Barrons weekend update: positive on UHAL
Cover story: The growing combination of semiconductors and miniature engines stands to transform tasks as basic as charging a smartphone or cooking an egg, or as complex as scanning for colon cancer or powering flying drones on long journeys; Companies that stand to benefit from the trend include AMAT, WATT, IDTI, and NXPI.
Features:
1) Positive on UHAL: Company's chief executive pays no attention to Wall Street, doesn't manage earnings, rarely meets with investors, and gets paid modestly, part of a thrifty corporate culture that has helped U-Haul dominate the industry;
2) Picks from the Barron's Art of Successful Investing conference participants include CCL, SHPG, CLS, LIOX (Scott Black); MSFT, GOOGL, PIC, V (William Priest); SNE, HRI, HRS, MSG (Mario Gabelli); NOMD, EVTC, COMM, ANIP (Oscar Schafer); WHR, LNC, MSCC, GT (Andrew Wellington); and WFC (Jerome Dodson);
3) Cautious on TWX: Shares are up on a possible T merger, but while not overpriced they don't have much upside, and could slide if the deal falls through or is priced below what investors expect.
Trader: The "Dogs of the Dow" strategy-in which investors put equal dollar amounts in the 10 highest-yielding Dow stocks at year-end and hold them for 12 months-has returned an average of 10.6% annually over the past 10 years; Positive on AGN: The market's concerns about the maker of Botox are more related to industry issues than company problems, and shares could have 20-30% upside over the next year or two.
Profile: Scott DiMaggio and Doug Peebles, co-managers of AB Global Bond fund, use fundamental and quantitative analysis teams to form distinct views, after which investment decisions are made.
Small Caps: Positive on Lanxess: German chemical company's acquisition of Philadelphia-based CHMT will make it a less-cyclical and higher-margin company, and shares currently look cheap.
Follow-Up: Positive on CAT: New chief Jim Umpleby, a company veteran, will probably cut costs as he tries to get the company back on track, and investors should hold shares until next year to see if he sparks a rebound.
European Trader: Positive on Danone: The company's new focus on sustainable, profitable growth could translate into double-digit earnings growth in 2017 through 2019.
Asian Trader: A study from MS found that investors in Asia are increasingly looking for companies that score high on socially and environmentally responsible metrics, such as Astra International, SM Investments, City Development, and Unilever Indonesia.
Emerging Markets: Investors should expect more bond issues from Saudi Arabia, where a war with Yemen is putting pressure on a budget that is already supporting major economic reforms.
Commodities: Gold, which rose by 29% during the first seven months of 2016, making it one of the year's best performers, is losing its glitter amid concerns about a Fed interest rate hike.
Streetwise: Gluskin Sheff's David Rosenberg says the ability to borrow money at lower interest rates has added five percentage points annually to profit growth, though that doesn't mean the S&P 500 is destined to lose nearly 20% of its value with a rate hike.
Saturday, October 22, 2016
Friday, October 21, 2016
ECB Punts; Earnings Reports Mixed
TradeTheNews.com Weekly
Market Update: ECB Punts; Earnings Reports Mixed
Fri, 21 Oct 2016 16:07 PM EST
With Q3 earnings releases ratcheting up and a plethora of M&A stories hitting the tape, investors poured over a steady flow of corporate news throughout the week. Banks and financial companies continued to report generally strong quarterly results, highlighted by Bank of America and American Express. Generally, managements struck a cautiously-optimistic tone on their conference calls pointing to a December rate hike as a likely catalyst. Major industrial names were much more subdued in their commentary as sluggish global growth and a resurgent US dollar remain impediments. General Electric and Illinois Tool Works saw share price declines as investors were underwhelmed with their guidance. Early season technology reports painted a divergent picture for several industry bellwethers. Netflix, PayPal, and Microsoft surged on growth prospects for the cloud and digital media consumption, while old line names like IBM and Intel continued to see their share prices lag behind. Finally, by Friday talk of major industry consolidation was rampant as reports circulated that AT&T was closing in on a deal to acquire Time Warner. The news came amidst a flurry of M&A announcements and speculation across a variety of industries including consumer staples, retail, pharmaceuticals, and of course technology.
The US dollar spent the better part of the week pushing to multi-month highs. The Euro touched its lowest level since March after the ECB left rates and QE unchanged, and kicked the decision on extending QE down the road to the December meeting. The British Pound continues to be hounded by Brexit implementation concerns: Cable remained under pressure, ending the week around 1.22. The Chinese Yuan has stayed near 6-year lows following a week economic data that suggested not much has changed for the trajectory of the world's second largest economy. US economic data was generally in line to slightly better than expectations while the final Presidential debate appeared to do little to change the calculus for next month's election. Treasury prices moved up modestly but the benchmark US 10-year yield has stayed pegged around 1.75%, pre Brexit levels. Crude prices moved up mid-week on more bullish inventory statistics but fell back towards the end of the week to finish little changed. Stocks went sideways, and for the week the S&P500 added 0.4%, the DJIA was flat, and the Nasdaq gained 0.8%.
MONDAY 10/17
(EU) EURO ZONE SEPT FINAL CPI M/M: 0.4% V 0.4%E; Y/Y: 0.4% V 0.4%E; CPI CORE Y/Y: 0.8% V 0.8%E
BAC: Reports Q3 $0.41 v $0.34e, R$21.6B v $20.8Be
(US) SEPT INDUSTRIAL PRODUCTION M/M: 0.1% V 0.2%E; CAPACITY UTILIZATION: 75.4% V 75.6%E
IBM: Reports Q3 $3.29 v $3.21e, R$19.2B v $19.0Be
F: Plans shutdown at four plants in next weeks to align production with demand and inventory goals - press
TUESDAY 10/18
BN.FR: Reports Q3 Rev €5.54B v €5.55Be
BRBY.UK: Reports H1 Rev £1.16B v £1.17Be
(CN) CHINA SEPT NEW YUAN LOANS (CNY): 1.22T (3-month high) V 1.00TE
(UK) SEPT PPI INPUT M/M: 0.0% V 0.4%E; Y/Y: 7.2% V 7.4%E
(UK) Govt attorney Eadie: New Brexit treaty likely to be voted on by both Houses
GS: Reports Q3 $4.88 v $3.86e, R$8.17B v $7.56Be
S: Reports prelim Q2 Net loss $142M v loss $585M y/y, R$8.25B v $7.97Be
(US) SEPT CPI M/M: 0.3% V 0.3%E; CPI EX FOOD AND ENERGY M/M: 0.1% V 0.2%E; CPI NSA INDEX: 241.428 V 241.498E
(US) OCT NAHB HOUSING MARKET INDEX: 63 V 63E
(US) AUG TOTAL NET TIC FLOWS: $73.8B V $140.6B PRIOR; NET LONG-TERM TIC FLOWS: $48.3B V $103.9B PRIOR
INTC: Reports Q3 $0.80 (adj) v $0.73e, R$15.8B v $15.6Be
(CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 3.50%; AS EXPECTED
BHP.AU: Reports Q1 iron ore production 57.6Mt v 56.3e, flat y/y
(CN) CHINA Q3 GDP Q/Q: 1.8% V 1.8%E; Y/Y: 6.7% V 6.7%E
(CN) CHINA SEPT INDUSTRIAL PRODUCTION Y/Y: 6.1% V 6.4%E; YTD Y/Y: 6.0% V 6.1%E
(CN) CHINA SEPT RETAIL SALES Y/Y: 10.7% (8-month high) V 10.7%E; YTD Y/Y: 10.4% V 10.3%E
WEDNESDAY 10/19
ASML.NL: Reports Q3 Net €396M v €407Me, Rev €1.81B v €1.73Be
CA.FR: Reports Q3 Rev €21.8B v €21.7Be
(UK) AUG AVERAGE WEEKLY EARNINGS 3M/Y: 2.3% V 2.3%E; WEEKLY EARNINGS 3M/Y (EX BONUS): 2.3% V 2.1%E
(UK) SEPT JOBLESS CLAIMS CHANGE: +0.7K V +3.2KE; CLAIMANT COUNT RATE: 2.3% V 2.2%E
(UK) AUG ILO UNEMPLOYMENT RATE 3M/3M: 4.9% V 4.9%E
(US) SEPT HOUSING STARTS: 1.047M V 1.18ME; BUILDING PERMITS: 1.225M V 1.17ME
(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 0.50%; AS EXPECTED
LHA.DE: Reports 9-month adj EBIT €1.68B v €1.69B y/y, Rev €23.9B v €24.3B y/y
GOOGL: Reportedly in advanced talks with Fox and Disney for web TV service; has already signed up CBS for the service - CNBC
(BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC RATE BY 25BPS TO 14.00%; AS EXPECTED
RIO.AU: Reports Q3 Pilbara iron ore production 68.5Mt (attributable) v 70.6Mte; 83.2Mt (100% basis), +2% y/y; shipments 80.9Mt (100% basis), -5% y/y
(AU) AUSTRALIA SEPT EMPLOYMENT CHANGE: -9.8K (2nd straight decline, biggest decline since Apr 2015) V +15.0KE; UNEMPLOYMENT RATE: 5.6% (3-year low) V 5.7%E
THURSDAY 10/20
ROG.CH: Reports 9M Rev CHF37.5B v CHF37.7Be
NESN.CH: Reports 9M Rev CHF65.5B v CHF66.0Be
(UK) SEPT RETAIL SALES (EX AUTO FUEL) M/M: 0.0% V 0.2%E; Y/Y: 4.0% V 4.4%E
(UK) SEPT RETAIL SALES (INC AUTO FUEL) M/M: 0.0% V 0.3%E; Y/Y: 4.1% V 4.7%E
(ID) INDONESIA CENTRAL BANK (BI) CUTS 7-DAY REVERSE REPO BY 25BPS TO 4.75%; NOT EXPECTED
941.HK: Reports 9M Net CNY88.1B v CNY85.4B y/y, EBITDA CNY200.4B v CNY192B y/y, Op Rev CNY542.7B v CNY513B y/y
(EU) ECB LEAVES MAIN REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED; reiterates view on rate guidance and QE program
(US) INITIAL JOBLESS CLAIMS: 260K V 250KE; CONTINUING CLAIMS: 2.06M V 2.05ME
(US) OCT PHILADELPHIA FED BUSINESS OUTLOOK: 9.7 V 5.0E
(EU) ECB chief Draghi: Reiterates ECB interest rates to remain at present or lower levels for an extended period of time; monthly asset purchases of €80B are intended to run until the end of March 2017, or beyond - Prepared remarks
(EU) ECB chief Draghi: ECB will announce what its plans for future months are at its Dec meeting after considering council technical work Q&A
(US) SEPT EXISTING HOME SALES: 5.47M V 5.35ME
BAC: CEO: consumers spending 5% more YTD y/y; we feel good about the US - TV interview
MSFT: Reports Q1 $0.76 adj v $0.68e, R$22.3B v $21.5Be
SLB: Reports Q3 $0.25 v $0.22e, R$7.02B v $7.13Be
(US) NORTH AMERICA Sept SEMI BOOK/BILL RATIO: 1.05 V 1.03 prior (above parity for 10th straight month)
FRIDAY 10/21
SAP.DE: Reports Q3 Net €725M v €895M y/y, Op profit €1.64B v €1.66Be, Rev €5.38B v €5.30Be
DAI.DE: Reports Q3 Net €2.73B v €2.42B y/y, EBIT €4.01B v €3.77Be, Rev €38.6B v €38.4Be
(UK) SEPT PUBLIC FINANCES (PSNCR): £13.3B V £0.7B PRIOR; PUBLIC SECTOR NET BORROWING: £10.1B V £8.2BE
CNBC's Faber: sources say NXPI and Qualcomm in handshake deal for $110/shr; some details remain to be worked out
TWX: AT&T reportedly in "advanced" talks to acquire Time Warner - financial press
(US) Weekly Baker Hughes US Rig Count: 553 v 539 w/w (+2.6%) (5th straight weekly increase)
Fri, 21 Oct 2016 16:07 PM EST
With Q3 earnings releases ratcheting up and a plethora of M&A stories hitting the tape, investors poured over a steady flow of corporate news throughout the week. Banks and financial companies continued to report generally strong quarterly results, highlighted by Bank of America and American Express. Generally, managements struck a cautiously-optimistic tone on their conference calls pointing to a December rate hike as a likely catalyst. Major industrial names were much more subdued in their commentary as sluggish global growth and a resurgent US dollar remain impediments. General Electric and Illinois Tool Works saw share price declines as investors were underwhelmed with their guidance. Early season technology reports painted a divergent picture for several industry bellwethers. Netflix, PayPal, and Microsoft surged on growth prospects for the cloud and digital media consumption, while old line names like IBM and Intel continued to see their share prices lag behind. Finally, by Friday talk of major industry consolidation was rampant as reports circulated that AT&T was closing in on a deal to acquire Time Warner. The news came amidst a flurry of M&A announcements and speculation across a variety of industries including consumer staples, retail, pharmaceuticals, and of course technology.
The US dollar spent the better part of the week pushing to multi-month highs. The Euro touched its lowest level since March after the ECB left rates and QE unchanged, and kicked the decision on extending QE down the road to the December meeting. The British Pound continues to be hounded by Brexit implementation concerns: Cable remained under pressure, ending the week around 1.22. The Chinese Yuan has stayed near 6-year lows following a week economic data that suggested not much has changed for the trajectory of the world's second largest economy. US economic data was generally in line to slightly better than expectations while the final Presidential debate appeared to do little to change the calculus for next month's election. Treasury prices moved up modestly but the benchmark US 10-year yield has stayed pegged around 1.75%, pre Brexit levels. Crude prices moved up mid-week on more bullish inventory statistics but fell back towards the end of the week to finish little changed. Stocks went sideways, and for the week the S&P500 added 0.4%, the DJIA was flat, and the Nasdaq gained 0.8%.
