Saturday, June 6, 2020

Animal spirits unleashed by optimism, cemented by surprisingly strong US jobs report

TradeTheNews.com  

Weekly Market Update: Animal spirits unleashed by optimism, cemented by surprisingly strong US jobs report

2020-06-05T16:04:26.803

Markets began the week under the specter mass protests and sporadic urban looting following the murder George Floyd while in Minneapolis police custody. But neither the outbreak of civil unrest, nor the continued festering of US/China tensions could derail stock markets. Chinese officials appeared intentionally measured in their response to Friday’s press conference from President Trump, while the White House’s rhetoric largely covered the same ground as the week progressed. Positive commentary from a host US corporations along with both Germany and ECB’s willingness to press further on the stimulus pedal emboldened investors to search our risk assets. Those investors were rewarded on Friday when May non-farm payrolls expanded by more than 2.5M jobs, shocking nearly everyone. The surprise positive print reinforced the growing investor momentum around reopening the economy and a potential V-shaped recovery. Interest rates surged as money was allocated away from Treasury markets, pushing the spread between US 2- and 10-year notes to its widest level since early 2018. For the week, the S&P rose 4.9%, the DJIA surged 6.8%, and the Nasdaq climbed 3.4% to new all-time highs, surpassing the high water mark for the tech-heavy index set in February.

In corporate news this week, US airlines soared following constructive comments from American Airlines, with the company pointing to a ‘steady demand increase’ in May. Starbucks said it sees lower sales at US stores until at least autumn and plans to cut worker hours. eBay’s stock jumped after the online marketplace raised its Q2 outlook as it has seen orders surge amid the pandemic. Zoom reported blowout numbers and doubled its revenue outlook for the fiscal year as virtual meetings more broadly become the norm. Western Union reportedly made an offer for MoneyGram to unite two of the largest remittance firms in the world. FedEx said it would add new fees beginning June 8th for frequent shippers as well as oversized packages amid a recent flood of online shipments. The US Justice Department indicted current and former execs at Pilgrim's Pride and Claxton, including Pilgrim's CEO, in the first charges stemming from a DOJ probe into broiler chicken pricing.


SUN 5/31
05/31 (US) Unrest continues all over the US (incl fires, looting, riots, and peaceful protests) over the police killing of George Floyd, many cities are under curfew; President Trump has put military on alert for possible deployment to back up local police forces - press

MON 6/1
V Reports May total U.S. payments volume -5% y/y, global processed transactions -12% y/y
(US) Atlanta Fed cuts Q2 GDP growth to -52.8% from -51.2%
*(US) MAY FINAL MARKIT PMI MANUFACTURING 39.8 V 40.0E
(CN) China said to have halted some US agricultural imports due to rising tensions between the countries - financial press

TUES 6/2
(US) May ISM New York: 19.5 v 4.3 prior
(HK) US State Dept posts new travel advisory for travel to Hong Kong due to China Security Law; Increases advisory level to 2; comments on HK national security legislation

WED 6/3
*(DE) GERMANY MAY NET UNEMPLOYMENT CHANGE: +238K V +190.0KE; UNEMPLOYMENT RATE: 6.3% V 6.2%
*(EU) EURO ZONE APR UNEMPLOYMENT RATE: 7.3% V 8.2%E
(RU) Saudi, Russia said to be reluctant to extend production cuts without more compliance; planned meeting could be in doubt due to cheating - financial press
*(US) MAY ADP UNEMPLOYMENT CHANGE: -2.76M V -9.00ME
*(US) DOE CRUDE: -2.1M V +3ME; GASOLINE: +2.8M V -0.5ME; DISTILLATE: +9.9M V +3ME
PPC Justice Dept indicts current and former execs at Pilgrim's Pride and Claxton over price fixing, including Pilgrim's CEO - press
(US) Pres Trump chooses five virus vaccine candidates as 'finalists'; to announce decision in next few weeks; five companies mentioned are Moderna, AstraZeneca, J&J, Merck, and Pfizer; no mention in article of Inovio, Dynavax, or Novavax - NY Times
(DE) German Chancellor Merkel coalition reaches deal on Germany stimulus package - press

THURS 6/4
*(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
*(EU) ECB INCREASES SIZE OF ITS PANDEMIC BOND BUYING FUND (PEPP) FROM €750B TO €1.35T
*(US) Q1 FINAL NONFARM PRODUCTIVITY: -0.9% V -2.7%E; UNIT LABOR COSTS: 5.1% V 5.0%E
*(US) INITIAL JOBLESS CLAIMS: 1.88M V 1.84ME; CONTINUING CLAIMS: 21.5M V 20.00ME
(EU) ECB chief Lagarde: Economy showing signs that economy is bottoming out; improvement to be tepid - prepared remarks
(US) Atlanta Fed cuts Q2 GDP growth to -53.8% from -52.8%
AVGO Reports Q2 $5.14 v $5.13e, Rev $5.74B v $5.70Be
NVAX Receives US Department of Defense contract for coronavirus vaccine; DOD to provide $60M for funding for research, production of vaccine, first deliveries in 2020

FRI 6/5
*(US) MAY UNEMPLOYMENT RATE: 13.3% V 19.1%E
*(US) APR CHANGE IN NONFARM PAYROLLS: +2.51M V -7.50ME
*(US) MAY AVERAGE HOURLY EARNINGS M/M: -1.0% V 1.0%E; Y/Y: 6.7% V 8.5%E
(US) New York Fed Nowcast: raises Q2 forecast to -25.5% from -35.5%; raises Q3 forecast to -12.0% from 36.5%
(US) APR CONSUMER CREDIT: -$68.8B V -$20.0BE