(US) FEB JOLTS JOB OPENINGS 7.087M V 7.550ME
WEDNESDAY APRIL 10
*(EU) ECB LEAVES 7-DAY MAIN REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED;
maintains forward guidance on rates
*(US) MAR CPI M/M: 0.4% V 0.4%E; CPI EX-FOOD/ENERGY M/M: 0.1% V 0.2%E; CPI NSA:
254.202 V 254.167E
(EU) ECB's Draghi: Reiterates forward guidance; provides no details on upcoming
TLTRO-3 - Prepared remarks
(EU) ECB's Draghi: Too early to provide TLTRO and any possible Tiering details;
need consensus for further analysis of economic outlook - Q&A
(US) Reportedly a bipartisan bill to be proposed in Senate to expand EV tax
credits by 400K vehicles per manufacturer - press
(US) MAR MONTHLY BUDGET STATEMENT: -$146.9B V -$181.0BE
*(US) FOMC MINUTES FROM MARCH 20TH MEETING: MOST OFFICIALS SAW NO CHANGE IN
INTEREST RATES THIS YEAR; MAJORITY SAID PATIENT APPROACH ON RATES IS NEEDED
GIVEN UNCERTAINTIES
(US) Association of American Railroads weekly rail traffic report for week
ending April 6th: 510.2K, -2.8% y/y (has fallen for 8 consecutive weeks)
BBBY Reports Q4 $1.20 v $1.11e, Rev $3.31B v $3.33Be; Raises Quarterly dividend
6.3% to $0.17 from $0.16 (indicated yield 3.5%), updates Board refreshment
(UK) EU's Tusk confirms EU and UK have agreed to Brexit extension to Oct 31st
(additional 6-months), will check on progress in June
THURSDAY APRIL 11
*(DE) GERMANY FEB FINAL CPI M/M: 0.4% V 0.4%E; Y/Y: 1.3% V 1.3%E
*(US) MAR PPI FINAL DEMAND M/M: 0.6% V 0.3%E; Y/Y: 2.2% V 1.9%E
*(SG) MONETARY AUTHORITY OF SINGAPORE (MAS) SEMI-ANNUAL MONETARY POLICY
STATEMENT: LEAVES POLICY UNCHANGED (AS EXPECTED); Follows 2 consecutive
tightening moves
FRIDAY APRIL 12
*(CN) CHINA MAR TRADE BALANCE (CNY): 221.2B V 76.6BE
(US) NASA awarded SpaceX launch services contract for Asteroid Redirect Test
Mission
JPM Reports Q1 $2.65 v $2.32e, Managed Rev $29.85B v $27.9Be
(US) New York Fed Nowcast: maintains Q1 forecast at 1.4%; raises Q2 forecast to
2.0% from 1.9%
