TradeTheNews.com Weekly
Market Update: Markets Go Quietly Into Holiday Weekend
Fri, 23 Dec 2016 16:02 PM EST
US indices largely marked time heading into the final trading sessions of 2016.
Volumes were commensurate with the seasonal slowdown associated with holiday
trading schedules, running significantly below their 3-month averages. The hope
that has manifested itself as the 'Trump bump' appears to be fading as the
reality sets in that his administration is only week's away from taking the
reins. Concerns about a potential trade war with China and Trump's tweet about
expanding the nuclear arsenal raised questions about how aggressive the new
government will be in global affairs, nevertheless the VIX volatility index
moved below the July low in a continued sign of investor complacency. Stocks
remain just below the recent all-time highs while the Dollar index seems to
have stalled out around 1.03. In general, currencies, fixed income, and
commodities remain confined within their recent ranges with the US 10-year yield
consolidating in the mid 2.5% range. Central Banks including the BOJ and
Riksbank kept policy on course at their scheduled meetings and it appears the
ECB is likely to wait until after Germany's October election before making any
significant policy moves. FedEx and Nike headlined the late December earnings
reports and neither generated much in the way of excitement, but Micron shares
surged and helped put a bid under other names in the semiconductor space after
beating Q1 expectations forecasting Q2 results well above the analyst's
consensus. For the week the DJIA rose 0.5%, the S&P500 gained 0.2%, and the
Nasdaq added 0.5%.
SUN 12/18
*(AU) AUSTRALIA MID-YEAR ECONOMIC AND FISCAL OUTLOOK (MYEFO): Maintains FY20/21
target for return to surplus; Cuts FY16/17 & FY17/18 GDP Outlook
*(CN) CHINA NOV PROPERTY PRICES M/M: RISE IN 55 OUT OF 70 CITIES VS 62 PRIOR;
Y/Y: RISE IN 65 OUT OF 70 CITIES V 65 PRIOR
MON 12/19
*(DE) GERMANY DEC IFO BUSINESS CLIMATE: 111.0 V 110.6E (highest since Feb
2014); CURRENT ASSESSMENT: 116.6 V 115.9E
DB: Reportedly nearing DOJ settlement on RMBS case; agreement could come as
early as Weds; set to pay less than $14B settlement - press
*(US) DEC PRELIMINARY MARKIT SERVICES PMI: 53.4 V 55.2E (lowest since Sept)
(TR) Russia Ambassador to Turkey Andrey Karlov reportedly has been shot in
Ankara, with his condition unknown - press
(DE) Several dead, at least 50 reportedly injured after truck drives into
Christmas market in Berlin, Germany; local police spokesman points to terrorism
as motive - press
*(JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%;
AS EXPECTED; Maintains 10-year JGB yield target around ~0%
TUES 12/20
*(TR) TURKEY CENTRAL BANK (CBRT) LEAVES BENCHMARK REPURCHASE RATE UNCHANGED AT
8.00%; AS EXPECTED
NKE: Reports Q2 $0.50 v $0.43e, R$8.18B v $8.08Be
FDX: Reports Q2 $2.80 v $2.91e, R$14.9B v $14.9Be
WED 12/21
*(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT -0.50%; AS
EXPECTED; EXTENDS QE BOND BUYING PROGRAM BY 6 MONTHS IN AMOUNT OF SEK30B
*(US) NOV EXISTING HOME SALES: 5.61M V 5.50ME (highest since Feb 2007)
MU: Reports Q1 $0.32 v $0.28e, R$3.97B v $3.78Be
(US) President-elect Trump and transition team said to be considering a 5%
tariff on foreign imports - financial press
THRS 12/22
*(US) Q3 FINAL GDP ANNUALIZED Q/Q: 3.5% V 3.3%E; PERSONAL CONSUMPTION: 3.0% V
2.8%E
*(US) NOV PCE CORE M/M: 0.0% V 0.1%E; Y/Y: 1.6% V 1.7%E
(US) US President Elect Trump tweets U.S. must greatly expand nuclear
capabilities until world comes to senses regarding nukes
DBK.DE: Reaches settlement in principal with DoJ on RMBS; $3.1B penalty and
$4.1B in consumer relief in US; Sees Q4 pretax charge of ~$1.17B
FRI 12/23
CSGN.CH: Reaches settlement in principle with US DOJ on RMBS; Will pay $5.3B in
Mortgage accord
*(DE) GERMANY JAN GFK CONSUMER CONFIDENCE: 9.9 V 9.9E (3rd straight reading
below the 10 level)
*(UK) Q3 FINAL GDP (3RD READING) Q/Q: 0.6% V 0.5%E; Y/Y: 2.2% V 2.3%E
Friday, December 23, 2016
Sunday, December 18, 2016
Barrons weekend summary
Barrons weekend summary: cautious on DIN, NKE
Cover story: Barron's suggests that president-elect Donald Trump should take steps to make U.S. trade policy freer than it is now after a backslide during the past 15 years; Any aggressive push by Trump to hike tariffs will face resistance from a Republican-dominated Congress that has traditionally supported trade liberalization.
Features:
1) Story says the bull market has legs, and that after a strong post-election really, Wall Street's top strategists see stocks rising by 5% in 2017;
2) Cautious on DIN: Shares and profits are down this year on sluggish traffic and menu misfires, and the stock could lose up to 30% more during the next year as management implements a turnaround.
Tech Trader: Consumer technology is faltering, while the building of what's known as infrastructure for companies to use for data processing is on the rise-and 2007 should see a sharper divided than usual between the two sectors.
Trader: "Stocks look ready to deliver double-digit gains in 2016, but 2017 could be the year of living dangerously"; Since 1928, a Republican has taken the White House from a Democrat four times, and after each occurrence the market fell by about 10% during the new president's first year; Cautious on NKE: Apparel giant seems unable to keep pace with a changing footwear landscape, and could find itself on the wrong side of Donald Trump's policy goals; A strong dollar puts U.S. investors in a bind when it comes to global investing.
Profile: Tom Bohjalian, manager of the Cohen & Steers Real Estate Securities fund, screens REITs to identify those with the highest standard deviations, based on price-to-net-asset value and price-to-dividend-discount (top 10 holdings: SPG, PLD, UDR, HCP, BRX, AIV, EQIX, DLR, ESS, ARE).
Interview: Robert Willens, a leading tax and financial-accounting expert on Wall Street, talks about the potential impact of Donald Trump's tax cut proposals on individuals and corporations.
Small Caps: Barron's top picks for 2017 include, AMC, SSP, HMHC, RELY, EQC-the sole holdover from last year's list-all of which are likely to deliver gains for investors. Follow-Up: Positive on CBS: Investors should hold onto the network's shares, which could return another 10% during the next year, but sell VIA shares, which are likely to go down.
European Trader: "The outlook for European equities is surprisingly bright going into 2017, given the political clouds gathering around the eurozone and the broader European Union" (Positive on Wolsely, BTI, Inditex, EUFN).
Asian Trader: "In 2017, conversations about Asia will be dominated by the Japanese yen and the Chinese yuan, as Asia's two most important currencies continue their race to the bottom," offering opportunities in both the Nikkei and China's A shares.
Emerging Markets: The one near-certainty for emerging markets is that there will be volatility, providing equity investors with buying opportunities.
Commodities Corner: "Commodities should deliver their best annual performance in years, and traders think the rally will roll on in 2017."
Streetwise: Uncertainty next year could be further complicated if the unwinding of a 35-year bond bull market becomes unruly.
Friday, December 16, 2016
FOMC Charts 2017 Course, Trump Administration Fills In
TradeTheNews.com Weekly
Market Update: FOMC Charts 2017 Course, Trump Administration Fills In
Fri, 16 Dec 2016 16:13 PM EST
The week opened with US stock markets riding at fresh all-time highs ahead an all but certain FOMC rate hike. Global economic readings continued to improve led by better than expected readings in the US which only solidified Fed expectations, as well as kept upward pressure on interest rates and the Dollar. Though the 25 basis point hike was widely telegraphed, markets still spent much of the latter half of the week calibrating to what it heard from Chair Yellen in the FOMC statement and her press conference. Most FOMC members now expect three rate hikes in 2017 from two previously. By emphasizing she never favored running high pressure economy some perceived the news was ultimately a bit more hawkish then what markets were expecting. The Dollar Index extended to fresh 14 year highs and the US 10-year yield topped 2.6% while stocks sold off into Wednesday's close as aggressively as we had seen since the Nov election. Buyers though quickly returned when concerns surrounding the rising US dollar and higher interest rates were pushed aside by another round of accelerating economic data and performance chasing into years end. Friday's options expiration saw generally muted trade as Treasury prices stabilized and the Dollar rally lost momentum. The Euro closed the week at the lowest levels seen in more than 13-years and gold prices finished below $1150 for the first time since February. For the week the Dow rose 0.4%, while the S&P and NASDQ finished marginally lower.
