Barron's weekend summary

Barron's weekend summary: positive on BX, NCLH, BLL

 Cover story: Four exchange traded fund experts-Joel Dickson of Vanguard Group, Mark Wiedman of BLK, Jim Ross of STT and Tony Rochte of Fidelity-discuss the ETF industry and topics such as the active-versus-passive debate. 

Features: 

1) Positive on BX: The alternative-asset manager has been making far more money than rivals, and its shares could see a 40% rise based on more fund raising and an increase in distributable earnings; 

2) Positive on NCLH: Shares may have trailed those of other cruise line companies during the past year, but stronger booking trends and higher-paying passengers could send them up by 20%; 

3) Positive on BLL: Shares of the world's largest beverage-can maker have dropped amid concerns about its Rexam acquisition, presenting an opportunity for investors to buy in on the cheap;

Tech Trader: Asking whether SNAP is more like FB or TWTR is the wrong question-the recently listed company's identity crisis is more reminiscent of onetime highflyer GPRO, a camera company that sought to be a media company, much like Snap wants to be. 

Trader: "A sense of unease hangs over the market, especially after the price of oil fell 9.1% last week, sinking to its lowest level since November. And the market is certainly overdue for a selloff"; "Right now, confidence is surging in the market, but it has yet to translate into tangible gains"; Cautious on GILD: Biotech stocks are on the rise again, but investors are bypassing Gilead because it has yet to produce a blockbuster follow-up for its hepatitis-C treatments. 

Profile: Arvind Navaratnam of the Fidelity Event Driven Opportunities fund looks for corporate actions that will help him identify mispriced stocks (top 10 holdings: EXTN, MSG, FOX, BCO, ECPG, ADS, DEPO, TIME, FMCC, FNMA). 

Small Caps: Positive on MPW: Shares of the REIT have taken a hit over concerns about operational and liquidity problems at ADPT, but the selloff appears overdone, and shares are now cheap. 

Follow-Up: ANET is among smaller firms gaining ground on CSCO, and with a higher share price and greater operating momentum, investors should stick with it; Positive on VC: Shares could add another 20% as revenue and profits rise, and the company could be an acquisition target. 

European Trader: Positive on Peugeot: French automaker's acquisition of Opel and Vauxhall from GM "is a relatively small deal financially, but strategically smart," as it will make Peugeot Europe's second-biggest car maker. 

Asian Trader: "To sustain its gains, Hong Kong will need more capital flows from the mainland, because foreigners have not bought into China's recovery story yet. Actively managed funds are still selling." 

Emerging Markets: Positive on Fomento Economico Mexicano: Mexican conglomerate has seen a rally recently, but shares still look undervalued given the diversity of the company's revenue streams. 

Commodities: Analysts say sugar prices are likely to remain volatile in the months ahead, as uncertainties over weather conditions and production spark volatility. 

CEO Spotlight: Profile of Airbus chief executive Thomas Enders, who wants to build on the company's presence in the Asia-Pacific region, North America, and Europe. 

Streetwise: As the bull market enters its ninth year, investors should keep an eye on crude-and other commodity prices and be prepared for potential surprises. 

Markets Absorb Strong NFP Report and Calmer ECB

TradeTheNews.com Weekly Market Update: Markets Absorb Strong NFP Report and Calmer ECB
Fri, 10 Mar 2017 16:13 PM EST

The stock market advance saw a respite this week as legislators in Washington began what is going to be the arduous process of passing healthcare reform. Rising bond yields caught investors' attention testing some key levels. The February jobs data remained robust, surpassing expectations on the payrolls, while suggesting the tightening labor market is starting to translate into upward pressure on wages. The ECB signaled that it is no longer worried about deflation and raised both its inflation and GDP forecasts for this year and next. A growing number of market participants were emboldened in their calls that central banks are falling behind the curve on removing accommodation. By Friday, futures markets were pricing in at least three hikes from the Fed this year, and some analyst were pulling forward their timetable for beginning to shrink the Fed's balance sheet. WTI crude prices careened back through the $50 mark after US crude stockpiles showed another outsized jump. Many pointed to technical/seasonal selling pressures, but nonetheless a 9% weekly decline weighed on stock sentiment. Gold prices fell back below the 200-day moving average to test $1200. For the week, the DJIA fell 0.5%, the S&P500 dropped 0.4%, and the Nasdaq lost 0.2%.

Bonds continued to decline throughout the week, potentially hurt by a deluge of corporate issuance accompanying rising rate expectations. The 10-year Treasury note yield went from 2.49% on Monday to reach a week-high 2.61%. Bonds rallied slightly after NFP data as the market had been hoping for even stronger numbers in the wake of the blowout ADP jobs data on Wednesday. Bund prices sold off late in the week following slightly more constructive commentary from Draghi and a source report noting some ECB officials had requested a discussion on whether rates can rise before QE ends. The German 10-year yield rose 7bps, reaching 0.495%, before prices recovered some ground on Friday.

Investors looking for economic policy implementation had little reward as the White House started the messy process of engaging with Congress to repeal and replace Obamacare. The bill has been passed by two committees in Congress, but faces opposition from conservative groups, heathcare providers, the AARP, and Democrats. Trump also continued to work on deregulation of the financial sector, meeting with small banks and their associations. The administration is looking at ways to ease the burden on community banks and reinstate an updated Glass-Steagall Act.

In corporate news this week, airline names weakened after some carriers lowered guidance. Delta cut its op margin and passenger unit revenue outlook on Monday, noting higher costs. Southwest revised its RASM guidance lower, citing unexpected softness in close-in demand in the back half of February. Caterpillar came under pressure after the US government made accusations of tax and accounting fraud following a raid on its offices last week. On Friday, the company confirmed that the IRS is challenging its 2007-2012 taxes, but that Caterpillar stands by its financial reporting.

SUNDAY 3/5
(CN) CHINA NATIONAL PEOPLE'S CONGRESS (NPC) SETS 2017 GDP TARGET of "around 6.5% or higher if possible" vs 6.5-7.0% in 2016

MONDAY 3/6
DAL Adjusts Q1 PRASM flat to 1% (prior flat to +2% y/y) ; Affirms capacity flat to down 1%; Narrows CASM +5.5-6.5% y/y (prior 5-7%) ; Trims Op margin 10-11%(prior 11-13%)
(US) JAN FINAL DURABLE GOODS ORDERS: 2.0% V 1.0%E; DURABLES EX-TRANSPORTATION : 0.0% V +0.1%E
CRM IBM and Salesforce announce global strategic partnership centered on artificial intelligence
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50% (AS EXPECTED)

TUESDAY 3/7
(CN) CHINA FEB FOREIGN RESERVES: $3.005T V $2.965TE (1st monthly rise since June)
*(EU) EURO ZONE Q4 FINAL GDP Q/Q: 0.4% V 0.4%E; Y/Y: 1.7% V 1.7%E
(UK) HOUSE OF LORDS VOTES ON BREXIT BILL: PM MAY GOVT WINS VOTE; reject amendment to Brexit bill (votes down calls for second referendum)
(US) Atlanta Fed cuts Q1 GDP forecast to 1.3% from 1.8% on 3/1
(UK) HOUSE OF LORDS VOTES IN FAVOR OF ADDING EXTRA CONDITIONS TO BREXIT BILL (loss for PM May govt); calls for a binding vote on the final Brexit agreement with Europe
(JP) JAPAN Q4 FINAL GDP Q/Q: 0.3% V 0.4%E; ANNUALIZED GDP: 1.2% V 1.5%E
(CN) CHINA FEB TRADE BALANCE (CNY-TERMS): -60.4B V +172.5BE; First deficit since Feb 2014

WEDNESDAY 3/8
DPW.DE Reports Q4 Net €841M v €670M y/y, EBIT €1.11B v €1.13Be, Rev €15.4B v €15.4B y/y
(CN) CHINA FEB TRADE BALANCE (USD TERMS): -$9.2B V +$27.0BE (1st deficit since Feb 2014)
CAT: US government makes accusation of tax, accounting fraud
(PL) POLAND CENTRAL BANK (NBP) LEAVES BASE RATE UNCHANGED AT 1.50%; AS EXPECTED
(US) FEB ADP EMPLOYMENT CHANGE: +298K V +187KE
(US) Q4 FINAL NONFARM PRODUCTIVITY: 1.3% V 1.5%E; LABOR COSTS: 1.7% V 1.6%E
(US) Atlanta Fed cuts Q1 GDP forecast to 1.2% from 1.3% on 3/7
NVDA NVIDIA and Microsoft boost AI cloud computing with launch of industry-standard Hyperscale GPU accelerator

THURSDAY 3/9
(US) Association of American Railroads weekly rail traffic report for week ending March 4th: 521.6K carloads and intermodal units, +1.8% y/y (eighth straight week of gains)
(CN) CHINA FEB CPI M/M: -0.2% (first decline in 4 months, biggest decline in 9 months) V +1.0% PRIOR; Y/Y: 0.8% (2-year low) V 1.7%E
(CN) CHINA FEB PPI Y/Y: 7.8% V 7.7%E; 6th consecutive and biggest increase since Sept 2008

FRIDAY 3/10
(UK) JAN INDUSTRIAL PRODUCTION M/M: -0.4% V -0.5%E; Y/Y: 3.2% V 3.2%E
(US) FEB UNEMPLOYMENT RATE: 4.7% V 4.7%E
(US) FEB AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 2.8% V 2.8%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
(US) FEB CHANGE IN NONFARM PAYROLLS: +235K V +200KE
(CA) CANADA FEB NET CHANGE IN EMPLOYMENT: +15.3K V -5.0KE; UNEMPLOYMENT RATE: 6.6% V 6.8%E
(EU) ECB reportedly has discussed whether rates can rise before QE ends - press
(US) New York Fed Nowcast: raises Q1 GDP forecast to 3.2% from 3.1% on 3/3; raises Q2 GDP forecast to 3.0% from 2.9%

Barrons weekend summary

Barrons weekend summary: positive on RRC, XRX; cautious on SNAP 
Cover story: As Donald Trump tries to keep manufacturing jobs in the U.S., many companies that remain will use robots in an effort to lower labor costs; "For long-term investors, robots could be one key to securing healthy corporate profit growth, and stock returns, even as wages rise"; Investors should look at Fanuc, ROK, ABB, Yaskawa Electric, and ROBO. 

