Weekly Market Update: US/China Trade Sentiment Fluctuates Ahead of Strong Nov Employment Report
Fri, 06 Dec 04:03 PM EST/09:03 PM GMT
Stock markets opened the week under pressure as positive sentiment surrounding US-China trade talks ebbed. The President was in the UK meeting with NATO leaders, where he acknowledged a trade deal with China might not be possible until after the 2020 election. As foreshadowed by a surprise South American tariff announcement Monday, he struck a more contentious tone while meeting with NATO officials, which included new tariffs on French products in retaliation for the expected digital tax. By midweek, though, the pendulum began to swing back into more favorable territory surrounding the trade talks following a host of China sourced reports and more constructive commentary from administration officials. Hong Kong remained a potential flash point, but both sides appeared to remain in regular contact, reportedly plugging away towards a hopeful 'Phase 1' agreement before Trump’s Dec 15th tariff decision.
Friday’s November employment numbers handily surpassed expectations on nearly all accounts, though it was potentially helped by the late Thanksgiving calendar and the GM operations resumption. Nevertheless, risk assets continued to run up, affording US stock markets to move back into positive territory for the week. Oil prices held near multi-month highs as producers were able to cobble together an agreement to remove an additional 500K bpd when they met in Vienna. Rates finished the week near a one-month high and the US Treasury curve steepened in the wake of the Nov jobs report. For the week, the S&P and Dow added ~0.1% and the NASDAQ lost 0.1%.
In corporate news this week, Salesforce shares saw choppy trading after beating on the bottom line and raising its FY20 outlook, but Q4 guidance came in a little below consensus. Slack quarterly results topped expectations as competition with Microsoft’s Teams product intensifies. Ulta Beauty shares surged after posting an EPS beat despite continuing challenges in the cosmetics sector. Expedia CEO Mark Okerstrom and CFO Alan Pickerill announced their resignations amidst a strategy dispute between the board and senior management. Cleveland-Cliffs agreed to acquire AK Steel for ~$3.36/shr in an all-stock transaction as falling prices have roiled the steel sector. Google co-founders Page and Brin stepped down from their top management roles at the tech giant, as Sundar Pichai takes the reins at both Google and parent company Alphabet. United Airlines CEO Oscar Munoz said he would resign and that President Scott Kirby would take the airline’s leadership position.
SUNDAY 12/1
*(CN) CHINA NOV MANUFACTURING PMI (govt official): 50.2 V 49.5E (1st expansion in 7 months)
*(CN) CHINA NOV CAIXIN PMI MANUFACTURING: 51.8 V 51.5E (4th consecutive month of expansion, fastest rate of expansion in almost 3-years)
MONDAY 12/2
OPEC+ said to be discussing deepening current oil production cuts by at least 400K bpd at least until June - financial press
*(US) NOV ISM MANUFACTURING: 48.1 V 49.2E; PRICES PAID: 46.7 V 47.0E
(US) Atlanta Fed cuts Q4 GDP growth from 1.7% to 1.3%
(US) US offiicals reportedly considering loosening some intellectual property (IP) rules for drugmakers under the USMCA in order to win Democratic support - press
(FR) US issues decision in response to France digital tax: USTR will take action against digital tax regimes that discriminate against US companies; proposes $2.4B tariffs on French goods including sparkling wines, handbags, makeup, household goods, and cheeses
JGB (JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.1% 10-year JGBs: avg yield: -0.042% v -0.099% prior, bid to cover 3.28x v 3.62x prior (lowest btc since Aug 2016)
TUESDAY 12/3
(US) Sen Kamala Harris reportedly to drop out of Democratic primary contest - The Atlantic
(US) House Democrats in impeachment inquiry report claim Pres Trump used powers of his office to solicit foreign interference in 2020 US election
Reportedly OPEC+committee did NOT discuss deeper output cuts ahead of meetings this week - press
CRM Reports Q3 $0.75 v $0.66e, Rev $4.5B v $4.44Be
GOOGL CEO Larry Page and President Sergey Brin to step down from Alphabet; Google CEO Sundar Pichai will be the CEO of both Google and Alphabet going forward
WEDNESDAY 12/4
*(US) NOV ADP EMPLOYMENT CHANGE: +67K V +135KE (lowest rise since May 2019)
EXPE Announces 20M share buyback (14% of shares outstanding); CEO Mark Okerstrom and CFO Alan Pickerill to resign, effective immediately
*(US) NOV ISM NON-MANUFACTURING INDEX: 53.9 V 54.5E
(US) Association of American Railroads weekly rail traffic report for week ending Nov 30th: 436.9K, -23% y/y
(JP) Japan Investors Net Buying of Foreign Bonds: -¥511.1B v -¥150.8B prior week; Foreign Net Buying of Japan Stocks: +¥394B v ¥131.1B prior week
THURSDAY 12/5
*(EU) EURO ZONE Q3 FINAL GDP Q/Q: 0.2% V 0.2%E; Y/Y: 1.2% V 1.2%E
*(US) House Speaker Pelosi: confirms the House will draft Articles of Impeachment against President Trump
*(US) OCT FINAL DURABLE GOODS ORDERS: 0.5% V 0.6%E; DURABLES EX-TRANSPORTATION: 0.5% V 0.6%E
(US) Atlanta Fed raises Q4 GDP growth from 1.3% to 1.5%
FRIDAY 12/6
OPEC+ said to have agreed to a deepening of production cuts by 500K bpd (in-line with speculation)
*(US) NOV AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 3.1% V 3.0%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
Friday’s November employment numbers handily surpassed expectations on nearly all accounts, though it was potentially helped by the late Thanksgiving calendar and the GM operations resumption. Nevertheless, risk assets continued to run up, affording US stock markets to move back into positive territory for the week. Oil prices held near multi-month highs as producers were able to cobble together an agreement to remove an additional 500K bpd when they met in Vienna. Rates finished the week near a one-month high and the US Treasury curve steepened in the wake of the Nov jobs report. For the week, the S&P and Dow added ~0.1% and the NASDAQ lost 0.1%.
