TradeTheNews.com Weekly
Market Update: Gulf and trade tensions overshadow bustling M&A and IPO
activity
Fri, 14 Jun 2019 16:05 PM EST
Global stocks opened the week on a positive note after President Trump
refrained from slapping tariffs on Mexico, for now, but continued to espouse
the utility of using tariffs as a blunt tool to address what he sees as
unbalanced trade around the world. Monday also saw significant deals in the
tech, defense and energy sectors revive animal spirits, pushing the S&P
back within 2% of its all-time high. There was little new to report on the
US/China trade spat and it remains unclear whether Presidents Xi and Trump will
meet and the G20 later this month. Trump did indicate he had no deadline for
additional China tariffs at this time, but only after saying early in the week
that if Pres Xi doesn't come to the G20, he would put the next $300B of tariffs
into effect immediately. Wednesday’s weaker than expected US CPI figures
resulted in continued buying across most of the Treasury curve. Ahead of next
week’s FOMC meeting, short rates fell faster, indicating renewed bets for rate
cuts later this year.
After WTI prices dropped following mid-week inventory readings that showed
crude stockpiles continued to climb, on Thursday investors woke to find oil
prices bouncing following an attack on two tankers sailing from Saudi Arabia
near the Strait of Hormuz. US and UK officials were quick to point the finger
squarely at Iran. By Friday, US indices opened lower and gold prices rose to a
new high for the year. Chinese industrial production data disappointed investors
while geopolitical concerns continued to rise after the U.S. released a video
it said proved Iran was involved in the attacks on the oil tankers. Treasury
yields plumbed to new lows before a stronger than expected May retail sales
report when factoring in revisions. The yield curve flattened following the
data release as short rates moved up faster, while crude traded only marginally
higher. For the week, the S&P gained 0.5%, the DJIA added 0.4%, and the
Nasdaq rose 0.7%.
Merger announcements took top billing in corporate news this week. United
Technologies announced a plan to combine its aerospace business with Raytheon
in an all-stock merger that would create a new manufacturing behemoth, though
President Trump noted he was ‘a little concerned’ about the deal’s effects on
competition in the defense sector. Salesforce revealed its plans to acquire
Tableau Software for $15.7B in an all-stock deal in order to diversify further
into analytics. Ten state attorneys general, led by New York AG James, filed a
lawsuit to block the Sprint/T-Mobile merger, though the two companies vowed to
fight the states’ efforts if they do receive approval from the DOJ. Broadcom’s
earnings report blunted a rebound in the chip sector as management confirmed
that the US/China trade dispute and the ban on Huawei are hurting business to
the tune of a $2B cut in FY guidance. The IPO market continued to be red hot,
with the launches of CrowdStrike, Fiverr, and Chewy all drawing strong interest
from investors.
SUNDAY 6/9
RTN Raytheon and United Technologies Aerospace Businesses to Combine in Merger
of Equals in all stock deal; both companies affirm FY19 guidance
MONDAY 6/10
DATA To be acquired by Salesforce in all stock transaction valued at $15.7B;
Adjusts FY20 outlook
(US) Pres Trump: If China Pres Xi doesn't come to the G20, we would put the
next $300B of tariffs into effect immediately - CNBC interview
*(US) APR JOLTS JOB OPENINGS: 7.449M V 7.496ME
SFLY Agrees to be acquired by certain funds managed by affiliates of Apollo
Global Management in an all-cash $51/shr transaction with an enterprise value
of $2.7B
(CN) China issued notice related to local government special bonds issuance and
project financing; to encourage financial firms and individuals to invest in
local gov't bonds - Xinhua
TUESDAY 6/11
*(UK) APR AVERAGE WEEKLY EARNINGS 3M/Y: 3.1% V 3.0%E; WEEKLY EARNINGS (EX
BONUS) 3M/Y: 3.4% V 3.2%E
*(UK) MAY JOBLESS CLAIMS CHANGE: +23.2K V +19.1K PRIOR; CLAIMANT COUNT RATE:
3.1% V 3.0% PRIOR
*(US) MAY PPI FINAL DEMAND M/M: 0.1% V 0.1%E; Y/Y: 1.8% V 2.0%E
WEDNESDAY 6/12
(IT) EU's Moscovici: We need to see a credible fiscal path for 2019 and 2020
for Italy
(US) May CPI M/M: 0.1% v 0.1%e; CPI (ex-food/energy) M/M: 0.1% v 0.2%e; CPI
NSA: 256.092 v 256.179e
(US) Business Roundtable survey shows US CEOs' confidence hits lowest since Q4
2016
CRWD IPO opens for trade at $63.50
(UK) Parliament rejects Labour-backed bid to block no-deal Brexit in 309-298
vote
(US) Association of American Railroads weekly rail traffic report for week
ending June 8th: 513.1K, -8.5% y/y (has fallen for 17 consecutive weeks)
Algeria reportedly raises idea of OPEC+ supply cut of 1.8M bpd in H2'19 (up
from 1.2M now) - press
*(US) MAY MONTHLY BUDGET STATEMENT: -$207.8B V -$202.5BE
*(AU) AUSTRALIA MAY EMPLOYMENT CHANGE: +42.3K V +16.0KE; UNEMPLOYMENT RATE:
5.2% V 5.1%E
THURSDAY 6/13
(AE) UAE Port Officials report oil tanker is on fire in Gulf of Oman;
explosions reported
*(CH) SNB LEAVES SIGHT DEPOSIT RATE UNCHANGED AT -0.75%; AS EXPECTED;
Introduces a policy rate
TSN Unveils alternative protein products and new Raised & Rooted brand;
Company uniquely positioned; offers plant-based and blended protein products
06/13 AVGO Reports Q2 $5.21 v $5.17e, Rev $5.52B v $5.66Be; Cuts FY guidance
FRIDAY 6/14
(CN) CHINA MAY INDUSTRIAL PRODUCTION Y/Y: 5.0% V 5.4%E (weakest reading since
2002)
(CN) CHINA MAY RETAIL SALES Y/Y: 8.6% V 8.1%E
(IN) India reportedly seeks to impose higher tariffs on U.S. goods next week -
press
(US) MAY ADVANCE RETAIL SALES M/M: 0.5% V 0.6%E; RETAIL SALES (EX-AUTO) M/M:
0.5% V 0.4%E
(US) MAY INDUSTRIAL PRODUCTION M/M: 0.4% V 0.2%E; CAPACITY UTILIZATION: 78.1% V
78.0%E
(US) Atlanta Fed raises Q2 GDP forecast to 2.1% from 1.4% prior
CHWY IPO opens for trade at $36.00