Features: 
1) Positive on RRC: Leading U.S. gas producer appears undervalued, and its ability to drill profitable wells, even at current prices, gives it staying power and makes it an "option" on higher gas prices; 
2) Cautious on SNAP: Even assuming the startup sees strong growth, it's hard to justify more than half the current stock price, and the company is more likely to resemble TWTR than FB; 
3) Positive on XRX: Now that it has spun off business-processing units such as CNDT, Xerox and its investors have the opportunity to realize substantial long-term gains under new chief executive Jeff Jacobson.

Tech Trader: At the Mobile World Congress the key topic was the advent of 5G technology, which is less about making phones faster than about connecting a wide range of devices to the Web; NOK, ERIC, CIEN, and JNPR stand to benefit from the trend.

 Trader: "Merrill Lynch's Sell Side Indicator, a measure of Wall Street's bullishness, still sits in neutral territory despite hitting its highest level in 16 months"; Positive on PHM: Shares have lagged the market for the past four years and are nearing the top of their long-term range, but expectations of stronger growth and margins could carry them further; Cautious on SIG: Jeweler's valuation may be the one good thing it has going for it as it faces several challenges, including allegations it underpaid female workers. 

Profile: Brian Kessens, manager of the Tortoise MLP & Pipeline fund, is upbeat about the prospects for pipelines, storage facilities, and other midstream energy outfits (top 10 holdings: KMI, WMB, TRP, LNG, SE, ENG, OKE, PAGP, TRGP, Inter Pipeline). 

Interview: Mark Boyar, founder of Boyar Asset Management, is an "eclectic value investor" who looks for strong businesses that aren't in favor (picks: MSG, MSGN, QVCA, TRCO). 

Advisor Rankings: Barron's list of the top 1,200 financial advisors by state looks at assets under management, revenue produced for their firms, regulatory record, quality of practice, and philanthropic efforts. 

Follow-Up: Cautious on MLM: The miner's prospects remain strong, but the excitement is already priced into the shares, and investors may want to take profits; Cautious on AFSI: Questions Barron's raised earlier about the company's accounting and reserve levels remain, and there could be more bad news when it files its 10-K report for 2016. 

European Trader: Positive on AZN: This could be the year the company starts to deliver on a promise made in 2014 that it would fare better alone than by accepting PFE's takeover bid. 

Asian Trader: The Indian economy grew by 7% in the December quarter despite the government's ban of the use of large rupee bills, but Capital Economics doesn't see India's economy surpassing China's. 

Emerging Markets: In a recent report, Jim Barrineau of Schroders Investment Management claimed EMB and PCY haven't properly tracked their benchmark indexes and aren't proxies for the diversity of developing market debt. 

Commodities: Aluminum prices are up this year on expected boosts in China's smelting industry, but without more evidence that production is decreasing, investors may find prices falling. 

Streetwise: Reducing the U.S. corporate tax rate, which Donald Trump is unlikely to do if he wants to increase infrastructure spending, would hurt some companies, particularly those with high interest rates.

Fed Speak Moves Hike Expectations to March; Dow Tips 21,000

TradeTheNews.com Weekly Market Update: Fed Speak Moves Hike Expectations to March; Dow Tips 21,000
Fri, 03 Mar 2017 16:16 PM EST

The stock markets started the week on hold as investors slowed down the pace and strength of the recent bull run. Markets were muted at the beginning of the week, awaiting President Trump's speech to Congress on Tuesday evening. Investors were looking for some concrete details on economic policy including tax reform, which the speech failed to deliver. Trump did, however, strike what many considered a much more presidential tone while promising a $1 trillion infrastructure spending spree. Global stock markets received the comments extremely well sending the Dow up above the 21,000 mark for the first time. For the week, the DJIA gained 0.9%, the S&P500 rose 0.7%, and the Nasdaq added 0.4%.

Reflation trade flows picked up again helped by NY Fed president Dudley's comments on Tuesday clearly hinting at a likely rate at the March FOMC meeting. That foreshadowed what would be the narrative by a chorus of fed speakers through the week’s end, culminating Friday with Chair Yellen . The probability of a rate hike, determined by Fed Fund futures prices, jumped Monday from 35% to 50%, on the back of continued strong economic data. By Wednesday that probability had jumped to above 80% after a spate of hawkish commentary from Fed officials supporting the notion of a ‘live’ FOMC meeting on March 14-15.

The 10-Year Treasury Yield started the week at 2.35% and continued to rise, closing Friday at 2.51%. A stronger sell off in the shorter end of the curve caused the yield curve to flatten with the 10-year/30-year spread decreasing from 62bps to 59bps, and the 5-year/30-year curve decreasing 6bps to 106bps. The US dollar continued to rally as a March rate hike was priced in with the British Pound losing 1% over the week, the dollar index up 1.1%. By Friday gold prices dropped back towards the 90 day moving average for the first time in nearly a month.

The UK Brexit bill experienced a minor setback this week as the upper house endorsed an amendment to safeguard the rights of EU citizens in the country. PM May has stated her invocation of Article 50 remains on track for this month and she has asked the House of Commons to throw out the amendment when they debate the bill again March 13 and 14. In France the far-right anti EU candidate, Marine Le Pen, has begun to fall behind in the polls to the independent candidate Macron, who enjoys a more than 20 point lead in polling for the May run-off election. However, EGBs were subdued and core bonds continued to fall in price as inflation data for Germany was higher than expected.

As earnings season winds down, some key retailers reported this week and continued to paint a worrying picture for the sector. Best Buy’s Q4 earnings came in above estimates, but revenue lagged, driven by weakness in gaming, tablets, wearables and phone sales. Target shares plunged after missing profit estimates amid unexpected softness in stores, and the retailer guided a decline in SSS for next year, warning its investment into lower gross margins may present headwinds to short-term performance. Costco underperformed on the top and bottom line, and announced it would increase membership fees for the first time in six years. On the positive side, Lowe's shares surged on continued strong results and outlook. Snap Inc’s long-awaited Wall Street IPO finally debuted, and despite cautious comments from analysts, shares of the social media/tech firm were up 61% by the end of the week.


SUN 2/26
GSK.UK Has conducted the world's first drug trial under "real world" conditions, as the company looks to to prove the value of its medicines in a cost conscious health system - FT

MON 2/27
*(EU) EURO ZONE JAN M3 MONEY SUPPLY Y/Y: 4.9% V 4.8%E
*(EU) EURO ZONE FEB BUSINESS CLIMATE INDICATOR: 0.82 V 0.79E; CONSUMER CONFIDENCE (FINAL): -6.2 V -6.2E
*(US) JAN PRELIMINARY DURABLE GOODS ORDERS: 1.8% V 1.7%E; DURABLES EX-TRANSPORTATION: -0.2% V +0.5%E

TUE 2/28
(FR) FRANCE FEB PRELIMINARY CPI M/M: 0.1% V 0.4%E; Y/Y: 1.2% V 1.5%E
(FR) FRANCE Q4 PRELIMINARY GDP Q/Q: 0.4% V 0.4%E; Y/Y: 1.2% V 1.1%E
TGT Reports Q4 $1.45 v $1.50e, R$20.7B v $20.7Be; Will invest in lower gross margins
JPM Guides FY17 core loan growth +10% y/y - ahead of analyst day
- Guides Q1 trading rev up modestly y/y; Q1 invest banking largely flat q/q; FY17 NII $11B v $10B y/y
VRX Reports Q4 $1.26 v $1.24e, R$2.40B v $2.35Be
(IN) India Q4 GDP Y/Y: 7.0% v 6.1%e; GVA Y/Y: 6.6% v 6.0%e
*(US) Q4 PRELIMINARY GDP ANNUALIZED Q/Q: 1.9% V 2.1%E; PERSONAL CONSUMPTION: 3.0% V 2.6%E
(US) Q4 PRELIMINARY GDP PRICE INDEX: 2.0% V 2.1%E; CORE PCE Q/Q: 1.2% V 1.3%E
(US) Feb Chicago Purchasing Manager: 57.4 v 53.5e (highest since Dec 2014)
(US) FEB RICHMOND FED MANUFACTURING INDEX: 17 V 10E
(US) FEB CONSUMER CONFIDENCE: 114.8 V 111.0E (highest since 2001)
(US) Fed's Williams (moderate, non-voter): sees March hike getting serious consideration - comments in Santa Cruz
CRM Reports Q4 $0.28 v $0.25e, R$2.29B v $2.27Be
(AU) AUSTRALIA Q4 GDP Q/Q: 1.1% V 0.8%E; Y/Y: 2.4% V 2.0%E
(CN) CHINA FEB MANUFACTURING PMI (govt official): 51.6 V 51.2E
(CN) CHINA FEB CAIXIN MANUFACTURING PMI: 51.7 V 50.8E (8th consecutive expansion)
(HK) Macau Feb Gaming Rev MOP22.99B v MOP21.5Be; y/y: 17.8% v +10%e