MONDAY 10/17
(EU) EURO ZONE SEPT FINAL CPI M/M: 0.4% V 0.4%E; Y/Y: 0.4% V 0.4%E; CPI CORE Y/Y: 0.8% V 0.8%E
BAC: Reports Q3 $0.41 v $0.34e, R$21.6B v $20.8Be
(US) SEPT INDUSTRIAL PRODUCTION M/M: 0.1% V 0.2%E; CAPACITY UTILIZATION: 75.4% V 75.6%E
IBM: Reports Q3 $3.29 v $3.21e, R$19.2B v $19.0Be
F: Plans shutdown at four plants in next weeks to align production with demand and inventory goals - press
TUESDAY 10/18
BN.FR: Reports Q3 Rev €5.54B v €5.55Be
BRBY.UK: Reports H1 Rev £1.16B v £1.17Be
(CN) CHINA SEPT NEW YUAN LOANS (CNY): 1.22T (3-month high) V 1.00TE
(UK) SEPT PPI INPUT M/M: 0.0% V 0.4%E; Y/Y: 7.2% V 7.4%E
(UK) Govt attorney Eadie: New Brexit treaty likely to be voted on by both Houses
GS: Reports Q3 $4.88 v $3.86e, R$8.17B v $7.56Be
S: Reports prelim Q2 Net loss $142M v loss $585M y/y, R$8.25B v $7.97Be
(US) SEPT CPI M/M: 0.3% V 0.3%E; CPI EX FOOD AND ENERGY M/M: 0.1% V 0.2%E; CPI NSA INDEX: 241.428 V 241.498E
(US) OCT NAHB HOUSING MARKET INDEX: 63 V 63E
(US) AUG TOTAL NET TIC FLOWS: $73.8B V $140.6B PRIOR; NET LONG-TERM TIC FLOWS: $48.3B V $103.9B PRIOR
INTC: Reports Q3 $0.80 (adj) v $0.73e, R$15.8B v $15.6Be
(CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 3.50%; AS EXPECTED
BHP.AU: Reports Q1 iron ore production 57.6Mt v 56.3e, flat y/y
(CN) CHINA Q3 GDP Q/Q: 1.8% V 1.8%E; Y/Y: 6.7% V 6.7%E
(CN) CHINA SEPT INDUSTRIAL PRODUCTION Y/Y: 6.1% V 6.4%E; YTD Y/Y: 6.0% V 6.1%E
(CN) CHINA SEPT RETAIL SALES Y/Y: 10.7% (8-month high) V 10.7%E; YTD Y/Y: 10.4% V 10.3%E
WEDNESDAY 10/19
ASML.NL: Reports Q3 Net €396M v €407Me, Rev €1.81B v €1.73Be
CA.FR: Reports Q3 Rev €21.8B v €21.7Be
(UK) AUG AVERAGE WEEKLY EARNINGS 3M/Y: 2.3% V 2.3%E; WEEKLY EARNINGS 3M/Y (EX BONUS): 2.3% V 2.1%E
(UK) SEPT JOBLESS CLAIMS CHANGE: +0.7K V +3.2KE; CLAIMANT COUNT RATE: 2.3% V 2.2%E
(UK) AUG ILO UNEMPLOYMENT RATE 3M/3M: 4.9% V 4.9%E
(US) SEPT HOUSING STARTS: 1.047M V 1.18ME; BUILDING PERMITS: 1.225M V 1.17ME
(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 0.50%; AS EXPECTED
LHA.DE: Reports 9-month adj EBIT €1.68B v €1.69B y/y, Rev €23.9B v €24.3B y/y
GOOGL: Reportedly in advanced talks with Fox and Disney for web TV service; has already signed up CBS for the service - CNBC
(BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC RATE BY 25BPS TO 14.00%; AS EXPECTED
RIO.AU: Reports Q3 Pilbara iron ore production 68.5Mt (attributable) v 70.6Mte; 83.2Mt (100% basis), +2% y/y; shipments 80.9Mt (100% basis), -5% y/y
(AU) AUSTRALIA SEPT EMPLOYMENT CHANGE: -9.8K (2nd straight decline, biggest decline since Apr 2015) V +15.0KE; UNEMPLOYMENT RATE: 5.6% (3-year low) V 5.7%E
THURSDAY 10/20
ROG.CH: Reports 9M Rev CHF37.5B v CHF37.7Be
NESN.CH: Reports 9M Rev CHF65.5B v CHF66.0Be
(UK) SEPT RETAIL SALES (EX AUTO FUEL) M/M: 0.0% V 0.2%E; Y/Y: 4.0% V 4.4%E
(UK) SEPT RETAIL SALES (INC AUTO FUEL) M/M: 0.0% V 0.3%E; Y/Y: 4.1% V 4.7%E
(ID) INDONESIA CENTRAL BANK (BI) CUTS 7-DAY REVERSE REPO BY 25BPS TO 4.75%; NOT EXPECTED
941.HK: Reports 9M Net CNY88.1B v CNY85.4B y/y, EBITDA CNY200.4B v CNY192B y/y, Op Rev CNY542.7B v CNY513B y/y
(EU) ECB LEAVES MAIN REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED; reiterates view on rate guidance and QE program
(US) INITIAL JOBLESS CLAIMS: 260K V 250KE; CONTINUING CLAIMS: 2.06M V 2.05ME
(US) OCT PHILADELPHIA FED BUSINESS OUTLOOK: 9.7 V 5.0E
(EU) ECB chief Draghi: Reiterates ECB interest rates to remain at present or lower levels for an extended period of time; monthly asset purchases of €80B are intended to run until the end of March 2017, or beyond - Prepared remarks
(EU) ECB chief Draghi: ECB will announce what its plans for future months are at its Dec meeting after considering council technical work Q&A
(US) SEPT EXISTING HOME SALES: 5.47M V 5.35ME
BAC: CEO: consumers spending 5% more YTD y/y; we feel good about the US - TV interview
MSFT: Reports Q1 $0.76 adj v $0.68e, R$22.3B v $21.5Be
SLB: Reports Q3 $0.25 v $0.22e, R$7.02B v $7.13Be
(US) NORTH AMERICA Sept SEMI BOOK/BILL RATIO: 1.05 V 1.03 prior (above parity for 10th straight month)
FRIDAY 10/21
SAP.DE: Reports Q3 Net €725M v €895M y/y, Op profit €1.64B v €1.66Be, Rev €5.38B v €5.30Be
DAI.DE: Reports Q3 Net €2.73B v €2.42B y/y, EBIT €4.01B v €3.77Be, Rev €38.6B v €38.4Be
(UK) SEPT PUBLIC FINANCES (PSNCR): £13.3B V £0.7B PRIOR; PUBLIC SECTOR NET BORROWING: £10.1B V £8.2BE
CNBC's Faber: sources say NXPI and Qualcomm in handshake deal for $110/shr; some details remain to be worked out
TWX: AT&T reportedly in "advanced" talks to acquire Time Warner - financial press
(US) Weekly Baker Hughes US Rig Count: 553 v 539 w/w (+2.6%) (5th straight weekly increase)
Sunday, October 16, 2016
Barron's weekend update
Barron's weekend update: positive on PVH and X
Cover story: In Barron's latest Big Money Poll, 45% of respondents were bullish or very bullish about the market's outlook through the middle of 2017, up from the spring poll's record-low 38%; "A modest quickening of global economic activity and a related uptick in commodities prices seem to have quelled some money managers' doubts."
Features:
1) Positive on X: Shares of steel giant could rise 50% in a year if it successfully beats back challenges from Chinese rivals and higher costs, but the shares may still be a gamble because of price volatility in the sector;
2) Positive on PVH: Company's Calvin Klein and Tommy Hilfiger brands are seeing increased sales, with much of the growth coming from department stores such as M.
Tech Trader: In the tech sector, winning stocks don't always reflect underlying business reality, as the once-hot 3-D printing sector or the uneven semiconductor market show; "Not for the faint of heart is the occasional bet on a beaten-down stock still expensive in a fashionable market," such as NOW and WDAY.
Trader: Until the presidential election is over, the market will likely focus on quarterly reports, says Michael Purves of Weeden, and poor results will lead to skittishness; Positive on AMZN: Retailer's strong fundamentals could lead shares to spike further, fueled not just by bulls looking to get back in but by short-sellers covering their positions; Jeff Bahl of Bahl & Gaynor Investment Counsel likes BAC's 7.25% Preferred Series L and WFC's 7.50% Convertible Preferred Series L securities; Cautious on HAIN: Despite some insider buying lately, things could get worse before they get better at the food and beverage company.
Profile: Hitesh Patel, manager of PNC Multi-Factor Small Core fund, says the lack of information about small companies gives him more room to be active in the space (top 10 holdings: UFPI, AEPI, CHDN, SSB, IPHS, MSCC, CMN, FLML, ICLR, EVTC).
Interview: Joel Greenblatt, professor at Columbia University and co-founder of Gotham Asset Management, likes AAPL, CVS, and QCOM and is short on CRM, COST, and CAT.
Small Caps: Positive on FMC: Shares have plenty of room for upside-as much as 50%-when prices in the agricultural sector start heading up, and the company should benefit from the introduction of several new products.
Follow-Up:
1) Positive on Samsung: Company's "move to discontinue sales of its Galaxy Note 7 is a blow to its sizable cellphone business, but it doesn't destroy the bull case for its cheaply valued shares";
2) A look at the five nonprofits rated highest by Charity Watch for their efforts to help Haiti manage the aftermath of Hurricane Matthew.
European Trader: Positive on A.P. Moller-Maersk: Danish shipping conglomerate's decision to split into two companies should unlock value for shareholders.
Asian Trader: Following the death of Thailand's King Bhumibol Adulyadej, the military government will need to boost infrastructure spending to offset weak domestic spending, benefiting construction companies (Positive on CH Karnchang, Sino Thai Engineering).
Emerging Markets: Positive on YUM: Shares of company's spin-off, Yum China Holdings, should pay off for patient investors if it can boost store count and same-store sales.
Commodities: Investors who buy natural gas before the winter could reap rewards if nature cooperates, since prices are not far above historic lows and demand could surge in winter.
Streetwise: Companies such as MSFT, GE, and AAPL, among the approximately 50 companies that account for $1.7 of the $2.9T of profits held offshore, could benefit if the government gets a tax deal done next year.
Cover story: In Barron's latest Big Money Poll, 45% of respondents were bullish or very bullish about the market's outlook through the middle of 2017, up from the spring poll's record-low 38%; "A modest quickening of global economic activity and a related uptick in commodities prices seem to have quelled some money managers' doubts."
Features:
1) Positive on X: Shares of steel giant could rise 50% in a year if it successfully beats back challenges from Chinese rivals and higher costs, but the shares may still be a gamble because of price volatility in the sector;
2) Positive on PVH: Company's Calvin Klein and Tommy Hilfiger brands are seeing increased sales, with much of the growth coming from department stores such as M.
Tech Trader: In the tech sector, winning stocks don't always reflect underlying business reality, as the once-hot 3-D printing sector or the uneven semiconductor market show; "Not for the faint of heart is the occasional bet on a beaten-down stock still expensive in a fashionable market," such as NOW and WDAY.
Trader: Until the presidential election is over, the market will likely focus on quarterly reports, says Michael Purves of Weeden, and poor results will lead to skittishness; Positive on AMZN: Retailer's strong fundamentals could lead shares to spike further, fueled not just by bulls looking to get back in but by short-sellers covering their positions; Jeff Bahl of Bahl & Gaynor Investment Counsel likes BAC's 7.25% Preferred Series L and WFC's 7.50% Convertible Preferred Series L securities; Cautious on HAIN: Despite some insider buying lately, things could get worse before they get better at the food and beverage company.
Profile: Hitesh Patel, manager of PNC Multi-Factor Small Core fund, says the lack of information about small companies gives him more room to be active in the space (top 10 holdings: UFPI, AEPI, CHDN, SSB, IPHS, MSCC, CMN, FLML, ICLR, EVTC).
Interview: Joel Greenblatt, professor at Columbia University and co-founder of Gotham Asset Management, likes AAPL, CVS, and QCOM and is short on CRM, COST, and CAT.
Small Caps: Positive on FMC: Shares have plenty of room for upside-as much as 50%-when prices in the agricultural sector start heading up, and the company should benefit from the introduction of several new products.
Follow-Up:
1) Positive on Samsung: Company's "move to discontinue sales of its Galaxy Note 7 is a blow to its sizable cellphone business, but it doesn't destroy the bull case for its cheaply valued shares";
2) A look at the five nonprofits rated highest by Charity Watch for their efforts to help Haiti manage the aftermath of Hurricane Matthew.
European Trader: Positive on A.P. Moller-Maersk: Danish shipping conglomerate's decision to split into two companies should unlock value for shareholders.
Asian Trader: Following the death of Thailand's King Bhumibol Adulyadej, the military government will need to boost infrastructure spending to offset weak domestic spending, benefiting construction companies (Positive on CH Karnchang, Sino Thai Engineering).
Emerging Markets: Positive on YUM: Shares of company's spin-off, Yum China Holdings, should pay off for patient investors if it can boost store count and same-store sales.
Commodities: Investors who buy natural gas before the winter could reap rewards if nature cooperates, since prices are not far above historic lows and demand could surge in winter.
Streetwise: Companies such as MSFT, GE, and AAPL, among the approximately 50 companies that account for $1.7 of the $2.9T of profits held offshore, could benefit if the government gets a tax deal done next year.
Friday, October 14, 2016
Market Tensions High As Earnings Season Starts
TradeTheNews.com Weekly
Market Update: Market Tensions High As Earnings Season Starts
Fri, 14 Oct 2016 16:04 PM EST
US indices finished lower for the second straight week as investors' risk appetite faded heading into earnings season. Preannouncements from the likes of Honeywell, Dover, Ericsson, and Fortinet continued to spook market participants, along with a disappointing Q3 report from Alcoa, tempering expectations ahead of the quarterly deluge that begins in earnest next week. Friday's strong banking results took some of the sting away but traders nevertheless remain anxious to hear what managements have to say.
A stronger US Dollar, and in particular, continued selling in the British Pound served as a further headwind to overall sentiment. After last week's 'flash crash' in GBP/USD, cable moved back towards 1.20 early in the week before recovering. Separately, Thursday saw the PBOC set the yuan at the lowest levels since 2010, which also happened to coincide with a particularly soft September trade report from China, which sent many commodities tumbling. Some of the growing rumbling surrounding China dissipated on Friday though, after September inflation numbers moved notably higher.
Interest rates continued to back up. Markets seem to be getting more and more comfortable with a December FOMC rate hike, especially in light of the declining poll numbers for Donald Trump. US data reports were largely in line with the recent trends headlined by September retail sales and final PPI figures that generally topped estimates. By Friday various segments of both the US Treasury and UK GILTS yield curves were reaching the highest levels since before the Brexit vote. An October preliminary University of Michigan sentiment miss, that included the lowest 5-year inflation expectation since 1979, and a somewhat dovish speech from Fed Chair Yellen resulted in steeper US curve into the close. For the week, the S&P500 fell 1%, the DJIA lost 0.6%, and the Nasdaq dropped 1.5%.
MONDAY 10/10
(CN) China State Council releases guidelines on lowering companies' leverage and debt ratios; to allow companies to give equity in themselves to banks in exchange of lower debt - financial press
(EU) EURO ZONE OCT SENTIX INVESTOR CONFIDENCE: 8.5 V 6.0E
2202.HK: Reports Sept contracted sales CNY25.4B v CNY20.0B m/m
TUESDAY 10/11
IEA Sept Monthly Oil Market Report: Forecast both 2016 and 2017 Global oil demand growth at 1.2M bpd
(DE) GERMANY OCT ZEW CURRENT SITUATION SURVEY: 59.5 V 55.5E; EXPECTATIONS SURVEY: 6.2 V 4.0E
AA: Reports Q3 $0.32 v $0.35e, R$5.21B v $5.35Be
(US) Sept Labor Market Conditions Index Change: -2.2 v +1.5e
WEDNESDAY 10/12
005930.KR: Revises Q3 Op KRW5.2T v KRW7.8T prelim, Rev KRW47.0T v KRW49.0T prelim; Q3 guidance revision reflects effects of Galaxy Note 7 crisis
HUM: Raises FY16 EPS ~$9.50 v $9.28e (prior "at least $9.25"); Raises Q3 EPS ~$3.15 v $2.88e (prior "at least $2.85"); Reports plan year membership in 4-Star plans or higher at 37% v 78% y/y
(US) FOMC MINUTES FROM SEPT 20-21ST MEETING: REASONABLE CASE COULD BE MADE FOR BOTH HIKING AND WAITING
WFC: Chairman/CEO Stumpf to retire; President and COO Sloan to take over as CEO; effective immediately
(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.25%; AS EXPECTED; (4th straight pause in current easing cycle)
(CN) CHINA SEPT TRADE BALANCE (USD): $42.0B (6-month low) V $53.0BE; Trade Balance (CNY): 278.4B (6-month low) v 364.5Be
THURSDAY 10/13
UNA.NL: Reports Q3 Rev €13.4B v €13.2Be
*(US) SEPT IMPORT PRICE INDEX M/M: 0.1% V 0.2%E; Y/Y: -1.1% V -1.0%E
*(US) INITIAL JOBLESS CLAIMS: 246K (matches lowest since 1973) V 253KE; CONTINUING CLAIMS: 2.05M V 2.050ME
CVTI: Guides Q3 $0.12-0.17 v $0.27e (2 est)
(PE) PERU CENTRAL BANK (BCRP) LEAVES REFERENCE RATE UNCHANGED AT 4.25%; AS EXPECTED
(CN) CHINA SEPT CPI M/M: 0.7% (7-month high) V 0.1% PRIOR; Y/Y: 1.9% (3-month high) V 1.6%E
(CN) CHINA SEPT PPI Y/Y: +0.1% V -0.3%E (1st increase in 55 months)
FRIDAY 10/14
JPM: Reports Q3 $1.58 v $1.40e, R$25.5B v $24.0Be
C: Reports Q3 $1.24 v $1.15e, R$17.8B v $17.4Be
(US) OCT PRELIMINARY MICHIGAN CONFIDENCE: 87.9 V 91.8E (lowest since Sept 2015); 5 year inflation expectations 2.4% v 2.6% Sept final reading (lowest since 1979)
(US) SEPT PPI FINAL DEMAND M/M: 0.3% V 0.2%E; Y/Y: 0.7% V 0.6%E
(US) Weekly Baker Hughes US Rig Count: 539 v 524 w/w (+2.9%) (fourth straight week of increases)
TWTR: Salesforce CEO: have walked away from Twitter bid; Twitter was not the right fit - FT
(US) Fed Chair Yellen: 'high pressure' policy may be needed for full recovery from crisis - comments in Boston
Fri, 14 Oct 2016 16:04 PM EST
US indices finished lower for the second straight week as investors' risk appetite faded heading into earnings season. Preannouncements from the likes of Honeywell, Dover, Ericsson, and Fortinet continued to spook market participants, along with a disappointing Q3 report from Alcoa, tempering expectations ahead of the quarterly deluge that begins in earnest next week. Friday's strong banking results took some of the sting away but traders nevertheless remain anxious to hear what managements have to say.
A stronger US Dollar, and in particular, continued selling in the British Pound served as a further headwind to overall sentiment. After last week's 'flash crash' in GBP/USD, cable moved back towards 1.20 early in the week before recovering. Separately, Thursday saw the PBOC set the yuan at the lowest levels since 2010, which also happened to coincide with a particularly soft September trade report from China, which sent many commodities tumbling. Some of the growing rumbling surrounding China dissipated on Friday though, after September inflation numbers moved notably higher.
Interest rates continued to back up. Markets seem to be getting more and more comfortable with a December FOMC rate hike, especially in light of the declining poll numbers for Donald Trump. US data reports were largely in line with the recent trends headlined by September retail sales and final PPI figures that generally topped estimates. By Friday various segments of both the US Treasury and UK GILTS yield curves were reaching the highest levels since before the Brexit vote. An October preliminary University of Michigan sentiment miss, that included the lowest 5-year inflation expectation since 1979, and a somewhat dovish speech from Fed Chair Yellen resulted in steeper US curve into the close. For the week, the S&P500 fell 1%, the DJIA lost 0.6%, and the Nasdaq dropped 1.5%.
