Monday, September 20, 2021

Inflation, supply chain, and Delta continue to trouble markets, but some hopeful signs emerge

TradeTheNews.com 

 Weekly Market Update: Inflation, supply chain, and Delta continue to trouble markets, but some hopeful signs emerge

2021-09-17T16:06:54.073

Markets see-sawed this week and treasury yields backed up as investors grappled with mixed US and China economic data as well as the continued spread of the Delta variant. US August CPI data offered some of the first signs that inflation may be easing as Fed Chairman Powell has remained steadfast in forecasting. An unexpectedly strong rebound in August retail sales, alongside robust September manufacturing readings, offset decelerating economic readings out of China. Friday saw the PBOC undertake a significant liquidity add in an attempt to sooth market nerves frayed by quarter-end funding needs and China Evergrande Group’s mounting debt crisis.

Concerns about global stagnation lingered, amplified by a surge in energy prices in Europe. Natural gas and power prices spiked and EU government officials took notice as winter fast approaches. Rising prices in Europe forced US natural gas prices to the highest level since 2018. On the other hand iron ore prices dropped nearly 20%, the worst week since the financial crisis in 2008. Interest rates rose, highlighted by the highest US 10-year Treasury and Bund yields seen since early July. The greenback firmed up resulting in a 2-month low print for the Euro. By Friday, the S&P 500 was near testing its 50-day moving average, which has served as significant support on multiple occasions through 2021. For the week, the S&P fell 0.6%, the DJIA slipped 0.1%, and the Nasdaq gave up 0.5%.

In corporate news, Oracle’s Q1 earnings report disappointed investors as revenue growth was not as impressive as some hoped. Trading in Pfizer and Moderna was volatile as the companies shared more data and an FDA advisory panel debated the merits of Pfizer’s Covid booster shot for the general population. Automobile producers announced more plants would be temporarily idled amid the ongoing global shortage of semiconductor chips. Steel Dynamics and Nucor both raised guidance driven by higher selling prices and robust order books for steel. In M&A, Intuit announced it would acquire marketing platform Mailchimp for about $12B in cash and shares. Major pigment manufacturer Tronox reportedly received a $4.3B takeover approach from Apollo Global.


SUN 9/12
6688.HK Said that China is seeking to break up Alipay from company - FT

MON 9/13
OPEC Monthly Oil Report: Raises 2022 global oil demand growth
(US) Aug NY Fed Survey of Consumer Expectations: Survey shows improvement in expectations; Average reservation wage increases y/y
TROX Apollo reportedly makes $27/shr offer to acquire Tronox in $4.3B all-cash deal - press
(US) SEC Chair Gensler: SEC staff are examining 5 market structure projects
(US) AUG MONTHLY BUDGET STATEMENT: -$170.6B V -$177.5BE
- Receipts: $268B, +20% y/y
ORCL Reports Q1 $1.03 v $0.97e, Rev $9.73B v $9.77Be
INTU Confirms to acquire marketing platform for growing small and mid-market businesses Mailchimp for ~$12B in cash and shares
(CN) New delta variant COVID cases in Fujian province in China 59 v 22 yesterday, total now 102 since outbreak first started; Xiamen halts outbound bus services after outbreak

TUES 9/14
(DE) German 2022 baseload power price rises 2.1% to €101.1/MWh v €91.4/MWh w/w (highest ever)
BA Slightly raises 20-year jet deliveries expectations to 43.6K jets (prior 43.1K); full International recovery not till 2024 (US) AUG AUG CPI M/M: 0.3% V 0.4%E; Y/Y: 5.3% V 5.3%E (lowest annual pace since May 2021's print); CPI (ex-food/energy) M/M: 0.1% v 0.3%e; Y/Y: 4.0% v 4.2%e
(US) Three House Democrats announce they do not plan to support Biden drug pricing proposal - press

WEDS 9/15
Evergrande China said to have told banks that company will not pay interest [related to bank loans] that is Due on Mon, Sept 20th
(UK) AUG CPI M/M: 0.7% V 0.5%E; Y/Y: 3.2% V 2.9%E (moves back above target; highest level since Apr 2012, biggest jump in annual pace since 1997)
(UK) Reportedly fire hit key electricity converter station in UK shutting down a major 2,000 MW IFA cable linking UK to France – press
F Ford, Argo AI, and Walmart partner to launch Autonomous Vehicle delivery service in three US cities
STLD Guides Q3 adj $4.88-4.92 v $4.29e; Order entry continues to be robust
(US) SEPT EMPIRE MANUFACTURING: 34.3 V 17.9E; New Orders surge back to prior highs
Colonial Pipeline: Lines 1 and 2 are restored to normal operations after storm
(US) DOE CRUDE: -6.4M V -2.5ME; GASOLINE: -1.9M V -2.5ME; DISTILLATE: -1.7M V -1.5ME (Crude stocks fall to lowest since Sept 2019)
MRNA Highlights new clinical data on its COVID-19 vaccine; Believes data support benefit of an mRNA-1273 booster dose; mRNA-1273 remains highly effective against COVID-19 in real-world effectiveness study during surge in Delta cases
3333.HK All onshore bonds to suspend trading on the session; Unit Hengda Real Estate adjusts trading mechanism of bonds

THURS 9/16
(US) SEPT PHILADELPHIA FED BUSINESS OUTLOOK: 30.7 V 19.0E
(US) AUG ADVANCE RETAIL SALES M/M: +0.7% V -0.7%E; RETAIL SALES (EX-AUTO) M/M: 1.8% V 0.0%E
*(US) INITIAL JOBLESS CLAIMS: 332K V 322KE; CONTINUING CLAIMS: 2.67M V 2.74ME
(EU) An unpublished ECB inflation estimate said to raise the chance of a interest rate rise in just over 2-years; Expects to hit 2% inflation target by 2025 - Financial Times
NUE Guides Q3 $7.30-7.40 v $6.52e (Record earnings)
IVZ.UK Invesco reportedly in discussions to merge with State Street's asset management division - press

FRI 9/17
(EU) EURO ZONE AUG FINAL CPI Y/Y: 3.0% V 3.0%E; CPI CORE Y/Y: 1.6% V 1.6%E (confirms highest annual pace since 2011)
(US) Treasury said to be planning sanction to target ransomware crypto payments - press
GM Reportedly set to idle some of its North American plants for longer amid chip shortage - press
(US) SEPT PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 71.0 V 72.0E
STLA Jefferson North Assembly plant in Detroit to be idled week of Sept 20th due to the global chip shortage – press
PFE US FDA Advisory Committee votes against (2 votes Yes; 16 votes No; 0 vote to Abstain) of support of approval of a COMIRNATY booster dose