WEDS 3/1
(DE) GERMANY FEB FINAL MANUFACTURING PMI: 56.8 V 57.0E
*(UK) FEB MANUFACTURING PMI: 54.6 V 55.8E (7th month of expansion)
BBY Reports Q4 $1.95 v $1.66e, R$13.5B v $13.6Be; raises dividend 21% to $0.34 from $0.28 (indicated yield 3.22%)
(DE) GERMANY FEB PRELIMINARY CPI M/M: 0.6% V 0.6%E; Y/Y: 2.2% V 2.1%E
(US) JAN PCE CORE M/M: 0.3% V 0.3%E; Y/Y: 1.7% V 1.7%E
(US) JAN PERSONAL INCOME: 0.4% V 0.3%E; PERSONAL SPENDING: 0.2% V 0.3%E
(US) JAN PCE DEFLATOR M/M: 0.4% V 0.5%E; Y/Y: 1.9% V 2.0%E
*(US) FEB ISM MANUFACTURING: 57.7 V 56.2E; PRICES PAID: 68.0 V 68.0E (Manufacturing Activity highest since Aug 2014)
(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 0.50%; AS EXPECTED
(US) Atlanta Fed cuts Q1 GDP forecast to 1.8% from 2.5% on 2/27
AVGO Reports Q1 $3.63 v $3.48e, R$4.14B v $4.06Be
(KR) White House reportedly considering options against North Korea, including possible use of force, as part of strategy review - press
(AU) AUSTRALIA JAN TRADE BALANCE (A$): +1.3B V +3.8BE; 3rd straight surplus

THURS 3/2
DTE.DE Reports Q4 adj Net €973M v €959M y/y, adj EBITA €5.3B v €5.1B y/y, Rev €19.5B v €19.0Be; Takes €2.2B writedown ; proposes 9% dividend increase to €0.60/shr
ABI.BE Reports Q4 $0.43 v $0.98e, EBITDA $5.25B v $5.64Be, Rev $14.2B v $13.8Be
*(EU) EURO ZONE FEB ADVANCE CPI ESTIMATE Y/Y: 2.0% V 2.0%E (highest level since Feb 2013); CPI CORE Y/Y: 0.9% V 0.9%E
*(EU) EURO ZONE JAN UNEMPLOYMENT RATE: 9.6% V 9.6%E (matches its lowest level since May 2009)
(US) INITIAL JOBLESS CLAIMS: 223K V 245KE (lowest since Mar 1973); CONTINUING CLAIMS: 2.07M V 2.06ME
(US) Fed's Powell (moderate, voter): Rate hike in March is on table for discussion; we're certainly getting very close to 2% inflation goal - CNBC interview
SNAP IPO opens for trade at $24.00
(US) Attorney General Sessions: To recuse himself from any investigations related to the Trump campaign
COST Reports Q2 $1.17 v $1.35e, R$29.1B v $30.0Be; To increase membership fees by $5-10/year (+8.3-9.1%)
(HK) HONG KONG FEB COMPOSITE PMI:49.6 V 49.9 PRIOR; 2nd month of contraction

FRI 3/3
(US) FEB FINAL MARKIT SERVICES PMI: 53.8 V 54.0E
GM Peugeot board reportedly met today and approved Opel acquisition; to announce the deal on Monday – press
(US) Fed Chair Yellen: Raising interest rates at March meeting would probably be appropriate if economy evolves as expected - comments in Chicago
DBK.DE Confirms undertaking preparatory work for a potential €8B capital increase and further strategic measures including reintegration of Postbank
(US) US Trump administration to announce it will reopen 2022-2025 vehicle emissions standards for review next week - press

March-April 2017 Market Outlook: La La Land

TradeTheNews.com March-April 2017 Outlook: La La Land
Mon, 27 Feb 2017 11:44 AM EST

In a world where the U.K. votes itself out of Europe and where a reality TV show star is elected President of the United States it sometimes feels like we have entered La La Land. But this fanciful dream world is now reality, like it or not. The next couple of months will see the Brexit process begin and the first hundred days of the fledgling Trump administration wrap up. It remains to be seen if the populist wave that brought them to the fore will foment change in other spheres, but this atmosphere of disruption will continue to ripple across politics, trade and markets for the foreseeable future.

Arrival

The imminent IPO of Snapchat’s parent company may be a perfect metaphor on this unpredictable moment in history. Snap, which is headquartered in the real La La Land (Los Angeles) rather than Silicon Valley, is attempting to take on social media giant Facebook. The company is targeting a valuation north of $20 billion which would make it the biggest tech IPO in the US since Facebook in 2012, and thus is drawing a lot of attention from capital markets. A good reception for the IPO could lead a herd of other tech ‘unicorns’ to follow suit.

A successful IPO isn’t guaranteed, however. Snap has disclosed large financial losses and relatively modest active user numbers. In fact its user base is in the same vicinity as that of Twitter – which has floundered since its own IPO three and a half years ago – leading to some unflattering comparisons between the two. Like Twitter, Snapchat may not have the critical mass or technological innovation to generate a growing advertising revenue stream. Investors may also be leery of the share structure that gives Snap’s ordinary shareholders absolutely no say in direction of the business.

Snap is expected to arrive on the market on March 2nd. A dearth of major tech IPOs and speculation that it might be the next Facebook could be enough to send shares flying, or markets may judge it as the next Twitter and let it fizzle. The latter outcome could have a chilling effect on other ‘unicorns’ like Uber and cause investors to reconsidering plowing investments into risky unlisted tech firms.

Fences

Things are also uncertain in Washington these days, as the new Administration has striven to bend the government toward President Trump’s personal style. In his first month in office, Trump seems to be patterning his agenda on his old job as a businessman and real estate developer. He has used the highest profile office in the world to leverage his fellow CEOs to gather for powwows at the White House, and they have obliged him with upbeat sound bites and announcements on their domestic investment and hiring plans. Trump's early domestic policy forays – whether its immigration restrictions, contemplating border tariffs, or constructing a border wall – all seem to focus on building barriers. The developer-in-chief appears intent on building Fortress American in the name of national security and his 'America First' doctrine.

Trump’s deliberately unorthodox and combative style won him enough support to carry the election, but it has also caused political problems. The President’s impulsive tweets have ranged from irrelevant commentary on TV ratings for ‘The Apprentice’, to a darkly disturbing declaration that several mainstream media outlets are “the enemy of the American people.” White House spokespeople have had to walk back or massage a number of the President’s inaccurate, off-the-cuff remarks about policy. The President has also been quick to claim the surge in stocks since his election – which some market watchers have dubbed the ‘Trump Rally’ – as a sign of approval for his policies (rather than market enthusiasm over one-party control in Washington). His predecessors were much more guarded about laying claim to the animal spirits of the market, and Trump may be setting himself up for taking the blame the next time stocks enter a significant correction.

On the last day of February, the President will address a joint session of Congress to discuss his budget and policy plans. Though not technically a ‘State of the Union’ address, many market participants are looking toward this major speech as a marker for progress on the Trump agenda. If by that time the Administration has not formulated more specific plans for tax reform and the overhauls of healthcare and trade policy, markets may get nervous that Trump’s rhetoric is not translating into any legislative agenda. Reconciling greater spending on the military, border security, and infrastructure with tax cuts and debt reduction may also be difficult for those that run the numbers, raising the ire of deficit hawks.

Lion

Harkening back to the age of Europe’s royal houses battling each other, the United Kingdom is about to throw up its own barrier against the continent. The Brexit is on track to begin in March and it does not appear that Parliament will stand in the way. Over the last few weeks, UK Prime Minister May has won a series of votes in the House of Commons that swatted away attempts to add various amendments that sought to sandbag the Brexit bill. As March approaches it appears that May will have a free hand to invoke Article 50 to formally initiate the up to two-year-long Brexit process.

The latest reports from London suggest that the final Brexit bill could be cleared by the Parliament in early March, and that the PM may invoke Article 50 ahead of her self-imposed deadline at the end of the month. That could provide the opportunity for European leaders to discuss the Brexit process at an EU summit (the European Council) scheduled for March 9-10. If the remaining EU members take a hard line with Britain the erosion of economic confidence that some anticipated right after the Brexit vote last June may finally take hold as Britons contemplate potentially less favorable trade agreements and large multinationals relocating their HQs out of London. Additionally, in the face of a ‘hard Brexit’, pro-EU Scottish leaders are threatening to call a fresh referendum for independence from the United Kingdom. As the decoupling process begins EU leaders will be reminded that populist movements in their own countries can’t be ignored for fear that other countries might eventually follow Britain’s lead and unravel the entire bloc.

