Weekly Market Update: Mixed signals, but no roadblocks, allow equity markets to mark fresh record highs
Fri, 15 Nov 04:16 PM EST/09:16 PM GMT
US stock indices continued to make new highs this week despite a modest pull back in Treasury yields. For a majority of the trading sessions, cautious optimism surrounding US/China trade negotiations underpinned a bid in equities. US administration officials, in particular, on multiple occasions expressed their belief we were still well on our way to a ‘Phase 1’ agreement. The assurances came in the wake of President’s Trumps Tuesday speech where he re-emphasized that new tariffs are still on the table if no deal can be reached, as well as various sourced press reports indicating talks had hit a snag over agriculture purchases and intellectual property protections. House speaker Pelosi suggested that a USMCA deal breakthrough may be imminent despite the palpably partisan environment in Washington as the House’s public impeachment hearings got underway.
Global economic data provided some mixed signals. US October headline CPI ran a bit hotter than expected but Friday’s retails sales and industrial production data disappointed. Germany avoided a technical recession with a slightly positive GDP print. That and a strong improvement in the November Euro Zone ZEW expectations index provided some green shoots. In Asia, Chinese industrial production and retails sales came in significantly short once again. Overall the incoming data did little to change the narrative around Fed policy. In his Capitol Hill testimony Chairman Powell repeated the Fed litany that in all likelihood monetary policy is now on hold unless there is a material change in the outlook. Interest rates retreated modestly on a global basis, but risk assets in general continued to perform well. Crude finished near the highs of the week and the VIX dropped back towards 12 through options expiration on Friday. US equity markets hit fresh all-time highs: the S&P moved up 0.9%, rising above 3,100, while the DJIA topped 28,000 with a 1.2% gain, and the Nasdaq rose 0.8%.
In corporate news this week, Google announced plans to partner with banks to begin offering a smart checking account to consumers next year. Disney launched its Netflix streaming video competitor Disney+ and surprised investors by announcing 10M signups within its first 24 hours. In the semis space, Applied Materials reported a beat on its top and bottom lines and guided above consensus, while Nvidia edged lower after forecasting a return to revenue growth in Q4 that the street viewed as conservative. Walgreens reportedly received a formal approach from KKR on a potential buyout. Canada’s OpenText acquired data security firm Carbonite for over $1.4 billion. American Outdoor Brands announced plans to separate into two independent publicly traded companies, splitting off its gun business Smith & Wesson amid ‘changes in the political climate.’
MON 11/11
WBA Reportedly KKR has made a formal approach to Walgreens about a possible buyout - press
TUES 11/12
VOD.UK Reports H1 adj €0.01 v €0.04 y/y, adj EBITDA €7.11B v €6.92B y/y, Rev €21.9B v €21.9B y/y
*(UK) OCT JOBLESS CLAIMS CHANGE: +33.0K V +13.5K PRIOR; CLAIMANT COUNT RATE: 3.4% V 3.3% PRIOR
*(DE) GERMANY NOV ZEW CURRENT SITUATION SURVEY: -24.7 V -22.3E; EXPECTATIONS SURVEY: -2.1 V -13.0E
(US) US is reportedly considering blocking the passage of the WTO's budget - press
WEDS 11/13
700.HK Reports Q3 (CNY) Net 20.4B v 23.5Be, Rev 97.2B v 99.0Be
GOOGL Reportedly to partner with banks to offer checking accounts to consumers - US financial press
*(US) OCT CPI M/M: 0.4% V 0.3%E; CPI EX FOOD AND ENERGY M/M: 0.2% V 0.2%E; CPI NSA: 257.346 V 257.200E
(US) Fed Chair Powell: rates remain on hold barring material change in outlook - Congressional testimony text release