MONDAY 10/10
(CN) China State Council releases guidelines on lowering companies' leverage and debt ratios; to allow companies to give equity in themselves to banks in exchange of lower debt - financial press
(EU) EURO ZONE OCT SENTIX INVESTOR CONFIDENCE: 8.5 V 6.0E
2202.HK: Reports Sept contracted sales CNY25.4B v CNY20.0B m/m
TUESDAY 10/11
IEA Sept Monthly Oil Market Report: Forecast both 2016 and 2017 Global oil demand growth at 1.2M bpd
(DE) GERMANY OCT ZEW CURRENT SITUATION SURVEY: 59.5 V 55.5E; EXPECTATIONS SURVEY: 6.2 V 4.0E
AA: Reports Q3 $0.32 v $0.35e, R$5.21B v $5.35Be
(US) Sept Labor Market Conditions Index Change: -2.2 v +1.5e
WEDNESDAY 10/12
005930.KR: Revises Q3 Op KRW5.2T v KRW7.8T prelim, Rev KRW47.0T v KRW49.0T prelim; Q3 guidance revision reflects effects of Galaxy Note 7 crisis
HUM: Raises FY16 EPS ~$9.50 v $9.28e (prior "at least $9.25"); Raises Q3 EPS ~$3.15 v $2.88e (prior "at least $2.85"); Reports plan year membership in 4-Star plans or higher at 37% v 78% y/y
(US) FOMC MINUTES FROM SEPT 20-21ST MEETING: REASONABLE CASE COULD BE MADE FOR BOTH HIKING AND WAITING
WFC: Chairman/CEO Stumpf to retire; President and COO Sloan to take over as CEO; effective immediately
(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.25%; AS EXPECTED; (4th straight pause in current easing cycle)
(CN) CHINA SEPT TRADE BALANCE (USD): $42.0B (6-month low) V $53.0BE; Trade Balance (CNY): 278.4B (6-month low) v 364.5Be
THURSDAY 10/13
UNA.NL: Reports Q3 Rev €13.4B v €13.2Be
*(US) SEPT IMPORT PRICE INDEX M/M: 0.1% V 0.2%E; Y/Y: -1.1% V -1.0%E
*(US) INITIAL JOBLESS CLAIMS: 246K (matches lowest since 1973) V 253KE; CONTINUING CLAIMS: 2.05M V 2.050ME
CVTI: Guides Q3 $0.12-0.17 v $0.27e (2 est)
(PE) PERU CENTRAL BANK (BCRP) LEAVES REFERENCE RATE UNCHANGED AT 4.25%; AS EXPECTED
(CN) CHINA SEPT CPI M/M: 0.7% (7-month high) V 0.1% PRIOR; Y/Y: 1.9% (3-month high) V 1.6%E
(CN) CHINA SEPT PPI Y/Y: +0.1% V -0.3%E (1st increase in 55 months)
FRIDAY 10/14
JPM: Reports Q3 $1.58 v $1.40e, R$25.5B v $24.0Be
C: Reports Q3 $1.24 v $1.15e, R$17.8B v $17.4Be
(US) OCT PRELIMINARY MICHIGAN CONFIDENCE: 87.9 V 91.8E (lowest since Sept 2015); 5 year inflation expectations 2.4% v 2.6% Sept final reading (lowest since 1979)
(US) SEPT PPI FINAL DEMAND M/M: 0.3% V 0.2%E; Y/Y: 0.7% V 0.6%E
(US) Weekly Baker Hughes US Rig Count: 539 v 524 w/w (+2.9%) (fourth straight week of increases)
TWTR: Salesforce CEO: have walked away from Twitter bid; Twitter was not the right fit - FT
(US) Fed Chair Yellen: 'high pressure' policy may be needed for full recovery from crisis - comments in Boston
Saturday, October 8, 2016
Barrons weekend update
Barrons weekend update: positive on EBAY, SHPG, LKQ
Cover story: Barron's first annual list of the Top 200 Sustainable Mutual Funds is topped by Transamerica Large Cap Value, Davis Opportunity, American Century Equity Income, Loomis Sayles Growth, and Skybridge Dividend Value; The list is comprised of U.S.-based large-company, actively managed funds with the most sustainable portfolios, ranked by one-year returns.
Features:
1) Positive on EBAY: Company is overhauling how it lists merchandise for sale in a bid to address shortcomings that had dented growth; with expectations low and a modest valuation, contrarian investors should buy;
2) Positive on SHPG: Pharma giant continues to make acquisitions, growing a pipeline of drugs "capable of propelling sales and profits for years"; the acquisition of Baxalta could boost shares by more than 25%;
3) Positive on LKQ: Auto insurers increasingly seek lower-cost repairs, benefiting the provider of recycled and refurbished bumpers, fenders, hoods, and axles.
Tech Trader: It may be too soon to declare that the tech IPO market is back, says Tiernan Ray, but it's beginning to feel that way; Investors should keep an eye on component makers such as MRAM and FMAX, because they usually come to market with a roster of customers; Cloud and equipment vendors also tend to do well, while makers of integrating computing systems have struggled.
Trader: Economic growth should continue to boost markets in the long run, says Jason Price of Glenmede, and the current economic expansion isn't likely to stop, benefiting risk assets and equities; Positive on DKS: Sporting-goods chain has been among the biggest beneficiaries of the retail sector shake-up-it has reconfigured stores to sell more fitness apparel and footwear, and added new merchandise; The SEC's track record this year on bribery cases is strong, and investors benefit from knowing what companies have FCPA violations.
Interview: Keith Trauner and Larry Pitkowsky of GoodHaven Capital Management look for solid but beaten-down companies and wait for the market to recognize their value and reprice them (picks: ABX, WPX, LUK, VZ).
Profile: George Papadoyannis of Ameriprise Financial is a big believer in municipal bonds, and is scaling back on growth-oriented investments in favor of less-volatile options.
Mutual Fund Quarterly: Some funds categorized as "sustainable" don't really fit into the category; ETFs comprise only a small part of the sustainable investing universe, but that could soon change; Big fund firms are competing with Vanguard on ETF pricing, potentially taking losses to win assets; "Closed-end municipal bond funds have soared recently, but income investors who missed out can still find some opportunity"; Chinese and Japanese markets got a boost because of a strong fourth quarter for stocks, while U.S. share outflows were the result of concerns about the presidential election.
Follow-Up:
1) Positive on Samsung Electronics: After a recent 40% gain, shares still look cheap despite problems with the Galaxy Note 7 smartphone, because the company maintains a dominant position in numerous sectors; 2
) Cautious on ADSK: Shares are up 53% since September 2015, but the company's financials are a concern; much of the current optimism is already priced into shares, and investors should consider taking profits;
3) Some investors wonder if Bass Pro Shops is overpaying for CAB, whose retail stores are struggling and may have trouble generating the required cash flow to make the deal work.
European Trader: U.K. government bonds face bad news, because the pound's weakness is a sign that higher inflation will erode future coupon payments.
Asian Trader: Postal Savings Bank of China had a strong IPO, going public at more than book value, but as fears about China's massive debt recede, the shares are likely to gradually lose their premium.
Emerging Markets: This year's best-performing emerging-market mutual funds, including Brandes Emerging Markets Value fund, share at least one trait: betting on Brazil.
Commodities: "Oil prices jumped in late September on news of an OPEC deal to reduce production, but the agreement comes with too many caveats to push prices much higher."
Streetwise: Low-volatility stocks have been driven not just by the demand for safety, but also the reach for yield, but that demand is starting to wane, says JPM strategist Dubravko Lakos-Bujas.
Cover story: Barron's first annual list of the Top 200 Sustainable Mutual Funds is topped by Transamerica Large Cap Value, Davis Opportunity, American Century Equity Income, Loomis Sayles Growth, and Skybridge Dividend Value; The list is comprised of U.S.-based large-company, actively managed funds with the most sustainable portfolios, ranked by one-year returns.
Features:
1) Positive on EBAY: Company is overhauling how it lists merchandise for sale in a bid to address shortcomings that had dented growth; with expectations low and a modest valuation, contrarian investors should buy;
2) Positive on SHPG: Pharma giant continues to make acquisitions, growing a pipeline of drugs "capable of propelling sales and profits for years"; the acquisition of Baxalta could boost shares by more than 25%;
3) Positive on LKQ: Auto insurers increasingly seek lower-cost repairs, benefiting the provider of recycled and refurbished bumpers, fenders, hoods, and axles.
Tech Trader: It may be too soon to declare that the tech IPO market is back, says Tiernan Ray, but it's beginning to feel that way; Investors should keep an eye on component makers such as MRAM and FMAX, because they usually come to market with a roster of customers; Cloud and equipment vendors also tend to do well, while makers of integrating computing systems have struggled.
Trader: Economic growth should continue to boost markets in the long run, says Jason Price of Glenmede, and the current economic expansion isn't likely to stop, benefiting risk assets and equities; Positive on DKS: Sporting-goods chain has been among the biggest beneficiaries of the retail sector shake-up-it has reconfigured stores to sell more fitness apparel and footwear, and added new merchandise; The SEC's track record this year on bribery cases is strong, and investors benefit from knowing what companies have FCPA violations.
Interview: Keith Trauner and Larry Pitkowsky of GoodHaven Capital Management look for solid but beaten-down companies and wait for the market to recognize their value and reprice them (picks: ABX, WPX, LUK, VZ).
Profile: George Papadoyannis of Ameriprise Financial is a big believer in municipal bonds, and is scaling back on growth-oriented investments in favor of less-volatile options.
Mutual Fund Quarterly: Some funds categorized as "sustainable" don't really fit into the category; ETFs comprise only a small part of the sustainable investing universe, but that could soon change; Big fund firms are competing with Vanguard on ETF pricing, potentially taking losses to win assets; "Closed-end municipal bond funds have soared recently, but income investors who missed out can still find some opportunity"; Chinese and Japanese markets got a boost because of a strong fourth quarter for stocks, while U.S. share outflows were the result of concerns about the presidential election.
Follow-Up:
1) Positive on Samsung Electronics: After a recent 40% gain, shares still look cheap despite problems with the Galaxy Note 7 smartphone, because the company maintains a dominant position in numerous sectors; 2
) Cautious on ADSK: Shares are up 53% since September 2015, but the company's financials are a concern; much of the current optimism is already priced into shares, and investors should consider taking profits;
3) Some investors wonder if Bass Pro Shops is overpaying for CAB, whose retail stores are struggling and may have trouble generating the required cash flow to make the deal work.
European Trader: U.K. government bonds face bad news, because the pound's weakness is a sign that higher inflation will erode future coupon payments.
Asian Trader: Postal Savings Bank of China had a strong IPO, going public at more than book value, but as fears about China's massive debt recede, the shares are likely to gradually lose their premium.
Emerging Markets: This year's best-performing emerging-market mutual funds, including Brandes Emerging Markets Value fund, share at least one trait: betting on Brazil.
Commodities: "Oil prices jumped in late September on news of an OPEC deal to reduce production, but the agreement comes with too many caveats to push prices much higher."
Streetwise: Low-volatility stocks have been driven not just by the demand for safety, but also the reach for yield, but that demand is starting to wane, says JPM strategist Dubravko Lakos-Bujas.
Friday, October 7, 2016
US Gets "Goldilocks" Jobs Report; Brexit Redux and ECB Tapering Are Latest Worries for Europe
TradeTheNews.com Weekly
Market Update: US Gets "Goldilocks" Jobs Report; Brexit Redux and ECB
Tapering Are Latest Worries for Europe
Fri, 07 Oct 2016 16:09 PM EST
October trade kicked off in an orderly manner but as the week progressed many of the same underlying cross currents returned to the surface resulting in market swings. WTI crude futures gained a foothold above $50 for the first time since early July helped by generally improved ISM data globally and large declines in weekly crude inventory figures. The British Pound continued to fall to fresh 3 decade lows largely on the backs of tough talk from various European officials surrounding Brexit. The move culminated in what many referred to as a "flash crash" into the Asian trading session on Friday. Cable trades briefly printed below 1.20, down some 10 big figures before rebounding into the US open.
Global rates backed up to some of the highest levels since the Brexit vote ahead of the US payrolls report on Friday, spooked in part by a mid-week report that suggested ECB was already discussion QE tapering scenarios. That report was later walked back by several ECB officials but sovereign bond prices never fully recovered. Friday's September payrolls report was described by several analysts, including Fed Vice Chair Fischer, as a "goldilocks" number, not too hot, not too cold. The implication was that the Fed will remain on hold in November and remains on track for a December rate move. The UK 10-year Gilt yield finished the week just below 1% while the 10-year Treasury held near 1.75%. Gold prices careened down through the 200-day moving average weighed on by higher rates and a resurgent US dollar.
Deutsche Bank remained in focus as each day saw vying press reports on the company's travails. Last week's lows held and hopes are the bank, along with US and German government officials can reach a path forward that will allow DB to recapitalize. Twitter shares topped $25 mid-week before sliding on reports that several potential suitors dropped out. The IPO market stayed hot, headlined by Coupa Software's 100% rise on Wednesday and word that the thawing market had both Snapchat and Bloom Energy nearing a filing. The week also saw the launch of Innogy, the largest IPO in the German stock market in nearly a decade. Disappointing annual guidance from Honeywell and Walmart weighed on the major US indices late in the week along with a steady rotation out of higher yielding defensive sectors. The S&P futures saw the 50-day moving average set up as notable resistance throughout the week's trade. For the week, the S&P500 lost 0.7%, the DJIA slipped 0.4%, and the Nasdaq fell 0.4%.
SUNDAY 10/2
10/02 14:11:17 TSLA: Reports Q3 deliveries 24.5K (record high from any quarter) vehicles, +70% q/q; 15.8K were Model S and 8.7K Model X; Production +37% q/q to 25.2K units
(HK) Macau Sept casino revenue 18.4B patacas v 18.8B m/m, y/y: +7.4% (2nd straight increase after 26 months of decline) v +1.1% prior
MONDAY 10/3
(UK) SEPT PMI MANUFACTURING: 55.4 V 52.1E (2nd month of expansion, highest reading since Nov 2015)
(US) SEPT FINAL MARKIT MANUFACTURING PMI: 51.5 V 51.4E (lowest reading since Jun)
(US) SEPT ISM MANUFACTURING: 51.5 V 50.3E; PRICES PAID: 53.0 V 53.5E
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET AT 1.50%; AS EXPECTED
TUESDAY 10/4
ERICB.SE: Confirms to cut ~3-4K employees (~3% of total workforce); to hire 1K R&D positions mainly from universities
(IN) INDIA CENTRAL BANK (RBI) CUTS REPURCHASE RATE BY 25BPS TO 6.25%; NOT EXPECTED
(US) IMF UPDATES WORLD ECONOMIC OUTLOOK (WEO): Maintains 2016 global growth forecast at 3.1%
(US) Sept ISM New York: 49.6 v 47.5 prior
(EU) ECB QE tapering scenarios reportedly include slowing by increments of €10B/month; timing on tapering to depend on economic outlook - press
MU: Reports Q4 -$0.05 v -$0.12e, R$3.22B v $3.11Be
(US) Weekly API Oil Inventories: Crude: -7.6M v -0.8M prior (3rd straight draw; largest draw since Sept 7th)
WEDNESDAY 10/5
TSCO.UK: Reports H1 adj PBT £410M v £183M y/y, Op £596M v £523Me, Rev (ex Fuel) £24.4B v £23.7B y/y
(US) SEPT ADP EMPLOYMENT CHANGE: 154K V 165KE
(US) SEPT FINAL MARKIT SERVICES PMI: 52.3 V 51.9E (highest since April)
(US) SEPT ISM NON-MANUFACTURING COMPOSITE: 57.1 V 53.0E
(US) AUG FINAL DURABLE GOODS ORDERS: 0.1% V 0.0%E; DURABLES EX TRANSPORTATION: -0.2% V -0.4% PRELIM
YUM: Reports Q3 $1.09 v $1.09e, R$3.32B v $3.52Be; Raises FY16 op profit growth guidance to at least 15% from 14% prior forecast
LRCX: Terminates proposed combination with KLA-Tencor
TWTR: Google does not plan to make an offer for Twitter; Apple bid also said to be unlikely - Recode
THURSDAY 10/6
Nov WTI crude futures move above $50/bbl for the first time since July 7th
Dec gold futures test 200-day moving average
(EU) ECB's Constancio (Portugal): earlier report ECB was near tapering consensus is not correct; QE to go until inflation is back on path to target - press
005930.KR: Reports prelim Q3 Op profit KRW7.8T v KRW7.6Te, Rev KRW49.0T v KRW51.0Te
(CN) CHINA SEPT FOREIGN RESERVES: $3.166T V $3.183TE; 3rd consecutive decline, biggest monthly drop in 4 months multi-year lows
FRIDAY 10/7
(FR) FRANCE AUG INDUSTRIAL PRODUCTION M/M: +2.1% V +0.6%E; Y/Y: +0.5% V -1.3%E
*(FR) FRANCE AUG MANUFACTURING PRODUCTION M/M: +2.2% V +0.3%E; Y/Y: +0.7% V -1.4%E
*(UK) AUG MANUFACTURING PRODUCTION M/M: +0.2% V +0.4%E; Y/Y: 0.5% V 0.8%
(UK) AUG INDUSTRIAL PRODUCTION M/M: -0.4% V +0.1%E; Y/Y: 0.7% V 1.3%E
*(CA) CANADA SEPT NET CHANGE IN EMPLOYMENT: +67.2K V +7.5KE; UNEMPLOYMENT RATE: 7.0% V 7.0%E
(US) SEPT CHANGE IN NONFARM PAYROLLS: 156K V 172KE
*(US) SEPT AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 2.6% V 2.6%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
*(US) SEPT UNEMPLOYMENT RATE: 5.0% V 4.9%E
(US) Weekly Baker Hughes US Rig Count: 524 v 522 w/w (+0.4%)
Fri, 07 Oct 2016 16:09 PM EST
October trade kicked off in an orderly manner but as the week progressed many of the same underlying cross currents returned to the surface resulting in market swings. WTI crude futures gained a foothold above $50 for the first time since early July helped by generally improved ISM data globally and large declines in weekly crude inventory figures. The British Pound continued to fall to fresh 3 decade lows largely on the backs of tough talk from various European officials surrounding Brexit. The move culminated in what many referred to as a "flash crash" into the Asian trading session on Friday. Cable trades briefly printed below 1.20, down some 10 big figures before rebounding into the US open.