France’s Presidential election will be the next test of populist fervor in Europe. Playing on unease about the immigrant population and recent terrorist attacks, right-wing nationalist Marine Le Pen is the lion of the French populist movement and she is making a legitimate run at the French Presidency. After the leading conventional candidate Francois Fillon was hamstrung by a nepotism scandal, polls have been showing that Le Pen and the upstart progressive party leader Emmanuel Macron will emerge from the first round vote for a head-to-head contest. In the run-off election, the polls show that Macron should handily beat Le Pen, but given the faulty polling ahead of the Brexit and the US Presidential election, the outcome can’t be certain until all of the ballots are counted. The candidates will duke it out in a televised debate on March 20, and the first round vote will be on April 23, followed by the run-off two weeks later.

The French vote is just the first in a number of elections this year across Europe, including in Holland, Italy, and Germany. The euro-skeptics are not seen winning any of these contests but their rising popularity may beenough to rattle nerves and push the euro ever closer to dollar parity.

Manchuria by the Sea

Currency issues are also central to Sino-US relations these days, but President Trump’s approach so far has been erratic. He railed against Chinese currency manipulation during his campaign, but pulled back on the rhetoric after he was elected, even as he became the first President to try and talk down the dollar. Ahead of inauguration day, Trump ruffled China’s feathers by speaking directly with the President of Taiwan and following that up by announcing that “everything is under negotiation” including the long standing ‘One China’ policy. Then on the same day last week thatPresident Trump declared China a "grand champion" of currency manipulation, Treasury Secretary Mnuchin said he had had great discussions so far with Beijing and would reserve any judgment on China policy until the Treasury’s semi-annual currency review is released in mid-April.

Even as President Trump is trying to impose his authority over the Washington bureaucracy, his Chinese counterpart is on the brink of consolidating his power to an extent not seen in decades. On March 5, the National People's Congress (NPC) convenes its annual session, spending two weeks discussing government policy objectives. Importantly, at this year’s conclave nearly half of the seats in the 25-member Politburo will open up, including five of the seven seats on the Standing Committee, the party’s top leadership. The only two Standing Committee members who are not retiring are President Xi Jinping and his right-hand man Premier Li Keqiang.

At the communist party’s Sixth Plenum last October, Xi was designated the party’s “core” leader, elevating him to a status that was not granted to his predecessor Hu Jintao. This may signal China moving away from the consensus-style leadership of recent years, giving President Xi more control in shaping the government as he sees fit. The President may use the Politburo shake up to appoint loyalists to the standing committee, consolidating his power. If he makes such a move, it could well indicate that Xi intends to extend his rule past his scheduled retirement in 2022.

March’s NPC is also the venue for announcing China’s new economic goals for the year. Reports have circulated that top economic planners have already settled on targeting GDP growth of around 6.5% for 2017. That would be less than the expected 6.7% rate in 2016, the slowest growth in a quarter century, giving the government some leeway to continue the pursuit of economic reforms while still tracking toward long term growth goals. Officials are also said to have agreed to maintain the CPI target at 3% this year. That indicates they are not deeply concerned that a rise in commodity costs that has pushed up producer price data will translate into higher consumer prices, as weak demand persists. That should give the central bank breathing room to avoid tightening policy.

Hidden Figures

An era of profound central bank stimulus has reached the beginning of the end. The Fed and other global central banks have poured massive amounts of money into quantitative easing programs and slashed rates to near or even below zero. The numbers will never be clear on how much economic suffering this historic feat of monetary engineering may have averted, but it has definitely created lasting distortions in the global economy.

But now the global economy is regaining its footing and some of the stimulus programs have begun to pull back. The Fed has raised rates for a second time and is planning several more hikes this year. Even the ECB, which is farther from its goals than the Fed, has reduced the pace of its QE program by 25% in a nod to improving conditions.

The next move toward monetary policy normalization will be another Fed rate hike, but the timing isn’t quite certain.Despite the Fed’s SEP forecast for another 75 basis points in tightening this year and Chair Yellen warning that the all meetings remain ‘live’ for rate action, Fed funds futures predict only about a 25% chance of a rate hike in March. Most forecasters see May or June as the more likely timeframe for the first rate move of 2017. It seems unlikely that after nine years monetary policy erring on the side of caution that the Fed would take this moment to tighten faster than expected.

Some argue that the anticipation of fiscal stimulus from the Trump Administration takes pressure off the Fed which has until now been the only game in town as far as stimulus goes. But Fed officials have generally stated that they are not adjusting their forecasts to account for fiscal policy changes because it is still unclear when and how Trump’s policies will shape up.

The President also has a chance to shift the policy disposition of the Fed through his appointments. Fed governor Tarullo, the Fed’s point man on banking regulation, just announced that he will step down in April, more than four years before his term was slated to end. His resignation creates a third open seat among the seven-person Fed board of governors, providing President Trump an even greater opportunity to put his stamp on the Fed. Trump plans to fill the empty seats quickly and he is likely to choose candidates that support his plans to roll back bank supervision regulations put in place by the Dodd-Frank Act.

The other impending change at the Fed to watch for is the balance sheet policy. The headline from the minutes of the February FOMC meeting was that the committee would start evaluating the future disposition of the now $4.5 trillion in assets held by the Fed. Minneapolis Fed President Kashkari recently stated that the central bank could stop balance sheet reinvestment or start tapering in the "not too distant future," while Atlanta Fed President Lockhart postulated that the balance sheet would stay above historical norms, at a minimum of $1.5-2 trillion. By all accounts the process of balance sheet reduction will be measured and take years, but the prospect of the unwinding could trigger another ‘taper tantrum’ event from markets that have become accustomed to a decade of unprecedented stimulus.

Hell or High Water

In the bilateral “deals” environment that President Trump is trying to foster, multilateral agreements are still seeing some success. Notably the production cutting accord between OPEC and many non-OPEC nations has been a rousing success so far. In the face of collapsing oil prices, these countries that depend largely on oil revenues put aside their deep political differences and reached an accord to reduce production for the first half of 2017 in a last ditch effort to revitalize energy prices.

The participants have shown discipline, announcing cutbacks that were ahead of schedule in January. The first major report from the compliance committee in late February indicated that OPEC members were hitting 90% of cutback targets, while non-OPEC contributors were at close to 60%. That has been enough to keep WTI and Brent crude futures in the mid-$50/bbl range, a comfortable level for most OPEC producers.

Assuming this level of compliance continues, the next big decision for the signatories will be whether to extend the cutbacks for another six months when the initial agreement expires at the end of June. Oil ministers are expected to discuss this prospect at a conference in March in Houston. Russia, the largest non-OPEC contributor to the agreement, has said it will decide if it should extend its commitment by April or May. So far, indications from OPEC officials have them leaning toward no extension, with signs of demand starting to catch up to supply. Meanwhile the North American rig count has surged as independent US firms have enjoyed the higher oil prices created by their foreign competitors.


CALENDAR
FEBRUARY
28: President Trump’s address to Congress
MARCH
1: German Unemployment; UK Manufacturing PMI; US Personal Income & Spending; US ISM Manufacturing PMI
2: UK Construction PMI; Japan Household Spending; China Caixin Services PMI
3: UK Services PMI; US ISM Non-manufacturing PMI; Snap IPO (tentative)

5: China National People's Congress convenes
6: US Factory Orders
7: German Factory Orders; US Trade Balance; Japan Final Q4 GDP; China Trade Balance (tentative)
8: UK Annual Budget Release; China CPI & PPI
9: ECB Policy Statement & Press Conf; China Industrial Production; EU Summit (2 days)
10: UK Manufacturing Production; UK Goods Trade Balance; US Payrolls & Unemployment

13: US JOLTS Jobs Openings
14: German ZEW Economic Sentiment; US PPI
15: UK Claimant Count & Unemployment; US CPI; US Retail Sales; FOMC Policy Statement & Conf Call; BOJ Policy Statement & Press Conf
16: Euro Zone Final CPI; BOE Policy Statement; US Housing Starts & Building Permits; US Philly Fed Manufacturing Index
17: Industrial Production & Capacity Utilization; Prelim University of Michigan Consumer Sentiment

20: French Presidential debate
21: Euro Zone Flash Manufacturing & Services PMIs; UK CPI
22: US Existing Home Sales
23: UK Retail Sales; US New Home Sales;
24: US Durable Goods Orders

27: German Ifo Business Climate
28: US Consumer Confidence
29: German Prelim CPI
30: US Final Q4 GDP; Japan Household Spending
31: German Retail Sales; German Unemployment Change; UK Current Account

APRIL
2: Japan Tankan Manufacturing & Non-manufacturing Indices; China Caixin Manufacturing PMI
3: UK Manufacturing PMI; US ISM Manufacturing PMI
4: UK Construction PMI; US Trade Balance; US Factory Orders
5: UK Services PMI; US ISM Non-manufacturing PMI; FOMC Minutes; China Caixin Services PMI
6: German Factory Orders; ECB Minutes
7: UK Manufacturing Production; UK Goods Trade Balance; US Payrolls & Unemployment
8: China CPI & PPI