(US) House Intelligence and Judiciary Committees begins pubic hearings on Impeachment Inquiry
(US) Fed Chair Powell: US economy can operate at lower rate of unemployment than thought - Testimony before joint economic committee
DIS Reports 10M signups for Disney+ since launch - press
(CN) US-China trade talks said to hit snag over specific US agriculture purchases; China also resisting commitments on tech transfers and enforcement mechanisms - press
(JP) Japan Investors Net Buying of Foreign Bonds: ¥528.8B v ¥668.1B prior week; Foreign Net Buying of Japan Stocks: ¥569.5B v ¥420.9B prior week
* (AU) AUSTRALIA OCT EMPLOYMENT CHANGE: -19.0K V +15.0KE (1st decline in 14 months and largest in 3 years); UNEMPLOYMENT RATE: 5.3% V 5.2%E
*(CN) CHINA OCT INDUSTRIAL PRODUCTION Y/Y: 4.7% V 5.4%E
*(CN) CHINA OCT RETAIL SALES Y/Y: 7.2% V 7.8%E
THURS 11/14
*(DE) GERMANY Q3 PRELIMINARY GDP Q/Q: +0.1% V -0.1%E; Y/Y: 0.5% V 0.5%E (avoids technical recession)
*(UK) OCT RETAIL SALES (EX-AUTO/FUEL) M/M: -0.3% V +0.2%E; Y/Y: 2.7% V 3.4%E
*(EU) EURO ZONE Q3 PRELIMINARY GDP Q/Q: 0.2% V 0.2%E; Y/Y: 1.2% V 1.1%E
WMT Reports Q3 $1.16 v $1.09e, Rev $128.0B v $129.0Be
*(US) OCT PPI FINAL DEMAND M/M: 0.4% V 0.3%E; Y/Y: 1.1% V 0.9%E
(US) Fed Chair Powell: labor force participation is a pressing US issue - House Budget Committee
(US) House Speaker Pelosi (D-CA): USMCA deal breakthrough may be imminent
(CN) US and China struggling to complete Phase 1 trade deal; Trump administration officials said to be frustrated that China hasn't offered enough to justify a reduction in US tariffs on Chinese goods - FT
AMAT Reports Q4 $0.80 v $0.76e, Rev $3.75B v $3.68Be
NVDA Reports Q3 $1.78 v $1.57e, Rev $3.01B v $2.90Be
FRI 11/15
*(US) OCT ADVANCE RETAIL SALES M/M: 0.3% V 0.2%E; RETAIL SALES (EX-AUTO) M/M: 0.2% V 0.4%E
*(US) OCT INDUSTRIAL PRODUCTION M/M: -0.8% V -0.4%E; CAPACITY UTILIZATION: 76.7% V 77.0%E
Global economic data provided some mixed signals. US October headline CPI ran a bit hotter than expected but Friday’s retails sales and industrial production data disappointed. Germany avoided a technical recession with a slightly positive GDP print. That and a strong improvement in the November Euro Zone ZEW expectations index provided some green shoots. In Asia, Chinese industrial production and retails sales came in significantly short once again. Overall the incoming data did little to change the narrative around Fed policy. In his Capitol Hill testimony Chairman Powell repeated the Fed litany that in all likelihood monetary policy is now on hold unless there is a material change in the outlook. Interest rates retreated modestly on a global basis, but risk assets in general continued to perform well. Crude finished near the highs of the week and the VIX dropped back towards 12 through options expiration on Friday. US equity markets hit fresh all-time highs: the S&P moved up 0.9%, rising above 3,100, while the DJIA topped 28,000 with a 1.2% gain, and the Nasdaq rose 0.8%.
In corporate news this week, Google announced plans to partner with banks to begin offering a smart checking account to consumers next year. Disney launched its Netflix streaming video competitor Disney+ and surprised investors by announcing 10M signups within its first 24 hours. In the semis space, Applied Materials reported a beat on its top and bottom lines and guided above consensus, while Nvidia edged lower after forecasting a return to revenue growth in Q4 that the street viewed as conservative. Walgreens reportedly received a formal approach from KKR on a potential buyout. Canada’s OpenText acquired data security firm Carbonite for over $1.4 billion. American Outdoor Brands announced plans to separate into two independent publicly traded companies, splitting off its gun business Smith & Wesson amid ‘changes in the political climate.’
