TradeTheNews.com Weekly
Market Update: Markets buoyed by renewed optimism that trade and Brexit deals
can materialize
Fri, 13 Sep 2019 16:11 PM EST
US stock indices continued to churn back up towards this summer’s highs after
last week’s apparent bottoming in interest rates gathered momentum. The major
impetus once again was perceived de-escalation in the US/China trade war. Lower
level officials are set to meet next week after both sides offered concessions
and the rhetoric took on a decidedly softer tone. Hotter than expect August US
CPI data and better than expected retails sales figures also caused some
rethinking about how easy it will be for Fed Chairman Powell to attain
consensus to cut rates at the FOMC meeting next Wednesday. Meanwhile the ECB
unveiled a series of stimulus measures including a relaunch of quantitative
easing, but the news was largely expected and there appeared to be real
dissension among some key Northern ECB officials which mitigated the market’s
reception of Draghi’s dovish presser on Wednesday.
The pound moved up almost 400 pips this week on hopes the UK will find some way
around the Irish backstop issue; this after Parliament was suspended but PM
Johnson was unable to obtain enough MP votes for a new election. The Euro
maintained an upward bias following the ECB decision and Draghi’s renewed call
for fiscal authorities to take on more responsibility in supporting economic
growth. The OPEC+ Joint Ministerial Monitoring Committee (JMMC) met and
producers pledged even more stringent compliance, but did not discuss further
production cuts which resulted in modest giveback in crude prices. By Friday
government bond yields had risen the highest levels in roughly a month and the
US curve had steepened significantly. The Dow was riding an eight day winning
streak and the S&P cash market came within 10 handles of the July all-time
high. The continued drift up in US indices was accompanied by intense
rotational flows out of high-beta, higher-growth winners into deep value groups
that have drastically underperformed. For the week, the S&P rose 1%, the
DJIA added 1.6%, and the Nasdaq gained 0.9%.
In corporate news this week, some major financial firms, including Wells Fargo,
Citi and JP Morgan, trimmed their net interest income outlook for the year as
rates begin to fall. Oracle released some disappointing earnings a day earlier
than scheduled due to Co-CEO Hurd’s announcement he would take a medical leave
of absence. Alcoa disclosed plans to restructure amid global headwinds by
implementing a new operating model and cutting executive positions. Moody’s cut
Ford Motors’ unsecured rating to junk, pointing to weak future cash generation
and a ‘lengthy and costly’ restructuring plan. Apple announced release dates
for new iPhone 11 and Apple Watch Series 5 products and laid out pricing plans
for its Apple Arcade and Apple TV+ services at an investor event. A report
emerged that the FTC has opened a probe into Amazon’s marketplace over
potential competition concerns. Wendy’s shares dropped after the fast food
chain adjusted its outlook on plans for a national rollout of its breakfast
menu. CSX management provided some cautious commentary to investors, noting
more softness than expected in the coal sector and a ‘confusing’ outlook for
intermodal demand. Restoration Hardware posted an earnings beat and outlook
raise, despite the increase in tariffs and some foreboding macro trends.
SUN 9/8
(CN) China Aug Trade Balance: $34.8B v $44.3Be
*(JP) JAPAN FINAL Q2 GDP Q/Q: 0.3% V 0.3%E; ANNUALIZED Q/Q: 1.3% V 1.3%E
MON 9/9
AA Announces new operating model; to eliminate its business unit structure and
consolidate sales, procurement and other commercial capabilities at an
enterprise level; Expects to report Q3 charge
WRK To reconfigure North Charleston, SC, paper mill; to boost annual EBITDA by
$40M
*(US) JULY CONSUMER CREDIT: $23.3B V $16.0BE
F Moody's cuts Ford's unsecured rating one notch to junk status; cuts to Ba1
from Baa3; outlook Stable
WEN Plans to launch breakfast across the U.S. system in 2020; Cuts outlook
