9/1/2023 4:21:50 PM
The final week of August saw investors thankfully put a rough start to the month further into the rear view mirror. Trading volumes were some the lowest of the year which belied a week that offered a litany of key economic readings and developments, along with swath of influential tech and consumer related earnings reports. Animal spirits initially served as a tailwind when Monday saw several modest M&A announcements. None was more important than the news the FTC opened the door for the $28B Horizon Therapeutics/Amgen deal to be able to close as early as this fall. China stimulus headlines continued to serve as a buoy to underlying sentiment, culminating in confirmed changes to China’s mortgage market, and the PBOC’s 200 basis point cut to the forex reserve requirement ratio. The Yuan continued to creep up off of recent multi-month lows, while copper and crude prices remained on firmer footing.
Clearly the overarching narrative to trade this week was the softening economic data, and the implications for global central banks. Eurozone PMI figures remained well into contraction territory causing some ECB officials to dial back rhetoric, and along with that expectations they will raise rates in September. Importantly, Tuesday the US July JOLTS data sent both stock and bond prices sharply higher. The headline data fell to its lowest level in roughly 2-years, nearly 700K openings below estimates. It served as a precursor to Friday’s August US employment report. The unemployment and labor force participation rates both jumped more than expected, while wage growth decelerated. Payrolls remained robust and weekly hours ticked up, but regardless, the Fed is likely to cheer the signs of normalization seen filtering through labor market. The jobs readings were sandwiched around July PCE data which further supported the belief the Fed can look to hold rates here and see how their restrictive stance plays out before deciding if rates need to go any higher. Nevertheless risks remain for Fed officials, probably none more so than oil prices, which appear to breaking out to the upside. Saudi crude output continued to dwindle in August even as Aramco is said contemplating an historic $50B share offering. De-inverting along the US yield curve was prevalent throughout the week as traders’ focus moved away from whether the Fed will hike the funds rate again, towards betting on a soft landing and if and when they will start to consider cutting rates next year. For the week, the S&P gained 2.5%, the DJIA rose 1.4%, and the Nasdaq recouped 3.2%.
Corporate news this week continued to highlight the struggle to get a clear picture of what is happening in retail. Dollar General, a discount chain that usually fares well when consumers are strapped, reported a stinker of a quarter and cut its outlook, laying much of the blame on ‘shrink.’ Walgreens Boots cuts its fiscal year forecast as it announced its CEO will step down. Costco reported another month of lukewarm same store sales growth in the low single digits. Meanwhile, Best Buy beat earnings expectations handily and affirmed its forecast that tech product demand should bottom out this year and stabilize in 2024. High tech names were also a mixed bag. Salesforce reported a good EPS beat and raised guidance and Dell blew out estimates, sending its shares up more than 20% on Friday. Broadcom was a different case, providing mostly in-line results and guidance, and noting that it would not have made its numbers if not for strong AI-related spending from customers.
SUN 8/27
BP.UK CEO: BP needs rapid and 'just' energy transition; To invest up to 50% of its capital in energy transition by end of the decade - financial press
(CN) China Securities Regulator (CSRC): To slow pace of IPO's at the current stage; Exchanges to lower margin requirements - financial press
