Weekly Market Update: Markets face a reality check
2020-05-15T16:05:50.357
Stock indices rolled over this week as investor sentiment underwent somewhat of reality check. The economic data saw historic declines both in Europe and the US. The brutal numbers, though not unexpected, came alongside circumspect comments from Fed Chairman Powell as well as several legendary investors. The notion of any v-shaped economic recovery seemed to dissipate further after Powell warned of potential lasting economic damage from this crisis could very well mean additional measures will be needed. Treasury yields moved lower and the curve flattened despite a barrage of Fed commentary meant to push back on the notion that US rates could eventually find their way into negative territory. The week came to a close amid renewed concerns surrounding rising China tensions. President Trump and his administration repeatedly emphasized their dissatisfaction and distrust of China’s handling of the coronavirus crisis, going as far as to suggest he could consider cutting ties altogether. Friday the US Commerce Department announced rules aimed at cutting off Huawei's efforts to undermine US export controls, prompting swift reaction by Chinese state media. The VIX moved up and gold prices moved back to the highest levels in weeks. Oil prices continued to rebound to levels not seen since before the wild volatility of mid-April. For the week, the S&P slipped 2.3%, the DJIA fell 2.7%, and the Nasdaq lost 1.2%.
As the major thrust of earnings season winds down, some names still remained to report this week. Applied Materials reported a miss on its top and bottom line, but noted it sees evidence that the supply chain is recovering. Cisco shares rose on an earnings beat despite “manufacturing challenges and component constraints” amid the pandemic. United Natural Foods released preliminary Q3 numbers that smashed expectations, as demand surged for both its natural and conventional products and sales remain elevated. Word that Uber is in talks to acquire GrubHub in an all-stock deal surprised the Street this week, though follow-up reports indicate the companies remain at odds on price. Disney added its name to the list of corporations moving in to capital markets to shore up balance sheets, filing to offer $11B in notes.
MON 5/11
DIS Launches $11B six-tranche note offering
BA CEO: Likely that a US airline will shutdown by Sept, sees US air traffic levels at less than 25% by Sept
TUES 5/12
7203.JP Reports FY19/20 Net ¥2.08T v ¥1.88T y/y; Op ¥2.44T v ¥2.47T y/y; Rev ¥29.93T v ¥30.23T y/y
VOD.UK Reports FY20 adj 5.60p v 6.27p y/y, adj EBITDA €14.9B v €13.9B y/y, Rev €45.0B v €43.7B y/y; affirms FY19 dividend at 9c/shr v 9c/shr y/y
*(US) APR CPI M/M: -0.8% V -0.8%E; CPI (EX-FOOD/ENERGY) M/M: -0.4% V -0.2%E; CPI NSA: 256.389 V 256.489E (CORE INDEX FALLS BY MOST ON RECORD)
(IN) India PM Modi: announces economic package worth INR20T (10% of GDP)
GRUB Uber reportedly approached Grubhub with takeover offer - press
KSU Reports QTD volume -25% y/y, Rev -22% y/y - investor slides
*(US) APR MONTHLY BUDGET STATEMENT: -$737.9B V -$737.2BE
*(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 0.25%; AS EXPECTED; RAISES LARGE SCALE ASSET PURCHASE (LSAP) PROGRAM FROM NZ$33B TO NZ$60B
WEDS 5/13
*(UK) Q1 PRELIMINARY GDP Q/Q: -2.0% V -2.6%E; Y/Y: -1.6% V -2.2%E ((worst quarterly contraction since Q4 2008)
700.HK Reports Q1 (CNY) Net 28.9B v 27.2B y/y, Op 37.3B v 30.6Be, Rev 108.1B v 101.0Be
TMO Raises Q2 Organic Rev -10% to flat (prior -15% to flat) - filing
*(US) APR PPI FINAL DEMAND M/M: -1.3% V -0.5%E; Y/Y: -1.2% V -0.4%E
(US) Fed Chairman Powell: growing sense that recovery may be slower than we like; expect unemployment to peak in next month or so, but will likely to remain well above levels we saw in 2018 and 2019 - Q&A
(US) Fed Chairman Powell: Negative rates is NOT something we are looking at; our view has NOT changed
*(US) DOE CRUDE: -0.7M V +4.5ME; GASOLINE: -3.5M V -2.5ME; DISTILLATE: +3.5M V +3.5ME
ABT New York University data shows Abbott coronavirus test missed one-third of COVID cases in preliminary test; the 15-min test may yield false negatives - press
*(US) TREASURY $22B 30-YEAR BOND AUCTION DRAWS 1.342%; BID TO COVER 2.30 V 2.43 PRIOR AND 2.28 OVER LAST 4 AUCTIONS
THURS 5/14
*(EU) ECB ECONOMIC BULLETIN: To continue to support the euro area economy in the face of the current economic disruption and heightened uncertainty
LH Confirms launch of "return to work services" for employers with IgG test
MMM CFO: Expects to be producing Respirators at run rate of 2B/yr by end-2020 - investor conf comments
*(US) INITIAL JOBLESS CLAIMS: 2.98M V 2.50ME; CONTINUING CLAIMS: 22.83M V 25.12ME
AMAT Reports Q2 $0.89 v $0.91e, Rev $3.96B v $4.20Be; Supply chain is recovering
FRI 5/15
*(DE) GERMANY Q1 PRELIMINARY GDP Q/Q: -2.2% V -2.2%E ; Y/Y: -2.3% V -2.0%E (confirms technical recession and worst quarterly performance since financial crisis)
(EU) EURO ZONE Q1 PRELIMINARY GDP Q/Q: -3.8% V -3.8%E; Y/Y: -3.2% V -3.3%E
*(US) MAY EMPIRE MANUFACTURING: -48.5 V -60.0E
*(US) APR ADVANCE RETAIL SALES M/M: -16.4% V -12.0%E; RETAIL SALES (EX-AUTO) M/M: -17.2% V -8.5%E
(US) APR INDUSTRIAL PRODUCTION M/M: -11.2% V -12.0%E; CAPACITY UTILIZATION: 64.9% V 63.8%E
(US) MAR JOLTS JOB OPENINGS: 6.191M V 5.800ME
(US) Atlanta Fed cuts Q2 GDP growth to -42.8% from -34.9%
As the major thrust of earnings season winds down, some names still remained to report this week. Applied Materials reported a miss on its top and bottom line, but noted it sees evidence that the supply chain is recovering. Cisco shares rose on an earnings beat despite “manufacturing challenges and component constraints” amid the pandemic. United Natural Foods released preliminary Q3 numbers that smashed expectations, as demand surged for both its natural and conventional products and sales remain elevated. Word that Uber is in talks to acquire GrubHub in an all-stock deal surprised the Street this week, though follow-up reports indicate the companies remain at odds on price. Disney added its name to the list of corporations moving in to capital markets to shore up balance sheets, filing to offer $11B in notes.