Global rates backed up to some of the highest levels since the Brexit vote ahead of the US payrolls report on Friday, spooked in part by a mid-week report that suggested ECB was already discussion QE tapering scenarios. That report was later walked back by several ECB officials but sovereign bond prices never fully recovered. Friday's September payrolls report was described by several analysts, including Fed Vice Chair Fischer, as a "goldilocks" number, not too hot, not too cold. The implication was that the Fed will remain on hold in November and remains on track for a December rate move. The UK 10-year Gilt yield finished the week just below 1% while the 10-year Treasury held near 1.75%. Gold prices careened down through the 200-day moving average weighed on by higher rates and a resurgent US dollar.
Deutsche Bank remained in focus as each day saw vying press reports on the company's travails. Last week's lows held and hopes are the bank, along with US and German government officials can reach a path forward that will allow DB to recapitalize. Twitter shares topped $25 mid-week before sliding on reports that several potential suitors dropped out. The IPO market stayed hot, headlined by Coupa Software's 100% rise on Wednesday and word that the thawing market had both Snapchat and Bloom Energy nearing a filing. The week also saw the launch of Innogy, the largest IPO in the German stock market in nearly a decade. Disappointing annual guidance from Honeywell and Walmart weighed on the major US indices late in the week along with a steady rotation out of higher yielding defensive sectors. The S&P futures saw the 50-day moving average set up as notable resistance throughout the week's trade. For the week, the S&P500 lost 0.7%, the DJIA slipped 0.4%, and the Nasdaq fell 0.4%.
SUNDAY 10/2
10/02 14:11:17 TSLA: Reports Q3 deliveries 24.5K (record high from any quarter) vehicles, +70% q/q; 15.8K were Model S and 8.7K Model X; Production +37% q/q to 25.2K units
(HK) Macau Sept casino revenue 18.4B patacas v 18.8B m/m, y/y: +7.4% (2nd straight increase after 26 months of decline) v +1.1% prior
MONDAY 10/3
(UK) SEPT PMI MANUFACTURING: 55.4 V 52.1E (2nd month of expansion, highest reading since Nov 2015)
(US) SEPT FINAL MARKIT MANUFACTURING PMI: 51.5 V 51.4E (lowest reading since Jun)
(US) SEPT ISM MANUFACTURING: 51.5 V 50.3E; PRICES PAID: 53.0 V 53.5E
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET AT 1.50%; AS EXPECTED
TUESDAY 10/4
ERICB.SE: Confirms to cut ~3-4K employees (~3% of total workforce); to hire 1K R&D positions mainly from universities
(IN) INDIA CENTRAL BANK (RBI) CUTS REPURCHASE RATE BY 25BPS TO 6.25%; NOT EXPECTED
(US) IMF UPDATES WORLD ECONOMIC OUTLOOK (WEO): Maintains 2016 global growth forecast at 3.1%
(US) Sept ISM New York: 49.6 v 47.5 prior
(EU) ECB QE tapering scenarios reportedly include slowing by increments of €10B/month; timing on tapering to depend on economic outlook - press
MU: Reports Q4 -$0.05 v -$0.12e, R$3.22B v $3.11Be
(US) Weekly API Oil Inventories: Crude: -7.6M v -0.8M prior (3rd straight draw; largest draw since Sept 7th)
WEDNESDAY 10/5
TSCO.UK: Reports H1 adj PBT £410M v £183M y/y, Op £596M v £523Me, Rev (ex Fuel) £24.4B v £23.7B y/y
(US) SEPT ADP EMPLOYMENT CHANGE: 154K V 165KE
(US) SEPT FINAL MARKIT SERVICES PMI: 52.3 V 51.9E (highest since April)
(US) SEPT ISM NON-MANUFACTURING COMPOSITE: 57.1 V 53.0E
(US) AUG FINAL DURABLE GOODS ORDERS: 0.1% V 0.0%E; DURABLES EX TRANSPORTATION: -0.2% V -0.4% PRELIM
YUM: Reports Q3 $1.09 v $1.09e, R$3.32B v $3.52Be; Raises FY16 op profit growth guidance to at least 15% from 14% prior forecast
LRCX: Terminates proposed combination with KLA-Tencor
TWTR: Google does not plan to make an offer for Twitter; Apple bid also said to be unlikely - Recode
THURSDAY 10/6
Nov WTI crude futures move above $50/bbl for the first time since July 7th
Dec gold futures test 200-day moving average
(EU) ECB's Constancio (Portugal): earlier report ECB was near tapering consensus is not correct; QE to go until inflation is back on path to target - press
005930.KR: Reports prelim Q3 Op profit KRW7.8T v KRW7.6Te, Rev KRW49.0T v KRW51.0Te
(CN) CHINA SEPT FOREIGN RESERVES: $3.166T V $3.183TE; 3rd consecutive decline, biggest monthly drop in 4 months multi-year lows
FRIDAY 10/7
(FR) FRANCE AUG INDUSTRIAL PRODUCTION M/M: +2.1% V +0.6%E; Y/Y: +0.5% V -1.3%E
*(FR) FRANCE AUG MANUFACTURING PRODUCTION M/M: +2.2% V +0.3%E; Y/Y: +0.7% V -1.4%E
*(UK) AUG MANUFACTURING PRODUCTION M/M: +0.2% V +0.4%E; Y/Y: 0.5% V 0.8%
(UK) AUG INDUSTRIAL PRODUCTION M/M: -0.4% V +0.1%E; Y/Y: 0.7% V 1.3%E
*(CA) CANADA SEPT NET CHANGE IN EMPLOYMENT: +67.2K V +7.5KE; UNEMPLOYMENT RATE: 7.0% V 7.0%E
(US) SEPT CHANGE IN NONFARM PAYROLLS: 156K V 172KE
*(US) SEPT AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 2.6% V 2.6%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
*(US) SEPT UNEMPLOYMENT RATE: 5.0% V 4.9%E
(US) Weekly Baker Hughes US Rig Count: 524 v 522 w/w (+0.4%)
Saturday, October 1, 2016
Barrons weekend update
Barrons weekend update: Cover story on John Malone's Liberty Media; positive on AVGO
Cover story: Under the leadership of cable mogul John Malone and chief executive Greg Maffei, the nine stocks under the Liberty Media umbrella have in the aggregate, over the past decade, delivered an annualized 13%-compared with 7.5% for Berkshire Hathaway and 7.7% for the S&P 500.
Feature:
1) At Barron's Asia Roundtable, Michelle Leung of Xingtai Capital Management, Erwin Sanft of Macquarie Securities, Anh Lu of T. Rowe Price, and Ronald Chan of Chartwell Capital, discussed China's economic slowdown and the impact of higher U.S. interest rates on Asian markets;
2) Positive on AVGO: Company stands to benefit from strong sales of the AAPL iPhone 7, of which it has 25-30% more content than in previous models, and shares could rise 20%.
Tech Trader: Cautious on GOOGL, FB: Tech companies currently dominate the online advertising business, but that situation could change at some point if rivals discover new ways to deliver ads-and investors should begin to consider the possibility, and the potential implications.
Trader: Investors are trying to assess the impact of concerns such as a possible rate hike in the U.S. and DB's financial strength, says Chris Hyzy of BAC, who remains upbeat about U.S. stocks; Mark Roberts of Off Wall Street Research says bulls may be wrong about PNRA, where profits will be pinched by rising costs and slower demand; Positive on CBS: Shares of broadcaster will remain attractive even if the company doesn't strike a deal with VIA, and if a deal does take place, chief Les Moonves will have an outsize say over the terms.
Profile: Michael S. Beall, manager, Davenport Value & Income fund, focuses on well-run businesses with strong owner-operated managements (top 10 holdings: JNJ, FNF, MKL, WSO, COF, JPM, GE, DEO, WFC, GLPI).
Small Caps: Positive on AMC: New initiatives at movie chain, such as reclining seats, reserved seating, and higher-quality concessions, are driving growth despite a steady decline in attendance.
European Trader:Positive on RWE.DE: German utility giant's plan to spin off its renewables, infrastructure, and retail business into a new company, Innogy, should drive a 20% increase in its stock.
Asian Trader: "Indonesia's tax-amnesty program, introduced in July, is turning out to be hugely successful," and has led Indonesians to repatriate more than $9.5B.
Emerging Markets: The leading emerging market performers this year have been Brazil, Peru, and Russia, while the worst have been Greece, China, and Czechoslovakia.
Commodities: Analysts say the decline in butter prices, the result of bulging inventory, probably has farther to go.
Streetwise: "Healthcare is considered one of the market's four defensive pillars-along with utilities, telecoms, and consumer stocks-but last week it was anything but"; MS analyst Adam Parker identified JNJ, AMGN, MDT, AGN, and LLY as some of the more defensive issues among the market's 50 largest stocks.
Cover story: Under the leadership of cable mogul John Malone and chief executive Greg Maffei, the nine stocks under the Liberty Media umbrella have in the aggregate, over the past decade, delivered an annualized 13%-compared with 7.5% for Berkshire Hathaway and 7.7% for the S&P 500.
Feature:
1) At Barron's Asia Roundtable, Michelle Leung of Xingtai Capital Management, Erwin Sanft of Macquarie Securities, Anh Lu of T. Rowe Price, and Ronald Chan of Chartwell Capital, discussed China's economic slowdown and the impact of higher U.S. interest rates on Asian markets;
2) Positive on AVGO: Company stands to benefit from strong sales of the AAPL iPhone 7, of which it has 25-30% more content than in previous models, and shares could rise 20%.
Tech Trader: Cautious on GOOGL, FB: Tech companies currently dominate the online advertising business, but that situation could change at some point if rivals discover new ways to deliver ads-and investors should begin to consider the possibility, and the potential implications.
Trader: Investors are trying to assess the impact of concerns such as a possible rate hike in the U.S. and DB's financial strength, says Chris Hyzy of BAC, who remains upbeat about U.S. stocks; Mark Roberts of Off Wall Street Research says bulls may be wrong about PNRA, where profits will be pinched by rising costs and slower demand; Positive on CBS: Shares of broadcaster will remain attractive even if the company doesn't strike a deal with VIA, and if a deal does take place, chief Les Moonves will have an outsize say over the terms.
Profile: Michael S. Beall, manager, Davenport Value & Income fund, focuses on well-run businesses with strong owner-operated managements (top 10 holdings: JNJ, FNF, MKL, WSO, COF, JPM, GE, DEO, WFC, GLPI).
Small Caps: Positive on AMC: New initiatives at movie chain, such as reclining seats, reserved seating, and higher-quality concessions, are driving growth despite a steady decline in attendance.
European Trader:Positive on RWE.DE: German utility giant's plan to spin off its renewables, infrastructure, and retail business into a new company, Innogy, should drive a 20% increase in its stock.
Asian Trader: "Indonesia's tax-amnesty program, introduced in July, is turning out to be hugely successful," and has led Indonesians to repatriate more than $9.5B.
Emerging Markets: The leading emerging market performers this year have been Brazil, Peru, and Russia, while the worst have been Greece, China, and Czechoslovakia.
Commodities: Analysts say the decline in butter prices, the result of bulging inventory, probably has farther to go.
Streetwise: "Healthcare is considered one of the market's four defensive pillars-along with utilities, telecoms, and consumer stocks-but last week it was anything but"; MS analyst Adam Parker identified JNJ, AMGN, MDT, AGN, and LLY as some of the more defensive issues among the market's 50 largest stocks.
Friday, September 30, 2016
OPEC and Deutsche Bank Keep Markets on Edge
TradeTheNews.com Weekly
Market Update: OPEC and Deutsche Bank Keep Markets on Edge
Fri, 30 Sep 2016 16:07 PM EST
The trading week opened with two main storylines dominating markets. All eyes were on Berlin and Algiers as the precipitously declining stock price of Germany's largest bank and growing expectations OPEC members would finally reach some sort of coordinated production agreement pushed and pulled on investors' willingness to take risk. Stocks were under pressure on reports that the German government had ruled out any state assistance for Deutsche Bank which was facing a reported $14B demand from the DOJ to settle and MBS probe. Meanwhile crude prices slipped back as it appeared OPEC still didn't have a consensus on a production freeze headed into this week's meeting. Global Treasury markets rallied as safe haven flows buoyed prices and weighed on yields.
By midweek stocks and oil prices began to stabilize as the headlines surrounding DB and OPEC improved. Shorts were caught off guard when OPEC managed to cobble together enough unity to announce a deal had been reached to cut output to 32.5-33M bpd beginning in November (from 33.2M bpd in Aug). Though much of the details still have to be ironed out, by Friday WTI crude prices reached $48 for the first time since mid-August up some 8% on the week, sparking a similar rally in the energy stocks.
DB shares on the other hand went on a wild ride after reports surfaced hedge funds had begun cutting exposure by reducing collateral with the bank's prime brokerage unit. The headline sparked panic amongst some stock holders who harkened back to the collapse of Lehman Brothers at the start of the 2008 financial crisis. By Friday morning the shares were trading below €10 on the European open. Buyers stepped in aggressively as rumors of a $5.4B settlement circulated, and shares continued to surge as European press sources seemed to affirm that figure. European markets responded in kind finishing Friday's session up 1% after being down 2%.
US equity markets finished the week on a solid note largely on the coattails of the rebound in DB shares. The safe haven flows into Treasuries from earlier in the week unwound and combined with stepped up reports of brewing technology M&A and continued signs of a receptive IPO market resulted in a 1% gain in the major indices on Friday. Dow Theorists have been quick to point out with another 2% rise in the Transports, that index is nearing September highs. For the week the DJIA gained 0.3%, the S&P500 added 0.2%, and the Nasdaq rose 0.1%.