10:
11: UK CPI & PPI
12: UK Claimant Count & Unemployment; China Q1 GDP; China Industrial Production; China Trade Balance (tentative)
13: BOE Credit Conditions Survey; US PPI
14: Good Friday (US market holiday); US CPI; US Retail Sales; University of Michigan Consumer Sentiment

17:
18: German ZEW Economic Sentiment; US Housing Starts & Building Permits; US Industrial Production
19: Euro Zone Final CPI
20: Philly Fed Manufacturing Index
21: Euro Zone Flash Manufacturing & Services PMIs; UK Retail Sales; US Existing Home Sales

23: France Presidential Election (first round)
24: German Ifo Business Climate
25: US Consumer Confidence; US New Home Sales
26: BOJ Policy Statement, Outlook Report & Press Conf
27: ECB Policy Statement & Press Conf; US Durable Goods Orders; Japan Household Spending
28: German Retail Sales; UK Prelim Q1 GDP; Euro Zone Flash CPI; US Q1 Advance GDP; Chicago PMI
Late April or later: US Treasury Current Report
30: China Manufacturing & Non-manufacturing PMIs
MAY
1: UK Manufacturing PMI; US Personal Spending; US ISM Manufacturing PMI; China Caixin Manufacturing PMI
2: German Unemployment; UK Construction PMI
3: UK Services PMI; Euro Zone Flash Q1 GDP; US ISM Non-Manufacturing PMI; FOMC Policy Statement; China Caixin Services PMI
4: US Nonfarm Productivity; US Trade Balance: US Factory Orders
5: US Payrolls & Unemployment

7 May : France Run-off Election

Barrons weekend summary

Barrons weekend summary: positive on TV, RIG, GPN ; Cautious on HOG, QCOM, INTC, SAM 

Cover story (Cautious): HOG would be a key beneficiary of Donald Trump’s plan to cut taxes and promote American-made goods, but its core demographic of middle-aged white men is shrinking along with other ridership markets, and a strong dollar is crimping foreign sales; Shares should trade in the high $40s, not the high $50s. 

Tech Trader: Cautious on QCOM, INTC: Both companies recently unveiled new mobile chips, but overall they will see diminishing returns; the best bet for investors interested in wireless chips may be smaller rivals SWKS and QRVO.

 Trader: Most investors think the Fed will wait to raise rates, while 40% expect a March hike, down slightly from the week prior; Cautious on SAM: Craft beer seems to have hit a saturation point, and the company has been slow to embrace the “tap room” approach other breweries use to draw customers. 

Interview: David Gluskin, chief economist and strategist at Gluskin Sheff & Associates, sees volatility ahead, is cautious on the Trump rally, and thinks the market will finish the year where it started. 

Features: 

1) Positive on TV: Shares of the Mexican television giant, which owns an appealing range of businesses, appear undervalued, having sat out the strong rally in most U.S. cable and media stocks the past year; 

2) Positive on RIG: As the company puts lower revenue and losses behind it during a turnaround, shares could rise by more than 35% during the next year or two, making them a good play for patient, value-oriented investors; 

3) Cressida Hogg, who oversees the Canada Pension Plan Investment Board’s $18B infrastructure portfolio, talks about Donald Trump’s infrastructure proposals and how the Brexit will affect the market; 

4) Positive on GPN: Technology and services provider for small and mid-size merchants has strong international exposure, giving it an edge on U.S. rivals, and is getting into a wider range of businesses. 

Small Caps: Positive AXTA: Company has a high-quality franchise with top positions in various auto-coating sectors, and its refinishing business, which accounts for 40% of revenue, should grow during the next year. 

Follow-Up: Positive on Snap: As the company prepares for an initial public offering, “it seems to be overcoming qualms about profitability and slowing user growth,” and investors see strong advertising potential. 

European Trader: Cautious on Nestle: Food and beverage giant has suffered a number of setbacks, but it still has good prospects in a tough market. 

Asian Trader: Positive on Shenzhen Huiding Technology, Egis Technology: The Asian companies stand to benefit from the growing user of fingerprint sensors on smartphones, a trend started by AAPL. 

Emerging Markets: Russian and Indonesia stand to be winners if commodity prices stabilize, driven by demand in China and the U.S. 

Commodities: Platinum prices are up 11% since the start of 2017, but oversupply and weak demand could end the rally, creating an opportunity for investors to benefit from a drop. 

Streetwise: “Cyclical rejuvenation hasn’t cured the structural ills of an economy hollowed out by automation and global competition, and stagnant wages for 90% of the population.” 

Stocks Continued to Climb the Wall of Worry, Waiting for Trump to Deliver

TradeTheNews.com Weekly Market Update: Stocks Continued to Climb the Wall of Worry, Waiting for Trump to Deliver
Fri, 24 Feb 2017 16:07 PM EST

Early on this week, US stocks looked poised for a fifth consecutive week of record high closes. The economic data generally remained robust globally. A hotter than expected print for US CPI figures and a FOMC minutes release that pointed to a committee inclined to pull the trigger sooner rather than later kept the reflation narrative intact. President Trump continued to meet with high-profile business leaders and talk up his soon-to-be-announced tax and regulatory reforms. By Friday, the Dow was riding a 10-day winning streak.

The second half of the week though, saw the tone reach an inflection point, and investor appetite for risk began to wane. Polls out of Europe drummed up populism/nationalism concerns ahead of key elections in France and Germany later this year. President Trump doubled and tripled down on many of his most controversial campaign promises/tactics, while his Treasury Secretary laid out a timeline for growth reforms that underwhelmed. The narrative shifted its focus onto the growing number of obstacles that stand in the way of his administration and Congress reaching a deal on substantial fiscal reforms. The markets seemed to reflect this in rising bond and gold prices, while stock gains were notably more subdued. Trading may have also hit a bit of a dead spot; with earnings season nearing an end and a relatively sparse economic calendar, markets have become beholden to headlines out of Washington ahead of Trump's congressional address next week. The Dow S&P and the NASDAQ finished a fifth consecutive week at all-time highs, but the Russell 2000 lost ground. For the week the Dow rose 1%, the S&P added 0.7% and the NASDAQ eked out a gain.

Fixed income markets continued to rally and yields fell throughout the week, leading to a lot of hand-wringing over the divergence in sentiment being projected by exuberant stock and stubborn fixed income markets. Treasury yields were further pressured by a decline in German government bond rates. Political concerns and talk of an ECB-induced short squeeze sent the German 2-year yield towards -1%. The US benchmark 10-Year yield peaked for the week at 2.43% to slide lower to 2.32% today. The Feb FOMC minutes appeared to pull forward hopes for the next rate hike, but the market is not yet behind a move at the next meeting. Futures prices suggest most believe the best bet could be May or more likely June, when the Fed is currently scheduled to hold a post-meeting press conference.

As earnings season plows on, it was retailers’ turn to report this week, and the results were mixed. Nordstrom beat on top and bottom line, and investors were pleased despite its outlook coming in below street estimates. Gap reported a strong end to its year and sees next year same store sales flat to up slightly. Discount giant TJX topped analyst expectations, and its outlook also saw a slight increase in same store sales for next year. Macy’s beat street estimates on earnings, but posted its eighth quarterly same-store sales decline in a row. JCP shares slid on its results and a restructuring announcement. Walmart beat and guided initial FY18 rev above consensus, and Home Depot posted a solid end to the year. On the M&A front, Kraft Heinz slumped and Modelez rose after Unilever's offer from late last week was rescinded, and Yahoo came to an amended agreement with Verizon for a reduced asset sale price.

MONDAY, FEB 20
(UK) FEB CBI INDUSTRIAL TRENDS TOTAL ORDERS: 8 V 4E
(JP) JAPAN FEB PRELIMINARY PMI MANUFACTURING: 53.5 V 52.7 PRIOR (6th month of expansion and highest level in 35 months)
HSBC Reports FY16 Adj pretax $19.3B v $20.3Be; Adj Rev $50.2B v $51.4B y/y; Launches $1.0B share buyback program (0.6% of market cap) to be completed in H1

TUESDAY, FEB 21
BHP.AU Reports H1 Net profit $3.2B v loss $5.7B y/y, underlying Pretax $3.24B v $2.9Be, Rev $18.8B v $18.5Be
(FR) FRANCE FEB PRELIMINARY MANUFACTURING PMI: 52.3 V 53.5E (5th month of expansion)
(DE) GERMANY FEB PRELIMINARY MANUFACTURING PMI: 57.0 V 56.0E (27th month of expansion and highest since May 2011)
(EU) EURO ZONE FEB PRELIMINARY MANUFACTURING PMI: 55.5 V 55.0E (44th month of expansion and highest since Apr 2011)
HD Reports Q4 $1.44 v $1.33e, R$22.2B v $21.8Be; raises dividend 29% to $0.89/shr (implied yield 2.5%); announces new $15B share repurchase program (8.5% of market cap)
M Reports Q4 $2.02 v $1.97e, R$8.52B v $8.58Be
(US) FEB PRELIMINARY MARKIT MANUFACTURING PMI: 54.3 V 55.3E
(UK) DRAFT BREXIT BILL PASSES HOUSE OF LORDS FOLLOWING ITS 2ND READING (without a vote); Bill moves onto its next stage
(CN) CHINA JAN PROPERTY PRICES M/M: RISE IN 45 OUT OF 70 CITIES VS 46 PRIOR; Y/Y: RISE IN 66 OUT OF 70 CITIES V 65 PRIOR