MON 5/11
DIS Launches $11B six-tranche note offering
BA CEO: Likely that a US airline will shutdown by Sept, sees US air traffic levels at less than 25% by Sept
TUES 5/12
7203.JP Reports FY19/20 Net ¥2.08T v ¥1.88T y/y; Op ¥2.44T v ¥2.47T y/y; Rev ¥29.93T v ¥30.23T y/y
VOD.UK Reports FY20 adj 5.60p v 6.27p y/y, adj EBITDA €14.9B v €13.9B y/y, Rev €45.0B v €43.7B y/y; affirms FY19 dividend at 9c/shr v 9c/shr y/y
*(US) APR CPI M/M: -0.8% V -0.8%E; CPI (EX-FOOD/ENERGY) M/M: -0.4% V -0.2%E; CPI NSA: 256.389 V 256.489E (CORE INDEX FALLS BY MOST ON RECORD)
(IN) India PM Modi: announces economic package worth INR20T (10% of GDP)
GRUB Uber reportedly approached Grubhub with takeover offer - press
KSU Reports QTD volume -25% y/y, Rev -22% y/y - investor slides
*(US) APR MONTHLY BUDGET STATEMENT: -$737.9B V -$737.2BE
*(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 0.25%; AS EXPECTED; RAISES LARGE SCALE ASSET PURCHASE (LSAP) PROGRAM FROM NZ$33B TO NZ$60B
WEDS 5/13
*(UK) Q1 PRELIMINARY GDP Q/Q: -2.0% V -2.6%E; Y/Y: -1.6% V -2.2%E ((worst quarterly contraction since Q4 2008)
700.HK Reports Q1 (CNY) Net 28.9B v 27.2B y/y, Op 37.3B v 30.6Be, Rev 108.1B v 101.0Be
TMO Raises Q2 Organic Rev -10% to flat (prior -15% to flat) - filing
*(US) APR PPI FINAL DEMAND M/M: -1.3% V -0.5%E; Y/Y: -1.2% V -0.4%E
(US) Fed Chairman Powell: growing sense that recovery may be slower than we like; expect unemployment to peak in next month or so, but will likely to remain well above levels we saw in 2018 and 2019 - Q&A
(US) Fed Chairman Powell: Negative rates is NOT something we are looking at; our view has NOT changed
*(US) DOE CRUDE: -0.7M V +4.5ME; GASOLINE: -3.5M V -2.5ME; DISTILLATE: +3.5M V +3.5ME
ABT New York University data shows Abbott coronavirus test missed one-third of COVID cases in preliminary test; the 15-min test may yield false negatives - press
*(US) TREASURY $22B 30-YEAR BOND AUCTION DRAWS 1.342%; BID TO COVER 2.30 V 2.43 PRIOR AND 2.28 OVER LAST 4 AUCTIONS
THURS 5/14
*(EU) ECB ECONOMIC BULLETIN: To continue to support the euro area economy in the face of the current economic disruption and heightened uncertainty
LH Confirms launch of "return to work services" for employers with IgG test
MMM CFO: Expects to be producing Respirators at run rate of 2B/yr by end-2020 - investor conf comments
*(US) INITIAL JOBLESS CLAIMS: 2.98M V 2.50ME; CONTINUING CLAIMS: 22.83M V 25.12ME
AMAT Reports Q2 $0.89 v $0.91e, Rev $3.96B v $4.20Be; Supply chain is recovering
FRI 5/15
*(DE) GERMANY Q1 PRELIMINARY GDP Q/Q: -2.2% V -2.2%E ; Y/Y: -2.3% V -2.0%E (confirms technical recession and worst quarterly performance since financial crisis)
(EU) EURO ZONE Q1 PRELIMINARY GDP Q/Q: -3.8% V -3.8%E; Y/Y: -3.2% V -3.3%E
*(US) MAY EMPIRE MANUFACTURING: -48.5 V -60.0E
*(US) APR ADVANCE RETAIL SALES M/M: -16.4% V -12.0%E; RETAIL SALES (EX-AUTO) M/M: -17.2% V -8.5%E
(US) APR INDUSTRIAL PRODUCTION M/M: -11.2% V -12.0%E; CAPACITY UTILIZATION: 64.9% V 63.8%E
(US) MAR JOLTS JOB OPENINGS: 6.191M V 5.800ME
(US) Atlanta Fed cuts Q2 GDP growth to -42.8% from -34.9%