3333.HK Reports H1 FY23 (CNY) Attributable Net -33.0B v -64.2B y/y, Op -17.4B, Rev 128.2B v 89.3B y/y; Warns that ability to continue as a going concern still depends on (i) whether it can successfully complete the Proposed Offshore Debts Restructuring, (ii) whether it can successfully negotiate with the remaining lenders on extensions or deferrals
MON 8/28
(CN) China Foreign Ministry: From Aug 30th, inbound travelers to China will no longer need pre-departure antigen test for COVID
(US) US and China agree to launch 'Export Control Enforcement Exchange'; Both countries agree to communicate regularly - US press after US Commerce Sec Raimondo meeting with China Commerce Min Wan
1211.HK Reports H1 (CNY) Net 10.95B v 3.60B y/y, Rev 206.1B v 150.6B y/y
(US) AUG DALLAS FED MANUFACTURING ACTIVITY: -17.2 V -19E
(JP) Japan govt annual economic white paper: Notes Japan may be at an inflection point in its 25-year battle with deflation as price and wage rises show signs of broadening - press
7203.JP Confirms to halt all 14 plants in Japan on Tues night following systems failure; Does not believe it was a cyberattack
TUES 8/29
(CN) CHINA BIGGEST STATE-OWNED BANKS CONSIDER FURTHER DEPOSIT RATE CUTS FOR A THIRD TIME IN A YEAR IN ORDER TO BOOST GROWTH - PRESS
7203.JP Reportedly likely to gradually resume vehicle production at domestic factories in Japan from tomorrow, Aug 29th; Continues to investigate cause of malfunction - press
PDD Reports Q2 (CNY) 10.47* v 7.13e, Rev 52.3B v 31.4B y/y; Saw a positive shift in consumer sentiment, leading to a rise in demand across various product sectors
(US) White House announce first 10 prescription drugs selected for Medicare price negotiations as part of Inflation Reduction Act (as expected); New prices will be announced Sept 1, 2024 and go into effect Jan 1, 2026
(CN) US Commerce Sec Raimondo: China asked US to reduce export controls but US rejected it; Hope export control dialogue with China to boost compliance; Will wait and see if there is action from China - comments from China
MMM Confirms Combat Arms settlement; To contribute a total of $6.0B between 2023-2029, including $5.0B in cash and $1.0B in 3M common stock; Notes agreement is not an admission of liability
BBY Reports Q2 $1.22 v $1.06e, Rev $9.58B v $9.52Be; Continue to expect that this year will be the low point in tech demand after two years of sales declines, but consumer electronics industry should see stabilization in 2024
BBY Guides Q4 SSS -3% to slightly positive; Holiday shopping to return to near pre pandemic patterns; Comp sales -6% y/y first four weeks of Aug - conf call
(US) AUG CONSUMER CONFIDENCE: 106.1 V 116.0E
(US) JULY JOLTS JOB OPENINGS: 8.83M V 9.50ME (lowest since May 2021)
GBTC US federal appeals court rules SEC was wrong to reject Grayscale application for a spot bitcoin ETF
HPQ Reports Q3 $0.86 v $0.86e, Rev $13.2B v $13.4Be; Cuts FY guidance
(US) Weekly API Crude Oil Inventories: -11.5M v -2.4M prior
3382.JP Sogo & Seibu union to go on strike on Aug 31st (first such strike in Japan since 1950s) - Japanese press
WED 8/30
(ES) SPAIN AUG PRELIMINARY CPI M/M: 0.5% V 0.5%E; Y/Y: 2.6% V 2.5%E (2nd month above target and highest annual pace since May)
(UK) JULY MORTGAGE APPROVALS: 49.4K V 51.0KE
(CN) US Commerce Sec Raimondo: Did NOT get resolution of specific issues during China trip; Had productive, candid and constructive meetings in China; Raised the tough issues with Chinese govt; US policy not decoupling - comments from China
(US) NHC on Idalia: Now a major hurricane at Category 4; Still has a few hours left to intensify before it makes landfall near Wakulla/Jefferson County line in Florida; Expected to keep the system near hurricane strength for longer over southeastern Georgia and South Carolina
(US) NHC on Major Hurricane Idalia: Downgraded back from Category 4 to Category 3 ahead of landfall; After landfall, Idalia is forecast to turn toward the northeast and east-northeast, moving near or along the coasts of Georgia, South Carolina, and North Carolina late today and Thursday
000002.CN Reports H1 (CNY) Net 9.87B v 12.2B y/y, Rev 201B v 207B y/y