In corporate news this week, Salesforce shares saw choppy trading after beating on the bottom line and raising its FY20 outlook, but Q4 guidance came in a little below consensus. Slack quarterly results topped expectations as competition with Microsoft’s Teams product intensifies. Ulta Beauty shares surged after posting an EPS beat despite continuing challenges in the cosmetics sector. Expedia CEO Mark Okerstrom and CFO Alan Pickerill announced their resignations amidst a strategy dispute between the board and senior management. Cleveland-Cliffs agreed to acquire AK Steel for ~$3.36/shr in an all-stock transaction as falling prices have roiled the steel sector. Google co-founders Page and Brin stepped down from their top management roles at the tech giant, as Sundar Pichai takes the reins at both Google and parent company Alphabet. United Airlines CEO Oscar Munoz said he would resign and that President Scott Kirby would take the airline’s leadership position.
SUNDAY 12/1
*(CN) CHINA NOV MANUFACTURING PMI (govt official): 50.2 V 49.5E (1st expansion in 7 months)
*(CN) CHINA NOV CAIXIN PMI MANUFACTURING: 51.8 V 51.5E (4th consecutive month of expansion, fastest rate of expansion in almost 3-years)
MONDAY 12/2
OPEC+ said to be discussing deepening current oil production cuts by at least 400K bpd at least until June - financial press
*(US) NOV ISM MANUFACTURING: 48.1 V 49.2E; PRICES PAID: 46.7 V 47.0E
(US) Atlanta Fed cuts Q4 GDP growth from 1.7% to 1.3%
(US) US offiicals reportedly considering loosening some intellectual property (IP) rules for drugmakers under the USMCA in order to win Democratic support - press
(FR) US issues decision in response to France digital tax: USTR will take action against digital tax regimes that discriminate against US companies; proposes $2.4B tariffs on French goods including sparkling wines, handbags, makeup, household goods, and cheeses
JGB (JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.1% 10-year JGBs: avg yield: -0.042% v -0.099% prior, bid to cover 3.28x v 3.62x prior (lowest btc since Aug 2016)
TUESDAY 12/3
(US) Sen Kamala Harris reportedly to drop out of Democratic primary contest - The Atlantic
(US) House Democrats in impeachment inquiry report claim Pres Trump used powers of his office to solicit foreign interference in 2020 US election
Reportedly OPEC+committee did NOT discuss deeper output cuts ahead of meetings this week - press
CRM Reports Q3 $0.75 v $0.66e, Rev $4.5B v $4.44Be
GOOGL CEO Larry Page and President Sergey Brin to step down from Alphabet; Google CEO Sundar Pichai will be the CEO of both Google and Alphabet going forward
WEDNESDAY 12/4
*(US) NOV ADP EMPLOYMENT CHANGE: +67K V +135KE (lowest rise since May 2019)
EXPE Announces 20M share buyback (14% of shares outstanding); CEO Mark Okerstrom and CFO Alan Pickerill to resign, effective immediately
*(US) NOV ISM NON-MANUFACTURING INDEX: 53.9 V 54.5E
(US) Association of American Railroads weekly rail traffic report for week ending Nov 30th: 436.9K, -23% y/y
(JP) Japan Investors Net Buying of Foreign Bonds: -¥511.1B v -¥150.8B prior week; Foreign Net Buying of Japan Stocks: +¥394B v ¥131.1B prior week
THURSDAY 12/5
*(EU) EURO ZONE Q3 FINAL GDP Q/Q: 0.2% V 0.2%E; Y/Y: 1.2% V 1.2%E
*(US) House Speaker Pelosi: confirms the House will draft Articles of Impeachment against President Trump
*(US) OCT FINAL DURABLE GOODS ORDERS: 0.5% V 0.6%E; DURABLES EX-TRANSPORTATION: 0.5% V 0.6%E
(US) Atlanta Fed raises Q4 GDP growth from 1.3% to 1.5%
FRIDAY 12/6
OPEC+ said to have agreed to a deepening of production cuts by 500K bpd (in-line with speculation)
*(US) NOV AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 3.1% V 3.0%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