WEDNESDAY, FEB 22
AIR.FR Reports FY16 Net €995M v €2.70B y/y, Adj EBIT €3.96B v €3.80Be, Rev €66.6B v €65.4Be
BAYN.DE Reports Q4 Net profit €453M (adj) v €690Me, EBITDA adj €2.18B v €2.07Be, Rev €11.8B v €11.7Be
LLOY.UK Reports Q4 PBT £973M v £1.3Be, Underlying Profit €1.79B v €1.91B y/y, Total Income £4.35B v £4.28B y/y
(DE) GERMANY FEB IFO BUSINESS CLIMATE: 111.0 V 109.6E (matches high from Feb 2014); CURRENT ASSESSMENT: 118.4 V 116.6E
(UK) Q4 PRELIMINARY GDP Q/Q: 0.7% V 0.6%E; Y/Y: 2.0% V 2.2%E (lowest annual pace since Q1 2013)
(EU) EURO ZONE JAN CPI M/M: -0.8% V -0.8%E; Y/Y (final reading): 1.8% V 1.8%E; CPI CORE Y/Y (final reading): 0.9% V 0.9%E
TJX Reports Q4 $1.03 v $1.00e, R$9.5B v $9.47Be; Raises dividend 20% to $0.3125/shr (1.64% yield); To buyback between $1.3-1.8B of stock (2.4-3.7% of market cap)
(US) JAN EXISTING HOME SALES: 5.69M V 5.55ME (highest since Feb 2007)
(US) Association of American Railroads weekly rail traffic report for week ending Feb 18th: 531.1K carloads and intermodal units, +6.8% y/y (sixth straight week of gains)
(US) FOMC MINUTES FROM FEB 1 MEETING: FOMC TO START BALANCE SHEET DEBATE AT UPCOMING MEETINGS
TSLA Reports Q4 -$0.69 v -$0.13e, R$2.28B v $2.20Be
(BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 75BPS TO 12.25%; AS EXPECTED
(US) Weekly API Oil Inventories: Crude: -0.9M v +9.9M prior; first draw in 5 weeks
(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.25%; AS EXPECTED

THURSDAY, FEB 23
ORA.FR Reports FY16 EBITDA €12.68B v €12.6Be, Rev €40.9B v €40.7Be; Raises dividend 8.3% to €0.65/shr
(DE) GERMANY Q4 FINAL GDP Q/Q: 0.4% V 0.4%E; Y/Y: 1.7% V 1.7%E; GDP NSA Y/Y: 1.2% V1.2%E
BA.UK Reports FY16 EPS 40.3p v 40.2p y/y, Underlying EBITA £1.91B v £1.68B y/y, Rev £19.0B v £17.9B y/y
BARC.UK Reports Q4 Net £99M v loss £2.42B y/y, adj Pretax £284M v £646Me, Core Net Rev £4.99B v £4.45B y/y; cuts FY dividend from 6.5p to 3.0p/shr; Provides update on Barclays Africa sell down & Seperation
(US) Treasury Sec Mnuchin: number one committment is to growth and passing significant tax reform - CNBC
(US) INITIAL JOBLESS CLAIMS: 244K V 240KE; CONTINUING CLAIMS: 2.06M V 2.07ME
(US) DOE CRUDE: +0.6M V +3.5ME; GASOLINE: -2.6M V -1ME; DISTILLATE: -4.9M V -0.5ME
(MX) Mexico Foreign Min Videgaray: US-Mexico relationship took steps in the right direction today
BIDU Reports Q4 $1.91 v $0.93e, R$2.62B v $2.51Be (2 est)

FRIDAY, FEB 24
BAS.DE Reports Q4 Net €689M v €688Me, EBIT (before items) €1.18B v €1.16Be, Rev €14.9B v €14.1Be
RBS.UK Reports FY16 Net loss £6.96B* v loss £1.98B y/y, adj Op profit £3.67B v £3.30Be, Rev £12.4B v £12.0Be
STAN.UK Reports FY16 Statutory Pretax profit +$409M v -$1.5B y/y, adj Pretax $1.09B v $1.42Be; Underlying Op Rev $13.8B v $13.7Be
(US) JAN NEW HOME SALES: 555K V 571KE
(US) FEB FINAL MICHIGAN CONFIDENCE: 96.3 V 96.0E
(US) White House Econ Adviser Cohn says White House doesn't support House GOP version of border adjustment tax - Axios
(US) Weekly Baker Hughes US Rig Count: 754 v 751 w/w (+0.4%) (6th straight rise)
(US) White House reportedly blocks CNN, NY Times, LA Times, Politico and BuzzFeed correspondents from White House press gaggle - Politico

Reflation Trade Ignores Trump’s Stumbles

TradeTheNews.com Weekly Market Update: Reflation Trade Ignores Trump’s Stumbles
Fri, 17 Feb 2017 16:03 PM EST

Fed Chair Yellen's remarks to Congress on Tuesday added extra fuel to the Trump and reflation trades, as the markets saw the likelihood of the next rate hike getting closer. The odds of a March rate move edged higher as she confirmed that all policy meetings are ‘live’, stating that waiting too long to raise rates may be detrimental to the economy and could cause the Fed to raise rates later at a hasty pace. A chorus of other Fed speakers largely echoed Yellen, with members agreeing that with the employment and inflation mandates nearing targets, three or so rate hikes this year would be appropriate.

Stocks rallied along with the Fed-speak: the Dow jumping 1.2% over two days, and touching a new all-time high at 20,639 before leveling off in the back half of the week. Bonds sold off, with the 10-year Treasury yield spiking above 2.51%, before bond prices rallied again and stocks sold off, as investors pondered how markets are reacting to macro factors. For the week, the DJIA gained 1.7%, the S&P500 rose 1.5%, and the Nasdaq added 1.8%.

ECB meeting minutes released this week show the central bank was unanimous in its decision to keep its stimulus at current levels. Members also noted there would be a trade-off between changes to its ‘capital key’ menu of eligible securities and bond-buying in the short part of the curve that yield less than the deposit rate. Initially, peripheral EGBs went into a rally, with 10-year BTPs losing 7bps in yield. German Bunds also recovered in price Friday as the market reassessed the extent of the trade-off between short-term bonds and capital key revisions.

In politics, Trump largely avoided making any market moving remarks this week, but he lost some key appointments. He accepted the resignation of national security adviser Mike Flynn after reports of his conversations with the Russian ambassador came to light. Labor nominee Andrew Puzder also withdrew his name from consideration after several Republican senators balked at his appointment. Trump also gave a long and rambling press conference on Thursday berating the mainstream media again for 'fake news' and unjustified criticism towards himself and administration.

Corporate news this week was dominated by major merger developments and a persistent flow of earnings releases. On the M&A front, Aetna and Humana formally ended their $37B combination attempt on Tuesday, though Aetna remains on the hook for the $1B termination fee. And after a court blocked the Cigna and Anthem combination last week, Cigna moved on Tuesday to formally end its merger agreement, seeking damages exceeding $13B; Anthem filed a temporary restraining order aiming to halt any merger termination. On Friday morning, Kraft Heinz confirmed it had made an approach for Unilever in a cash and stock deal valued at $143B, but Unilever rejected the proposal as it sees no merit for shareholders. Yahoo was said to have reached a tentative deal with Verizon for a $250-350M price reduction in the sale of its operating business after hacking reports surfaced. On the earnings side, Deere reported a beat on the top and bottom line, and surprised the street by raising its outlook on equipment sales.