MCFT Reports Q4 $1.30 v $1.08e, Rev $166.6M v $162Me; Guides FY24 very weak citing significant uncertainty which is limiting retail demand visibility
(DE) GERMANY AUG PRELIMINARY CPI M/M: 0.3% V 0.3%E; Y/Y: 6.1% V 6.0%E
(US) Q2 PRELIMINARY GDP ANNUALIZED Q/Q: 2.1% V 2.4%E; PERSONAL CONSUMPTION: 1.7% V 1.8%E
(US) Q2 PRELIMINARY GDP PRICE INDEX: 2.0% V 2.2%E; CORE PCE Q/Q: 3.7% V 3.8%E
(US) Nevada reports July casino gaming Rev $1.32B, +6.7% y/y, Las Vegas strip Rev $773.4M, +8.0% y/y
(US) JULY PENDING HOME SALES M/M: 0.9% V -1.0%E; Y/Y: -13.8% V -15.7%E
(US) DOE CRUDE: -10.6M V -2ME; GASOLINE: -0.2M V -1.5ME; DISTILLATE: +1.2M V -0.5ME
2007.HK Reports H1 (CNY) Net -48.9B v +612M y/y, Rev 226.3B v 162.4B y/y; Declares no interim dividend; Will continue to actively adjust sales and pre-sale activities to respond to market changes and capture demand
CRM Reports Q2 $2.12 v $1.90e, Rev $8.60B v $8.52Be; Raises FY24 guidance
CRWD Reports Q2 $0.74 v $0.56e, Rev $732M v $726Me; Raises FY24 outlook
V Reports Aug US payment volume +7%, credit +6% y/y; Global processed transactions +10% y/y - filing
COST Reports Aug Total SSS +4.1% y/y (ex-gas and FX); US SSS +3.2% (ex-gas and FX) v +4.5% prior
THRS 8/31
UBSG.CH Reports Q2 Pretax $29.2B* v $2.62B y/y, Rev $9.54B v $8.92B y/y; Aim to achieve gross exit-rate cost saving >$10B by end-2026; Credit Suisse (Schweiz) AG to be fully integrated
(CN) China reportedly exploring ways to make its own AI memory chips despite US sanctions; May take some China firms up to four years to deliver its own high-bandwidth memory (HBM) chips - SCMP
AAL 99.47% of flight attendants at American Airlines voted to authorize union leaders to call for a possible strike if contracts talks fail
(DE) ECB’s Schnabel (Germany): Underlying price pressures remain stubbornly high; Cannot predict where peak rate is going to be; EU growth prospects are more dire than officials predicted in June
(CN) China Defense Ministry: Rumours that PLA Type 093 submarine had accident near Taiwan strait are completely false
(DE) GERMANY AUG NET UNEMPLOYMENT CHANGE: +18K V +10.0KE; UNEMPLOYMENT CLAIMS RATE: 5.7% V 5.7%E
(EU) EURO ZONE AUG ADVANCE CPI ESTIMATE Y/Y: 5.3% V 5.1%E; CPI CORE Y/Y: 5.3% V 5.3%E
(IT) ITALY AUG PRELIMINARY CPI M/M: 0.4% V 0.4%E; Y/Y: 5.5% V 5.4%E
(CN) China govt raises deduction in personal income tax collection - press
(AT) ECB’s Holzmann (Austria, hawk): Aug inflation is a conundrum for ECB; Another hike or two are possible
(IN) India Aug monsoon rains was the lowest amount in over a century, 36% below long-term average - India Meteorological Department (IMD)
GCO Reports Q2 -$2.79 v $0.59 y/y, Rev $523M v $535.2M y/y; Notes during Q3-to-date, sales trends for the Back-to-School season improved a little further
DG Reports Q2 $2.13 v $2.49e, Rev $9.80B v $9.94Be; Cuts FY23 outloook
(CN) CHINA PBOC CUTS RATES ON SOME EXISTING MORTGAGES, EFFECTIVE SEPT 25TH (as speculated)
(US) JULY PERSONAL INCOME: 0.2% V 0.3%E; PERSONAL SPENDING: 0.8% V 0.7%E
(US) JULY PCE DEFLATOR M/M: 0.2% V 0.2%E; Y/Y: 3.3% V 3.3%E
(US) INITIAL JOBLESS CLAIMS: 228K V 235KE; CONTINUING CLAIMS: 1.73M V 1.71ME (highest continuing claims since July 20th)
(US) AUG CHICAGO PURCHASE MANAGER’S INDEX (PMI): 48.7 V 44.2E
(RU) Russia Dep PM Novak: Russia and OPEC+ have agreed on further action and will announce new main parameters and further steps next week
(US) Atlanta Fed GDPNow: Cuts Q3 GDP forecast from 5.9% to 5.6%
(EU) ECB's de Guindos (Spain): Latest data from July and Aug point towards economic deceleration in Q3 and probably in Q4; Rate decision in Sept is still up for debate
(US) July Dallas Fed Trimmed Mean PCE (m/m) +2.4% v +2.6% prior
NDA.DE Identifies serious indications of shortfall in metals; believes it has been target of further criminal activity; Damages potentially in 3-digit million euro range; Will not achieve prior FY guidance
