Weekly Market Update: Markets pause awaiting better signals on the direction of the recovery and stimulus plans
2020-08-14T16:05:53.3
US stock markets pushed higher this week and the move included a welcomed expansion of leadership. The gains came despite rising concerns about the resurgence of Covid-19 infections globally and a hardening of the Washington stalemate over new financial stimulus. The Senate went on recess after President Trump passed executive orders that are expected to result in a deferral of payroll tax withholdings, and both sides spent the week outlining a significant gulf in demands that has only widened. The S&P neared its mid-February all-time highs while the Transports and small caps rode extended winning streets. The NASDSAQ took a step back, especially early in the week, as money appeared to rotate away from large cap tech/growth into areas more traditionally deemed as value like banks and other more deep cyclical sectors. Treasury yields backed up and the curve steepened alongside that rotation spurred by hotter than expected US July inflation readings and a deluge of UST supply which culminated in a very poorly received 30-year bond auction on Thursday. The US dollar was unable to garner any momentum as the discord in DC likely served as a headwind. Hopes that a Sino-US teleconference this weekend might ease tensions over sharping White House rhetoric on the virus origins and Chinese social media firms’ position in the US market were dashed after the meeting was postponed indefinitely on Friday. For the week, the S&P gained 0.6%, the DJIA added 1.8%, and the Nasdaq edged up 0.1%.
In corporate news this week, 3M shares rose after posting solid July numbers, noting ‘broad-based improvements’ in sales trends. Cisco stock slid after reporting a drop in revenue and offering downbeat guidance for next quarter amid caution from enterprise customers. Tesla followed Apple’s lead and announced a 5-for-1 stock split, effective at the end of August. Epic Games filed antitrust suits against Apple and Google after both banned the ‘Fortnite’ game from their app stores because of unsanctioned in-game payments. After its recent IPO, Rocket Companies’ shares surged after reporting jaw-dropping growth in preliminary earnings as the company said it was positioned to capture further market share. Simon Property was said to be in talks with Amazon over turning certain department store spaces into Amazon fulfillment centers. Twitter reportedly held preliminary talks about taking over TikTok, after Microsoft confirmed last week it had held discussions about acquiring the controversial social media company. Barry Diller’s IAC announced it invested $1B to take a 12% stake in gaming giant MGM, adding it is particularly interested in online gaming. The White House announced it had reached a $1.5B supply agreement with Moderna for an initial 100M doses of their COVID-19 vaccine, while Novavax announced a more modest vaccine collaboration with the UK government.
MON 8/10
*(US) JUN JOLTS JOB OPENINGS: 5.889M V 5.300ME
(US) FCC plans auction for 100 megahertz of spectrum that had been previously reserved for military radar; sale could begin in Dec 2021 - press
TUES 8/11
*(DE) GERMANY AUG ZEW CURRENT SITUATION SURVEY: -81.3 V -69.5E; EXPECTATIONS SURVEY: 71.5 V 55.8E
MSTR Adopts 21.5K Bitcoin (~$250M) as primary treasury reserve asset
*(US) JULY PPI FINAL DEMAND M/M: 0.6% V 0.3%E; Y/Y: -0.4% V -0.7%E
TSLA Announces a 5-for-1 stock split, effective Aug 31st
(US) Fed to modify pricing for Municipal Liquidity Facility (MLF); cuts interest rate spread on tax-exempt notes by 50bps
*(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 0.25%; (AS EXPECTED) EXPANDS QE BOND BUYING PROGRAM
WEDS 8/12
*(UK) Q2 PRELIMINARY GDP Q/Q: -20.4% V -20.7%E; Y/Y: % V -22.3%E
700.HK Reports Q2 (CNY) Net 30.2B v 29.2Be, Rev 114.9B v 88.8B y/y; does not provide interim dividend
*(US) JULY CPI M/M: 0.6% V 0.3%E; CPI (EX-FOOD/ENERGY) M/M: 0.6% V 0.2%E; CPI NSA: 259.101 V 258.543E
*(US) DOE CRUDE: -4.5M V -2ME; GASOLINE: -0.7M V -1ME; DISTILLATE: -2.3M V +0.5ME
(US) House Speaker Pelosi: we are still 'miles apart' from any deal on coronavirus aid; there's no use in continuing talks if Republicans don't come to the table - MSNBC interview
(US) NJ Gov Murphy: signing Executive Order officially clearing both our public and nonpublic pre-K through 12 schools and our colleges and universities to reopen for upcoming academic year in New Jersey
*(US) JULY MONTHLY BUDGET STATEMENT: -$63B V -$137.5BE
THURS 8/13
MMM Reports July Rev $2.8B +6% y/y
*(US) INITIAL JOBLESS CLAIMS: 963K V 1.10ME (lowest level since mid-Mar); CONTINUING CLAIMS: 15.49M V 15.80ME
*(US) TREASURY $26B 30-YEAR BOND AUCTION DRAWS 1.406%; BID TO COVER 2.14 V 2.30 PRIOR AND 2.30 OVER LAST 4 AUCTIONS
AAPL Epic Games files civil antitrust suit against Apple after Fortnite removal from the App Store - press
BIDU Reports Q2 $1.46 v $1.39e, Rev $3.69B v $3.66Be
FRI 8/14
*(EU) EURO ZONE Q2 PRELIMINARY GDP Q/Q: -12.1% V -12.1%E V -12.1% ADVANCE; Y/Y: -15.0% V -15.0%E
RKT Reports Prelim Q2 adj Net $2.8B +995% y/y; Rev $5.0B, +437% y/y
*(US) Q2 PRELIMINARY NONFARM PRODUCTIVITY: 7.3% V 1.5%E; UNIT LABOR COSTS: 12.2% V 6.9%E
*(US) JULY ADVANCE RETAIL SALES M/M: 1.2% V 2.1%E; RETAIL SALES (EX-AUTO) M/M: 1.9% V 1.3%E
(CN) US-China six-month review of trade agreement reportedly postponed due to a scheduling issue; had been planned for tomorrow; parties have not set new date yet - press
