TradeTheNews.com Weekly
Market Update: Strong US jobs report salvages a choppy week; Central banks stay
neutral
Fri, 03 May 2019 16:09 PM EST
US stock markets pushed to new highs early in the week helped by another benign
inflation reading when core PCE data missed expectations once again. Improving
data in continental Europe buoyed risk sentiment and helped rates move up
globally heading into the FOMC and BOE meetings Wednesday and Thursday. Stock
prices also backed away from the highs as some noted seasonality and a heavy
upcoming IPO calendar as a good reason to reassess and potentially take
profits. Oil prices also dropped notably as US inventories and production
continued to swell. The Dollar index fell back from 2-year highs as inflation
expectations slipped and European data exhibited relative strength.
The spread between the US 2 and 10-year treasury yield continued to widen to
the highest levels in months into what was initially perceived as a dovish FOMC
statement Wednesday. Chairman Powell was not as dovish as the market may have
expected, though, when he went out of his way to explain that the low inflation
readings are likely the result of “transient” factors. Advocates for an
‘insurance’ rate cut amid low inflation, including the White House, were
disappointed when Powell said he didn’t see any reason to move rates in either
direction at this time. Thursday’s Q1 productivity data rose at the fastest
pace since 2014 and was seen as an extremely positive signal. That, combined
with another strong April jobs report on Friday enabled not only the White
House, but also Fed doves to come out and hint the environment may be right for
a rate cut aimed at bringing inflation back up to target. A Chinese press
report on Thursday dampened markets by suggesting trade talks had reached an
“impasse,” but stocks recouped the losses on Friday and interest rates settled.
Gold prices bounced and the Dollar stayed on its back foot. For the week, the
S&P gained 0.2%, the DJIA slipped 0.2%, and the Nasdaq rose 0.2%.
A heavy week of earnings topped corporate headlines this week. Google shares
slumped after reporting a top-line miss and noting a slowdown in Pixel
smartphone sales. Apple rallied after posting a beat and boosting its stock
buyback program, despite a 5% drop in total revenue on an annual basis.
McDonald’s reached fresh all-time highs after announcing strong SSS growth in
Q1, while Yum Brands shares moved lower after disappointing SSS readings from
Taco Bell and Pizza Hut. GE popped after beating its beaten-down expectations
and reaffirming its FY outlook. Occidental partnered with Berkshire Hathaway to
solidify financing for an Anadarko takeover, and reports indicated Chevron was
unlikely to counterbid. Amazon rose after word surfaced that Berkshire had bought
shares in the tech giant. HealthEquity confirmed a $2B bid for WageWorks in an
effort to create a larger health savings account and employee benefits
provider. Tesla stock rallied after the automaker formally announced an upsized
$2.7B capital raise and Elon Musk said he would personally buy $25M of shares.
SUNDAY 4/28
(ES) Spain Snap Election Results: Socialists Party of PM Sanchez wins with 123
seats; will need to form coalition to get majority of 176 seats, likely with
far left, anti-austerity Podemos
MONDAY 4/29
3328.HK Reports Q1 (CNY) Net 21.07B v 20.1B y/y, NII 34.86B v 30.5B y/y
*(EU) EURO ZONE APR BUSINESS CLIMATE INDICATOR: 0.42 V 0.49E
3988.HK Reports Q1 (CNY) Net 51B v 49B y/y, Op Income 141.0B v 126.1B y/y
386.HK Reports Q1 (CNY) Net 15.5B v 19.3B y/y, Rev 717.6B v 621.3B y/y
*(US) MAR PERSONAL INCOME: 0.1% V 0.4%E; PERSONAL SPENDING: 0.9% V 0.7%E
(US) Apr Dallas Fed Manufacturing Activity: 2.0 v 10.0e
(US) Atlanta Fed forecasts initial Q2 GDP growth at 1.3%
DB1.DE Reports Q1 adj €1.59 v €1.54e, adj EBITDA €475.5M v €460.8Me, Rev
€720.8M v €722Me
GOOGL Reports Q1 $11.90** (ex fine) v $10.51e, Rev $29.5B (ex $6.9B TAC) v
$30.0Be
TUESDAY 4/30
AIR.FR Reports Q1 adj EBIT €549M v €545Me, Rev €12.6B v €12.6Be