In corporate news, Donald Trump again took center stage to start the week, tweeting on Monday that Lockheed's F-35 costs were 'out of control' and he planned to save 'billions' from the aircraft program, sending LMT down 4%. In less contentious fashion, Trump met midweek with prominent tech leaders, promising he's here to help the industry and will make trade deals 'fair.' Also on the regulatory front, gaming names were boosted this week when the Japanese parliament gave final passage to its casino bill, setting the stage for potentially large-scale investment into Japanese casinos in the coming decade. Shares of General Motors and Ford took a hit Wednesday when a Chinese official said the government was considering penalties on an unnamed US automaker for monopolistic behavior. Many key names reported or held Analyst Days as well this week: Athena Heath shares surged on its initial 2017 outlook, where it guided strong bookings and revenue growth. Adobe reported a strong finish to FY16 but its guidance came in slightly below consensus due to FX headwinds.
In M&A news, the long-running Viacom-CBS merger saga came to an abrupt end when Shari Redstone on Monday called off the deal, choosing instead to support CEO Bakish's plans to turn Viacom around. In addition, Sumner Redstone announced he would no longer vote in Viacom board meetings and would step down from board in Feb. Rupert Murdoch's 21st Century Fox agreed to a £10.75/shr bid for European TV provider Sky, taking advantage of the weaker pound to grow Fox's global media reach. And foreign press reports of a Kraft Heinz bid for Mondelez were denied by the company, but a New York Post report indicated Brazil's 3G Capital may be raising funds to pursue Mondelez.
SUNDAY 12/11
BA: Boeing and Iran Air announce agreement for 80 airplanes with estimated value of $16.6B
MONDAY 12/12
Four major cities (Paris, Mexico City, Madrid and Athens) move to ban diesel vehicles by 2025 (update)
(CN) China Association of Automobile (CAAM) Nov Vehicle Sales y/y: 2.59M units, +16.6% v +18.7% prior; YTD: 24.9M units, +14.1% v +3.3% y/y - CAAM
*(CN) CHINA NOV INDUSTRIAL PRODUCTION Y/Y: 6.2% (3-month high) V 6.1%E; YTD Y/Y: 6.0% V 6.0%E
*(CN) CHINA NOV RETAIL SALES Y/Y: 10.8% (11-month high) V 10.2%E; YTD Y/Y: 10.4% V 10.3%E
TUESDAY 12/13
*(UK) NOV CPI M/M: 0.2% V 0.2%E; Y/Y: 1.2% (highest since summer 2014) V 1.1%E; CPI CORE Y/Y: 1.4% V 1.3%E
*(UK) NOV PPI INPUT M/M: -1.1% V -0.5%E; Y/Y: 12.9% V 13.5%E
*(DE) GERMANY DEC ZEW CURRENT SITUATION: 63.5 V 59.0E; EXPECTATIONS SURVEY: 13.8 V 14.0E
(US) Both UPS and Fedex said to be struggling to keep up with record holiday shipping demand - financial press
*(US) NOV IMPORT PRICE INDEX M/M: -0.3% V -0.4%E; Y/Y: -0.1% V 0.0%E
*(CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 3.50%; AS EXPECTED
*(JP) JAPAN Q4 TANKAN LARGE MANUFACTURING INDEX: 10 (1-year high) V 10E; MANUFACTURERS OUTLOOK: 8 (1-year high) V 9E; ALL-INDUSTRY CAPEX: 5.5% (3-quarter low) V 6.1%E
(CN) NDRC to penalize an un-named US automaker for monopoly - China Daily
WEDNESDAY 12/14
(CN) China end of Nov Yuan forex positions CNY22.3T, lower by CNY382.7B m/m (Largest monthly drop this year and marks the 13th consecutive month of decline)
*(UK) OCT AVERAGE WEEKLY EARNINGS 3M/Y: 2.5% V 2.3%E; WEEKLY EARNINGS (EX BONUS) 3M/Y: 2.6% V 2.6%E
*(UK) NOV JOBLESS CLAIMS CHANGE: +2.4K V +6.5KE; CLAIMANT COUNT RATE: 2.3% V 2.3%E
*(UK) OCT ILO UNEMPLOYMENT RATE 3M/3M: 4.8% V 4.8%E
*(US) NOV ADVANCE RETAIL SALES M/M: 0.1% V 0.3%E; RETAIL SALES EX AUTO M/M: 0.2% V 0.4%E
*(US) NOV PPI FINAL DEMAND M/M: 0.4% V 0.1%E; Y/Y: 1.3% V 0.9%E
*(US) NOV INDUSTRIAL PRODUCTION M/M: -0.4% V -0.3%E; CAPACITY UTILIZATION: 75.0% V 75.1%E
(US) Atlanta Fed cuts Q4 GDP forecast to 2.4% from 2.6% on Dec 9th
(US) US govt reportedly files first criminal charges in generic drug price fixing investigation - press
(US) Association of American Railroads weekly rail traffic report for week ending Dec 10th: 538.9K carloads and intermodal units, -1.1% y/y
*(US) FOMC RAISES FED FUNDS TARGET RANGE 25BPS TO 0.50-0.75% (AS EXPECTED); Average Fed official looking for three hikes in 2017
*(US) FOMC UPDATED ECONOMIC FORECAST FOR DEC MEETING
MDLZ: Kraft Heinz said to consider acquiring Mondelez; Berkshire, Lemann may join acquisition - Swiss press
YHOO: Identifies data security issues concerning certain Yahoo user accounts; believes 3rd party stole data from 1B user accounts in Aug 2013
*(AU) AUSTRALIA NOV EMPLOYMENT CHANGE: +39.1K (1-year high) V +17.5KE; UNEMPLOYMENT RATE: 5.7% V 5.6%E
*(KR) BANK OF KOREA (BOK) LEAVES INTEREST RATE UNCHANGED AT 1.25%; AS EXPECTED (6th consecutive month of holding rates)
THURSDAY 12/15
*(FR) FRANCE DEC PRELIMINARY MANUFACTURING PMI: 53.5 V 51.8E (3rd month of expansion and highest since May 2011)
*(CH) SWISS NATIONAL BANK (SNB) LEAVES SIGHT DEPOSIT INTEREST RATE UNCHANGED AT -0.75%; AS EXPECTED
*(DE) GERMANY DEC PRELIMINARY MANUFACTURING PMI: 55.5 V 54.5E (25th month of expansion)
*(EU) EURO ZONE DEC PRELIMINARY MANUFACTURING PMI: 54.9 V 53.7E (42nd month of expansion and fastest pace since April 2011)
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS EXPECTED; maintains rate path
*(UK) NOV RETAIL SALES EX-AUTO/FUEL M/M: 0.5% V 0.0%E; Y/Y: 6.6% V 6.0%E
*(UK) NOV RETAIL SALES (INCLUDING AUTO/FUEL) M/M: 0.2% V 0.0%E; Y/Y: 5.9% V 5.9%E
EUR/USD: *EURO MOVES BELOW $1.0460 FOR ITS LOWEST LEVEL SINCE JAN 2003
*(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS EXPECTED
*(UK) BOE DEC MINUTES: VOTED 9-0 (UNANIMOUS) TO LEAVE POLICY UNCHANGED AT 0.25%
*(US) INITIAL JOBLESS CLAIMS: 254K V 255KE; CONTINUING CLAIMS: 2.02M V 2.00ME
*(US) NOV CPI M/M: 0.2% V 0.2%E; CPI EX FOOD AND ENERGY M/M: 0.2% V 0.2%E; CPI INDEX NSA: 241.353 V 241.413E
*(US) DEC EMPIRE MANUFACTURING: 9.0 V 4.0E
*(US) DEC PHILADELPHIA FED BUSINESS OUTLOOK: 21.5 V 9.1E (highest since Nov 2014)
*(US) DEC PRELIMINARY MARKIT MANUFACTURING PMI: 54.2 V 54.5E (highest since March 2015)
*(US) DEC NAHB HOUSING MARKET INDEX: 70 V 63E (largest one month gain in 20 years)
*(MX) MEXICO CENTRAL BANK (BANXICO) RAISES OVERNIGHT RATE BY 50BPS TO 5.75%; MORE THAN EXPECTED
*(US) OCT TOTAL NET TIC FLOWS: +$18.8B V -$152.9B PRIOR; NET LONG-TERM TIC FLOWS: +$9.4B V -$26.2B PRIOR
ORCL: Reports Q2 $0.61 v $0.61e, R$9.07B v $9.11Be
*(PE) PERU CENTRAL BANK (BCRP) LEAVES REFERENCE RATE UNCHANGED AT 4.25%; AS EXPECTED
