Weekly Market Update: Markets stay calm despite US stimulus deadlock and Trump testing Covid positive
2020-10-02T16:15:24.463
Trade commenced this week amid renewed hopefulness regarding US fiscal stimulus talks which came alongside several M&A announcement. A pronounced rebound in European banks also gained traction following a report Ping An acquired more shares of HSBC. Tuesday saw all eyes turn to the election in what could best be described as a wild, chaotic and decidedly unpresidential first debate. What was viewed by many as a poor showing for each candidate, appeared to result in little change in trajectory heading into next month’s vote. Focus quickly shifted back to DC, where, as the week progressed, hope waned that Treasury Secretary Mnuchin and House Speaker Pelosi would be able to bridge a roughly $700B gap and find a way to a fiscal stimulus package compromise. Thursday evening the Democrats went ahead and pushed their $2.2T stimulus package through the House. Airlines did get a little boost on Friday as Pelosi said she was open to a separate deal to resume support for industry payrolls.
Ultimately Tuesday’s Presidential debate might just be the only one to occur after Friday’s bombshell announcement that the President and First Lady had tested positive for Covid-19, along with several other White House personnel. Initial reports indicated President Trump’s symptoms were mild but the news sent shockwaves through Washington and the nation. It also somewhat overshadowed a mixed September jobs report. Payroll figures missed expectations but the unemployment rate fell more than expected and the previous month’s job gains were revised higher. Particularly worrying though was the number of long-term unemployed (those jobless for 27 weeks or more), which increased by 781K to 2.4M, the single largest monthly increase since they started keeping records in 1948. For the week the S&P gained 1.5%, the DJIA added 1.9%, and the Nasdaq was up 1.5%.
In corporate news this week, airlines gained back some of their losses for the week after Speaker Pelosi said the House will pass standalone legislation to keep airline workers on payroll even if there is no broader agreement with the White House on COVID-19 relief, though any action by the House has been pushed to next week. Micron Q1 guidance disappointed, pushing shares lower, and the company couldn’t put a date on when it could sell to Huawei again. Bed Bath and Beyond posted a surprise blowout earnings number and notched its first comp sales gain since 2016 as it saw an upswing in e-commerce sales. Tesla reported a company record number of deliveries in Q3, setting the pace to reach its planned 500K total for the full year. Disney announced plans to cut 28K US theme park positions, 67% of which are part-time employees, as its California theme parks experience prolonged closures. Duke Energy reportedly rejected a takeover approach from NextEra Energy, though Next Era was said to still be interested in making a deal and Duke could be open to more discussions. Apollo's Covis reached an agreement to acquire AMAG Pharmaceuticals, which focuses on ‘underrecognized health conditions,’ at $13.75/share in cash, valuing it at $647M. Ford named John Lawler as CFO, effective immediately, as the auto industry enters the high-demand autumn selling season. Molson Coors signed an exclusive agreement with Coca-Cola to launch Mexico’s Topo Chico brand as a new hard seltzer product in the US.
SUN 9/27
981.HK US has imposed restrictions on exports to SMIC, the move by the US government said to be not as severe as blacklisting the co. - financial press
5.HK Ping An Insurance (largest shareholder) raised stake to 8% from 7.95%, purchased an additional 10.8M H-shares - update
MON 9/28
(US) White House plans to announce shipments of millions of rapid Covid tests to the states in an effort to get them to reopen schools - press
(UK) EU negotiators said to have indicated it was prepared to start writing a joint legal text of a post Brexit trade agreement with the UK - UK press
TUES 9/29
*(EU) EURO ZONE SEPT ECONOMIC CONFIDENCE: 91.1 V 89.0E
*(DE) GERMANY SEPT PRELIMINARY CPI M/M: -0.2% V -0.1%E; Y/Y: -0.2% V 0.0%E