MONDAY 9/26
(JP) BoJ Gov Kuroda: Main tool for more easing to be more cuts in negative rates
*(DE) GERMANY SEPT IFO BUSINESS CLIMATE: 109.5 (2-year high) V 106.3E; CURRENT ASSESSMENT: 114.7 V 112.9E
*(UK) AUG BBA LOANS FOR HOUSE PURCHASE: 37.0K V 37.1KE
(EU) ECB's Draghi: euro area recovery expected to continue at moderate and steady pace, but slightly less momentum than thought in June - comments to European Parliament
TWTR: Disney reportedly working with adviser to consider a bid for Twitter - press
TUESDAY 9/27
*(EU) EURO ZONE AUG M3 MONEY SUPPLY Y/Y: 5.1% V 4.9%E
(DE) German Gov Spokeman: Volkswagen and Deutsche Bank a source of concern
VOW3.DE: Exec: The total special items relating to diesel issue amounts to €17.8B and all consequences of diesel topic known so far are covered
*(US) SEPT PRELIMINARY MARKIT SERVICES PMI: 51.9 V 51.2E (highest reading since Apr)
*(US) SEPT RICHMOND FED MANUFACTURING INDEX: -8 V -2E
*(US) SEPT CONSUMER CONFIDENCE: 104.1 V 99E (highest since Aug 2007)
TPX: Guides FY16 Rev -3% to -1% y/y (implies R$3.06-3.12B v $3.23Be), cuts adj EBITDA $500-525M (prior $525-550M)
NKE: Reports Q1 $0.73 v $0.56e, R$9.06B v $8.85Be
(CN) China Q3 Beige Book: Q3 growth seen exclusively from old engines - financial press
WEDNESDAY 9/28
*(DE) GERMANY OCT GFK CONSUMER CONFIDENCE: 10.0 V 10.2E
DBK.DE: German Government reportedly working on a contingency plan; Looking at taking a stake in the bank as an option - press
*(US) AUG PRELIMINARY DURABLE GOODS ORDERS: 0.0% V -1.5%E; DURABLES EX TRANSPORTATION: -0.4% V -0.5%E
(US) Fed Chair Yellen: banking system in the US is well capitalized; loan growth is picking up and problem loans are down - testifies before House Panel
OPEC reportedly reaches deal in Algiers to limit oil production, execution of deal in Nov; agrees to limit oil production to 32.5M bpd (v 33.2M in Aug) - press
(US) Senate has sufficient votes to pass stopgap funding measure; would keep govt funded through Dec 9th - press
THURSDAY 9/29
(JP) BOJ Gov Kuroda: Will seek appropriate yield curve for 2% price target - comments from Tokyo
*(EU) EURO ZONE SEPT BUSINESS CLIMATE INDICATOR: 0.45 V 0.05E; CONSUMER CONFIDENCE (FINAL): -8.2 V -8.2E
*(CZ) CZECH CENTRAL BANK (CNB) LEAVES REPURCHASE RATE UNCHANGED AT 0.05%, AS EXPECTED
*(DE) GERMANY SEPT PRELIMINARY CPI M/M: 0.1% V 0.0%E; Y/Y: 0.7% V 0.6%E
*(US) Q2 FINAL GDP ANNUALIZED Q/Q: 1.4% V 1.3%E; PERSONAL CONSUMPTION: 4.3% V 4.4%E
*(US) Q2 FINAL GDP PRICE INDEX: 2.3% V 2.3%E; CORE PCE Q/Q: 1.8% V 1.8%E
*(US) AUG PENDING HOME SALES M/M: -2.4% V 0.0%E; Y/Y: +4.0% V +2.6%E (lowest M/M reading since Jan)
DBK.DE: Reportedly 10 hedge funds have reduced exposure to Deutsche Bank, hedge fund clients have reduced collateral on trades - press
*(MX) MEXICO CENTRAL BANK (BANXICO) RAISES OVERNIGHT RATE BY 50BPS TO 4.75%; AS EXPECTED
COST: Reports Q4 $1.77 v $1.73e, R$36.6B (total) v $36.6Be
CAT: Announces 0-4% price action on most machines; effective Jan 2017 - filing
*(CN) CHINA SEPT CAIXIN PMI MANUFACTURING: 50.1 V 50.1E; 3rd straight month of expansion
FRIDAY 9/30
*(UK) Q2 FINAL GDP Q/Q: 0.7% V 0.6%E; GDP Y/Y: 2.1% V 2.2%E
*(EU) EURO ZONE SEPT ADVANCE CPI ESTIMATE Y/Y: 0.4% V 0.4%E; CPI CORE Y/Y: 0.8% V 0.9%E
*(EU) EURO ZONE AUG UNEMPLOYMENT RATE: 10.1% V 10.0%E
*(US) AUG PERSONAL INCOME: 0.2% V 0.2%E; PERSONAL SPENDING: 0.0% V 0.1%E
*(US) AUG PCE DEFLATOR M/M: 0.1% V 0.2%E; Y/Y: 1.0% V 0.9%E
*(US) AUG PCE CORE M/M: 0.2% V 0.2%E; Y/Y: 1.7% V 1.7%E
*(US) SEPT CHICAGO PURCHASING MANAGER: 54.2 V 52.0E (4th straight above 50 reading)
*(US) SEPT FINAL MICHIGAN CONFIDENCE: 91.2 V 90.0E
DBK.DE: Reportedly nears $5.4B settlement with US officials over mortgage bonds - France press
NTNX: IPO opens for trade at $26.50. Priced 14.9M shares at $16.00
Fri, 30 Sep 2016 16:07 PM EST
The trading week opened with two main storylines dominating markets. All eyes were on Berlin and Algiers as the precipitously declining stock price of Germany's largest bank and growing expectations OPEC members would finally reach some sort of coordinated production agreement pushed and pulled on investors' willingness to take risk. Stocks were under pressure on reports that the German government had ruled out any state assistance for Deutsche Bank which was facing a reported $14B demand from the DOJ to settle and MBS probe. Meanwhile crude prices slipped back as it appeared OPEC still didn't have a consensus on a production freeze headed into this week's meeting. Global Treasury markets rallied as safe haven flows buoyed prices and weighed on yields.
By midweek stocks and oil prices began to stabilize as the headlines surrounding DB and OPEC improved. Shorts were caught off guard when OPEC managed to cobble together enough unity to announce a deal had been reached to cut output to 32.5-33M bpd beginning in November (from 33.2M bpd in Aug). Though much of the details still have to be ironed out, by Friday WTI crude prices reached $48 for the first time since mid-August up some 8% on the week, sparking a similar rally in the energy stocks.
DB shares on the other hand went on a wild ride after reports surfaced hedge funds had begun cutting exposure by reducing collateral with the bank's prime brokerage unit. The headline sparked panic amongst some stock holders who harkened back to the collapse of Lehman Brothers at the start of the 2008 financial crisis. By Friday morning the shares were trading below €10 on the European open. Buyers stepped in aggressively as rumors of a $5.4B settlement circulated, and shares continued to surge as European press sources seemed to affirm that figure. European markets responded in kind finishing Friday's session up 1% after being down 2%.
US equity markets finished the week on a solid note largely on the coattails of the rebound in DB shares. The safe haven flows into Treasuries from earlier in the week unwound and combined with stepped up reports of brewing technology M&A and continued signs of a receptive IPO market resulted in a 1% gain in the major indices on Friday. Dow Theorists have been quick to point out with another 2% rise in the Transports, that index is nearing September highs. For the week the DJIA gained 0.3%, the S&P500 added 0.2%, and the Nasdaq rose 0.1%.
MONDAY 9/26
(JP) BoJ Gov Kuroda: Main tool for more easing to be more cuts in negative rates
*(DE) GERMANY SEPT IFO BUSINESS CLIMATE: 109.5 (2-year high) V 106.3E; CURRENT ASSESSMENT: 114.7 V 112.9E
*(UK) AUG BBA LOANS FOR HOUSE PURCHASE: 37.0K V 37.1KE
(EU) ECB's Draghi: euro area recovery expected to continue at moderate and steady pace, but slightly less momentum than thought in June - comments to European Parliament
TWTR: Disney reportedly working with adviser to consider a bid for Twitter - press
TUESDAY 9/27
*(EU) EURO ZONE AUG M3 MONEY SUPPLY Y/Y: 5.1% V 4.9%E
(DE) German Gov Spokeman: Volkswagen and Deutsche Bank a source of concern
VOW3.DE: Exec: The total special items relating to diesel issue amounts to €17.8B and all consequences of diesel topic known so far are covered
*(US) SEPT PRELIMINARY MARKIT SERVICES PMI: 51.9 V 51.2E (highest reading since Apr)
*(US) SEPT RICHMOND FED MANUFACTURING INDEX: -8 V -2E
*(US) SEPT CONSUMER CONFIDENCE: 104.1 V 99E (highest since Aug 2007)
TPX: Guides FY16 Rev -3% to -1% y/y (implies R$3.06-3.12B v $3.23Be), cuts adj EBITDA $500-525M (prior $525-550M)
NKE: Reports Q1 $0.73 v $0.56e, R$9.06B v $8.85Be
(CN) China Q3 Beige Book: Q3 growth seen exclusively from old engines - financial press
WEDNESDAY 9/28
*(DE) GERMANY OCT GFK CONSUMER CONFIDENCE: 10.0 V 10.2E
DBK.DE: German Government reportedly working on a contingency plan; Looking at taking a stake in the bank as an option - press
*(US) AUG PRELIMINARY DURABLE GOODS ORDERS: 0.0% V -1.5%E; DURABLES EX TRANSPORTATION: -0.4% V -0.5%E
(US) Fed Chair Yellen: banking system in the US is well capitalized; loan growth is picking up and problem loans are down - testifies before House Panel
OPEC reportedly reaches deal in Algiers to limit oil production, execution of deal in Nov; agrees to limit oil production to 32.5M bpd (v 33.2M in Aug) - press
(US) Senate has sufficient votes to pass stopgap funding measure; would keep govt funded through Dec 9th - press
THURSDAY 9/29
(JP) BOJ Gov Kuroda: Will seek appropriate yield curve for 2% price target - comments from Tokyo
*(EU) EURO ZONE SEPT BUSINESS CLIMATE INDICATOR: 0.45 V 0.05E; CONSUMER CONFIDENCE (FINAL): -8.2 V -8.2E
*(CZ) CZECH CENTRAL BANK (CNB) LEAVES REPURCHASE RATE UNCHANGED AT 0.05%, AS EXPECTED
*(DE) GERMANY SEPT PRELIMINARY CPI M/M: 0.1% V 0.0%E; Y/Y: 0.7% V 0.6%E
*(US) Q2 FINAL GDP ANNUALIZED Q/Q: 1.4% V 1.3%E; PERSONAL CONSUMPTION: 4.3% V 4.4%E
*(US) Q2 FINAL GDP PRICE INDEX: 2.3% V 2.3%E; CORE PCE Q/Q: 1.8% V 1.8%E
*(US) AUG PENDING HOME SALES M/M: -2.4% V 0.0%E; Y/Y: +4.0% V +2.6%E (lowest M/M reading since Jan)
DBK.DE: Reportedly 10 hedge funds have reduced exposure to Deutsche Bank, hedge fund clients have reduced collateral on trades - press
*(MX) MEXICO CENTRAL BANK (BANXICO) RAISES OVERNIGHT RATE BY 50BPS TO 4.75%; AS EXPECTED
COST: Reports Q4 $1.77 v $1.73e, R$36.6B (total) v $36.6Be
CAT: Announces 0-4% price action on most machines; effective Jan 2017 - filing
*(CN) CHINA SEPT CAIXIN PMI MANUFACTURING: 50.1 V 50.1E; 3rd straight month of expansion
FRIDAY 9/30
*(UK) Q2 FINAL GDP Q/Q: 0.7% V 0.6%E; GDP Y/Y: 2.1% V 2.2%E
*(EU) EURO ZONE SEPT ADVANCE CPI ESTIMATE Y/Y: 0.4% V 0.4%E; CPI CORE Y/Y: 0.8% V 0.9%E
*(EU) EURO ZONE AUG UNEMPLOYMENT RATE: 10.1% V 10.0%E
*(US) AUG PERSONAL INCOME: 0.2% V 0.2%E; PERSONAL SPENDING: 0.0% V 0.1%E
*(US) AUG PCE DEFLATOR M/M: 0.1% V 0.2%E; Y/Y: 1.0% V 0.9%E
*(US) AUG PCE CORE M/M: 0.2% V 0.2%E; Y/Y: 1.7% V 1.7%E
*(US) SEPT CHICAGO PURCHASING MANAGER: 54.2 V 52.0E (4th straight above 50 reading)
*(US) SEPT FINAL MICHIGAN CONFIDENCE: 91.2 V 90.0E
DBK.DE: Reportedly nears $5.4B settlement with US officials over mortgage bonds - France press
NTNX: IPO opens for trade at $26.50. Priced 14.9M shares at $16.00
Sunday, September 25, 2016
Barron's weekend summary: Cover positive on CBS and speculates about it buying VIAB; positive on COF, SAVE
Cover story: Amid ongoing turmoil at VIA, simple management changes, such as the departure of interim chief executive Tom Dooley, won't be enough to fix the problems; The company should consider a sale, with CBS the most natural buyer-though the network's investors will likely prosper with or without such a deal. With or without a Viacom deal, CBS shares might double in the next 4 years.
Features:
1) Positive on COF: Firm's skillful loan underwriting and its growing commitment to credit cards that offer rewards have put it in a strong competitive position relative to other issuers and regional banks;
2) Positive on SAVE: Though rivals have adapted some of the discount carrier's business strategies, both the fares it charges and the share price should rise soon, giving earnings a boost.
Technology Trader: Positive on DLPH, MAG: Automotive parts makers play a key role in the development of new cars, so their shares-which have reasonable valuations-are a good way for investors to gain exposure to the growing autonomous vehicle sector.
Trader: The Fed's lower rate expectations have longer-term implications for defensive stock sectors such as utilities, telecoms, and staples, according to Michael Yoshikami of Destination Wealth Management; Positive on WFM: Concerns about growing competition, slowing sales growth, and the need to lower prices have been discounted into the grocer's share price, and a little good news could send it higher; Spending on healthcare is denting consumer finances, despite a healthy jobs and housing market, low gas prices, and rising wages.
Interview: Jamie Cook, an analyst at CSFB, talks about what companies will benefit if the next president ramps up infrastructure spending (Positive on CMI, DE, CAT, PH, ACM).
Alternative Investments: Richard Merage runs MIG Capital with a long/short strategy that focuses on the consumer and invests with a longer time line than most peers (top 10 holdings: S, RCL, AAPL, Liberty Global, CCOI, CPRT, CCI, VSAT, DSW, CMG).
Small Caps: Positive on KLXI: "Distributor of aerospace parts is poised to benefit from a new aircraft-maintenance cycle, which could help lift the stock price more than 30%."
Follow-Up: Positive on SRPT: Following the recent FDA approval of Sarepta's Duchenne muscular dystrophy drug, Exondys 51, shares could see more upside, and the company could become a lucrative biotech play in the coming years.
International Trader: Positive on Dufry: Operator of duty-fee and retail stores at airports, seaports, and railway stations has 24% market share in airport travel retail and should continue to provide investor gains.
Asian Trader: Even if the Bank of Japan succeeds in boosting long-term bond yields, earnings at Japanese banks will hardly improve, says BNP Paribas analyst Toyoki Sameshima; Unlike in Europe, negative interest rates don't work in Japan.
Emerging Markets: It's not yet clear whether infrastructure spending can contribute to Brazil's economic growth, though that question shouldn't dampen investor enthusiasm for the country.
Commodities: Demand for lead in China has slowed, and supplies of the metal are ample, but that won't necessarily halt recent price gains.
Streetwise: The Fed should take its time raising rates, says columnist Ben Levisohn, who adds that "Economic growth is still sluggish, and inflation is low, leaving no real reason for an increase except a desire to get one done."
Cover story: Amid ongoing turmoil at VIA, simple management changes, such as the departure of interim chief executive Tom Dooley, won't be enough to fix the problems; The company should consider a sale, with CBS the most natural buyer-though the network's investors will likely prosper with or without such a deal. With or without a Viacom deal, CBS shares might double in the next 4 years.
Features:
1) Positive on COF: Firm's skillful loan underwriting and its growing commitment to credit cards that offer rewards have put it in a strong competitive position relative to other issuers and regional banks;
2) Positive on SAVE: Though rivals have adapted some of the discount carrier's business strategies, both the fares it charges and the share price should rise soon, giving earnings a boost.
Technology Trader: Positive on DLPH, MAG: Automotive parts makers play a key role in the development of new cars, so their shares-which have reasonable valuations-are a good way for investors to gain exposure to the growing autonomous vehicle sector.
Trader: The Fed's lower rate expectations have longer-term implications for defensive stock sectors such as utilities, telecoms, and staples, according to Michael Yoshikami of Destination Wealth Management; Positive on WFM: Concerns about growing competition, slowing sales growth, and the need to lower prices have been discounted into the grocer's share price, and a little good news could send it higher; Spending on healthcare is denting consumer finances, despite a healthy jobs and housing market, low gas prices, and rising wages.
Interview: Jamie Cook, an analyst at CSFB, talks about what companies will benefit if the next president ramps up infrastructure spending (Positive on CMI, DE, CAT, PH, ACM).
Alternative Investments: Richard Merage runs MIG Capital with a long/short strategy that focuses on the consumer and invests with a longer time line than most peers (top 10 holdings: S, RCL, AAPL, Liberty Global, CCOI, CPRT, CCI, VSAT, DSW, CMG).
Small Caps: Positive on KLXI: "Distributor of aerospace parts is poised to benefit from a new aircraft-maintenance cycle, which could help lift the stock price more than 30%."
Follow-Up: Positive on SRPT: Following the recent FDA approval of Sarepta's Duchenne muscular dystrophy drug, Exondys 51, shares could see more upside, and the company could become a lucrative biotech play in the coming years.
International Trader: Positive on Dufry: Operator of duty-fee and retail stores at airports, seaports, and railway stations has 24% market share in airport travel retail and should continue to provide investor gains.
Asian Trader: Even if the Bank of Japan succeeds in boosting long-term bond yields, earnings at Japanese banks will hardly improve, says BNP Paribas analyst Toyoki Sameshima; Unlike in Europe, negative interest rates don't work in Japan.
Emerging Markets: It's not yet clear whether infrastructure spending can contribute to Brazil's economic growth, though that question shouldn't dampen investor enthusiasm for the country.
Commodities: Demand for lead in China has slowed, and supplies of the metal are ample, but that won't necessarily halt recent price gains.
Streetwise: The Fed should take its time raising rates, says columnist Ben Levisohn, who adds that "Economic growth is still sluggish, and inflation is low, leaving no real reason for an increase except a desire to get one done."
Friday, September 23, 2016
Markets Clear Hurdles of Central Bank Policy Risk
TradeTheNews.com Weekly
Market Update: Markets Clear Hurdles of Central Bank Policy Risk
Fri, 23 Sep 2016 16:03 PM EST
Coming into the week, focus was squarely on two key Central Bank meetings. Equities drifted higher and global bond prices stabilized leading into the BOJ and FOMC announcements on Wednesday. The Bank of Japan surprised many observers when it formally changed course introducing yield curve control and inflation overshooting policies. Investors' increased willingness to add risk was evident globally and was only intensified by the US Federal Reserve announcement a few hours later. The FOMC left rates unchanged exasperating some who felt the window was there for the Fed to take the next step in the slow process of normalizing rates. Despite three hawkish dissenters in the decision, markets took solace from the updated forecast that plotted rates staying lower for even longer than they had previously thought.
With the risk of central bank induced turmoil behind it, the market settled back in to risk on mode for the balance of the week. By Thursday, the NASDAQ was touching fresh all-time highs, and for the week, the S&P500 gained 1.2%, the DJIA added 0.8%, and the Nasdaq was 1.2% higher. Treasury markets rallied in tandem while curves flattened as investors moved back into the long end. The benchmark US 10-year yield fell towards 1.6% after entering the weak at 1.7%.