*(US) NORTH AMERICA NOV SEMI BOOK/BILL RATIO: 0.96 V 0.91 PRIOR; 2nd straight month below parity
FRIDAY
*(EU) EURO ZONE NOV CPI M/M: -0.1% V -0.1%E; Y/Y (FINAL): 0.6% V 0.6%E; CPI CORE Y/Y (FINAL): 0.8% V 0.8%E
*(RU) RUSSIA CENTRAL BANK (CBR) LEAVES 1-WEEK AUCTION RATE UNCHANGED AT 10.00%; AS EXPECTED
*(UK) DEC CBI INDUSTRIAL TRENDS TOTAL ORDERS: 0 (nil) V -5E
*(US) NOV HOUSING STARTS: 1.09M V 1.230ME; BUILDING PERMITS: 1.20M V 1.240ME
(US) Atlanta Fed raises Q4 GDP forecast to 2.6% from 2.4% on Dec 14th
(CN) China Navy reportedly seizes unmanned underwater US Navy vehicle in South China Sea international waters - press
(US) Weekly Baker Hughes US Rig Count: 637 v 624 w/w (+2.1%) (5th straight weekly increase)
(US) Fed's Bullard (FOMC voter, Dovish): in a revision to policy view, now sees an additional rate hike in 2017
Fri, 16 Dec 2016 16:13 PM EST
The week opened with US stock markets riding at fresh all-time highs ahead an all but certain FOMC rate hike. Global economic readings continued to improve led by better than expected readings in the US which only solidified Fed expectations, as well as kept upward pressure on interest rates and the Dollar. Though the 25 basis point hike was widely telegraphed, markets still spent much of the latter half of the week calibrating to what it heard from Chair Yellen in the FOMC statement and her press conference. Most FOMC members now expect three rate hikes in 2017 from two previously. By emphasizing she never favored running high pressure economy some perceived the news was ultimately a bit more hawkish then what markets were expecting. The Dollar Index extended to fresh 14 year highs and the US 10-year yield topped 2.6% while stocks sold off into Wednesday's close as aggressively as we had seen since the Nov election. Buyers though quickly returned when concerns surrounding the rising US dollar and higher interest rates were pushed aside by another round of accelerating economic data and performance chasing into years end. Friday's options expiration saw generally muted trade as Treasury prices stabilized and the Dollar rally lost momentum. The Euro closed the week at the lowest levels seen in more than 13-years and gold prices finished below $1150 for the first time since February. For the week the Dow rose 0.4%, while the S&P and NASDQ finished marginally lower.
In corporate news, Donald Trump again took center stage to start the week, tweeting on Monday that Lockheed's F-35 costs were 'out of control' and he planned to save 'billions' from the aircraft program, sending LMT down 4%. In less contentious fashion, Trump met midweek with prominent tech leaders, promising he's here to help the industry and will make trade deals 'fair.' Also on the regulatory front, gaming names were boosted this week when the Japanese parliament gave final passage to its casino bill, setting the stage for potentially large-scale investment into Japanese casinos in the coming decade. Shares of General Motors and Ford took a hit Wednesday when a Chinese official said the government was considering penalties on an unnamed US automaker for monopolistic behavior. Many key names reported or held Analyst Days as well this week: Athena Heath shares surged on its initial 2017 outlook, where it guided strong bookings and revenue growth. Adobe reported a strong finish to FY16 but its guidance came in slightly below consensus due to FX headwinds.
In M&A news, the long-running Viacom-CBS merger saga came to an abrupt end when Shari Redstone on Monday called off the deal, choosing instead to support CEO Bakish's plans to turn Viacom around. In addition, Sumner Redstone announced he would no longer vote in Viacom board meetings and would step down from board in Feb. Rupert Murdoch's 21st Century Fox agreed to a £10.75/shr bid for European TV provider Sky, taking advantage of the weaker pound to grow Fox's global media reach. And foreign press reports of a Kraft Heinz bid for Mondelez were denied by the company, but a New York Post report indicated Brazil's 3G Capital may be raising funds to pursue Mondelez.
SUNDAY 12/11
BA: Boeing and Iran Air announce agreement for 80 airplanes with estimated value of $16.6B
MONDAY 12/12
Four major cities (Paris, Mexico City, Madrid and Athens) move to ban diesel vehicles by 2025 (update)
(CN) China Association of Automobile (CAAM) Nov Vehicle Sales y/y: 2.59M units, +16.6% v +18.7% prior; YTD: 24.9M units, +14.1% v +3.3% y/y - CAAM
*(CN) CHINA NOV INDUSTRIAL PRODUCTION Y/Y: 6.2% (3-month high) V 6.1%E; YTD Y/Y: 6.0% V 6.0%E
*(CN) CHINA NOV RETAIL SALES Y/Y: 10.8% (11-month high) V 10.2%E; YTD Y/Y: 10.4% V 10.3%E
TUESDAY 12/13
*(UK) NOV CPI M/M: 0.2% V 0.2%E; Y/Y: 1.2% (highest since summer 2014) V 1.1%E; CPI CORE Y/Y: 1.4% V 1.3%E
*(UK) NOV PPI INPUT M/M: -1.1% V -0.5%E; Y/Y: 12.9% V 13.5%E
*(DE) GERMANY DEC ZEW CURRENT SITUATION: 63.5 V 59.0E; EXPECTATIONS SURVEY: 13.8 V 14.0E
(US) Both UPS and Fedex said to be struggling to keep up with record holiday shipping demand - financial press
*(US) NOV IMPORT PRICE INDEX M/M: -0.3% V -0.4%E; Y/Y: -0.1% V 0.0%E
*(CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 3.50%; AS EXPECTED
*(JP) JAPAN Q4 TANKAN LARGE MANUFACTURING INDEX: 10 (1-year high) V 10E; MANUFACTURERS OUTLOOK: 8 (1-year high) V 9E; ALL-INDUSTRY CAPEX: 5.5% (3-quarter low) V 6.1%E
(CN) NDRC to penalize an un-named US automaker for monopoly - China Daily
WEDNESDAY 12/14
(CN) China end of Nov Yuan forex positions CNY22.3T, lower by CNY382.7B m/m (Largest monthly drop this year and marks the 13th consecutive month of decline)
*(UK) OCT AVERAGE WEEKLY EARNINGS 3M/Y: 2.5% V 2.3%E; WEEKLY EARNINGS (EX BONUS) 3M/Y: 2.6% V 2.6%E
*(UK) NOV JOBLESS CLAIMS CHANGE: +2.4K V +6.5KE; CLAIMANT COUNT RATE: 2.3% V 2.3%E
*(UK) OCT ILO UNEMPLOYMENT RATE 3M/3M: 4.8% V 4.8%E
*(US) NOV ADVANCE RETAIL SALES M/M: 0.1% V 0.3%E; RETAIL SALES EX AUTO M/M: 0.2% V 0.4%E
*(US) NOV PPI FINAL DEMAND M/M: 0.4% V 0.1%E; Y/Y: 1.3% V 0.9%E
*(US) NOV INDUSTRIAL PRODUCTION M/M: -0.4% V -0.3%E; CAPACITY UTILIZATION: 75.0% V 75.1%E
(US) Atlanta Fed cuts Q4 GDP forecast to 2.4% from 2.6% on Dec 9th
(US) US govt reportedly files first criminal charges in generic drug price fixing investigation - press
(US) Association of American Railroads weekly rail traffic report for week ending Dec 10th: 538.9K carloads and intermodal units, -1.1% y/y
