TradeTheNews.com Weekly
Market Update: Trade war escalates; UK Brexit talks remain at impasse
Fri, 17 May 2019 16:13 PM EST
Stocks opened the week in freefall as risk appetite dried up, spurred by the US
and China continuing to exchange barbs over trade. Also lurking large in the
background were various press reports surrounding Iran suggesting there was
growing concern for a potential US military confrontation in the Middle East.
The S&P managed to hold the 2800 mark on Monday and stock investors became
more comfortable with the escalating trade tensions as the week progressed. The
President did delay a potential decision on auto import tariffs which helped US
indices rebound sharply from Monday’s low. By Friday, reports that the Chinese
were exasperated and ready to call off talks with the Trump administration all
together were somewhat overshadowed by news the US, Mexico and Canada had
reached a deal to end steel and aluminum tariffs, likely paving the way for
USMCA ratification in Congress. The Chinese Yuan remained under significant
pressure as data points coming from the region remained disappointing and
reports continued to suggest trade talks were at a standstill. It resulted in
Chinese press recycling reports that the PBOC would defend the 7 Yuan to the
dollar level if the weakness accelerates. Friday also saw UK Brexit talks
between PM May’s Conservative Party and the opposition Labour Party break down,
leaving another round of indicative votes as the most likely course of action.
For the week, the Dow lost 0.7%, NASDAQ declined 1.3% and the S&P dropped
0.8%. The Dow saw its first 4-week losing streak in three years.
On the corporate front this week, Disney reached a deal with Comcast to assume
full operational control of the Hulu streaming service, effective immediately,
with Comcast agreeing to sell its Hulu stake to Disney for $5.8B. Macy's
announced an earnings beat and reaffirmed its outlook on strong online sales,
as SSS held in positive territory. Walmart topped EPS estimates and also noted
strong growth in e-commerce sales. Nvidia beat on the top and bottom line and
guided in line with consensus, though the CFO on their conference call noted
the Q2 outlook is somewhat lower than their expectation earlier in the quarter.
Baidu shares took a dive after reporting its first earnings loss since 2005 and
guiding Q2 below consensus. Boeing announced it has completed development of an
updated software fix for the 737 MAX and said it would now work with the FAA to
schedule certification test flights and submit final certification documents.
MONDAY 5/13
(US) Pres Trump tweets: Their is no reason for the U.S. Consumer to pay the
Tariffs, which take effect on China today. This has been proven recently when
only 4 points were paid by the U.S., 21 points by China because China
subsidizes product to such a large degree.
(CN) Global Times Editor-in-chief Hu Xijin: China may stop purchasing US
agricultural products and energy, reduce Boeing orders and restrict US service
trade with China. Many Chinese scholars are discussing the possibility of
dumping US Treasuries and how to do it specifically
(US) Pres Trump: will meet with China Pres Xi at G20 (June 28-29), believes
US-China meeting at G20 could be fruitful
TUESDAY 5/14
*(CN) CHINA APR RETAIL SALES Y/Y: 7.2% V 8.6%E (lowest level since May 2003);
RETAIL SALES YTD Y/Y: 8.0% V 8.4%E
*(CN) CHINA APR INDUSTRIAL PRODUCTION Y/Y: 5.4% V 6.5%E; YTD Y/Y: 6.2% V 6.5%E
DIS Disney and Comcast agree on Hulu’s future governance and ownership; Disney
to assume full operational control of Hulu, effective immediately; extends
NBCUniversal content agreement for 3 years
(US) Senior Trump administration officials reportedly suggested trade deal with
China is NOT close and the U.S. could be in for a long trade war - Axios
*(DE) GERMANY MAY ZEW CURRENT SITUATION SURVEY: 8.2 V 6.3E; EXPECTATIONS
SURVEY: -2.1 V +5.0E
*(UK) APR JOBLESS CLAIMS CHANGE: 24.7K V +22.6K PRIOR; CLAIMANT COUNT RATE:
3.0% V 3.0% PRIOR
*(UK) MAR AVERAGE WEEKLY EARNINGS 3M/Y: 3.2% V 3.4%E; WEEKLY EARNINGS
(EX-BONUS): 3M/Y: 3.3% V 3.3%E
VOD.UK Reports FY18/19 Net -€8.02B v €2.44B y/y,adj EBITDA €14.1B v €14.2Be,
Rev €43.7B v €45.2Be; Announces progressive dividend policy; 5G goes live on
Jul 3, 2019
TKA.DE Reports Q2 full group** Net -€99M v +€240M y/y, Adj EBIT €353M v €495M
y/y, Rev €10.64B v €10.44B y/y
WEDNESDAY 5/15
ACA.FR Reports Q1 Net €763M v € 856M y/y, Rev €4.86B v €4.9Be
*(DE) GERMANY Q1 PRELIMINARY GDP Q/Q: 0.4% V 0.4%E; Y/Y: 0.7% V 0.7%E
(CN) China Foreign Ministry spokesperson Geng Shuang: Reiterates it is the U.S.