BP.UK Reports Q1 adj Net $2.36B v $2.36Be, Rev $67.4B v $69.1B y/y; raises
dividend 2.5% to $0.1025/shr
066570.KR Reports final Q1 (KRW) Net 571B v 730B y/y; Op 901B, -18.7% y/y, Rev
14.9T v 14.9T prelim
*(FR) FRANCE APR PRELIMINARY CPI M/M: 0.2% V 0.3%E; Y/Y: 1.2% V 1.2%E
*(DE) GERMANY APR UNEMPLOYMENT CHANGE: -12K V -7KE; UNEMPLOYMENT CLAIMS RATE:
4.9% V 4.9%E
*(EU) EURO ZONE Q1 ADVANCE GDP Q/Q: 0.4% V 0.3%E; Y/Y: 1.2% V 1.1%E
*(EU) EURO ZONE MAR UNEMPLOYMENT RATE: 7.7% V 7.8%E (lowest level since 2008)
*(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL €5.5B VS. €4.25-5.5B INDICATED
RANGE IN 5-YEAR AND 10-YEAR BTP BONDS
*(IT) ITALY Q1 PRELIMINARY GDP Q/Q: +0.2% V +0.1%E; Y/Y: +0.1% V -0.1%E (ends
its technical recession)
GE Reports Q1 $0.14 v $0.09e, Rev $27.3B v $26.9Be
*(DE) GERMANY APR PRELIMINARY CPI M/M: 1.0% V 0.5%E; Y/Y: 2.0% V 1.5%E
GM Reports Q1 $1.41 v $1.09e, Rev $34.9B v $35.8Be
ARNC Reports Q1 $0.43 v $0.40e, Rev $3.54B v $3.55Be
APC Berkshire Hathaway commits to $10B equity investment in Occidental to finance
acquisition of Anadarko
WAGE Confirms to be acquired by HealthEquity for $50.50/shr in cash, in a deal
valued at $2B
*(US) APR CONSUMER CONFIDENCE:129.2 V 126.8E
(US) House Speaker Pelosi (D-CA): meeting with Pres Trump about infrastructure
was productive; we agree on need for big and bold infrastructure package
WEDNESDAY 5/1
*(UK) APR UK PMI MANUFACTURING: 53.1 V 53.1E (33rd month of expansion)
(US) Treasury to sell $38B 3-year, $27B 10-year notes, and $19B 30-year bonds
*(US) APR ISM MANUFACTURING: 52.8 V 55.0E; PRICES PAID: 50.0 V 55.0E (lowest
Manufacturing PMI since Oct 2016)
(US) Atlanta Fed cuts Q2 GDP forecast to 1.2% from 1.3%
(US) Association of American Railroads weekly rail traffic report for week
ending April 27th: 533.2K, -3.3% y/y (has fallen for 11 consecutive weeks)
(US) Reportedly US and China nearing deal to roll back certain tariffs -
Politico
*(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 2.25-2.50%; CUTS IOER TO 2.35%
FROM 2.40%; TO STAY PATIENT ON RATES AS ECONOMY IS SOLID AND INFLATION IS MUTED
(US) Fed Chair Powell: data since the March meeting has been broadly in line
with our expectations; inflation has been somewhat weaker
(US) Fed Chair Powell: inflation weakness likely due to "transient"
factors; some asset prices are elevated; don't see any evidence at all of
overheating economy - FOMC Q&A
(UK) PM May reportedly mulls staying in the EU customs union in order to secure
a deal with Labour - FT
6752.JP Execs have noted that they do not want to invest more money into Tesla
gigafactory until they are sure Tesla can sell Model 3 at $35K without losing
money - Nikkei
THURSDAY 5/2
RDSA.NL Reports Q1 Basic CCS EPS $0.65 v $0.69 y/y, adj CCS Net $5.43B v $5.81B
y/y, Rev $83.7B v $83.0Be; Announces next $2.75B tranche of share buyback
program
*(ES) SPAIN APR MANUFACTURING PMI: 51.8 V 51.2E (2nd straight expansion)
*(UK) BANK OF ENGLAND (BOE) QUARTERLY INFLATION REPORT (QIR); cuts inflation
outlook for 2019 and 2020
*(UK) BOE LEAVES INTEREST RATES UNCHANGED AT 0.75%; AS EXPECTED
*(UK) BOE APR MINUTES: VOTED 9-0 TO LEAVE INTEREST RATES UNCHANGED
*(US) Q1 PRELIMINARY NONFARM PRODUCTIVITY: 3.6% V 2.2%E; UNIT LABOR COSTS:
-0.9% V 1.5%E
BYND IPO opens for trade at $46.00
(US) Pres Trump: Stephen Moore is withdrawing consideration for the Fed
AMZN Berkshire Hathaway reportedly buying shares of Amazon - US press
FRIDAY 5/3
HSBA.UK Reports Q1 $0.21 v $0.15 y/y, adj EBIT $6.35B v $5.70Be, Rev $14.4B v
$13.9Be
BAS.DE Reports Q1 adj Net €1.41B v €1.27Be, Adj EBIT €1.73B v €1.70Be, Rev
€16.2B v €16.1Be; Affirms outlook
*(UK) APR SERVICES PMI: 50.4 V 50.3E (moves back into expansion)
*(US) APR AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 3.2 V 3.3%E; AVERAGE
WEEKLY HOURS: 34.4 V 34.5E
*(US) APR CHANGE IN NONFARM PAYROLLS: +263K V +190KE
*(US) APR UNEMPLOYMENT RATE: 3.6% V 3.8%E (lowest level since 1969)
*(US) APR ISM NON-MANUFACTURING INDEX: 55.5 V 57.0E (lowest since Aug 2017)