after $20M in breakfast investments; to hire 20K new crew members
TUES 9/10
2330.TW Reports Aug (NT$) Rev 106.1B v 91.1B y/y
*(UK) JULY AVERAGE WEEKLY EARNINGS 3M/Y: 4.0% V 3.7%E; WEEKLY EARNINGS
(EX-BONUS) 3M/Y: 3.8% V 3.7%E (fastest pace since the 2008-09 global financial
crisis)
*(UK) AUG JOBLESS CLAIMS CHANGE: +28.2K V +19.8K PRIOR; CLAIMANT COUNT RATE:
3.3% V 3.2% PRIOR
*(US) JULY JOLTS JOB OPENINGS: 7.217M V 7.331ME
*(US) PRES TRUMP FIRES NATIONAL SECURITY ADVISER JOHN BOLTON
09/10 AAPL CEO: Apple TV+ streaming service to be available Nov 1st, priced at
$4.99/mo for family service; Arcade to be available on Sept 19th at $4.99/mo;
Announces iPhone 11 featuring improved cameras; iPhone 11 Pro to feature 3
cameras on the back
(DE) Germany Chancellor Merkel: must continue to reduce debt-to-GDP ratio below
60%; govt stands by its goal for a balanced budget
WED 9/11
(US) California Senate passes employment bill on gig workers, as speculated
(expected to impact app based jobs)
(CN) CHINA FINANCE MINISTRY UNVEILS 1ST LIST FOR TARIFF EXEMPTIONS FOR US
GOODS; effective on Tuesday, Sept 17th
AMZN Reportedly FTC has opened an antitrust probe over Amazon's online
marketplace - press
OPEC Sept Monthly Report: Cuts both 2019 and 2020 global oil demand growth forecasts
again
*(US) AUG PPI FINAL DEMAND M/M: +0.1% V 0.0%E; Y/Y: 1.8% V 1.7%E
(US) Reportedly Pres Trump is again considering a capital gains tax cut - press
(US) California Gov Newsom: still seeks to reach deal with Uber and Lyft on
'gig' worker bill; best interest of the state is to remain at bargaining table
(EU) ECB sources: ECB to cut some growth projections; sees both 2019 and 2020
GDP expansion not much above 1%
ORCL Reports Q1 $0.81 v $0.81e, Rev $9.22B v $9.29Be; authorizes $15B buyback
(8% of market cap); CEO Mark Hurd to take a leave of absence for health-related
reasons
*(CN) US PRESIDENT TRUMP TO DELAY TARIFF INCREASE TO 30% (PRIOR 25%) ON $250B
OF CHINA GOODS TO OCT 15TH (PRIOR OCT 1)
(JP) Japan Investors Net Buying of Foreign Bonds: ¥724.4B v +¥1.49T prior week;
Foreign Net Buying of Japan Stocks: -¥161.3B v -¥89.5B prior week
THURS 9/12
OPEC-Non-OPEC Joint Ministerial Monitoring Committee (JMMC) statement:
Important for all members to fulfill compliance of agreed upon production cuts
(EU) ECB CUTS DEPOSIT RATE BY 10BPS TO -0.50%; AS EXPECTED; restarts QE;
revises forward guidance
*(EU) ECB ANNOUNCES STIMULATIVE MEASURES: Relaunching QE at €20B/month; revises
forward guidance (both with no specific end date)
*(US) AUG CPI M/M: 0.1% V 0.1%E; CPI EX FOOD AND ENERGY M/M: 0.3% V 0.2%E; CPI
NSA: 256.558 V 256.586E
KR Reports Q2 $0.44 v $0.41e, Rev $28.2B v $28.4Be
(EU) ECB's Draghi: Conducted a thorough assessment; reiterates stimulative
statement on rates, QE and guidance- Prepared Remarks
(EU) ECB's Draghi: rationale for today's measures: protracted slowdown is more
marked than expected; persistence of downside risks - Q&A
(CN) Trump advisers reportedly mulling an interim China trade agreement to
postpone tariffs; discussions are preliminary and Pres Trump has yet to approve
the offer - press
*(CN) SENIOR ADMIN OFFICIAL TELLS CNBC THAT THE WHITE HOUSE IS 'ABSOLUTELY NOT'
CONSIDERING AN INTERIM CHINA DEAL
*(US) TREASURY $16B 30-YEAR BOND REOPENING DRAWS 2.270%; BID TO COVER 2.22 V
2.13 PRIOR AND 2.28 AVERAGE OVER LAST 8
*(US) AUG MONTHLY BUDGET STATEMENT: -$200.3B V -$200.0BE (Budget gap hits
$1.07T in first 11 months of 2019)
AVGO Reports Q3 $5.16 v $5.11e, Rev $5.52B v $5.50Be; believes semiconductor
solutions segment has bottomed out
(UK) Northern Ireland DUP Party reportedly could agree to Northern Ireland
accepting some EU rules after Brexit as part of deal to replace backstop - UK's
Times
(CN) Pres Trump: would rather get a 'whole deal' with China rather than an
interim deal; I guess I'd consider an interim trade deal with China
FRI 9/13
(US) AUG ADVANCE RETAIL SALES M/M: 0.4% V 0.2%E; RETAIL SALES (EX-AUTO) M/M:
0.0% V 0.1%E
(US) SEPT PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 92.0 V 90.8E
(US) New York Fed Nowcast: raises Q3 forecast to 1.6% from 1.5%; affirms Q4
forecast at 1.1%