*(US) FOMC RAISES FED FUNDS TARGET RANGE 25BPS TO 0.50-0.75% (AS EXPECTED); Average Fed official looking for three hikes in 2017
*(US) FOMC UPDATED ECONOMIC FORECAST FOR DEC MEETING
MDLZ: Kraft Heinz said to consider acquiring Mondelez; Berkshire, Lemann may join acquisition - Swiss press
YHOO: Identifies data security issues concerning certain Yahoo user accounts; believes 3rd party stole data from 1B user accounts in Aug 2013
*(AU) AUSTRALIA NOV EMPLOYMENT CHANGE: +39.1K (1-year high) V +17.5KE; UNEMPLOYMENT RATE: 5.7% V 5.6%E
*(KR) BANK OF KOREA (BOK) LEAVES INTEREST RATE UNCHANGED AT 1.25%; AS EXPECTED (6th consecutive month of holding rates)
THURSDAY 12/15
*(FR) FRANCE DEC PRELIMINARY MANUFACTURING PMI: 53.5 V 51.8E (3rd month of expansion and highest since May 2011)
*(CH) SWISS NATIONAL BANK (SNB) LEAVES SIGHT DEPOSIT INTEREST RATE UNCHANGED AT -0.75%; AS EXPECTED
*(DE) GERMANY DEC PRELIMINARY MANUFACTURING PMI: 55.5 V 54.5E (25th month of expansion)
*(EU) EURO ZONE DEC PRELIMINARY MANUFACTURING PMI: 54.9 V 53.7E (42nd month of expansion and fastest pace since April 2011)
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS EXPECTED; maintains rate path
*(UK) NOV RETAIL SALES EX-AUTO/FUEL M/M: 0.5% V 0.0%E; Y/Y: 6.6% V 6.0%E
*(UK) NOV RETAIL SALES (INCLUDING AUTO/FUEL) M/M: 0.2% V 0.0%E; Y/Y: 5.9% V 5.9%E
EUR/USD: *EURO MOVES BELOW $1.0460 FOR ITS LOWEST LEVEL SINCE JAN 2003
*(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS EXPECTED
*(UK) BOE DEC MINUTES: VOTED 9-0 (UNANIMOUS) TO LEAVE POLICY UNCHANGED AT 0.25%
*(US) INITIAL JOBLESS CLAIMS: 254K V 255KE; CONTINUING CLAIMS: 2.02M V 2.00ME
*(US) NOV CPI M/M: 0.2% V 0.2%E; CPI EX FOOD AND ENERGY M/M: 0.2% V 0.2%E; CPI INDEX NSA: 241.353 V 241.413E
*(US) DEC EMPIRE MANUFACTURING: 9.0 V 4.0E
*(US) DEC PHILADELPHIA FED BUSINESS OUTLOOK: 21.5 V 9.1E (highest since Nov 2014)
*(US) DEC PRELIMINARY MARKIT MANUFACTURING PMI: 54.2 V 54.5E (highest since March 2015)
*(US) DEC NAHB HOUSING MARKET INDEX: 70 V 63E (largest one month gain in 20 years)
*(MX) MEXICO CENTRAL BANK (BANXICO) RAISES OVERNIGHT RATE BY 50BPS TO 5.75%; MORE THAN EXPECTED
*(US) OCT TOTAL NET TIC FLOWS: +$18.8B V -$152.9B PRIOR; NET LONG-TERM TIC FLOWS: +$9.4B V -$26.2B PRIOR
ORCL: Reports Q2 $0.61 v $0.61e, R$9.07B v $9.11Be
*(PE) PERU CENTRAL BANK (BCRP) LEAVES REFERENCE RATE UNCHANGED AT 4.25%; AS EXPECTED
*(US) NORTH AMERICA NOV SEMI BOOK/BILL RATIO: 0.96 V 0.91 PRIOR; 2nd straight month below parity
FRIDAY
*(EU) EURO ZONE NOV CPI M/M: -0.1% V -0.1%E; Y/Y (FINAL): 0.6% V 0.6%E; CPI CORE Y/Y (FINAL): 0.8% V 0.8%E
*(RU) RUSSIA CENTRAL BANK (CBR) LEAVES 1-WEEK AUCTION RATE UNCHANGED AT 10.00%; AS EXPECTED
*(UK) DEC CBI INDUSTRIAL TRENDS TOTAL ORDERS: 0 (nil) V -5E
*(US) NOV HOUSING STARTS: 1.09M V 1.230ME; BUILDING PERMITS: 1.20M V 1.240ME
(US) Atlanta Fed raises Q4 GDP forecast to 2.6% from 2.4% on Dec 14th
(CN) China Navy reportedly seizes unmanned underwater US Navy vehicle in South China Sea international waters - press
(US) Weekly Baker Hughes US Rig Count: 637 v 624 w/w (+2.1%) (5th straight weekly increase)
(US) Fed's Bullard (FOMC voter, Dovish): in a revision to policy view, now sees an additional rate hike in 2017
Saturday, December 10, 2016
Barron's weekend summary
Barron's weekend summary: positive on GT, DVA, JNJ
Cover story: The Dow Jones Industrial Average has risen by 8% since Donald Trump won the presidential election, and the index is up 13% for the year, topping the S&P 500 and the Nasdaq-and is rapidly approaching the historic 20,000 mark, which it could soon hit; The rally has been led by GS, UNH, and CAT.
Features:
1) Positive on GT: Key concerns about the stock seem overstated and more than priced in, and while low materials costs are helping the company, efficiency gains are the key driver; shares could rise by 25%;
2) Positive on JNJ: Company has a diverse range of businesses, steady earnings growth, and a dividend yield near 3%-and shares could rally by 20% as operating improvements spark earnings growth;
3) Stock picks from the Sohn Investment Conference include CHTR, MBLY, ALV, Leonardo-Finmeccanica, Ferrrovial, and Euro Disney, all of which should see gains next year;
4) Positive on DVA: Shares of kidney dialysis machine maker are down on worries its operating income will be cut by new CMS guidelines, making them cheap for a company that continues to spin out cash.
Tech Trader: Positive on CSCO: With company's traditional networking gear business slowing, Cisco is focusing on the security sector, where it has sizable revenue and sales growth; its subscription-based network-security software could give shares a 25% boost.
Trader: If Donald Trump's tax cuts and spending plans become reality, a virtuous cycle could result in which "the gain in animal spirits could amplify the boost to the economy from fiscal stimulus," says BAC's Michelle Meyer; When markets are moving fast, some stocks become mispriced, says Societe Generale strategist Alain Bokobza, meaning next year "will be the kingdom of stockpickers"; "Without something new to propel the stocks higher, banks remain at risk of a sharp pullback"; among those with $50M or more in total assets, KWB analyst Frederick Cannon recommends JPM, BK, COF, and CFG.
Interview: Value investor Mohnish Pabrai of Pabrai Investment Funds likes autos and airlines, including GM, FCAU, and LUV.
Profile: Nick Kaiser and Scott Klimo of shariah-focused Saturna Capital won't hold stocks that derive more than 5% of sales from alcohol, tobacco, gambling, pornography, or pork processing (top 10 holdings: ADBE, AAPL, CHD, INTU, AMGN, TJX, LOW, EL, QCOM, LLY). Penta: Profile of Fiduciary Trust's new chief executive, John Dowd, who wants to double the number of clients and assets under management during the next five years through tapping next-gen clients, digitization, global expansion, and rebranding; The IRS is closing wealthy families' biggest tax break, the ability to pass on shares of family-owned businesses, LLCs, and/or limited partnerships to heirs at a discounted value.
Follow-Up: Cautious on X: Earnings estimates are widely scattered, and investors may want to take profits now and wait until the anticipated infrastructure steel boom turns into something realistic.
European Trader: Italy's rejection of proposed constitutional reforms hasn't sparked a crisis, mainly because pollsters predicted the outcome and because of the country's improving economic prospects.
