Saturday, November 9, 2019

Santa Claus rally starts early amid talk of rolling back China tariffs

TradeTheNews.com 

Weekly Market Update: Santa Claus rally starts early amid talk of rolling back China tariffs

Fri, 08 Nov 04:02 PM EST/09:02 PM GMT
The breakout in US stock indices resumed this week as investors’ willingness to add to risk positions increased. Technicians and Dow theorists were heartened by widening participation into new high territory which now includes a confirmatory new high in the Transports for Dow theorists. Sentiment continued to be underpinned by reports that the US and China were discussing rolling back tariffs on the way to signing the first phase of a trade deal. Risk-on trade flows powered Treasury bond yields to jump to levels not seen since the summer. Heavy sovereign supply in both Europe and the US exacerbated the aggressive move up in rates. Rising rates and steepening yield curves helped financials assume a leadership role.

By Friday, the strength in equity markets petered out after President Trump and others within his administration emphasized that, despite what had been reported in the press, nothing had been agreed upon with regards tariff roll backs. Crude and copper prices drifted lower along with the Yuan as some of the risk-on flows perpetuated by trade hopes earlier in the week reversed, and gold ended off of lows after breaking back below $1,500. The Dollar index crept higher, approaching potential resistance at the 50-day moving average. For the week, the S&P gained 0.8%, the DJIA added 1.2%, and the Nasdaq rose 1.1%.

In corporate news this week, McDonald's CEO Steve Easterbook was forced to step down after the board determined he violated company policy in regards to a recent consensual relationship with an employee. Under Armour confirmed it was the subject of a federal accounting probe related to revenue recognition. Xerox offered to acquire HP Inc (HPQ) for $22/share, and HP confirmed that talks have been occurring intermittently. Bidu posted top and bottom line beats, citing strength in its video streaming division. Roku shares plunged after the company cut its EBITDA outlook despite notching better than expected earnings for the quarter. Dish Network rallied after reporting a Q3 that saw its pay TV net subs surprisingly increase. Disney shares also rallied on Friday after reporting strong earnings results ahead of next week’s official launch of the Disney+ streaming platform.


SUN 11/3
MCD Appoints President, McDonald's USA Chris Kempczinski new CEO; effective immediately; succeeds Steve Easterbrook, who has separated from the Company following violation of company policy and demonstrated poor judgment involving a recent consensual relationship with an employee
UA Confirms under investigation: Cooperating with US SEC and DoJ investigations, believe accounting practices and disclosures were appropriate - CNBC

MON 11/4
*(ES) SPAIN OCT MANUFACTURING PMI: 46.8 V 47.5E (5th straight contraction and lowest reading since Apr 2013)
*(US) SEPT FINAL DURABLE GOODS ORDERS: -1.2% V -1.1%E; DURABLES (EX-TRANSPORTATION): -0.4% V -0.3%E
(CN) US said to be considering removing some tariffs from China goods in order to secure partial trade deal - FT
SHAK Reports Q3 $0.31 v $0.20e, Rev $158M v $157Me

TUES 11/5
ARNC Reports Q3 $0.58 v $0.53e, Rev $3.56B v $3.60Be
*(US) OCT ISM NON-MANUFACTURING INDEX: 54.7 V 53.5E
*(US) SEPT JOLTS JOB OPENINGS: 7.024M V 7.063ME
WBA Reportedly considering deal with buyout firms to go private - press
(EU) Pres Trump reportedly to miss auto import tariff deadline next week in order to maintain leverage in broader US-EU trade talks, according to former officials - press
(CN) China PBOC sets Yuan Reference Rate: 7.0080 v 7.0385 prior (strongest fix since early Aug)
JGB (JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.1% 10-year JGBs: avg yield: -0.099% v -0.158% prior, bid to cover 3.62x v 3.42x prior
HPQ Xerox considers cash and stock takeover offer - US Financial Press

WEDS 11/6
*(US) Q3 NONFARM PRODUCTIVITY: -0.3% V +0.9%E; UNIT LABOR COSTS: 3.6% V 2.3%E
(US) Senior Trump administration official: Trump-Xi meeting could be delayed until Dec as talks continue over terms and venue; still possible that a US-China trade agreement will not be reached, but deal is more likely than not - press
BIDU Reports Q3 $1.76 v $1.25e, Rev $3.93B v $3.97Be (2 est)
(CN) China PBOC sets Yuan Reference Rate: 7.0008 v 7.0080 prior (strongest since Aug 7)
992.HK Reports Q2 Net $202.2M v $201Me, Op $441.7M v $784M y/y Rev $13.5B v $13.4B y/y
7203.JP Reports H1 Net ¥1.3T v ¥1.2T y/y; Op ¥1.4T v ¥1.3T y/y; Rev ¥15.3T v ¥14.7T y/y, announces stock buyback of ¥200B (~1.2% of market cap)

THURS 11/7
DTE.DE Reports Q3 adj Net €1.4B v €1.3B y/y, adj EBITDA (adj for leases) €6.48B v €6.44Be, Rev €20.2B v €19.1B y/y
SIE.DE Reports Q4 Net €1.32B v €1.01Be, Industrial Business EBITA €2.64B v €2.21B y/y, Rev €24.5B v €22.6B y/y
MT.NL Reports Q3 Net -$0.5B v -$0.5B y/y, EBITDA $1.06B v $943.2Me, Rev $16.6B v $16.8Be
(CN) China Commerce Ministry (MOFCOM): If China and US reach Phase 1 deal, both sides must cancel existing tariffs at the same time, with the same proportion based on agreement - weekly press conference
*(UK) BOE NOV MINUTES: VOTED 7-2 TO KEEP INTEREST RATES UNCHANGED AT 0.75%; First dovish dissent since July 2016
(CN) US govt spokesperson: US has agreed that first China trade deal would include tariff rollbacks - press
*(US) TREASURY $19B 30-YEAR BOND REOPENING DRAWS 2.430%; BID TO COVER 2.23 V 2.25 PRIOR
*(US) SEPT CONSUMER CREDIT: $9.5B V $15.0BE
(JP) Japan Investors Net Buying of Foreign Bonds: ¥668.1B v -¥1.02T prior week; Foreign Net Buying of Japan Stocks: ¥420.9B v +¥649.5B prior week
DISH Reports Q3 $0.66 v $0.59e, Rev $3.17B v $3.17Be; Pay-TV net additions 148K v -341K y/y

FRI 11/8
ACA.FR Reports Q3 Net €1.23B v €1.13Be, Rev €5.03B v €4.99Be