SUNDAY 2/12
(JP) JAPAN PRELIMINARY Q4 GDP Q/Q: 0.2% V 0.3%E (4th straight quarterly growth); Y/Y: 1.0% V 1.1%E

MONDAY 2/13
(CN) CHINA JAN CPI M/M: 1.0% (11-month high) V 0.2% PRIOR; Y/Y: 2.5% (32-month high) V 2.4%E
(CN) CHINA JAN PPI Y/Y: 6.9% V 6.5%E; 5th straight increase and highest since Aug 2011
(US) NY Fed JAN Survey of Consumer Expectations: inflation expectations highest since summer 2015; household spending expectations lowest since Jan 2016

TUESDAY 2/14
CSGN.CH Reports Q4 Net loss CHF2.35B v loss CHF2.07Be; Pretax profit CHF692M v loss CHF2.01Be; Rev CHF5.38B v CHF5.10Be
(DE) GERMANY Q4 PRELIMINARY GDP Q/Q: 0.4% V 0.5%E; Y/Y: 1.7% V 1.8%E; GDP NSA Y/Y: 1.2% V 1.4%E
(IT) ITALY Q4 PRELIMINARY GDP Q/Q: 0.2% V 0.3%E; Y/Y: 1.1% V 1.0%E
(UK) JAN CPI M/M: -0.5% V -0.5%E; Y/Y: 1.8% V 1.9%E; CPI CORE Y/Y: 1.6% V 1.7%E (highest annual reading since Jun 2014)
(UK) JAN PPI INPUT M/M: 1.7% V 1.0%E; Y/Y: 20.5% V 18.5%E
(DE) GERMANY FEB ZEW CURRENT SITUATION SURVEY: 76.4 V 77.0E; EXPECTATIONS SURVEY: 10.4 V 15.0E
(EU) EURO ZONE Q4 PRELIMINARY GDP Q/Q: 0.4% V 0.5%E; Y/Y: 1.7% V 1.8%E
AET Aetna and Humana Mutually End Merger Agreement; Aetna to pay $1B breakup fee
(US) JAN PPI FINAL DEMAND M/M: 0.6% V 0.3%E; Y/Y: 1.6% V 1.5%E
(US) Fed Chair Yellen: waiting too long to tighten would be unwise; more policy adjustments will likely be needed if the economy remains on track - semi-annual testimony
CI Cigna terminates merger agreement with Anthem; files suit seeking damages exceeding $13B - filing
Berkshire Hathaway discloses latest quarterly holdings; adds to stakes in airline industry - 13 F-HR filing
(US) Weekly API Oil Inventories: Crude: +9.9M (4th straight build) v +14.2M prior
000725.CN Apple reportedly considering BOE Technology as its first China supplier for iPhone screens - financial press

WEDNESDAY 2/15
ACA.FR Reports Q4 Net €291M v €315Me; Rev €4.58B v €4.29Be; to reduce stake in Amundi to 70% (currently holds 74.2%)
HEIA.NL Reports FY16 Net €2.10B v €2.13Be, Op Profit €3.54B v €3.47Be, Rev €20.8B v €20.6Be
BN.FR Reports FY16 Net €1.72B v €1.79Be, Op €3.02B v €2.89B y/y, Rev €21.9B v €22.4B y/y; Announces €1B efficiency program
(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT -0.50%; AS EXPECTED
(UK) JAN JOBLESS CLAIMS CHANGE: -42.4K V +0.5KE; CLAIMANT COUNT RATE: 2.1% V 2.3%E
(UK) DEC AVERAGE WEEKLY EARNINGS 3M/Y: 2.6% V 2.8%E; WEEKLY EARNINGS (EX BONUS) 3M/Y: 2.6% V 2.7%E
(UK) DEC ILO UNEMPLOYMENT RATE 3M/3M: 4.8% V 4.8%E
(US) JAN ADVANCE RETAIL SALES M/M: 0.4% V 0.1%E; RETAIL SALES EX AUTO M/M: 0.8% V 0.4%E
(US) FEB EMPIRE MANUFACTURING: 18.7 V 7.0E (highest since Sept 2014)
(US) JAN CPI M/M: 0.6% V 0.3%E; CPI EX FOOD AND ENERGY M/M: 0.3% V 0.2%E; CPI INDEX NSA: 242.839 V 242.479E
(US) JAN INDUSTRIAL PRODUCTION M/M: -0.3% V 0.0%E; CAPACITY UTILIZATION: 75.3% V 75.4%E
(US) FEB NAHB HOUSING MARKET INDEX: 65 V 67E
(US) DOE CRUDE: +9.5M V +3.5ME; GASOLINE: +2.8M V +0.5ME; DISTILLATE: -0.7M V -1ME
(US) Atlanta Fed cuts Q1 GDP forecast to 2.2% from 2.7% on 2/9
(US) Association of American Railroads weekly rail traffic report for week ending Feb 11th: 518K carloads and intermodal units, +2.6% y/y
(US) Top Senate Republicans reportedly urge White House to withdraw Labor Sec-designate Puzder's nomination - CNN
(US) DEC TOTAL NET TIC FLOWS: -$42.8B V +$30.2B PRIOR; NET LONG-TERM TIC FLOWS: -$12.9B (first decline in 3 months) V +$34.4B PRIOR
AMAT Reports Q1 $0.67 v $0.66e, R$3.28B v $3.29Be
CSCO Reports Q2 $0.57 v $0.56e, R$11.6B v $11.6Be; Increases dividend 11.5% to $0.29/shr (implied yield 3.5%)
(CN) China Jan Foreign Direct Investment (FDI): CNY80.1B v CNY81.4B prior, Y/Y: -9.2% (First decline in 27 months) v +1.4%e
992.HK Reports Q3 Net $98M v $146Me; R$12.2B v $11.7Be

THURSDAY 2/16
NESN.CH Reports FY16 Net CHF8.5B v CHF9.6Be, Op Profit CHF13.7B v CHF13.8Be, Rev CHF89.5B v CHF89.7Be; proposes dividend of CHF2.30/shr
SU.FR Reports FY16 Net €1.75B v €1.85Be; adj EBITA €3.48B v €3.48Be, Rev €24.7B v €24.7Be
(ID) INDONESIA CENTRAL BANK (BI) LEAVES 7-DAY REVERSE REPURCHASE RATE UNCHANGED AT 4.75%; AS EXPECTED
(US) JAN HOUSING STARTS: 1.25M V 1.23ME; BUILDING PERMITS: 1.29M V 1.23ME
(US) INITIAL JOBLESS CLAIMS: 239K V 245KE; CONTINUING CLAIMS: 2.076M V 2.05ME
(US) FEB PHILADELPHIA FED BUSINESS OUTLOOK: 43.3 V 18.0E (highest since Jan 1984)
TGH Believes used shipping container prices have bottomed - earnings slides
(US) Atlanta Fed raises Q1 GDP forecast to 2.4% from 2.2% on 2/15

FRIDAY 2/17
(UK) JAN RETAIL SALES (EX-AUTO FUEL) M/M: -0.2% V 0.7%E; Y/Y: 2.6% V 3.9%E
DE Reports Q1 $0.61 v $0.51e, R$5.63B v $4.63Be; Raises outlook
ULVR.UK Kraft Heinz confirms made approach on possible combination; Unilever declines proposal
(US) Weekly Baker Hughes US Rig Count: 751 v 741 w/w (+1.3%) (5th straight rise)
S Softbank reportedly preparing to approach Deutsche Telekom's T-Mobile US about a possible merger with Sprint - press

Barrons weekend summary

Barrons weekend summary: positive on Macy's (M), ABT, PSH.NL 
Cover story: Barron's 2016 list of the best fund families is topped by Natixis Global Asset Management, Pimco, State Street Bank & Trust, American Funds, and First Trust Advisors; Pimco is ranked No. 1 for U.S. equity and world equity, Lord Abbott is ranked No. 1 for mixed asset and taxable bond, and OppenheimerFunds is ranked No. 1 for tax-exempt bonds. 

Features: 
1) The managers of Barron's four top fund families-John Hailer of Natixis, Emmanuel Roman of Pimco, Nick Good of State Street, and Tim Armour of Capital Group-discuss the past year, and what lies ahead; 
2) Positive on M: The retail sector remains troubled, but as the retailer downsizes its physical locations and ramps up the online side, shares could rise by 20-30%, and a sale would benefit investors; 
3) Positive on ABT: Global healthcare giant faces challenges including currency headwinds and making its acquisition of St. Jude Medical boost growth, but shares are inexpensive, offering investors an opportunity; 
4) Positive on Pershing Square Holdings, Third Point Offshore Investors: Closed-end funds offer individual investors a cheap way to invest with prominent hedge fund managers Bill Ackman and Daniel Loeb.

Tech Trader: Positive on LITE: Most analysts think the company's 3-D sensing system will be the next big thing for the AAPL iPhone, though similar technology has already been used by MSFT and INTC in devices other than smartphones; Other companies working on new technology for smartphones include FNSR, IIVI, VIAV, AMS, and Infineon Technologies. 

Trader: Earnings growth in Europe could be faster than in the U.S. this year and next, says Ronan Carr of Merrill Lynch; "Much attention has been focused on the possibility of slashing the corporate tax rate, but those gains could be eroded by other Trump policies"; Cautious on ABX: A strong finish in 2016 bodes well for the company, which has slashed debt and cut costs by removing layers of management and sold unnecessary assets, though metals will continue to see volatility. Profile: Karen Bowie, manager of Nuveen Small Cap Value, seeks unsung or unnoticed companies with clear turnaround potential based on catalysts the market has missed (top 10 holdings: BANR, RNST, WBS, STL, NSR, CY, PLT, HTLF, PFBC). 

Interview: Ken Siazon of Longleaf Partners Asia Pacific fund, runs a highly concentrated portfolio with extensive research backing its holdings (picks: Global Logistics Properties, New World Development, JIN, MPEL, Melco International Development). 

Small Caps: Positive on IGT: Company's merger with Italian lottery-operator Gtech has proven successful, and more upside could lie ahead for the shares despite a recent uptick. 

Follow-Up: Cautious on TWTR: Company continues to face problems, and its best hope is probably a sale, a situation that doesn't bode well for the upcoming IPO of Snap; Positive on KEY: While investors may want to consider taking profits in big bank stocks, they should hold their KeyCorp shares, which look fairly priced relative to earnings, which could grow by double-digits.