Crude prices stabilized early in the week helped by a deluge of press reports surrounding producers. OPEC members met in Vienna ahead of next week's Algiers meeting and there was no shortage of jawboning by officials. Momentum appears to be building for some kind of agreement on a production freeze, but Iran and Saudi Arabia remain at odds on what yardstick will be used in determining high water output marks. On Friday, the price of WTI slipped back below $45 after the Saudis said they do not to expect any formal decision from Algiers next week.
In corporate news there was intrigue around Apple's plans for the auto market again, with a report that it could consider buying supercar maker McLaren. Later in the week Apple shares were dragged lower on more concerns about interest waning in the iPhone 7. Shares of Twitter jumped 20% on Friday after a report that the social media firm was stepping up efforts to sell itself and had attracted some early interest from Google and Salesforce.com. The IPO market was seeing a renaissance with several notable deals pricing favorably and posting big first day gains including Apptio Inc. and Elf Cosmetics.
SUNDAY 9/18
(EU) Italy PM Renzi: Germany, France, and Spain are not following EU rules on trade and deficit control - Italian press
MONDAY 9/19
*(US) SEPT NAHB HOUSING MARKET INDEX: 65 V 60E
HNI: Cuts Q3 $0.74-0.79 v $0.95e (prior $0.90-0.95), cuts FY16 $2.50-2.70 v $2.87e (prior $2.80-2.95)
TUESDAY 9/20
*(HU) HUNGARY CENTRAL BANK (NBH) LEAVES BASE RATE UNCHANGED AT 0.90%; AS EXPECTED
(US) AUG HOUSING STARTS: 1.14M V 1.19ME; BUILDING PERMITS: 1.14M V 1.17ME
(HU) Hungary Central Bank Gov Matolcsy: to limit size of 3-mo deposits at HUF900B at Oct - Post Rate Decision Statement
FDX: Reports Q1 $2.90 v $2.79e, R$14.7B v $14.4Be
WEDNESDAY 9/21
(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10% (AS EXPECTED); CHANGES POLICY FRAMEWORK TO "QQE WITH YIELD CONTROL"
DGE.UK: Issues trading update: FY17 has started well
(JP) BOJ Gov Kuroda: Easing made Japan no longer in deflationary state - post rate decision press conference
(UK) AUG PUBLIC FINANCES (PSNCR): +£0.7B V -£2.1B PRIOR; PUBLIC SECTOR NET BORROWING: £10.1B V £10.3BE
AAPL: Reportedly in talks with sports car maker McLaren over potential acquisition - FT
(US) FOMC HOLDS TARGET RATE RANGE AT 0.25-0.50%: AS EXPECTED; NEAR-TERM RISKS APPEAR ROUGHLY BALANCED; STRONGER CASE FOR HIKE BUT WAITING FOR MORE EVIDENCE
(US) FOMC UPDATED ECONOMIC FORECAST FOR SEPT MEETING; lowers 2016 GDP forecast; lowers 2016 PCE inflation forecast; raises 2016 unemployment forecast
(US) Fed Chair Yellen: seeing solid increases in household income and consumer sentiment - FOMC press conf
(US) Fed Chair Yellen: seeing definite evidence economy is expanding more strongly after weak H1; unemployment rate is close to equilibrium - FOMC press conf Q&A
(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE UNCHANGED AT 2.00%; AS EXPECTED
(AU) RBA Gov Lowe: Flexible medium term inflation target remains the right monetary policy; inflation to remain low for some time
THURSDAY 9/22
MAERSKB.DK: To separate into 2 division; Announces progress update on strategic review and change of management
(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS EXPECTED
(PH) PHILIPPINES CENTRAL BANK (BSP) LEAVES OVERNIGHT BORROWING RATE UNCHANGED AT 3.00%, AS EXPECTED
(ID) INDONESIA CENTRAL BANK (BI) CUTS 7- DAY REVERSE RATE (NEW BENCHMARK RATE) BY 25BPS TO 5.00%; AS EXPECTED (5TH CUT IN 2016)
(UK) SEPT CBI TRENDS TOTAL ORDERS: -5 V -5E
(TR) TURKEY CENTRAL BANK (CBRT) LEAVES BENCHMARK REPURCHASE RATE UNCHANGED AT 7.50%; AS EXPECTED; again narrows rate corridor (as expected)
(ZA) SOUTH AFRICA CENTRAL BANK (SARB) LEAVES INTEREST RATE UNCHANGED AT 7.00%; AS EXPECTED
(US) AUG EXISTING HOME SALES: 5.33M V 5.45ME
ELF: IPO opens for trade at $24.00
YHOO: Confirms certain data from over 500M user accounts stolen, believed to be by a state-sponsored actor; stolen data includes hashed passwords, names and email addresses
BATS: CBOE reportedly in discussions to acquire BATS Global - press
FRIDAY 9/23
(FR) FRANCE SEPT PRELIMINARY MANUFACTURING PMI: 49.5 V 48.5E (highest reading in 6 months and 7th straight contraction)
(KR) South Korea Fin Min Yoo: Says 90% of Hanjin ships to offload by end of October - statement
(DE) GERMANY SEPT PRELIMINARY MANUFACTURING PMI: 54.3 (22nd month of expansion) V 53.1E
(EU) EURO ZONE SEPT PRELIMINARY MANUFACTURING PMI: 52.6 (39th month of expansion) V 51.5E
AAPL: iPhone 7 chip orders said to have likely fell in Q1 - press
(SA) Saudi Arabia ready to reduce output if Iran agrees to freeze production at current levels of 3.6M bpd - financial press
(US) Fed's Rosengren (moderate, FOMC voter): not doing modest, gradual tightening now will put recovery's duration and sustainability at greater risk - statement on FOMC dissent (was 1 of 3 dissenters)
TWTR: CNBC's Faber: Twitter reportedly moving closer to a sale; suitors include Google and Salesforce
(US) SEPT PRELIMINARY MARKIT MANUFACTURING PMI: 51.4 V 52.0E
VVV: IPO opens for trade at $24.10
APTI: IPO opens for trade at $23.40
(US) Weekly Baker Hughes US Rig Count: 511 v 506 w/w (+0.9%)
Fri, 23 Sep 2016 16:03 PM EST
Coming into the week, focus was squarely on two key Central Bank meetings. Equities drifted higher and global bond prices stabilized leading into the BOJ and FOMC announcements on Wednesday. The Bank of Japan surprised many observers when it formally changed course introducing yield curve control and inflation overshooting policies. Investors' increased willingness to add risk was evident globally and was only intensified by the US Federal Reserve announcement a few hours later. The FOMC left rates unchanged exasperating some who felt the window was there for the Fed to take the next step in the slow process of normalizing rates. Despite three hawkish dissenters in the decision, markets took solace from the updated forecast that plotted rates staying lower for even longer than they had previously thought.
With the risk of central bank induced turmoil behind it, the market settled back in to risk on mode for the balance of the week. By Thursday, the NASDAQ was touching fresh all-time highs, and for the week, the S&P500 gained 1.2%, the DJIA added 0.8%, and the Nasdaq was 1.2% higher. Treasury markets rallied in tandem while curves flattened as investors moved back into the long end. The benchmark US 10-year yield fell towards 1.6% after entering the weak at 1.7%.
Crude prices stabilized early in the week helped by a deluge of press reports surrounding producers. OPEC members met in Vienna ahead of next week's Algiers meeting and there was no shortage of jawboning by officials. Momentum appears to be building for some kind of agreement on a production freeze, but Iran and Saudi Arabia remain at odds on what yardstick will be used in determining high water output marks. On Friday, the price of WTI slipped back below $45 after the Saudis said they do not to expect any formal decision from Algiers next week.
In corporate news there was intrigue around Apple's plans for the auto market again, with a report that it could consider buying supercar maker McLaren. Later in the week Apple shares were dragged lower on more concerns about interest waning in the iPhone 7. Shares of Twitter jumped 20% on Friday after a report that the social media firm was stepping up efforts to sell itself and had attracted some early interest from Google and Salesforce.com. The IPO market was seeing a renaissance with several notable deals pricing favorably and posting big first day gains including Apptio Inc. and Elf Cosmetics.
SUNDAY 9/18
(EU) Italy PM Renzi: Germany, France, and Spain are not following EU rules on trade and deficit control - Italian press
MONDAY 9/19
*(US) SEPT NAHB HOUSING MARKET INDEX: 65 V 60E
HNI: Cuts Q3 $0.74-0.79 v $0.95e (prior $0.90-0.95), cuts FY16 $2.50-2.70 v $2.87e (prior $2.80-2.95)
TUESDAY 9/20
*(HU) HUNGARY CENTRAL BANK (NBH) LEAVES BASE RATE UNCHANGED AT 0.90%; AS EXPECTED
(US) AUG HOUSING STARTS: 1.14M V 1.19ME; BUILDING PERMITS: 1.14M V 1.17ME
(HU) Hungary Central Bank Gov Matolcsy: to limit size of 3-mo deposits at HUF900B at Oct - Post Rate Decision Statement
FDX: Reports Q1 $2.90 v $2.79e, R$14.7B v $14.4Be
WEDNESDAY 9/21
(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10% (AS EXPECTED); CHANGES POLICY FRAMEWORK TO "QQE WITH YIELD CONTROL"
DGE.UK: Issues trading update: FY17 has started well
(JP) BOJ Gov Kuroda: Easing made Japan no longer in deflationary state - post rate decision press conference
(UK) AUG PUBLIC FINANCES (PSNCR): +£0.7B V -£2.1B PRIOR; PUBLIC SECTOR NET BORROWING: £10.1B V £10.3BE
AAPL: Reportedly in talks with sports car maker McLaren over potential acquisition - FT
(US) FOMC HOLDS TARGET RATE RANGE AT 0.25-0.50%: AS EXPECTED; NEAR-TERM RISKS APPEAR ROUGHLY BALANCED; STRONGER CASE FOR HIKE BUT WAITING FOR MORE EVIDENCE
(US) FOMC UPDATED ECONOMIC FORECAST FOR SEPT MEETING; lowers 2016 GDP forecast; lowers 2016 PCE inflation forecast; raises 2016 unemployment forecast
(US) Fed Chair Yellen: seeing solid increases in household income and consumer sentiment - FOMC press conf
(US) Fed Chair Yellen: seeing definite evidence economy is expanding more strongly after weak H1; unemployment rate is close to equilibrium - FOMC press conf Q&A
(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE UNCHANGED AT 2.00%; AS EXPECTED
(AU) RBA Gov Lowe: Flexible medium term inflation target remains the right monetary policy; inflation to remain low for some time
THURSDAY 9/22
MAERSKB.DK: To separate into 2 division; Announces progress update on strategic review and change of management
(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS EXPECTED
(PH) PHILIPPINES CENTRAL BANK (BSP) LEAVES OVERNIGHT BORROWING RATE UNCHANGED AT 3.00%, AS EXPECTED
(ID) INDONESIA CENTRAL BANK (BI) CUTS 7- DAY REVERSE RATE (NEW BENCHMARK RATE) BY 25BPS TO 5.00%; AS EXPECTED (5TH CUT IN 2016)
(UK) SEPT CBI TRENDS TOTAL ORDERS: -5 V -5E
(TR) TURKEY CENTRAL BANK (CBRT) LEAVES BENCHMARK REPURCHASE RATE UNCHANGED AT 7.50%; AS EXPECTED; again narrows rate corridor (as expected)
(ZA) SOUTH AFRICA CENTRAL BANK (SARB) LEAVES INTEREST RATE UNCHANGED AT 7.00%; AS EXPECTED
(US) AUG EXISTING HOME SALES: 5.33M V 5.45ME
ELF: IPO opens for trade at $24.00
YHOO: Confirms certain data from over 500M user accounts stolen, believed to be by a state-sponsored actor; stolen data includes hashed passwords, names and email addresses
BATS: CBOE reportedly in discussions to acquire BATS Global - press
FRIDAY 9/23
(FR) FRANCE SEPT PRELIMINARY MANUFACTURING PMI: 49.5 V 48.5E (highest reading in 6 months and 7th straight contraction)
(KR) South Korea Fin Min Yoo: Says 90% of Hanjin ships to offload by end of October - statement
(DE) GERMANY SEPT PRELIMINARY MANUFACTURING PMI: 54.3 (22nd month of expansion) V 53.1E
(EU) EURO ZONE SEPT PRELIMINARY MANUFACTURING PMI: 52.6 (39th month of expansion) V 51.5E
AAPL: iPhone 7 chip orders said to have likely fell in Q1 - press
(SA) Saudi Arabia ready to reduce output if Iran agrees to freeze production at current levels of 3.6M bpd - financial press
(US) Fed's Rosengren (moderate, FOMC voter): not doing modest, gradual tightening now will put recovery's duration and sustainability at greater risk - statement on FOMC dissent (was 1 of 3 dissenters)
TWTR: CNBC's Faber: Twitter reportedly moving closer to a sale; suitors include Google and Salesforce
(US) SEPT PRELIMINARY MARKIT MANUFACTURING PMI: 51.4 V 52.0E
VVV: IPO opens for trade at $24.10
APTI: IPO opens for trade at $23.40
(US) Weekly Baker Hughes US Rig Count: 511 v 506 w/w (+0.9%)
Saturday, September 17, 2016
Barron's Weekend summary
Barron's Weekend summary: positive on CAA, HPE, LH
Cover story: For the first time, the number of families with more than $5M in assets has surpassed one million, part of a trend in which every level of the wealth pyramid is expanding; Last year, there were 492 billionaires in the U.S., one hundred of which were created in the past five years alone.
Feature:
1) Positive on HPE: With chief Meg Whitman focusing on computer-infrastructure products such as servers for corporate clients, company should see increased cash flow, much of which will go to investors;
2) Positive on LH: Company, whose tests are generally cheaper than those performed at hospitals, should benefit from a growing senior population and broader health insurance coverage through the ACA;
3) Positive on CAA: Homebuilder is expanding in some of the country's fastest-growing regions, and shares, which have a lower P/E ratio than peers, could have 25% upside.
Tech Trader: The camera on AAPL's new iPhone 7 model is said to be able to match or beat professional gear costing thousands of dollars, but that's just one element in the rapidly changing photography sector; Investors can play the trend with CEVA and Foveon, a subsidiary of Japanese lens and camera maker Sigma.
Trader: "A Fed hike Wednesday could be followed by a knee-jerk selloff below 2100 on the S&P 500," says Peter Kenny of Kenny & Co., but a relief rally is likely if there's no hike; Positive on CTSH: Company is a leading global player in infotech, consulting, and outsourcing, and with a potential 15% gain in shares as companies spend on digital infrastructure, investors should take a look; Positive on PII: Company continues to face issues, including recalls, but is installing the infrastructure to improve and monitor its products, and the stock could be a long-term winner.
Profile: John Loffredo and Robert DiMella, co-managers, MainStay High Yield Municipal Bond fund, don't use leverage and take a cautious approach to non-rated securities (sector weightings: education, health, transportation, general obligation, industrial, tobacco, cash equivalents and other, water & sewer, advance refunded, housing, utilities, miscellaneous revenue).
Interview: Jeff Rottinghaus, manager, T. Rowe Price U.S. Large-Cap Core fund, says he does a deep dive into companies he owns-and those he avoids-and thinks the market is fairly valued to overvalued.
Barron's Penta: Barron's annual list of the top 40 wealth management firms is topped by Bank of America Global Wealth & Investment Management, Morgan Stanley Wealth Management, and J.P. Morgan Private Bank; Other Penta stories report on Biedermeier furniture, Cap Ferrat, suitmaker Hickey Freeman, in-demand aircraft, the new Maserati off-road vehicle, watchmaker Laurent Ferrier, undervalued housing markets, UBS head of U.S. wealth management Tom Narati, trends in philanthropy, how to cut accounting fees, how to build an education trust, trends in wine, and the boom in homemade brewing.
Small Caps: Positive on PICO: Shares of the company, which holds a sizable amount of water rights in Nevada and Arizona, look deeply undervalued, and the company could be a takeover target. Follow-Up: Positive on NWL: Shares are up 35% to about $50 since Barron's recommended them in January, and they could rise to $60 as the company seeks fresh savings and pares its holdings; Cautious on MFIN: Company has cut dividends among ongoing trouble in the taxi industry, but at this point investors should hold on to shares, because yellow cabs are a long way from disappearing.
European Trader: Positive on Total: Shares of French integrated energy company, which is keenly focused on profitability, could gain 20% in the next 12 months.
Asian Trader: Positive on HSBC, China Construction Bank, Axis Bank: Three Asian-listed banks offer strong yields, growth prospects, or both, and despite a recent stock surge, they may have more room to grow.
Emerging Markets: Positive on Cielo, Sberbank: James Donald, who runs Lazard's Emerging Markets Equity Portfolio, likes the Brazilian credit-card processor and Russia's largest bank.
Commodities: Despite an active hurricane season in Florida, frozen concentrated orange juice futures are up and aren't likely to drop for some time.
Streetwise: Though investors are calling on GILD to make a major deal, management has chosen to focus on smaller acquisitions, which is exactly what it should be doing, according to Hilarey Bhatt of Bhatt Innovation Capital.
Cover story: For the first time, the number of families with more than $5M in assets has surpassed one million, part of a trend in which every level of the wealth pyramid is expanding; Last year, there were 492 billionaires in the U.S., one hundred of which were created in the past five years alone.