MON 11/11
WBA Reportedly KKR has made a formal approach to Walgreens about a possible buyout - press
TUES 11/12
VOD.UK Reports H1 adj €0.01 v €0.04 y/y, adj EBITDA €7.11B v €6.92B y/y, Rev €21.9B v €21.9B y/y
*(UK) OCT JOBLESS CLAIMS CHANGE: +33.0K V +13.5K PRIOR; CLAIMANT COUNT RATE: 3.4% V 3.3% PRIOR
*(DE) GERMANY NOV ZEW CURRENT SITUATION SURVEY: -24.7 V -22.3E; EXPECTATIONS SURVEY: -2.1 V -13.0E
(US) US is reportedly considering blocking the passage of the WTO's budget - press
WEDS 11/13
700.HK Reports Q3 (CNY) Net 20.4B v 23.5Be, Rev 97.2B v 99.0Be
GOOGL Reportedly to partner with banks to offer checking accounts to consumers - US financial press
*(US) OCT CPI M/M: 0.4% V 0.3%E; CPI EX FOOD AND ENERGY M/M: 0.2% V 0.2%E; CPI NSA: 257.346 V 257.200E
(US) Fed Chair Powell: rates remain on hold barring material change in outlook - Congressional testimony text release
(US) House Intelligence and Judiciary Committees begins pubic hearings on Impeachment Inquiry
(US) Fed Chair Powell: US economy can operate at lower rate of unemployment than thought - Testimony before joint economic committee
DIS Reports 10M signups for Disney+ since launch - press
(CN) US-China trade talks said to hit snag over specific US agriculture purchases; China also resisting commitments on tech transfers and enforcement mechanisms - press
(JP) Japan Investors Net Buying of Foreign Bonds: ¥528.8B v ¥668.1B prior week; Foreign Net Buying of Japan Stocks: ¥569.5B v ¥420.9B prior week
* (AU) AUSTRALIA OCT EMPLOYMENT CHANGE: -19.0K V +15.0KE (1st decline in 14 months and largest in 3 years); UNEMPLOYMENT RATE: 5.3% V 5.2%E
*(CN) CHINA OCT INDUSTRIAL PRODUCTION Y/Y: 4.7% V 5.4%E
*(CN) CHINA OCT RETAIL SALES Y/Y: 7.2% V 7.8%E
THURS 11/14
*(DE) GERMANY Q3 PRELIMINARY GDP Q/Q: +0.1% V -0.1%E; Y/Y: 0.5% V 0.5%E (avoids technical recession)
*(UK) OCT RETAIL SALES (EX-AUTO/FUEL) M/M: -0.3% V +0.2%E; Y/Y: 2.7% V 3.4%E
*(EU) EURO ZONE Q3 PRELIMINARY GDP Q/Q: 0.2% V 0.2%E; Y/Y: 1.2% V 1.1%E
WMT Reports Q3 $1.16 v $1.09e, Rev $128.0B v $129.0Be
*(US) OCT PPI FINAL DEMAND M/M: 0.4% V 0.3%E; Y/Y: 1.1% V 0.9%E
(US) Fed Chair Powell: labor force participation is a pressing US issue - House Budget Committee
(US) House Speaker Pelosi (D-CA): USMCA deal breakthrough may be imminent
(CN) US and China struggling to complete Phase 1 trade deal; Trump administration officials said to be frustrated that China hasn't offered enough to justify a reduction in US tariffs on Chinese goods - FT
AMAT Reports Q4 $0.80 v $0.76e, Rev $3.75B v $3.68Be
NVDA Reports Q3 $1.78 v $1.57e, Rev $3.01B v $2.90Be
FRI 11/15
*(US) OCT ADVANCE RETAIL SALES M/M: 0.3% V 0.2%E; RETAIL SALES (EX-AUTO) M/M: 0.2% V 0.4%E
*(US) OCT INDUSTRIAL PRODUCTION M/M: -0.8% V -0.4%E; CAPACITY UTILIZATION: 76.7% V 77.0%E