Asian Trader: Positive on Samsung: South Korea's presidential corruption scandal could be a blessing in disguise for the electronics giant, pushing it further toward the restructuring called for by Elliott Management.
Emerging Markets: The key focus for growth at a revamped AVP is mostly in emerging markets such as Brazil, Mexico, Russia, Colombia, and Turkey-and a turnaround effort is already showing promising signs.
Commodities: "Silver may have been clobbered in recent months, but the price of the widely used metal is likely to strengthen gradually over the next year or two."
Streetwise: "Rates are rising from extraordinarily low levels," says JPM chief global strategist David Kelly, "and fixed-income investors will not have the buffer of juicy yields" to protect against capital depreciation of falling bond prices.
Cover story: The Dow Jones Industrial Average has risen by 8% since Donald Trump won the presidential election, and the index is up 13% for the year, topping the S&P 500 and the Nasdaq-and is rapidly approaching the historic 20,000 mark, which it could soon hit; The rally has been led by GS, UNH, and CAT.
Features:
1) Positive on GT: Key concerns about the stock seem overstated and more than priced in, and while low materials costs are helping the company, efficiency gains are the key driver; shares could rise by 25%;
2) Positive on JNJ: Company has a diverse range of businesses, steady earnings growth, and a dividend yield near 3%-and shares could rally by 20% as operating improvements spark earnings growth;
3) Stock picks from the Sohn Investment Conference include CHTR, MBLY, ALV, Leonardo-Finmeccanica, Ferrrovial, and Euro Disney, all of which should see gains next year;
4) Positive on DVA: Shares of kidney dialysis machine maker are down on worries its operating income will be cut by new CMS guidelines, making them cheap for a company that continues to spin out cash.
Tech Trader: Positive on CSCO: With company's traditional networking gear business slowing, Cisco is focusing on the security sector, where it has sizable revenue and sales growth; its subscription-based network-security software could give shares a 25% boost.
Trader: If Donald Trump's tax cuts and spending plans become reality, a virtuous cycle could result in which "the gain in animal spirits could amplify the boost to the economy from fiscal stimulus," says BAC's Michelle Meyer; When markets are moving fast, some stocks become mispriced, says Societe Generale strategist Alain Bokobza, meaning next year "will be the kingdom of stockpickers"; "Without something new to propel the stocks higher, banks remain at risk of a sharp pullback"; among those with $50M or more in total assets, KWB analyst Frederick Cannon recommends JPM, BK, COF, and CFG.
Interview: Value investor Mohnish Pabrai of Pabrai Investment Funds likes autos and airlines, including GM, FCAU, and LUV.
Profile: Nick Kaiser and Scott Klimo of shariah-focused Saturna Capital won't hold stocks that derive more than 5% of sales from alcohol, tobacco, gambling, pornography, or pork processing (top 10 holdings: ADBE, AAPL, CHD, INTU, AMGN, TJX, LOW, EL, QCOM, LLY). Penta: Profile of Fiduciary Trust's new chief executive, John Dowd, who wants to double the number of clients and assets under management during the next five years through tapping next-gen clients, digitization, global expansion, and rebranding; The IRS is closing wealthy families' biggest tax break, the ability to pass on shares of family-owned businesses, LLCs, and/or limited partnerships to heirs at a discounted value.
Follow-Up: Cautious on X: Earnings estimates are widely scattered, and investors may want to take profits now and wait until the anticipated infrastructure steel boom turns into something realistic.
European Trader: Italy's rejection of proposed constitutional reforms hasn't sparked a crisis, mainly because pollsters predicted the outcome and because of the country's improving economic prospects.
Asian Trader: Positive on Samsung: South Korea's presidential corruption scandal could be a blessing in disguise for the electronics giant, pushing it further toward the restructuring called for by Elliott Management.
Emerging Markets: The key focus for growth at a revamped AVP is mostly in emerging markets such as Brazil, Mexico, Russia, Colombia, and Turkey-and a turnaround effort is already showing promising signs.
Commodities: "Silver may have been clobbered in recent months, but the price of the widely used metal is likely to strengthen gradually over the next year or two."
Streetwise: "Rates are rising from extraordinarily low levels," says JPM chief global strategist David Kelly, "and fixed-income investors will not have the buffer of juicy yields" to protect against capital depreciation of falling bond prices.
Friday, December 9, 2016
ECB Extends QE and Reflation Rally Continues
TradeTheNews.com Weekly
Market Update: ECB Extends QE and Reflation Rally Continues
Fri, 09 Dec 2016 16:02 PM EST
Stocks had a positive week in the US and globally, with many hitting new all-time highs and the S&P 500 posting consecutive record levels over the past three sessions. On the week, the S&P and DJIA each gained 3.1%, while the Nasdaq surged 3.6%. After the historic OPEC agreement and talks with non-OPEC producers this weekend expected to be fruitful, cuts set by the oil cartel last week seem to be real. And with a Fed rate decision also on the horizon, the markets have heavily discounted a likely hike in December. In the past, the dark shadow of higher rates pushed stock prices down, whereas now expected corporate tax cuts and deregulation have more than offset the higher cost of money.
The market rally was also given extra fuel by the hoped-for extension of the ECB asset buying program. The market reacted positively after Thursday's meeting, which saw the ECB extend purchases, but at a reduced amount. ECB President Draghi said purchases will continue through Dec 2017, an extension of 9 months, while the size of purchases will be reduced to $60B from $80B as of April 2017. Under the current macro narrative, bonds are the target, with the inevitability of higher interest rates and a larger federal budget pushing prices lower. Over the week, 10-year Treasuries gained 7bps in yield going from 2.39% to 2.46%, while 30-year bonds were hit harder, gaining 9bps, from 3.06% to 3.15%.
In corporate news, President-elect Trump gained some market attention by targeting both the pharmaceutical industry and Boeing in some pointed comments. On Tuesday, Trump told Boeing through Twitter that the price of its next delivery for Air Force One was too high and would have to be renegotiated, and on Wednesday, the president-elect stated in an interview that drug prices would have to come down, which sent pharmaceutical sector plunging and the NASDAQ Biotechnology Index down 3% on the day. The financial sector was one of the big gainers this week, rising 4.4%, helped by interest rate normalization and a high probability of easier capital requirements. The Italian financial sector was an exception, with banks selling off after Italian voters said "no" to constitutional reforms that would have smoothed capital raising by Monte Paschi and other banks. Energy deals were busy this week: Glencore is said to be in the final stage of a deal to buy 19.5% of Russian Rosneft at €10.2B, while a Macquarie-led consortium plans to buy a 61% stake in the UK National Gas grid for $7B, with the Qatari Government involved in both deals. Also Sky disclosed it received a takeover approach from 21st Century Fox, which already hold a 39% stake.