Feature:
1) Positive on HPE: With chief Meg Whitman focusing on computer-infrastructure products such as servers for corporate clients, company should see increased cash flow, much of which will go to investors;
2) Positive on LH: Company, whose tests are generally cheaper than those performed at hospitals, should benefit from a growing senior population and broader health insurance coverage through the ACA;
3) Positive on CAA: Homebuilder is expanding in some of the country's fastest-growing regions, and shares, which have a lower P/E ratio than peers, could have 25% upside.
Tech Trader: The camera on AAPL's new iPhone 7 model is said to be able to match or beat professional gear costing thousands of dollars, but that's just one element in the rapidly changing photography sector; Investors can play the trend with CEVA and Foveon, a subsidiary of Japanese lens and camera maker Sigma.
Trader: "A Fed hike Wednesday could be followed by a knee-jerk selloff below 2100 on the S&P 500," says Peter Kenny of Kenny & Co., but a relief rally is likely if there's no hike; Positive on CTSH: Company is a leading global player in infotech, consulting, and outsourcing, and with a potential 15% gain in shares as companies spend on digital infrastructure, investors should take a look; Positive on PII: Company continues to face issues, including recalls, but is installing the infrastructure to improve and monitor its products, and the stock could be a long-term winner.
Profile: John Loffredo and Robert DiMella, co-managers, MainStay High Yield Municipal Bond fund, don't use leverage and take a cautious approach to non-rated securities (sector weightings: education, health, transportation, general obligation, industrial, tobacco, cash equivalents and other, water & sewer, advance refunded, housing, utilities, miscellaneous revenue).
Interview: Jeff Rottinghaus, manager, T. Rowe Price U.S. Large-Cap Core fund, says he does a deep dive into companies he owns-and those he avoids-and thinks the market is fairly valued to overvalued.
Barron's Penta: Barron's annual list of the top 40 wealth management firms is topped by Bank of America Global Wealth & Investment Management, Morgan Stanley Wealth Management, and J.P. Morgan Private Bank; Other Penta stories report on Biedermeier furniture, Cap Ferrat, suitmaker Hickey Freeman, in-demand aircraft, the new Maserati off-road vehicle, watchmaker Laurent Ferrier, undervalued housing markets, UBS head of U.S. wealth management Tom Narati, trends in philanthropy, how to cut accounting fees, how to build an education trust, trends in wine, and the boom in homemade brewing.
Small Caps: Positive on PICO: Shares of the company, which holds a sizable amount of water rights in Nevada and Arizona, look deeply undervalued, and the company could be a takeover target. Follow-Up: Positive on NWL: Shares are up 35% to about $50 since Barron's recommended them in January, and they could rise to $60 as the company seeks fresh savings and pares its holdings; Cautious on MFIN: Company has cut dividends among ongoing trouble in the taxi industry, but at this point investors should hold on to shares, because yellow cabs are a long way from disappearing.
European Trader: Positive on Total: Shares of French integrated energy company, which is keenly focused on profitability, could gain 20% in the next 12 months.
Asian Trader: Positive on HSBC, China Construction Bank, Axis Bank: Three Asian-listed banks offer strong yields, growth prospects, or both, and despite a recent stock surge, they may have more room to grow.
Emerging Markets: Positive on Cielo, Sberbank: James Donald, who runs Lazard's Emerging Markets Equity Portfolio, likes the Brazilian credit-card processor and Russia's largest bank.
Commodities: Despite an active hurricane season in Florida, frozen concentrated orange juice futures are up and aren't likely to drop for some time.
Streetwise: Though investors are calling on GILD to make a major deal, management has chosen to focus on smaller acquisitions, which is exactly what it should be doing, according to Hilarey Bhatt of Bhatt Innovation Capital.
Friday, September 16, 2016
Markets Choppy Ahead of FOMC Next Wednesday
TradeTheNews.com Weekly
Market Update: Markets Choppy Ahead of FOMC Next Wednesday
Fri, 16 Sep 2016 16:05 PM EST
Volatility continued this week as the markets pondered the timing of the next Fed rate hike. The week started off with Fed Governor Brainard making the dovish case for Fed policy, which helped reverse the risk off sentiment that built up last week amid a barrage of hawkish commentary from Brainard's colleagues. A big miss on US Advanced Retail Sales data on Thursday lent support to the dovish view that the Fed will be on hold next week. But a hotter than expected US CPI reading on Friday caused markets to once again reassess expectations for Fed policy as progress toward the inflation target could bring the next hike sooner. Meanwhile, the BOE kept its policy unchanged this week, as expected, but said it could cut rates again if the baseline forecast set in August is realized. The renewed contrast between US policy tightening and European easing led to the dollar strengthening substantially on Friday, particularly against the pound sterling. WTI crude futures slid throughout the week, dropping three bucks to around $43/bbl. Two major M&A deals in the agriculture sector, an earnings miss by Oracle and increased guidance from Intel provided the buzz in the corporate sector. The tech sector was also bolstered by a surge in Apple shares driven by strong pre-orders for iPhone 7 at Sprint and T-Mobile. Equities were volatile but ended little changed: for the week the DJIA gained 0.2%, the S&P500 added 0.5%, and the Nasdaq was jumped 2.3%.
Agrium and Potash began a week replete with large-scale M&A activity by announcing a $26B merger of equals on Monday morning. The all-stock combination would partner Potash's crop nutrient production capacity with the farm retail network of Agrium to form an integrated crop inputs platform. In another agricultural mega-merger announcement, Germany's Bayer agreed to acquire Monsanto with an improved $128/share cash offer after months of back-and-forth. With a total value of $66B, the deal would be the largest all-cash deal on record, a fact which has not gone unnoticed by regulators; Iowa Republican Senator Grassley has already noted a Bayer-Monsanto merger would likely cause concerns for US farmers. In another sign of a rebound in oil sector M&A, Anadarko announced the acquisition of Freeport McMoran's deepwater Gulf of Mexico assets for $2B, adding approximately 80K net BOE per day to Anadarko's production, who aims to use the added revenue from the offshore wells to accelerate its onshore development plans. And late in the week, Gilead registered a $5B notes offering, leading investors to believe some future acquisition plans could soon be set into motion.
In the only major corporate earnings release this week, Oracle reported a miss on both profit and revenue in Q1, noting continued growth in its burgeoning cloud business but a slowdown in traditional new software licenses. The tech giant raised its SaaS/PaaS FY revenue growth outlook, but guided its overall revenue below street consensus, sending shares lower. Intel, on the other hand, raised its Q3 revenue guidance Friday, citing replenished PC supply chain inventory and some signs of improving PC demand. Off-road vehicle manufacturer Polaris cut its FY profit guidance on effects from the RZR Turbo product recall that have become more expensive than previously anticipated.
MON 9/12
AGU.CA: To combine in merger of equals with Potash; To form new parent company in all-stock deal with EV of $36B
(US) Fed Gov Brainard (FOMC voter, dove): urges continued prudence in removing accommodation; more concerned about undershooting inflation
TUES 9/13
(DE) GERMANY AUG FINAL CPI M/M: 0.0% V 0.0%E; Y/Y: 0.4% V 0.4%E
IEA Monthly Report: Cuts 2016 global oil demand forecast by 100K bpd and by 200K in 2017
(UK) AUG CPI M/M: 0.3% V 0.4%E; Y/Y: 0.6% V 0.7%E; CPI CORE Y/Y: 1.3% V 1.4%E (annual pace matches 21-month high)
(UK) AUG PPI INPUT M/M: 0.2% V 0.6%E; Y/Y: 7.6% V 8.1%E
(DE) GERMANY SEPT ZEW CURRENT SITUATION SURVEY: 55.1 V 56.0E; EXPECTATIONS SURVEY: 0.5 V 2.5E
AAPL: T-Mobile says iPhone 7 and iPhone 7 Plus sales in pre orders were up 4x compared to the next most popular iPhone
(JP) BOJ to consider moving deeper into negative rates; may drop timing on reaching 2% inflation target - Nikkei
WED 9/14
RMS.FR: Reports H1 Net €545M v €546Me, Op €827M v €818.5Me, Rev €2.44B v €2.44B prelim
(UK) JULY AVERAGE WEEKLY EARNINGS 3M/Y: 2.3% V 2.1%E; WEEKLY EARNINGS 3M/Y (EX BONUS): 2.1% V 2.2%E
(UK) AUG JOBLESS CLAIMS CHANGE: +2.4K V +1.8KE; CLAIMANT COUNT RATE: 2.2% V 2.2%E
(UK) JULY ILO UNEMPLOYMENT RATE 3M/3M: 4.9% V 4.9%E
(US) AUG IMPORT PRICE INDEX M/M: -0.2% V -0.1%E; Y/Y: -2.2% V -2.2%E
(AU) AUSTRALIA AUG EMPLOYMENT CHANGE: -3.9K (first decline in 6 months) V +15.0KE; UNEMPLOYMENT RATE: 5.6% (3-year low) V 5.7%E
THURS 9/15
(CH) SNB LEAVES SIGHT DEPOSIT INTEREST RATE UNCHANGED AT -0.75%; AS EXPECTED
(UK) AUG RETAIL SALES (EX-AUTO FUEL) M/M: -0.3% V-0.7%E; Y/Y: 5.9% V 4.8%E
(UK) AUG RETAIL SALES (INCLUDING AUTO FUEL) M/M: -0.2%V -0.4%E; Y/Y: 6.2%V 5.4%E
(EU) EURO ZONE AUG CPI M/M: 0.1% V 0.1%E; Y/Y: 0.2% V 0.2%E; CPI CORE Y/Y: 0.8% V 0.8%E
(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS EXPECTED
(UK) BOE SEPT MINUTES: VOTED 9-0 TO LEAVE INTEREST RATES UNCHANGED AT 0.25%
(US) AUG ADVANCE RETAIL SALES M/M: -0.3% V -0.1%E; RETAIL SALES EX AUTO M/M: -0.1% V +0.2%E
(US) AUG PPI FINAL DEMAND M/M: 0.0% V +0.1%E; Y/Y: 0.0% V +0.1%E
(US) SEPT PHILADELPHIA FED BUSINESS OUTLOOK: 12.8 V 1.0E (Highest since Feb 2015)
ORCL: Reports Q1 $0.55 v $0.58e, R$8.60B v $8.72Be
(US) NORTH AMERICA AUG SEMI BOOK/BILL RATIO: 1.03 V 1.05 prior
FRI 9/16
(RU) RUSSIA CENTRAL BANK (CBR) CUTS 1-WEEK AUCTION RATE BY 50BPS TO 10.00%; AS EXPECTED
(US) AUG CPI M/M: 0.2% V 0.1%E; CPI EX FOOD AND ENERGY M/M: 0.3% V 0.2%E
INTC: Raises Q3 R$15.3-15.9B v $14.8Be (prior R$14.4-15.4B); cites replenished PC supply chain inventory and improving PC demand
(US) SEPT PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 89.8 V 90.6E
(US) Fed reports Q2 Financial Accounts: Household Change in Net Worth: $1.075T v $0.837T prior; Total household net worth: $89.1T v $88.1T q/q
Fri, 16 Sep 2016 16:05 PM EST
Volatility continued this week as the markets pondered the timing of the next Fed rate hike. The week started off with Fed Governor Brainard making the dovish case for Fed policy, which helped reverse the risk off sentiment that built up last week amid a barrage of hawkish commentary from Brainard's colleagues. A big miss on US Advanced Retail Sales data on Thursday lent support to the dovish view that the Fed will be on hold next week. But a hotter than expected US CPI reading on Friday caused markets to once again reassess expectations for Fed policy as progress toward the inflation target could bring the next hike sooner. Meanwhile, the BOE kept its policy unchanged this week, as expected, but said it could cut rates again if the baseline forecast set in August is realized. The renewed contrast between US policy tightening and European easing led to the dollar strengthening substantially on Friday, particularly against the pound sterling. WTI crude futures slid throughout the week, dropping three bucks to around $43/bbl. Two major M&A deals in the agriculture sector, an earnings miss by Oracle and increased guidance from Intel provided the buzz in the corporate sector. The tech sector was also bolstered by a surge in Apple shares driven by strong pre-orders for iPhone 7 at Sprint and T-Mobile. Equities were volatile but ended little changed: for the week the DJIA gained 0.2%, the S&P500 added 0.5%, and the Nasdaq was jumped 2.3%.
Agrium and Potash began a week replete with large-scale M&A activity by announcing a $26B merger of equals on Monday morning. The all-stock combination would partner Potash's crop nutrient production capacity with the farm retail network of Agrium to form an integrated crop inputs platform. In another agricultural mega-merger announcement, Germany's Bayer agreed to acquire Monsanto with an improved $128/share cash offer after months of back-and-forth. With a total value of $66B, the deal would be the largest all-cash deal on record, a fact which has not gone unnoticed by regulators; Iowa Republican Senator Grassley has already noted a Bayer-Monsanto merger would likely cause concerns for US farmers. In another sign of a rebound in oil sector M&A, Anadarko announced the acquisition of Freeport McMoran's deepwater Gulf of Mexico assets for $2B, adding approximately 80K net BOE per day to Anadarko's production, who aims to use the added revenue from the offshore wells to accelerate its onshore development plans. And late in the week, Gilead registered a $5B notes offering, leading investors to believe some future acquisition plans could soon be set into motion.
In the only major corporate earnings release this week, Oracle reported a miss on both profit and revenue in Q1, noting continued growth in its burgeoning cloud business but a slowdown in traditional new software licenses. The tech giant raised its SaaS/PaaS FY revenue growth outlook, but guided its overall revenue below street consensus, sending shares lower. Intel, on the other hand, raised its Q3 revenue guidance Friday, citing replenished PC supply chain inventory and some signs of improving PC demand. Off-road vehicle manufacturer Polaris cut its FY profit guidance on effects from the RZR Turbo product recall that have become more expensive than previously anticipated.
MON 9/12
AGU.CA: To combine in merger of equals with Potash; To form new parent company in all-stock deal with EV of $36B
(US) Fed Gov Brainard (FOMC voter, dove): urges continued prudence in removing accommodation; more concerned about undershooting inflation
TUES 9/13
(DE) GERMANY AUG FINAL CPI M/M: 0.0% V 0.0%E; Y/Y: 0.4% V 0.4%E
IEA Monthly Report: Cuts 2016 global oil demand forecast by 100K bpd and by 200K in 2017
(UK) AUG CPI M/M: 0.3% V 0.4%E; Y/Y: 0.6% V 0.7%E; CPI CORE Y/Y: 1.3% V 1.4%E (annual pace matches 21-month high)
(UK) AUG PPI INPUT M/M: 0.2% V 0.6%E; Y/Y: 7.6% V 8.1%E
(DE) GERMANY SEPT ZEW CURRENT SITUATION SURVEY: 55.1 V 56.0E; EXPECTATIONS SURVEY: 0.5 V 2.5E
AAPL: T-Mobile says iPhone 7 and iPhone 7 Plus sales in pre orders were up 4x compared to the next most popular iPhone
(JP) BOJ to consider moving deeper into negative rates; may drop timing on reaching 2% inflation target - Nikkei
WED 9/14
RMS.FR: Reports H1 Net €545M v €546Me, Op €827M v €818.5Me, Rev €2.44B v €2.44B prelim
(UK) JULY AVERAGE WEEKLY EARNINGS 3M/Y: 2.3% V 2.1%E; WEEKLY EARNINGS 3M/Y (EX BONUS): 2.1% V 2.2%E
(UK) AUG JOBLESS CLAIMS CHANGE: +2.4K V +1.8KE; CLAIMANT COUNT RATE: 2.2% V 2.2%E
(UK) JULY ILO UNEMPLOYMENT RATE 3M/3M: 4.9% V 4.9%E
(US) AUG IMPORT PRICE INDEX M/M: -0.2% V -0.1%E; Y/Y: -2.2% V -2.2%E
(AU) AUSTRALIA AUG EMPLOYMENT CHANGE: -3.9K (first decline in 6 months) V +15.0KE; UNEMPLOYMENT RATE: 5.6% (3-year low) V 5.7%E
THURS 9/15
(CH) SNB LEAVES SIGHT DEPOSIT INTEREST RATE UNCHANGED AT -0.75%; AS EXPECTED
(UK) AUG RETAIL SALES (EX-AUTO FUEL) M/M: -0.3% V-0.7%E; Y/Y: 5.9% V 4.8%E
(UK) AUG RETAIL SALES (INCLUDING AUTO FUEL) M/M: -0.2%V -0.4%E; Y/Y: 6.2%V 5.4%E
(EU) EURO ZONE AUG CPI M/M: 0.1% V 0.1%E; Y/Y: 0.2% V 0.2%E; CPI CORE Y/Y: 0.8% V 0.8%E
(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS EXPECTED
(UK) BOE SEPT MINUTES: VOTED 9-0 TO LEAVE INTEREST RATES UNCHANGED AT 0.25%
(US) AUG ADVANCE RETAIL SALES M/M: -0.3% V -0.1%E; RETAIL SALES EX AUTO M/M: -0.1% V +0.2%E
(US) AUG PPI FINAL DEMAND M/M: 0.0% V +0.1%E; Y/Y: 0.0% V +0.1%E
(US) SEPT PHILADELPHIA FED BUSINESS OUTLOOK: 12.8 V 1.0E (Highest since Feb 2015)
ORCL: Reports Q1 $0.55 v $0.58e, R$8.60B v $8.72Be
(US) NORTH AMERICA AUG SEMI BOOK/BILL RATIO: 1.03 V 1.05 prior
FRI 9/16
(RU) RUSSIA CENTRAL BANK (CBR) CUTS 1-WEEK AUCTION RATE BY 50BPS TO 10.00%; AS EXPECTED
(US) AUG CPI M/M: 0.2% V 0.1%E; CPI EX FOOD AND ENERGY M/M: 0.3% V 0.2%E
INTC: Raises Q3 R$15.3-15.9B v $14.8Be (prior R$14.4-15.4B); cites replenished PC supply chain inventory and improving PC demand
(US) SEPT PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 89.8 V 90.6E
(US) Fed reports Q2 Financial Accounts: Household Change in Net Worth: $1.075T v $0.837T prior; Total household net worth: $89.1T v $88.1T q/q
Friday, September 9, 2016
Passive ECB and Hawkish Fed Finally Jar Markets
TradeTheNews.com Weekly
Market Update: Passive ECB and Hawkish Fed Finally Jar Markets
Fri, 09 Sep 2016 16:05 PM EST
September trade finally ushered in some volatility after the long slog higher for much of the summer. Early on in the week volumes remained light and movement remained minimal coming on the heels of a disappointing August employment report last Friday. An uptick in M&A announcements after the Labor Day holiday did little to juice equity markets. Corporate debt offerings surged as company's looked to roll over financing costs ahead of a potential Fed rate hike. US data continued to come in soft, highlighted by the August ISM Services reading that touched its lowest level since 2010. The weaker readings helped push Treasury markets higher, keeping a lid on yields through midweek.