INTC CEO Gelsinger: Q3 is above mid-point of guidance (guided EPS $0.20 v $0.21e, Rev $12.9-13.9B v $13.5Be) - DB conf comments
UPS Seeks to reduce pilot headcount by offering voluntary separation for 'eligible' pilots amid drop in air freight volumes - press
OXM Reports Q2 $3.45 v $3.46e, Rev $420M v $428Me; Cuts FY23 outlook and guides Q3 weak noting recently seen consumers become a bit more cautious
DELL Reports Q2 $1.74 v $1.13e, Rev $22.9B v $20.8Be
DELL Raises FY24 EPS $6.10-6.50 v $5.56e (prior $5.25-5.75); Guides Q3 $1.35-1.55 v $1.36e, Rev $22.5-23.5B v $21.4Be; Encouraged with some of the signs we are seeing in the macro environment as we move into H2 - earnings call comments
AVGO Reports Q3 $10.54 v $10.42e, Rev $8.88B v $8.86Be
AVGO CEO: All of growth comes from AI-related spending; Without AI, chip unit would have been flat y/y; Believe will get approval for VMware deal by Oct 30th - conf call comments
(US) ILWU says union members voted 75% in favor of approving the new 6-year agreement for West Coast port workers
(US) UAW President Fain: We are far apart in talks; Filed unfair labor practice complaint against GM and Stellantis in the agreement talks, says the companies refuse to bargain in good faith; Did NOT file a complaint against Ford Motor, as the company responded to the UAW’s demands with a counterproposal he heavily criticized
F Said to have made UAW contract offer, said to include 'significant' pay increases; Offered a 9% wage increase through 2027 v the 46% wage hike being sought by the UAW union - press
(CN) CHINA AUG CAIXIN PMI MANUFACTURING: 51.0 V 49.0E (moves back into expansion, highest since Feb)
TSLA Tesla US cuts Model X prices by ~19% from ~$98.5K to ~$80.0K, now qualifies for US tax credit; Tesla China also cuts price of existing stocks of Model S and Model X by up to 21% following official introducing of new refreshed Tesla Model 3 - press
FRI 9/1
(HK) Macau Aug Casino Rev (MOP): 17.2B v 16.7B m/m; Y/Y: +686% v +678%e
(CN) Reportedly China’s Pres Xi is likely to skip the G20 Summit in India on Sept 9-10th - Indian press
(UK) AUG NATIONWIDE HOUSE PRICE INDEX M/M: -0.8% V -0.4%E; Y/Y: -5.3% V -4.9%E (weakest since July 2009)
(CN) CHINA REPORTEDLY SET TO TAKE MORE ACTION TO REVIVE PROPERTY SECTOR, INCLUDING LIFTING HOME-PURCHASING CURBS IMPOSED SINCE 2010 IN KEY CITIES - PRESS
(CH) SWISS AUG CPI M/M: 0.2% V 0.2%E; Y/Y: 1.6% V 1.5%E (3rd straight reading within SNB's target)
(EU) ECB’s Villeroy (France): Very close to peak rates; Options are open at next and upcoming rate meetings; After overall inflation peaked, underlying inflation has also peaked since April and appears to have begun its decline
(CH) Swiss Aug PMI Manufacturing: 39.9 v 40.5e (8th month of contraction, stays below pandemic lows for 2nd mont
(IT) ITALY AUG MANUFACTURING PMI: 45.4 V 45.7E (5th month of contraction but highest since May 2023)
(DE) GERMANY AUG FINAL MANUFACTURING PMI: 39.1 V 39.1E (confirms 14th straight contraction)
ABBN.CH CEO: China is not really developing as we hoped in the beginning of the year; ABB has been impacted by a softening in China’s property sector; It will be challenging for the rest of the year - CNBC
(SA) Reportedly Saudi crude oil exports dropped to 5.6Mbpd in Aug v 6.8Mbpd in June - press
WBA Sees FY23 adj EPS at or near the lower end of the guidance cut on June 27th ($4.00-4.05 v $4.00e); Rosalind Brewer to step down as CEO; Names Ginger Graham as Interim CEO; effective H1 2024
(HK) Hong Kong raises typhoon warning signal to 10 (maximum) for Super Typhoon Saola - press
(IN) India's 26 opposition parties partner to challenge PM Modi's Hindu nationalist party in May 2024 elections - press
(US) AUG UNEMPLOYMENT RATE: 3.8% V 3.5%E (highest since Feb 2022)
(US) AUG AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 4.3% V 4.3%E
(US) AUG FINAL S&P MANUFACTURING PMI: 47.9 V 47.0E
ARAMCO.SA Reportedly considers selling $50B in shares; Would be the largest in capital markets history
(US) Weekly Baker Hughes Rig Count: 631 v 632 prior (-0.2% w/w)