SUNDAY 12/4
(CN) CHINA OCT CAIXIN CHINA SERVICES PMI: 53.1 V 52.4 PRIOR (16-month high)
*(HK) HONG KONG NOV COMPOSITE PMI: 49.5 V 48.2 PRIOR; highest since Mar 2015; 21st consecutive month of contraction
(IT) Italy PM Renzi: My govt ends here (resigns as promised); Turnout was higher than anyone expected; Italian people have spoke
(IT) Italy referendum early exit polls shows "no" vote ahead on PM Renzi's proposed Constitutional reforms
(AT) Austria Presidential election: Center-left candidate Alexander Van der Bellen defeats far-right Norbert Hofer by 53.3% to 46.7% margin
MONDAY 12/5
*(EU) EURO ZONE DEC SENTIX INVESTOR CONFIDENCE: 10.0 V 14.3E
*(US) NOV FINAL MARKIT SERVICES PMI: 54.6 V 54.9E (lowest since Sep 2016)
*(US) NOV ISM NON-MANUFACTURING COMPOSITE: 57.2 V 55.5E
(US) Nov Labor Market Conditions Index Change: 1.5 v 0.2e
*(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET (OCR) UNCHANGED AT 1.50%; AS EXPECTED
TUESDAY 12/6
*(DE) GERMANY OCT FACTORY ORDERS M/M: 4.9% V 0.6%E; Y/Y: 6.3% V 1.6%E
*(EU) EURO ZONE Q3 FINAL GDP Q/Q: 0.3% V 0.3%E; Y/Y: 1.7% V 1.6%E
*(US) Q3 FINAL NONFARM PRODUCTIVITY: 3.1% V 3.3%E; LABOR COSTS: 0.7% V 0.3%E
(US) OCT FINAL DURABLE GOODS ORDERS: 4.6% V 3.4%E; DURABLES EX TRANSPORTATION: 0.8% V 0.5%E
LNKD: EU approves Microsoft-LinkedIn merger with conditions, as expected - press
(US) Atlanta Fed GDPNow: cuts Q4 GDP forecast to 2.6% from 2.9% on Dec 1st
VA: Justice Department approves Virgin-Alaska merger, as expected
9984.JP: President-elect Trump tweets: "Masa (SoftBank) of Japan has agreed to invest $50 billion in the U.S. toward businesses and 50,000 new jobs"
*(AU) AUSTRALIA Q3 GDP Q/Q: -0.5% (first contraction in 5 years) V -0.1%E; Y/Y: 1.8% V 2.2%E (lowest annual pace since 2008)
WEDNESDAY 12/7
*(CN) CHINA NOV FOREIGN RESERVES: $3.052T V $3.061TE (5th straight month of decline and largest monthly amount since January; Lowest level since Mar 2011)
*(IN) INDIA CENTRAL BANK (RBI) LEAVES REPURCHASE RATE UNCHANGED AT 6.25%; NOT EXPECTED
*(UK) OCT INDUSTRIAL PRODUCTION M/M: -1.3% V 0.2%E; Y/Y: -1.1% V 0.5%E (largest decline since 2012)
*(UK) OCT MANUFACTURING PRODUCTION M/M: -0.9% V +0.2%E; Y/Y: -0.4% V +0.7%E
*(PL) POLAND CENTRAL BANK (NBP) LEAVES BASE RATE UNCHANGED AT 1.50%; AS EXPECTED
(US) President-elect Trump: will bring down drug prices - Time Magazine
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 0.50%; AS EXPECTED
ALR: Abbott seeks to terminate $56/shr cash Alere acquisition; files complaint seeking termination in the Delaware Court of Chancery
(US) Association of American Railroads weekly rail traffic report for week ending Dec 3rd: 553.1K carloads and intermodal units, +2% y/y (third straight week of gains)
COST: Reports Q1 $1.17 (ex $0.07 benefit from legal settlement) v $1.19e, R$28.1B (including member fees) v $28.4Be
*(JP) JAPAN Q3 FINAL GDP Q/Q: 0.3% V 0.5%E; ANNUALIZED GDP: 1.3% V 2.3%E (3rd straight expansion both quarterly and annualized)
*(CN) CHINA NOV TRADE BALANCE $44.6B V $46.9BE
THURSDAY 12/8
(CN) China Passenger Car Association (PCA): China Nov retail auto sales at 2.42M, +19.8% y/y
*(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE SEEN UNCHANGED AT 0.00%, AS EXPECTED
*(EU) ECB POLICY STATEMENT: EXTENDS ASSET PURCHASE TARGET UNTIL DEC 2017 (9-month extension); SCALES BACK PURCHASES TO €60B AFTER APRIL
*(US) INITIAL JOBLESS CLAIMS: 258K V 257KE; CONTINUING CLAIMS: 2.01M V 2.05ME
(EU) ECB chief Draghi: To buy €60B in QE from Apr until Dec; reiterates that program can be amended if needed - prepared remarks
*(EU) ECB chief Draghi: discussed option of continuing QE at full €80B for 6 months, decided instead to reduce QE to €60B in April - Q&A
(US) Fed reports Q3 Financial Accounts: Household Change in Net Worth: $1.59T v $0.84T prior
*(CN) CHINA NOV CPI M/M: 0.1% V 0.7% PRIOR; Y/Y: 2.3% (7-month high) V 2.2%E
*(CN) CHINA NOV PPI Y/Y: 3.3% V 2.3%E (3rd straight y/y positive print; 5-year high)
FRIDAY 12/9
*(FR) FRANCE OCT INDUSTRIAL PRODUCTION M/M: -0.2% V +0.6%E; Y/Y: -1.8% V -0.6%E
*(FR) FRANCE OCT MANUFACTURING PRODUCTION M/M: -0.6% V +0.7%E; Y/Y: -1.5% V +0.1%E
LLY: Provides detailed study from failed Alzheimer's drug Solanezumab trial
*(US) DEC PRELIMINARY MICHIGAN CONFIDENCE: 98.0 V 94.5E
SKY.UK: Discloses possible offer for Sky plc by 21st Century Fox at £10.75/shr in cash; forms independent committee to consider proposal terms
(US) Atlanta Fed maintains Q4 GDP forecast at 2.6%, no change from Dec 6th
(US) Weekly Baker Hughes US Rig Count: 624 v 597 w/w (+4.5%) (4th straight weekly increase)
Fri, 09 Dec 2016 16:02 PM EST
Stocks had a positive week in the US and globally, with many hitting new all-time highs and the S&P 500 posting consecutive record levels over the past three sessions. On the week, the S&P and DJIA each gained 3.1%, while the Nasdaq surged 3.6%. After the historic OPEC agreement and talks with non-OPEC producers this weekend expected to be fruitful, cuts set by the oil cartel last week seem to be real. And with a Fed rate decision also on the horizon, the markets have heavily discounted a likely hike in December. In the past, the dark shadow of higher rates pushed stock prices down, whereas now expected corporate tax cuts and deregulation have more than offset the higher cost of money.
The market rally was also given extra fuel by the hoped-for extension of the ECB asset buying program. The market reacted positively after Thursday's meeting, which saw the ECB extend purchases, but at a reduced amount. ECB President Draghi said purchases will continue through Dec 2017, an extension of 9 months, while the size of purchases will be reduced to $60B from $80B as of April 2017. Under the current macro narrative, bonds are the target, with the inevitability of higher interest rates and a larger federal budget pushing prices lower. Over the week, 10-year Treasuries gained 7bps in yield going from 2.39% to 2.46%, while 30-year bonds were hit harder, gaining 9bps, from 3.06% to 3.15%.
In corporate news, President-elect Trump gained some market attention by targeting both the pharmaceutical industry and Boeing in some pointed comments. On Tuesday, Trump told Boeing through Twitter that the price of its next delivery for Air Force One was too high and would have to be renegotiated, and on Wednesday, the president-elect stated in an interview that drug prices would have to come down, which sent pharmaceutical sector plunging and the NASDAQ Biotechnology Index down 3% on the day. The financial sector was one of the big gainers this week, rising 4.4%, helped by interest rate normalization and a high probability of easier capital requirements. The Italian financial sector was an exception, with banks selling off after Italian voters said "no" to constitutional reforms that would have smoothed capital raising by Monte Paschi and other banks. Energy deals were busy this week: Glencore is said to be in the final stage of a deal to buy 19.5% of Russian Rosneft at €10.2B, while a Macquarie-led consortium plans to buy a 61% stake in the UK National Gas grid for $7B, with the Qatari Government involved in both deals. Also Sky disclosed it received a takeover approach from 21st Century Fox, which already hold a 39% stake.