that is defining trade dispute as trade war; China is only taking actions in
self-defense
*(EU) EURO ZONE Q1 PRELIMINARY GDP: 0.4% V 0.4%E; Y/Y: 1.2% V 1.2%E
700.HK Reports Q1 (CNY) Net 27.2B v 19.4Be, Op 36.7B v 30.7B y/y, Rev 85.5B v
88.7Be
M Reports Q1 $0.44 v $0.33e, Rev $5.50B v $5.53Be; 2019 strategic initiatives
on track to deliver Rev growth
*(US) MAY EMPIRE MANUFACTURING: 17.8 V 8.0E (highest since Nov 2018)
*(US) APR ADVANCE RETAIL SALES M/M: -0.2% V 0.2%E; RETAIL SALES (EX-AUTO) M/M:
0.1% V 0.7%E
*(US) APR INDUSTRIAL PRODUCTION M/M: -0.5% V 0.0%E; CAPACITY UTILIZATION: 77.9%
V 78.7%E
*(US) PRES TRUMP REPORTEDLY PLANS TO DELAY AUTO IMPORTS TARIFFS UP TO 6 MONTHS
(in line with speculation from May 8th)
(IR) Iran Revolutionary Guards Corps commander: we're on the cusp of a
full-scale confrontation with the enemy
*(AU) AUSTRALIA APR EMPLOYMENT CHANGE +28.4K V +15.0KE; UNEMPLOYMENT RATE: 5.2%
V 5.0%E (8 month high for unemployment rate)
THURSDAY 5/16
(CN) China Commerce Ministry (MOFCOM) spokesperson Gao: Reiterates China
strongly opposes U.S. bullying; no information on any plans for U.S. trade
delegation to visit China at present
WMT Reports Q1 $1.13 v $1.02e, Rev $123.9B v $125.2Be
*(US) APR HOUSING STARTS 1.235M V 1.21ME; BUILDING PERMITS: 1.296M V 1.29ME
(US) Association of American Railroads weekly rail traffic report for week
ending May 11th: 529K, -3.7% y/y (has fallen for 13 consecutive weeks)
(US) Atlanta Fed raises Q2 GDP forecast to 1.2% from 1.1% prior
(US) Treasury to sell $11B 10-year (r) TIPS; $26B 52-week bills
BA Announces completed development of updated software for 737 MAX - press
AMAT Reports Q2 $0.70 v $0.66e, Rev $3.54B v $3.48Be
NVDA Reports Q1 $0.88 v $0.82e, Rev $2.22B v $2.25Be
BIDU Reports Q1 $0.41 v $0.41e, Rev $3.59B v $3.59Be; announces $1B share
buyback; Senior VP for search business resigns
(CN) China State Media Commentary: China may have no interest in continuing
trade talks with the US for now; sees little "sincerity" in Pres
Trump's approach
FRIDAY 5/17
(CN) China Central Bank (PBOC) said to not let CNY weaken past 7.00 per dollar
- press (in line with prior reports)
(DE) German Business Association DIHK estimates that further U.S. tariffs of
25% on cars, car parts would cost German economy €6B per year
(US) Trump Administration releases proclamation on EU, Japan auto tariffs delay
for at least 180 days (as expected); orders negotiations
*(US) MAY PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 102.4 V 97.2E (15-year
high)
