Sunday, December 15, 2019

Trade deals and UK vote reduce uncertainty into year end

TradeTheNews.com 

Weekly Market Update: Trade deals and UK vote reduce uncertainty into year end

Fri, 13 Dec 04:05 PM EST/09:05 PM GMT
Trading commenced this week supported by press reports that both the US and China were working feverishly to avoid the December 15 tariff deadline. By Friday, those efforts came to fruition when both sides confirmed a Phase 1 trade deal had been reached in principle and put on paper. China agreed to make efforts to increase purchases of US manufacturing, agriculture, energy, and services in return for President Trump’s decision to forgo the Dec 15 tariffs and an offer to reduce tariffs on one tranche that is already in place. Skeptics were quick to point out that details were sparse and the implementation could still face significant hurdles. Nevertheless, risk assets rallied into the trade announcement affording fresh all-time highs in the US stock market. Interest rates moved up largely on the back of those risk-on flows, driven by trade headlines. Other crosscurrents in Washington yielded a net positive for markets as the White House and House Democrats reached an agreement to ratify the USMCA North American trade agreement, even as the Dems moved to file articles of impeachment against President Trump. Fed Chairman Powell and newly minted ECB President Lagarde oversaw meetings where both central banks signaled rates will likely remain on hold for an extended period. The British Pound and investor risk sentiment overall was further supported by Thursday’s UK election that gave PM Boris Johnson’s Conservative party a resounding victory as voters backed his promise to deliver Brexit at the end of January. For the week, the S&P500 gained 0.7%, the DJIA added 0.4%, and the Nasdaq rose 0.9%.

In corporate news this week, Oracle shares fell after it reported a miss on earnings and guided in line with consensus. Broadcom posted a beat and raised its dividend, though investors were unenthused by slowing growth in the semiconductor business and a modest 2020 revenue forecast. Adobe shares rallied to record highs after topping estimates and demonstrating strength in its digital media division. Nucor forecast a Q4 profit well below market consensus, as lower prices have affected performance at its steel mills segment. The FTC is said to be considering an injunction against Facebook over how the company's products interact, and the government could take action as soon as January to block the technical integration of WhatsApp, Facebook Messenger, and Instagram. Merck agreed to acquire cancer drug developer ArQule for $2.7B, and UnitedHealth’s OptumRx division announced it would buy specialist pharmacist Diplomat for $300M in order to expand its pharmacy services. Sarepta shares surged after the FDA granted accelerated approval to its targeted treatment for rare Duchenne muscular dystrophy mutation.


SUNDAY 12/8
*(JP) JAPAN FINAL Q3 GDP Q/Q: 0.4% V 0.2%E; ANNUALIZED Q/Q: 1.8% V 0.6%E

TUESDAY 12/10
*(DE) GERMANY DEC ZEW CURRENT SITUATION SURVEY: -19.9 V -22.0E; EXPECTATIONS SURVEY: 10.7 V 0.3E (1st positive reading since April)
*(US) Q3 FINAL NONFARM PRODUCTIVITY: -0.2% V -0.1%E; UNIT LABOR COSTS: 2.5% V 3.4%E
(US) US and Chinese negotiators reportedly planning to delay Dec 15 tariffs - US financial press

WEDNESDAY 12/11
TKA.DE To decide on Elevator unit in Q1 2020; Targets €80M total gross savings over next 3 years through standardized products and optimized production network - Capital markets day
*(US) NOV CPI M/M: 0.3% V 0.2%E; CPI EX-FOOD/ENERGY M/M: 0.2% V 0.2%E; CPI NSA: 257.208 V 257.213E
(JP) Japan Investors Net Buying of Foreign Bonds: +¥235.8B v -¥511.1B prior week; Foreign Net Buying of Japan Stocks: -¥200.4B v +¥394B prior week
*(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 1.50-1.75%; AS EXPECTED; DOT PLOT SIGNALS RATE HOLD THROUGH 2020

THURSDAY 12/12
SAN.FR BIOCORP and SANOFI Announced partnership to fit SoloStar insulin pens with Mallya Technology Worldwide
*(CH) SWISS NATIONAL BANK (SNB) LEAVES SIGHT DEPOSIT INTEREST RATE UNCHANGED AT -0.75%; AS EXPECTED
(CN) China 2019 vehicle sales seen at 25.8M units, -8% y/y - Industry Association CAAM
*(EU) ECB ALLOTS €97.7B VS. €120BE IN TLTRO-3 OPERATION
(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED; reiterates forward guidance
(US) NOV PPI FINAL DEMAND M/M: 0.0% V 0.2%E; Y/Y: 1.1% V 1.3%E
(EU) ECB's Lagarde: Reiterates forward guidance; inflation outlook muted but sees initial signs of economic stabilization - Prepared Remarks
(EU) ECB's Lagarde: Direction of inflation is good, but not at the objective - Q&A
NUE Guides Q4 $0.25-0.30 v $0.70e; steel mill performance expected to decrease due to lower steel prices; expects Q4 profitability of steel products to be best Q4 in segment history
(US) Fed Reports Q3 Financial Accounts: Household Change in Net Worth: $0.574T v $1.862T prior
*(US) TREASURY $16B 30-YEAR BOND REOPENING DRAWS 2.307%; BID TO COVER 2.46 V 2.23 PRIOR and 2.24 of the last 8 reopenings
FB FTC reportedly considering injunction action against Facebook over how company's products interact - press
ORCL Reports Q2 $0.90 v $0.88e, Rev $9.6B v $9.65Be
AVGO Reports Q4 $5.39 v $5.36e, Rev $5.78B v $5.76Be; raises dividend 22.6%
COST Reports Q1 $1.73 adj v $1.71e, Rev $37.0B v $37.3Be
(US) Pres Trump reportedly has signed off on US-China agreement, which includes delaying new round of tariffs - press
*(UK) GENERAL ELECTION EXIT POLL: CONSERVATIVES TO WIN OUTRIGHT MAJORITY IN PARLIAMENT
*(JP) JAPAN Q4 TANKAN LARGE MANUFACTURING INDEX: 0 V 3E (4th straight quarterly decline and lowest in over 6-years); OUTLOOK SURVEY: 0 V 3E

FRIDAY 12/13
*(US) NOV ADVANCE RETAIL SALES M/M: 0.2% V 0.5%E; RETAIL SALES (EX-AUTO) M/M: 0.1% V 0.4%E
(US) Pres Trump: We have agreed to a very large Phase One Deal with China. They have agreed to many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more. The 25% Tariffs will remain as is, with 7 1/2% put on much of the remainder