SUNDAY 12/4
(CN) CHINA OCT CAIXIN CHINA SERVICES PMI: 53.1 V 52.4 PRIOR (16-month high)
*(HK) HONG KONG NOV COMPOSITE PMI: 49.5 V 48.2 PRIOR; highest since Mar 2015; 21st consecutive month of contraction
(IT) Italy PM Renzi: My govt ends here (resigns as promised); Turnout was higher than anyone expected; Italian people have spoke
(IT) Italy referendum early exit polls shows "no" vote ahead on PM Renzi's proposed Constitutional reforms
(AT) Austria Presidential election: Center-left candidate Alexander Van der Bellen defeats far-right Norbert Hofer by 53.3% to 46.7% margin
MONDAY 12/5
*(EU) EURO ZONE DEC SENTIX INVESTOR CONFIDENCE: 10.0 V 14.3E
*(US) NOV FINAL MARKIT SERVICES PMI: 54.6 V 54.9E (lowest since Sep 2016)
*(US) NOV ISM NON-MANUFACTURING COMPOSITE: 57.2 V 55.5E
(US) Nov Labor Market Conditions Index Change: 1.5 v 0.2e
*(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET (OCR) UNCHANGED AT 1.50%; AS EXPECTED
TUESDAY 12/6
*(DE) GERMANY OCT FACTORY ORDERS M/M: 4.9% V 0.6%E; Y/Y: 6.3% V 1.6%E
*(EU) EURO ZONE Q3 FINAL GDP Q/Q: 0.3% V 0.3%E; Y/Y: 1.7% V 1.6%E
*(US) Q3 FINAL NONFARM PRODUCTIVITY: 3.1% V 3.3%E; LABOR COSTS: 0.7% V 0.3%E
(US) OCT FINAL DURABLE GOODS ORDERS: 4.6% V 3.4%E; DURABLES EX TRANSPORTATION: 0.8% V 0.5%E
LNKD: EU approves Microsoft-LinkedIn merger with conditions, as expected - press
(US) Atlanta Fed GDPNow: cuts Q4 GDP forecast to 2.6% from 2.9% on Dec 1st
VA: Justice Department approves Virgin-Alaska merger, as expected
9984.JP: President-elect Trump tweets: "Masa (SoftBank) of Japan has agreed to invest $50 billion in the U.S. toward businesses and 50,000 new jobs"
*(AU) AUSTRALIA Q3 GDP Q/Q: -0.5% (first contraction in 5 years) V -0.1%E; Y/Y: 1.8% V 2.2%E (lowest annual pace since 2008)
WEDNESDAY 12/7
*(CN) CHINA NOV FOREIGN RESERVES: $3.052T V $3.061TE (5th straight month of decline and largest monthly amount since January; Lowest level since Mar 2011)
*(IN) INDIA CENTRAL BANK (RBI) LEAVES REPURCHASE RATE UNCHANGED AT 6.25%; NOT EXPECTED
*(UK) OCT INDUSTRIAL PRODUCTION M/M: -1.3% V 0.2%E; Y/Y: -1.1% V 0.5%E (largest decline since 2012)
*(UK) OCT MANUFACTURING PRODUCTION M/M: -0.9% V +0.2%E; Y/Y: -0.4% V +0.7%E
*(PL) POLAND CENTRAL BANK (NBP) LEAVES BASE RATE UNCHANGED AT 1.50%; AS EXPECTED
(US) President-elect Trump: will bring down drug prices - Time Magazine
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 0.50%; AS EXPECTED
ALR: Abbott seeks to terminate $56/shr cash Alere acquisition; files complaint seeking termination in the Delaware Court of Chancery
(US) Association of American Railroads weekly rail traffic report for week ending Dec 3rd: 553.1K carloads and intermodal units, +2% y/y (third straight week of gains)
COST: Reports Q1 $1.17 (ex $0.07 benefit from legal settlement) v $1.19e, R$28.1B (including member fees) v $28.4Be
*(JP) JAPAN Q3 FINAL GDP Q/Q: 0.3% V 0.5%E; ANNUALIZED GDP: 1.3% V 2.3%E (3rd straight expansion both quarterly and annualized)
*(CN) CHINA NOV TRADE BALANCE $44.6B V $46.9BE
THURSDAY 12/8
(CN) China Passenger Car Association (PCA): China Nov retail auto sales at 2.42M, +19.8% y/y
*(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE SEEN UNCHANGED AT 0.00%, AS EXPECTED
*(EU) ECB POLICY STATEMENT: EXTENDS ASSET PURCHASE TARGET UNTIL DEC 2017 (9-month extension); SCALES BACK PURCHASES TO €60B AFTER APRIL
*(US) INITIAL JOBLESS CLAIMS: 258K V 257KE; CONTINUING CLAIMS: 2.01M V 2.05ME
(EU) ECB chief Draghi: To buy €60B in QE from Apr until Dec; reiterates that program can be amended if needed - prepared remarks
*(EU) ECB chief Draghi: discussed option of continuing QE at full €80B for 6 months, decided instead to reduce QE to €60B in April - Q&A
(US) Fed reports Q3 Financial Accounts: Household Change in Net Worth: $1.59T v $0.84T prior
*(CN) CHINA NOV CPI M/M: 0.1% V 0.7% PRIOR; Y/Y: 2.3% (7-month high) V 2.2%E
*(CN) CHINA NOV PPI Y/Y: 3.3% V 2.3%E (3rd straight y/y positive print; 5-year high)
FRIDAY 12/9
*(FR) FRANCE OCT INDUSTRIAL PRODUCTION M/M: -0.2% V +0.6%E; Y/Y: -1.8% V -0.6%E
*(FR) FRANCE OCT MANUFACTURING PRODUCTION M/M: -0.6% V +0.7%E; Y/Y: -1.5% V +0.1%E
LLY: Provides detailed study from failed Alzheimer's drug Solanezumab trial
*(US) DEC PRELIMINARY MICHIGAN CONFIDENCE: 98.0 V 94.5E
SKY.UK: Discloses possible offer for Sky plc by 21st Century Fox at £10.75/shr in cash; forms independent committee to consider proposal terms
(US) Atlanta Fed maintains Q4 GDP forecast at 2.6%, no change from Dec 6th
(US) Weekly Baker Hughes US Rig Count: 624 v 597 w/w (+4.5%) (4th straight weekly increase)
Sunday, December 4, 2016
Barrons weekend update
Barrons weekend update: positive on ARCH
Cover story: A federal debt that's nearly $19T leaves less flexibility for the U.S. to fund infrastructure projects, but that doesn't mean they shouldn't be undertaken-failing to do so would be more expensive in the long run because of the affect crumbling infrastructure has on productivity; Historically low rates and the possibility of 100-year bonds should provide incentives for the government to act.
Features:
1) Barron's list of the top 10 stock picks for 2017 includes GOOGL, AAPL, C, DAL, Deutsche Telekom, MRK, NVS, TOL, UL, DIS;
2) The lower corporate tax rates the Trump administration plans to impose will help retailers such as TJX and FL more than struggling ones such as GME, AEO, JCP;
3) Positive on ARCH: Coal company emerged from bankruptcy having made significant changes, and should benefit from the shifts in supply and demand as it picks up orders for thermal and metallurgical coal.
Tech Trader: T's DirectTV NOW "looks to be a great product, but selling 60 channels of live video at close to, or below, cost seems unwise; Less media regulation under the Trump administration could make vertical integration for media companies such as VZ, DIS, VIA, FOXA, DISH an imperative.
Trader: Investors are no longer buying stocks whole hog, but are rotating their money from one part of the market to another, keeping a lid on the S&P for now, says Michael Shaoul of Marketfield Asset Management; The recent OPEC deal is a game changer, creating the possibility the oil glut will fade as early as the first quarter of 2017, says MS analyst Evan Calio; The market has accepted that tax cuts are a given under Donald Trump, but Wall Street is trying to figure out how much companies will gain from lower tax rates.
Interview: John Levin and Jack Murphy of Levin Capital looks for value-priced stocks with potential catalysts, and they see plenty of opportunities in the market (picks: DOW, DD, Nestle, NOK; pan: XOM).
Profile: Jenny Jones, portfolio manager of Hartford Schroders U.S. Small/Mid Cap Opportunities fund, looks for mispriced companies and companies that grow earnings consistently (top 10 holdings: ARMK, PVH, VWR, VNTV, KAR, SPB, ROL, GHC, XRAY, CPHD).
Small Caps: Positive on EVC: Broadcaster stands to benefit from a growing Hispanic market in the U.S., and its valuable spectrum holdings could help send shares higher. Follow-Up: "If the past is prologue, the Trump Treasury could go ahead with 50- or 100-year bond sales without further market disruption"; "Double-digit prices for crude oil are here to stay. But $100 crude is likely gone for good, as is OPEC's dominance of the market."
European Trader: When it meets on December 8 amid a backdrop of downside risks to economic growth from political uncertainty, the European Central Bank's governing council could signal more quantitative easing.
Asian Trader: China Unicom will invite BIDU, BABA, and Tencent to become shareholders, but investors should be cautious about rushing after the threesome into the stock because of Beijing's uncertain role.
Emerging Markets: Many emerging markets face a bumpy ride ahead following the presidential election, but countries such as Brazil, India, and Poland have corporate-earnings strength.
Commodities: Arabica futures prices fell in November as new data pointed to higher-than-expected supply in the current season, which could weigh on prices through next year.