By Wednesday traders focus turned decidedly towards Europe. With August (post-Brexit) economic readings holding up generally better than some officials admittedly had forecasted, expectations that much would come of Thursdays ECB meeting were diminished. Nevertheless, markets responded when the ECB held pat on rates and stimulus measures and Draghi was decidedly more hawkish than many had expected in his commentary. Notably Draghi said the ECB did not discuss extending its QE timeframe, even as the nominal end date is looming in March. The reverberations were felt most potently in the rates complex. Sovereign bonds sold off globally pushing benchmark rates in Europe and the US up to levels not seen since the Brexit vote. The pressure was amplified by a more hawkish tone from a slate of Fed speakers that spooked markets about the possibility the Fed could actually make its next rate move this month. Boston Fed President Rosengren said there is a reasonable case for gradual tightening, and even the usually cautious dove Governor Tarullo said he would not rule out a rate hike this year. Stock markets came under pressure and the selling accelerated into week's end. The S&P, Dow and Nasdaq Composite each fell below their 50-day moving averages on Friday for the first time since the post Brexit swoon, and the S&P500 saws its first daily move of greater than 1% for the first time in over 40 sessions. For the week, the DJIA lost 2.2%, the S&P500 dropped 2.4%, and the Nasdaq fell 2.4%.
Energy futures pushed higher for most of the week after Russia and Saudi Arabia agreed to form a working group on oil price stability and other oil producers including Iran made constructive comments about a potential oil production freeze agreement. Weekly energy inventory data also provided a boost for crude futures as the 12% of US Gulf of Mexico oil production that was shut in by tropical storm Hermine resulted in the largest weekly draw in crude since 1999.
In the realm of corporate news, the most anticipated event this week was Apple's product unveiling. CEO Cook divulged the new 'water-resistant' iPhone 7 model, which features larger hard drives, an upgraded camera, and a somewhat controversial removal of the headphone jack, but the announcement revealed few features that surprised any tech-watchers. The consumer electronics giant also introduced the Apple Watch 2, with built-in GPS, and Airpod wireless earphones. While the event disappointed some, Apple's week was considerably better than competitor Samsung's; the Korean electronics maker announced a global recall of its Galaxy Note 7 phones on reports of battery fires. M&A began to pick up from the relatively quiet pre-Labor Day holiday period. Hewlett Packard Enterprise announced it would spin off and sell its non-core software assets to Micro Focus in a deal valued at $8.8B, creating one of the world's largest pure-play enterprise software companies. Reports indicated Monsanto is could announce a deal to be acquired by Bayer next week at price a little below $130/share. And Liberty Media Corp agreed to acquire motorsports league Formula One for an equity value of $4.4B.
Sun 9/4
(CN) CHINA AUG CAIXIN PMI SERVICES: 52.1 V 51.7 PRIOR
Mon 9/5
(EU) EURO ZONE SEPT SENTIX INVESTOR CONFIDENCE: 5.6 V 5.0E
(RU) SAUDI ARABIA AND RUSSIA SIGN AGREEMENT ON OIL MARKET; discussed cooperation on oil and gas to avoid catastrophe and achieve stability; could include possible production freeze (as speculated)
Tues 9/6
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET AT 1.50%; AS EXPECTED
(EU) EURO ZONE Q2 FINAL GDP Q/Q: 0.3% V 0.3%E; Y/Y: 1.6% V 1.6%E
CPHD: To be acquired by Danaher for $53/shr valued at $4B
SE: To combine companies with Enbridge in an all stock for stock merger, EV at C$165B; values Spectra common stock at ~C$37B
NAV: Confirms wide-ranging strategic alliance with Volkswagen Truck & Bus; VW to invest at $15.76/shr for 19.9% stake
(US) AUG ISM NON-MANUFACTURING COMPOSITE: 51.4 V 55.0E (lowest since Feb 2010)
(US) Aug Labor Market Conditions Index Change: -0.7 v +1.0 prior
FDML: Enters into definitive merger agreement with Icahn Enterprises L.P. at $9.25/shr in all-cash offer
CMG: Pershing Square discloses new 9.9% stake; intends to engage in discussions with management - 13D filing
(AU) AUSTRALIA Q2 GDP Q/Q: 0.5% V 0.6%E (1-year low); Y/Y: 3.3% V 3.3%E (annual pace hits a 2-year high)
Wed 9/7
(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT -0.50%; AS EXPECTED
(CN) CHINA AUG FOREIGN RESERVES: $3.185T V $3.190TE (lowest level since Dec 2011)
(UK) JULY INDUSTRIAL PRODUCTION M/M: +0.1% V -0.2%E; Y/Y: 2.1% V 1.9%E
(UK) JULY MANUFACTURING PRODUCTION M/M: -0.9% V -0.3%E; Y/Y: 0.8% V 1.7%E
(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 0.50%; AS EXPECTED
AAPL: Introduces iPhone 7 and Apple Watch 2 - product event
(US) FEDERAL RESERVE RELEASES BEIGE BOOK: ECONOMY CONTINUED TO EXPAND AT MODEST PACE THROUGH LATE AUGUST; UPWARD WAGE PRESSURES INCREASED FURTHER
(JP) JAPAN Q2 FINAL GDP Q/Q: 0.2% V 0.0%E; ANNUALIZED GDP: 0.7% V 0.2%E (2nd straight expansion both quarterly and annualized)
(CN) CHINA AUG TRADE BALANCE: $52.1B V $58.4BE
Thrs 9/8
(CN) China Passenger Car Association (PCA): China July vehicle sales 1.8M units, +24.5% y/y; YTD 14.2M units, +12.7% y/y
(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
(EU) ECB Statement: Reiterates to continue €80B/month asset purchases program until Mar 2017 or beyond if necessary (no change in current timeline)
(US) INITIAL JOBLESS CLAIMS: 259K V 265KE; CONTINUING CLAIMS: 2.14M V 2.15ME
(EU) ECB chief Draghi: Sees rates at present or lower level for extended period; to preserve very substantial amount of support - prepared remarks
(EU) ECB chief Draghi: Did not discuss extension of QE; working on smooth implementation of policies, changes are needed - Q&A
(EU) ECB chief Draghi: Have not discussed helicopter money or equity buying
(US) DOE CRUDE: -14.5M V +0.5ME; GASOLINE: -4.2M V -0.5ME; DISTILLATE: +3.4M V +1ME (largest crude draw since 1999)
(PE) PERU CENTRAL BANK (BCRP) LEAVES REFERENCE RATE UNCHANGED AT 4.25%; AS EXPECTED
(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.25%; AS EXPECTED (3rd straight puase in current easing cycle)
(CN) CHINA AUG CPI Y/Y: 1.3% V 1.7%E; 10-month low
(CN) CHINA AUG PPI Y/Y: -0.8% V -0.9%E; 54th consecutive month of decline; smallest decline since Apr 2012
Fri 9/9
(FR) FRANCE JULY INDUSTRIAL PRODUCTION M/M: -0.6% V +0.3%E; Y/Y: -0.1% V +1.0%E
(FR) FRANCE JULY MANUFACTURING PRODUCTION M/M: -0.3% V +0.7%E; Y/Y: 0.4% V 1.8%E
GILTS: (UK) 10-year Gilt yield approaching 0.81%; highest since BOE announced new QE measures back on Aug 2nd - dealers
(US) Fed's Rosengren (moderate, FOMC voter): Sees reasonable case for gradual tightening
(CA) CANADA AUG NET CHANGE IN EMPLOYMENT: +26.2K V +14.0KE; UNEMPLOYMENT RATE: 7.0% V 7.0%E
(US) Weekly Baker Hughes US Rig Count: 508 v 497 w/w (+2%)
Fri, 09 Sep 2016 16:05 PM EST
September trade finally ushered in some volatility after the long slog higher for much of the summer. Early on in the week volumes remained light and movement remained minimal coming on the heels of a disappointing August employment report last Friday. An uptick in M&A announcements after the Labor Day holiday did little to juice equity markets. Corporate debt offerings surged as company's looked to roll over financing costs ahead of a potential Fed rate hike. US data continued to come in soft, highlighted by the August ISM Services reading that touched its lowest level since 2010. The weaker readings helped push Treasury markets higher, keeping a lid on yields through midweek.
By Wednesday traders focus turned decidedly towards Europe. With August (post-Brexit) economic readings holding up generally better than some officials admittedly had forecasted, expectations that much would come of Thursdays ECB meeting were diminished. Nevertheless, markets responded when the ECB held pat on rates and stimulus measures and Draghi was decidedly more hawkish than many had expected in his commentary. Notably Draghi said the ECB did not discuss extending its QE timeframe, even as the nominal end date is looming in March. The reverberations were felt most potently in the rates complex. Sovereign bonds sold off globally pushing benchmark rates in Europe and the US up to levels not seen since the Brexit vote. The pressure was amplified by a more hawkish tone from a slate of Fed speakers that spooked markets about the possibility the Fed could actually make its next rate move this month. Boston Fed President Rosengren said there is a reasonable case for gradual tightening, and even the usually cautious dove Governor Tarullo said he would not rule out a rate hike this year. Stock markets came under pressure and the selling accelerated into week's end. The S&P, Dow and Nasdaq Composite each fell below their 50-day moving averages on Friday for the first time since the post Brexit swoon, and the S&P500 saws its first daily move of greater than 1% for the first time in over 40 sessions. For the week, the DJIA lost 2.2%, the S&P500 dropped 2.4%, and the Nasdaq fell 2.4%.
Energy futures pushed higher for most of the week after Russia and Saudi Arabia agreed to form a working group on oil price stability and other oil producers including Iran made constructive comments about a potential oil production freeze agreement. Weekly energy inventory data also provided a boost for crude futures as the 12% of US Gulf of Mexico oil production that was shut in by tropical storm Hermine resulted in the largest weekly draw in crude since 1999.
In the realm of corporate news, the most anticipated event this week was Apple's product unveiling. CEO Cook divulged the new 'water-resistant' iPhone 7 model, which features larger hard drives, an upgraded camera, and a somewhat controversial removal of the headphone jack, but the announcement revealed few features that surprised any tech-watchers. The consumer electronics giant also introduced the Apple Watch 2, with built-in GPS, and Airpod wireless earphones. While the event disappointed some, Apple's week was considerably better than competitor Samsung's; the Korean electronics maker announced a global recall of its Galaxy Note 7 phones on reports of battery fires. M&A began to pick up from the relatively quiet pre-Labor Day holiday period. Hewlett Packard Enterprise announced it would spin off and sell its non-core software assets to Micro Focus in a deal valued at $8.8B, creating one of the world's largest pure-play enterprise software companies. Reports indicated Monsanto is could announce a deal to be acquired by Bayer next week at price a little below $130/share. And Liberty Media Corp agreed to acquire motorsports league Formula One for an equity value of $4.4B.
Sun 9/4
(CN) CHINA AUG CAIXIN PMI SERVICES: 52.1 V 51.7 PRIOR
Mon 9/5
(EU) EURO ZONE SEPT SENTIX INVESTOR CONFIDENCE: 5.6 V 5.0E
(RU) SAUDI ARABIA AND RUSSIA SIGN AGREEMENT ON OIL MARKET; discussed cooperation on oil and gas to avoid catastrophe and achieve stability; could include possible production freeze (as speculated)
Tues 9/6
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET AT 1.50%; AS EXPECTED
(EU) EURO ZONE Q2 FINAL GDP Q/Q: 0.3% V 0.3%E; Y/Y: 1.6% V 1.6%E
CPHD: To be acquired by Danaher for $53/shr valued at $4B
SE: To combine companies with Enbridge in an all stock for stock merger, EV at C$165B; values Spectra common stock at ~C$37B
NAV: Confirms wide-ranging strategic alliance with Volkswagen Truck & Bus; VW to invest at $15.76/shr for 19.9% stake
(US) AUG ISM NON-MANUFACTURING COMPOSITE: 51.4 V 55.0E (lowest since Feb 2010)
(US) Aug Labor Market Conditions Index Change: -0.7 v +1.0 prior
FDML: Enters into definitive merger agreement with Icahn Enterprises L.P. at $9.25/shr in all-cash offer
CMG: Pershing Square discloses new 9.9% stake; intends to engage in discussions with management - 13D filing
(AU) AUSTRALIA Q2 GDP Q/Q: 0.5% V 0.6%E (1-year low); Y/Y: 3.3% V 3.3%E (annual pace hits a 2-year high)
Wed 9/7
(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT -0.50%; AS EXPECTED
(CN) CHINA AUG FOREIGN RESERVES: $3.185T V $3.190TE (lowest level since Dec 2011)
(UK) JULY INDUSTRIAL PRODUCTION M/M: +0.1% V -0.2%E; Y/Y: 2.1% V 1.9%E
(UK) JULY MANUFACTURING PRODUCTION M/M: -0.9% V -0.3%E; Y/Y: 0.8% V 1.7%E
(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 0.50%; AS EXPECTED
AAPL: Introduces iPhone 7 and Apple Watch 2 - product event
(US) FEDERAL RESERVE RELEASES BEIGE BOOK: ECONOMY CONTINUED TO EXPAND AT MODEST PACE THROUGH LATE AUGUST; UPWARD WAGE PRESSURES INCREASED FURTHER
(JP) JAPAN Q2 FINAL GDP Q/Q: 0.2% V 0.0%E; ANNUALIZED GDP: 0.7% V 0.2%E (2nd straight expansion both quarterly and annualized)
(CN) CHINA AUG TRADE BALANCE: $52.1B V $58.4BE
Thrs 9/8
(CN) China Passenger Car Association (PCA): China July vehicle sales 1.8M units, +24.5% y/y; YTD 14.2M units, +12.7% y/y
(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
(EU) ECB Statement: Reiterates to continue €80B/month asset purchases program until Mar 2017 or beyond if necessary (no change in current timeline)
(US) INITIAL JOBLESS CLAIMS: 259K V 265KE; CONTINUING CLAIMS: 2.14M V 2.15ME
(EU) ECB chief Draghi: Sees rates at present or lower level for extended period; to preserve very substantial amount of support - prepared remarks
(EU) ECB chief Draghi: Did not discuss extension of QE; working on smooth implementation of policies, changes are needed - Q&A
(EU) ECB chief Draghi: Have not discussed helicopter money or equity buying
(US) DOE CRUDE: -14.5M V +0.5ME; GASOLINE: -4.2M V -0.5ME; DISTILLATE: +3.4M V +1ME (largest crude draw since 1999)
(PE) PERU CENTRAL BANK (BCRP) LEAVES REFERENCE RATE UNCHANGED AT 4.25%; AS EXPECTED
(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.25%; AS EXPECTED (3rd straight puase in current easing cycle)
(CN) CHINA AUG CPI Y/Y: 1.3% V 1.7%E; 10-month low
(CN) CHINA AUG PPI Y/Y: -0.8% V -0.9%E; 54th consecutive month of decline; smallest decline since Apr 2012
Fri 9/9
(FR) FRANCE JULY INDUSTRIAL PRODUCTION M/M: -0.6% V +0.3%E; Y/Y: -0.1% V +1.0%E
(FR) FRANCE JULY MANUFACTURING PRODUCTION M/M: -0.3% V +0.7%E; Y/Y: 0.4% V 1.8%E
GILTS: (UK) 10-year Gilt yield approaching 0.81%; highest since BOE announced new QE measures back on Aug 2nd - dealers
(US) Fed's Rosengren (moderate, FOMC voter): Sees reasonable case for gradual tightening
(CA) CANADA AUG NET CHANGE IN EMPLOYMENT: +26.2K V +14.0KE; UNEMPLOYMENT RATE: 7.0% V 7.0%E
(US) Weekly Baker Hughes US Rig Count: 508 v 497 w/w (+2%)
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