Friday, January 17, 2020

Positive sentiment continues to reign as trade deals come together

TradeTheNews.com 

Weekly Market Update: Positive sentiment continues to reign as trade deals come together

Fri, 17 Jan 04:38 PM EST/09:38 PM GMT
Investors saw the fantastic start to the new year continue this week, led by an ever rising equity market. As promised, the US and China signed the phase one trade agreement in DC and both sides remained optimistic that implementation will go smoothly. The deal was afforded increased goodwill after the US removed China’s currency manipulation designation ahead of the signing, though it remains unclear if and when US officials will be willing to cut Chinese tariffs further. Also on the trade front, the Senate passed the USMCA agreement sending the bill that updates trade arrangements with Canada and Mexico to the President’s desk. President Trump and his administration touted the positive trade developments throughout the week ahead of his Senate impeachment trial that is set to begin next Tuesday.

The US economic data stayed largely constructive with benign inflation readings coming alongside signals of improvement in the manufacturing sector. Friday’s single family housing starts saw the strongest reading since before the 2008 financial crisis, suggesting the industry is preparing for a jump in household formation resulting from the strong consumer environment. China Q4 data releases also calmed some investors’ nerves when GDP, retail sales, industrial production, and new loans data topped expectations. UK data largely underwhelmed, bolstering the belief the BOE could ease as early as this month. The pound and GILT yields moved lower for much of the week. US Treasury yields moved lower only to rebound late in the week spurred by news the US Treasury will be offering a new 20-year bond later this year. Gold and WTI crude futures found some support around $1550 and just below $60/barrel, respectively, following last week’s key reversal around the escalating Iran tensions. For the week, the S&P added 2%, the DJIA rose 1.8%, and the Nasdaq was up 2.3%.

In corporate news this week, major financial institutions kicked off earnings season. JPMorgan posted record profit, beating on its top and bottom line, as sentiment improves amid easing trade tensions. Wells Fargo, however, missed targets as legal challenges and low interest rates weighed on the company. Citigroup reported a beat on its top and bottom line, notching impressive revenue in its fixed-income unit. Goldman Sachs missed on profit after being hit with a $1.1B legal bill. Bank of America earnings and revenue came in above expectations, but a forecast for higher expenses concerned investors. Morgan Stanley posted outstanding Q4 results with strength seen across all its businesses. In the retail space, Target’s holiday same store sales disappointed, with notable weakness seen in its toys and electronics divisions. Five Below also posted weaker than expected holiday revenue, leading the company to cut its Q4 outlook. The Gap announced it no longer intends to spin off its Old Navy unit into a separate, publicly-traded company, backtracking on a plan it had announced early last year.


SUNDAY 1/12
(CN) China said there will be no significant reduction in new energy vehicle subsidies in 2020, 2020 NEV subsidy policy to remain relatively stable - financial press

MONDAY 1/13
FMCC Multifamily 2020 Outlook projects Originations will grow to $390B
(US) Democratic candidate Sen Booker (D-NJ) drops out of presidential race - press
V Confirms to acquire Plaid for $5.3B
(US) TREASURY SEMI-ANNUAL CURRENCY REPORT: confirms removal of China from designation as a currency manipulator; country must take necessary steps to avoid a persistently weak currency

TUESDAY 1/14
JPM Reports Q4 $2.57 v $2.32e, Managed Rev $29.2B v $27.3Be
C Reports Q4 $1.90 v $1.82e, Rev $18.4B v $17.7Be
(US) DEC CPI M/M: 0.2% V 0.3%E; CPI (EX-FOOD/ENERGY) M/M: 0.1% V 0.2%E; CPI NSA: 256.974 V 257.170E
(CN) Reportedly US officials have no plans to cut China duties further now; will verify China deal adherence of 'Phase 1' before considering further reduction of existing tariffs - press

WEDNESDAY 1/15
(UK) DEC CPI M/M: 0.0% V 0.2%E; Y/Y: 1.3% V 1.5%E (3-year low)
TGT Reports holiday SSS +1.4%, results came in below Co expectations
BAC Reports Q4 $0.74 v $0.68e, Rev $22.3B v $22.0Be
(RU) Russia PM Medvedev says govt (cabinet) to resign; President Putin will announce the makeup of the new govt
(US) JAN EMPIRE MANUFACTURING INDEX: 4.8 V 3.6E
(US) DEC PPI FINAL DEMAND MM: 0.1% V 0.2%E V 0.0% PRIOR; Y/Y: 1.3% V 1.3%E
(US) Association of American Railroads weekly rail traffic report for week ending Jan 11th: 501.6K, -9.6% y/y
(US) US and China officials sign 'Phase 1' trade deal at the White House
(US) FEDERAL RESERVE BEIGE BOOK: ECONOMY CONTINUED TO EXPAND MODESTLY IN LAST WEEKS OF 2019 (prior 'expanded modestly')

THURSDAY 1/16
2330.TW Reports Q4 (NT$) Net 116.0B v 111.3Be; Op 124.2B v 121Be; Rev 317.2B v 289.8B y/y
(TR) TURKEY CENTRAL BANK (CBRT) CUTS ONE-WEEK REPO RATE BY 75BPS TO 11.25%; AS EXPECTED
(US) DEC ADVANCE RETAIL SALES M/M: 0.3% V 0.3%E; RETAIL SALES (EX-AUTO) M/M: 0.7% V 0.5%E
(US) Senate passes USMCA trade deal; bill now goes to Pres Trump's desk for signing (as expected)
RIO.AU Reports Q4 Pilbara Iron Ore production 83.6Mt v 86.6 Mt y/y; Shipments 86.8Mt v 87.4Mt y/y
(CN) CHINA Q4 GDP Q/Q: 1.5% V 1.4%E; Y/Y: 6.0% V 6.0%E

FRIDAY 1/17
(UK) DEC RETAIL SALES (EX-AUTO/FUEL) M/M: -0.8% V +0.8%E; Y/Y: 0.7% V 3.0%E
FAST Reports Q4 $0.31 v $0.32e, Rev $1.28B v $1.29Be
STT Reports Q4 $1.98 adj v $1.70e, Rev $3.05B v $2.92Be
(US) DEC HOUSING STARTS: 1.608M V 1.380ME; BUILDING PERMITS: 1.416M V 1.460ME
(US) DEC INDUSTRIAL PRODUCTION M/M: -0.3% V -0.2%E; CAPACITY UTILIZATION: 77.0% V 77.0%E
(US) NOV JOLTS JOB OPENINGS: 6.800M V 7.250ME
BA During testing audit last weekend, 737 flight computers were reportedly not talking to each other at startup; unclear how long fix will take
(US) CDC to begin deploying staff to screen travelers arriving from Wuhan, China for novel coronavirus