 European Trader: Positive on Orkla: Norwegian consumer-goods company has been refocusing on higher-margin businesses, and could be a great turnaround play for investors. 

Asian Trader: "Chinese real-estate developers may be the new value performers this year, judging by the furious rally at the Hong Kong exchange last week" (Positive on China Resources Land, Longfor Properties). 

Emerging Markets: Positive on C: For investors seeking a hedge against emerging markets' volatility and some shelter from a strong dollar, the bank's shares appear to be a risk-averse way to tap into the sector's growth. 

Commodities: "Beef prices may have taken a tumble last year, but now it looks like they aren't going anywhere but sideways," an opportunity for investors who sell options at levels above and below recent prices. 

Streetwise: Letting the yuan float freely could eventually boost Chinese exports, stem capital flight, and increase inflation, says William Adams of PNC, but in the short term it could roil markets. 

Markets Stirred by Geopolitics Again, but Gravitate Back to Risk-on

TradeTheNews.com Weekly Market Update: Markets Stirred by Geopolitics Again, but Gravitate Back to Risk-on
Fri, 10 Feb 2017 16:02 PM EST

US stock markets had a bumpy ride this week succumbing to lingering geopolitical concerns in the first part of the week. Indices pushed away from early highs and money flowed into the arms of global bond markets. The US 10-year yield drifted back towards the early 2017 low, briefly dropping below 2.35%, while oil prices dipped and gold jumped. Polling data ahead of key European elections and more awkward rumblings from the Trump administration were ultimately pushed aside and reflation trades resurfaced. The DJIA, S&P and the NASDAQ made runs to fresh all-time highs before the week’s end and the flows into Treasuries were unwound. For the week, the DJIA gained 1%, the S&P500 added 0.8%, and the Nasdaq rose 1.2%.

Investor sentiment largely turned on another Trump tweet. At Thursday's meeting with airline executives the President teased the upcoming announcement of a “phenomenal” new tax plan in the next few weeks. Though yet again no specifics were offered, the headline gave investors the kind of fuel they were looking for to add more risk. The week finished with the state visit of Japanese PM Abe at the White House. A joint press conference failed to produce any headlines that could potentially damage the market's psyche and both leaders indicated their willingness to cooperate moving forward on security and trade.

Greek debt worries resurfaced as the IMF issued a statement saying that the EU would need to pay-in more cash to prop-up the country’s finances. The news irritated various officials in Greece and Europe, although various politicians from Germany have recently hinted it might be best for Greece to leave the EU altogether. In the UK, PM May’s government won a series of Parliamentary votes, swatting away proposed legislative amendments that would have impeded the planned invocation of Article 50 next month. The recent political upsurge of the far-right in various countries in Europe, such as Sweden, France and Holland, also adds to the pot for EU break-up risk. Spanish and Italian 10-year yields gained 9 basis points on Friday as peripheral European Government Bonds continue to take loses.

China took action in an attempt to stabilize the exchange rate and stop the continued slide of the yuan. The PBOC decided to stop reverse repo operations for four consecutive days, pushing short term money markets rates higher and making it more expensive to short sell yuan. However, the yuan reversed its bullish trend this week to close down 0.9% to the US dollar. The growing trade imbalance and potential weaker economic growth in the wake of policy tightening may have contributed to pushing the currency lower. Emerging markets, China in particular, will be watching Fed Chair Yellen's comments closely when she testifies on Capitol Hill next week. Any signal the Fed could be gearing up for a rate hike in March could unleash a significant bout of volatility into FX markets.

In corporate earnings news, GM reported better than expected results on Tuesday, but still saw some profit taking in the stock. Disney reported mixed Q1 results, as cable network revenues slipped. CEO Bob Iger confirmed press reports that he may further extend his executive tenure and promised a bright future as Disney moves more content to over the top services. Shares of Twitter collapsed after another lackluster quarter. Multiple analysts downgraded the social network after it missed revenue estimates and showed no almost growth again in monthly active users.

MON 2/6
TM Reports 9-month Net ¥1.43T v ¥1.89T y/y, Op Profit ¥1.56T v ¥2.31T y/y, Rev ¥20.2T v ¥21.4T y/y
*(EU) EURO ZONE FEB SENTIX INVESTOR CONFIDENCE: 17.4 V 16.8E
(US) Fed Q4 senior loan officer survey: about a quarter of banks tightened credits standards for commercial real estate loans in Q4
*(NZ) NEW ZEALAND Q1 INFLATION EXPECTATION SURVEY: 2-YEAR INFLATION EXPECTATION 1.92% V 1.68% PRIOR
*(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50%; AS EXPECTED

TUES 2/7
BNP.FR Reports Q4 Net €1.44B v €1.50Be, Rev €10.7B v €10.5Be
BP.UK Reports Q4 adj Net $400M v $568Me, Underlying replacement cost profit $72M v loss $2.23B y/y, Total Rev $51.0B v $49.2B y/y
*(CN) CHINA JAN FOREIGN RESERVES: $2.998T V $3.004TE (7th consecutive decline and falls below $3T for first time since Feb 2011)
GM Reports Q4 $1.28 v $1.14e, R$43.9B v $42.2Be
(US) Atlanta Fed cuts Q1 GDP forecast to 2.7% from 3.4% on 2/1
(US) Homeland Security Sec Kelly: expects border wall with Mexico to be well underway within 2 years - comments on Capitol Hill
(US) White House Press Sec: President Trump is in favor of negotiating pharma prices
DIS Reports Q1 $1.55 v $1.48e, R$14.8B v $15.3Be
2202.HK Reports Jan contracted sales CNY48.1B v CNY23.4B m/m

WED 2/8
CARLB.DK Reports FY16 adj EBIT DKK8.25B v DKK8.29Be, Rev DKK62.6B v DKK63.2Be RIO.AU Reports FY16 Net $4.62B v -$866M y/y; Underlying earnings $5.1B v $4.75Be; Rev $33.8B v $32.8B y/y
SAN.FR Reports Q4 Business EPS €1.25 v €1.25e, Business Op €2.12B v €2.20Be Rev €8.87B v €9.30Be
RMS.FR Reports Q4 Rev €1.5B v €1.5Be
MAERSKB.DK Reports FY16 underlying Profit $711M v $3.07B y/y, EBITDA $6.77B v $9.07B y/y, Rev $35.5B v $35.9Be;
*(TH) THAILAND CENTRAL BANK (BOT) LEAVES BENCHMARK INTEREST RATE UNCHANGED AT 1.50%; AS EXPECTED
*(IN) INDIA CENTRAL BANK (RBI) LEAVES REPURCHASE RATE UNCHANGED AT 6.25%; NOT EXPECTED (2nd straight pause)
*(PL) POLAND CENTRAL BANK (NBP) LEAVES BASE RATE UNCHANGED AT 1.50%; AS EXPECTED
HUM Reports Q4 $2.09 v $2.06e, R$12.9B v $13.5Be
(US) DOE Crude: +13.8M v +2.5Me; Gasoline: -0.9M v +1Me; Distillate: +0.03M v +0.5Me
JWN President Trump tweets: "My daughter Ivanka has been treated so unfairly by @Nordstrom. She is a great person -- always pushing me to do the right thing! Terrible!"
(US) Association of American Railroads weekly rail traffic report for week ending Feb 4th: 541.5K carloads and intermodal units, +7.3% y/y
(UK) House of Commons passes Article 50 trigger bill by 494-122 vote, as expected

THRS 2/9
(CN) China Passenger Car Association (PCA): China Jan retail auto sales 2.12M units v 2.76M m/m, -9.8% y/y
GLE.FR Reports Q4 Net €390M v €315Me, Op €1.79B v €1.70B y/y, Rev €6.13B v €5.99Be
TKA.DE Reports Q1 Net €15M v €92Me, adj EBIT €329M v €318.1Me, Rev €10.1B v €9.67Be
TWTR Reports Q4 $0.16 v $0.12e, R$717M v $738Me; MAU's ~flat q/q
*(US) INITIAL JOBLESS CLAIMS: 234K V 249KE; CONTINUING CLAIMS: 2.08M V 2.06ME (initial claims match lowest level since 1973)
(US) Pres Trump: to make a "phenomenal" tax announcement in the next 2 or 3 weeks - breakfast meeting with airline CEOs
*(CN) CHINA JAN TRADE BALANCE (USD TERMS): $51.4B (5-month high) V $48.5BE

FRI 2/10
MT.NL Reports Q4 Net +$403M v -$6.69B y/y, EBITDA $1.66B v $1.61Be, R$14.1B v $14.7Be
*(UK) DEC INDUSTRIAL PRODUCTION M/M: 1.1% V 0.2%E; Y/Y: 4.3% V 3.2%E
BHP Reportedly declaring force majeure on shipments from Escondida mine in Chile – press
*(US) JAN IMPORT PRICE INDEX M/M: 0.4% V 0.3%E; Y/Y: 3.7% V 3.4%E
*(CA) CANADA JAN NET CHANGE IN EMPLOYMENT: +48.3K V -10.0KE; UNEMPLOYMENT RATE: 6.8% V 6.9%E
(US) US Fed Gov Tarullo planning to resign on or around April 5th; Tarullo is the leading expert at the Fed on financial regulation issues; creates a 3rd open seat at the Fed