*(US) SEPT CONSUMER CONFIDENCE: 101.8 V 90.0E
(UK) Reportedly the UK has sent 5 new trade deal drafts to the EU in an effort to reach a breakthough in talks
(US) Dallas Fed Aug Texas Service Sector Outlook Survey: General Business Activity: 11.5 v 4.7 prior
(US) NYC test positivity rate registers at 3% today (tripling over last few days); if it remains at 3% for 7 days, all public schools close - press
(US) DOJ Antitrust Chief Delrahim: we are looking at controversy around data feeds from exchanges and data pricing - press interview
REGN REGN-COV2 Antibody Cocktail reduced Viral Levels and improved symptoms in Non-Hospitalized COVID-19 Patients in seamless Phase 1/2/3 trial
MU Reports Q4 $1.08 v $1.00e, Rev $6.06B v $5.91Be
*(CN) CHINA SEPT MANUFACTURING PMI (GOVT OFFICIAL): 51.5 V 51.3E (7th straight expansion)
WEDS 9/30
RDSA.NL Issues Q3 Update: Guides Q3 Integrated gas Production 820-860Kboe/d, LNG liquefaction volumes 7.9-8.3Mt, Adj Earnings $100-200M; Confirms to cut 9K jobs
*(DE) GERMANY SEPT NET UNEMPLOYMENT CHANGE: -8.0K V -7.0KE; UNEMPLOYMENT CLAIMS RATE: 6.3% V 6.4%E
*(US) SEPT ADP EMPLOYMENT CHANGE: +749K V +649KE; Strong gains in Manufacturing (4th month of improvement)
*(US) Q2 FINAL GDP PRICE INDEX: -1.8% V -2.0%E; CORE PCE Q/Q: -0.8% V -1.0%E
*(US) Q2 FINAL GDP ANNUALIZED Q/Q: -31.4% V -31.7%E; PERSONAL CONSUMPTION: -33.2% V -34.1%E
(US) Nevada reports Aug casino gaming Rev $743.0M, -22.1% y/y; Las Vegas strip Rev $317.3M, -39.2% y/y
*(US) DOE CRUDE: -2.0M V +1ME; GASOLINE: +0.7M V -1ME; DISTILLATE: -3.2M V -1ME
(US) Association of American Railroads weekly rail traffic report for week ending Sep 26th: 518.3K, -2.1% y/y
(US) Fed extends restrictions on large banks' dividends and buybacks into Q4 (for firms with over $100B in assets)
(JP) Tokyo Stock Exchange (TSE): probing reports of network issues; JPX is halting trade of all shares due to network issues; Unsure when system will be restored.
(JP) Follow Up: JPX: Nikkei trading is halted for full day [Thursday] due to network issue [first time trading has been halted for an entire day]; To announce trading schedule tomorrow, will attempt to resume TSE trading on Friday (Oct 2nd)
THURS 10/1
(HK) Macau Sept Casino Rev (MOP): 2.2B v 1.3B prior; Y/Y: -90.0% v -94.5% prior
*(IT) ITALY SEPT MANUFACTURING PM: 53.2 V 53.5E (3rd month of expansion and highest since Jun 2018 )
*(EU) EURO ZONE AUG UNEMPLOYMENT RATE: 8.1% V 8.1%E
F Names John Lawler (54) as CFO, effective immediately
*(US) INITIAL JOBLESS CLAIMS: 837K V 850KE; CONTINUING CLAIMS: 11.8M V 12.20ME; California to not report claims for next 2 weeks
*(US) AUG PERSONAL INCOME: -2.7% V -2.5%E; PERSONAL SPENDING: 1.0% V 0.8%E
*(US) SEPT ISM MANUFACTURING: 55.4 V 56.4E; PRICES PAID: 62.8 V 58.8E
(UK) Bank of England (BOE): have reached target in corporate bond purchase program, no corporate bond operations will be conducted until further notice
(US) Fed extends temporary actions aimed at increasing the availability of intraday credit extended by Federal Reserve Banks to March 31st
(US) US President Trump: Will begin quarantine after aide Hicks tested positive for COVID-19, First Lady to also start the quarantine process
FRI 10/2
*(US) PRESIDENT TRUMP TWEETS: TESTED POSITIVE FOR CORONAVIRUS
*(EU) EURO ZONE SEPT ADVANCE CPI ESTIMATE Y/Y: -0.3% V -0.2%E; CPI CORE Y/Y: 0.2% (record low) V 0.4%E
TSLA Reports Q3 total production 145.0K v 82.3K q/q; deliveries 139.3K v 90.7K q/q v 140Ke; Says Q3 vehicle inventory declined further
*(US) SEPT UNEMPLOYMENT RATE: 7.9% V 8.2%E
*(US) SEPT CHANGE IN NONFARM PAYROLLS: +661K V +875KE
*(US) SEPT AVERAGE HOURLY EARNINGS M/M: 0.1% V 0.2%E; Y/Y: 4.7% V 4.8%E; AVERAGE WEEKLY HOURS: 34.7 V 34.6E
*(US) SEPT FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 80.4 V 79.0E
(US) House Speaker Pelosi: relief for airline workers is being advanced; calls on airlines to postpone job cuts; House will pass standalone legislation to keep airline workers on payroll if no broader agreement on COVID-19 relief is possible
(US) Pres Trump reportedly plans to empower Pence to take over some duties in the event his coronavirus symptoms worsen; national security is said to be a top priority - Fox News
