TradeTheNews.com Weekly
Market Update: Fed promises easing, Trump and Xi confirm G20 sit down, Iran
tensions rise
Fri, 21 Jun 2019 16:04 PM EST
Coming into the week expectations were already riding exceedingly high heading
into the FOMC meeting. Rates remained under pressure and US stock markets were
within a few percent of all-time highs. US manufacturing data was soft
suggesting deceleration and an environment conducive to a rate cut. Those
expectations were only further strengthened by the ECB’s Draghi who said that
if the outlook does not improve then additional stimulus will be needed in the
Euro Zone. Draghi’s comments prompted President Trump to complain that Fed
policy isn’t providing the US with a “level playing field”, keeping the
pressure on Chainman Powell ahead of the rate decision. Global stocks and bonds
continued to rally and the move was turbocharged by news President Trump and
Chinese President Xi had spoken by phone confirming both sides were preparing
to meet at the G20 meeting next week.
Wednesday’s FOMC statement appeared to satisfy the markets, setting the table
for a rate cut in July. After dropping the word “patient” from the monetary
policy statement Chairman Powell acknowledged that many committee members,
perhaps even himself, saw a stronger case for stimulus amid the risks presented
by trade disputes, weak global growth and stubbornly low inflation. On
Thursday, stock indices opened at all-time highs despite a 5% pop in WTI crude
after Iran tensions were ratcheted significantly by the downing of a US
surveillance drone near the Straight of Hormuz. Rates trended lower, pressuring
the US 10-year back below 2% for the first time since before the 2016 election.
Gold prices broke above the $1,400 mark for the first time since 2013 and the
Greenback rolled over. Friday saw equities consolidate at or just below record
highs on very robust volumes due to options expiration. Bond yields lifted
helped by marginal improvement on some key European manufacturing PMI readings.
Also, trade sentiment was further buoyed by a report VP Pence would be
postponing a key China policy address indefinitely amid "positive
signs" of progress ahead of Trump/Xi meeting. For the week, the S&P
hit new highs up 2.2%, the DJIA gained 2.4%, and the Nasdaq added 3%.
In corporate news this week, Pfizer announced it would acquire Array BioPharma
for $48/share in a cash deal valued at $11.4B as part of an effort to expand
its colorectal cancer drug portfolio. Auction house Sotheby’s sold itself to
collector and Altice founder Patrick Drahi for $57/share in cash. American
steel makers described an industry slowdown: Steel Dynamics said it saw lower
Q2 earnings due to weaker prices; Nucor tempered its Q2 expectations citing
decreasing performance in its steel mill business; and US Steel said it would
idle some capacity to better align global production. After a slow start at the
Paris Air Show, Boeing announced its first order from the event on Tuesday, as
IAG signed a letter of intent for 200 Boeing 737 MAX aircraft to join its
fleet. Oracle posted an earnings beat for Q4 and said it expected a strong Q1.
Carnival Corp cut its FY outlook, noting US-Cuba policy changes and other
global headwinds.
MONDAY 6/17
ARRY To be acquried by Pfizer for $48/shr in cash valued at $11.4B
*(US) JUN EMPIRE MANUFACTURING: -8.6 V +11.0E (lowest since 2016)
BID To be acquired by Patrick Drahi (BidFair USA) for $57.00/shr in cash valued
at $3.7B
STLD Guides Q2 $0.86-0.90 v $0.98e, primarily related to lower profitability
from long product steel operations
TUESDAY 6/18
*(DE) GERMANY JUN ZEW CURRENT SITUATION: 7.8 V 6.1E; EXPECTATIONS SURVEY: -21.1
V -5.8E
*(US) MAY HOUSING STARTS: 1.27M V 1.239ME; BUILDING PERMITS: 1.29M V 1.29ME
(CN) China state media confirms Pres Xi held call with Pres Trump; confirms
Pres Xi plan to talk with Trump during G20 meeting - press
(US) Atlanta Fed cuts Q2 GDP forecast to 2.0% from 2.1% prior
BA IAG signs letter of intent with for 200 Boeing 737 MAX aircraft to join its
fleet
(US) Reportedly White House looked into legality of demoting Fed Chairman
Powell - press
(EU) ECB POLICYMAKERS SAID TO BE DIVIDED ON NEXT STEP; RATE CUT, GUIDANCE
CHANGE AND FURTHER QE ALL POSSIBILITIES - PRESS
X (US Steel) Guides Q2 $0.40 v $0.48e; idling two blast furnaces in the US and
one blast furnace in Europe to better align global production with order book
WEDNESDAY 6/19
(US) Association of American Railroads weekly rail traffic report for week
ending June 15th: 528K, -5.4% y/y (has fallen for 18 consecutive weeks)
(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 2.25-2.50%; AS EXPECTED; DROPS
'PATIENT' LANGUAGE ON FUTURE POLICY ADJUSTMENTS, SAYS 'WILL ACT AS APPROPRIATE'
TO SUSTAIN EXPANSION
(US) Fed Chair Powell: Many FOMC participants see stronger case for rate cuts;
changes made to today's statement were "significant" - post rate decision
press conference
ORCL Reports Q4 $1.16 v $1.07e, Rev $11.1B v $11.0Be
*(JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%;
AS EXPECTED
THURSDAY 6/20
(UK) MAY RETAIL SALES (EX-AUTO/FUEL) M/M: -0.3% V -0.4%E; Y/Y: 2.2% V 2.5%E
*(UK) BOE JUN MINUTES: VOTED 9-0 TO LEAVE INTEREST RATES UNCHANGED
KR Reports Q1 $0.72 v $0.72e, Rev $37.3B v $36.8Be
WORK *OPENS FOR TRADE ON NYSE $38.50
FRIDAY 6/21
*(DE) GERMANY JUN PRELIMINARY PMI MANUFACTURING: 45.4 V 44.6E ( 6th straight contraction)
(FR) FRANCE JUN PRELIMINARY PMI MANUFACTURING: 52.0 V 50.8E (3rd straight
expansion and highest since Sept)
(EU) EURO ZONE JUN PRELIMINARY PMI MANUFACTURING: 47.8 V 48.0E (5th straight
contraction)
*(US) JUN MARKIT PRELIMINARY PMI MANUFACTURING: 50.1 V 50.5E (lowest reading
since Sep 2009)
(US) VP Pence said to postpone China policy address indefinitely amid
"positive signs" of progress ahead of Trump/Xi meeting - press