Streetwise: The Trump administration isn't looking like the anti-establishment outfit the president-elect's working-class voters might have expected, but that doesn't matter to investors-especially those holding financial services stocks.
Friday, December 2, 2016
OPEC Cuts; Fed on Track to Hike
TradeTheNews.com Weekly
Market Update: OPEC Cuts; Fed on Track to Hike
Fri, 02 Dec 2016 16:11 PM EST
Markets entered the week focused on Vienna, and growing doubts about whether OPEC and in turn non-OPEC producers could come to an accord. Ultimately the Saudis appeared to blink and an agreement was reached that would cut production by 1.2M bpd to 32.5M bpd as laid out in September's tentative framework in Algiers. Crude prices moved up into the closed door meeting on Wednesday and ended the week up 10% from the lows. The US oil patch saw a dramatic rally with some shale names jumping more than 20%. The 6-month production cut that goes into effect with the New Year is seen as a potential boon for well capitalized US producers who will not be participating in any quotas.
Global economic data continued to paint a solid picture heading into the final month of the year, particularly here in the US. November manufacturing readings largely topped estimates while new orders saw growth. Friday's Labor Department report saw several surprises in the details but the bottom line did not differ greatly from expectations. Job growth was steady, labor market slack continues to diminish, and the case for a December rate hike remains intact.
US Treasury yields hit fresh highs mid-week propelled by a continuation of the post-election reflation trade and the surge in oil prices. After making a run at 2.5% in the benchmark 10-year yield, Treasury prices were firming into the jobs numbers on Friday. Yields moved down despite the lowest print in the unemployment rate since 2007. The Dollar index drifted back below 101, but as with most asset classes, price action remains well within recent ranges and suggests post-election trends remain entrenched. Overall, stocks trended lower for the first time since the US election, and for the week the S&P500 dropped 1.1% and the Nasdaq fell 2.7%, while the DJIA eked out a 0.1% gain.
In corporate news, Caterpillar threw some dirt on the rotation into the infrastructure play, cautioning that FY17 analyst earnings consensus is overly optimistic given the expected headwinds. Starbucks shares took a hit after CEO Howard Schultz said he would cede the CEO role to his lieutenant Kevin Johnson in April. Luxury retailer Tiffany Co. blew out expectations for Q3, but merely affirmed FY16 guidance in part due to the drag on sales at its New York flagship store caused by security cordon around the adjacent Trump Tower.
MONDAY 11/28
STAN.UK: Reportedly set to unveil wider global job cuts as early as this week - financial press
*(EU) EURO ZONE OCT M3 MONEY SUPPLY Y/Y: 4.4% V 5.0%E
TUESDAY 11/29
*(EU) EURO ZONE NOV BUSINESS CLIMATE INDICATOR: 0.42 V 0.60E; CONSUMER CONFIDENCE (FINAL): -6.1 V -6.1E
(IT) ECB ready to temporarily step up purchases of Italian government bonds if Dec 4th Referendum drives up borrowing costs- financial press
*(DE) GERMANY NOV PRELIMINARY CPI M/M: 0.1% V 0.1%E; Y/Y: 0.8% V 0.8%E
*(US) Q3 PRELIMINARY GDP PRICE INDEX: 1.4% V 1.5%E; CORE PCE Q/Q: 1.7% V 1.7%E
TIF: Reports Q3 $0.76 v $0.67e, R$949M v $923Me
*(US) Q3 PRELIMINARY GDP ANNUALIZED Q/Q: 3.2% V 3.0%E; PERSONAL CONSUMPTION: 2.8% V 2.3%E
(IR) Iran Oil Min Zanganeh: Iran will NOT cut oil production
*(US) NOV CONSUMER CONFIDENCE: 107.1 V 101.5E (highest since July 2007)
WEDNESDAY 11/30
*(EU) EURO ZONE NOV ADVANCE CPI ESTIMATE Y/Y: 0.6% V 0.6%E (Highest level since Apr 2014); CPI CORE Y/Y: 0.8% V 0.8%E
*(IN) INDIA Q3 GDP Y/Y: 7.3% V 7.5%E
*(US) NOV ADP EMPLOYMENT CHANGE: +216K V +170KE
*(US) OCT PCE CORE M/M: 0.1% V 0.1%E; Y/Y: 1.7% V 1.7%E
*(US) OCT PCE DEFLATOR M/M: 0.2% V 0.3%E; Y/Y: 1.4% V 1.5%E
*(US) OCT PERSONAL INCOME: 0.6% V 0.4%E; PERSONAL SPENDING: 0.3% V 0.5%E
*(US) NOV CHICAGO PURCHASING MANAGER: 57.6 V 52.5E (highest since Jan 2015)
(US) Atlanta Fed GDPNow: cuts Q4 GDP forecast to 2.4% from 3.6% on Nov 23rd
*OPEC Ministers comment after meeting concludes: confirms cutting output to 32.5M bpd, 6 month agreement starts in Jan and could extend it another 6 months at May meeting; seeks 600K bpd in cuts from non-OPEC producers
*(BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 25BPS TO 13.75%; AS EXPECTED
*(AU) AUSTRALIA Q3 PRIVATE CAPITAL EXPENDITURE (CAPEX) Q/Q: -4.0% V -3.0%E
*(CN) CHINA NOV MANUFACTURING PMI (Gov't official): 51.7 V 51.0E (4th consecutive expansion and highest since July 2014)
*(CN) CHINA NOV CAIXIN PMI MANUFACTURING: 50.9 V 51.0E; 5th consecutive expansion
(HK) Macau Nov Casino Rev 18.8B Patacas v 18.4B m/m, +14.4% y/y (4th consecutive increase, largest gain since Feb 2014) v 8.8% prior
THURSDAY 12/1
GLEN.UK: Trading update: Raises FY16 Marketing EBIT at upper end of $2.5-2.7B; Guides initial FY17 illustrative cash flow $6.5B, EBITDA $14.0B; Cuts Long-term EBIT $2.2-3.2B (prior $2.7-3.7B)
*(UK) NOV PMI MANUFACTURING: 53.4 V 54.4E (4th month of expansion)
*(EU) EURO ZONE OCT UNEMPLOYMENT RATE: 9.8% V 10.0%E (lowest since Sept 2011)
*(US) INITIAL JOBLESS CLAIMS: 268K V 253KE; CONTINUING CLAIMS: 2.08M V 2.03ME
*(US) NOV FINAL MARKIT MANUFACTURING PMI: 54.1 V 53.9E (highest since Oct 2015)
*(US) NOV ISM MANUFACTURING: 53.2 V 52.5E; PRICES PAID: 54.5 V 54.5E
CAT: Guides FY17 R$38B v $38.1Be, sees FY17 EPS $3.25 consensus ex restructuring as too optimistic considering expected headwinds (Zack's FY17 consensus estimates is $3.36e) - investor presentation
(US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 2.9% from 2.4% on Nov 30th
SBUX: *CEO Howard Schultz to step down, to become exec Chairman; COO Kevin Johnson to take over as CEO; effective April 3, 2017
FRIDAY 12/2
*(US) NOV UNEMPLOYMENT RATE: 4.6% V 4.9%E (lowest since 2007)
*(US) NOV CHANGE IN NONFARM PAYROLLS: +178K V +180KE
*(US) NOV AVERAGE HOURLY EARNINGS M/M: -0.1% V +0.2%E; Y/Y: 2.5% V 2.8%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
*(CA) CANADA NOV NET CHANGE IN EMPLOYMENT: +10.7K V -15.0KE; UNEMPLOYMENT RATE: 6.8% V 7.0%E
DAL: Reports Nov Load factor 85% v 84.1% y/y; Affirms Q4 metrics guidance
(US) CMS report: 2015 US health care spending +5.8% y/y to $3.2T
Fri, 02 Dec 2016 16:11 PM EST
Markets entered the week focused on Vienna, and growing doubts about whether OPEC and in turn non-OPEC producers could come to an accord. Ultimately the Saudis appeared to blink and an agreement was reached that would cut production by 1.2M bpd to 32.5M bpd as laid out in September's tentative framework in Algiers. Crude prices moved up into the closed door meeting on Wednesday and ended the week up 10% from the lows. The US oil patch saw a dramatic rally with some shale names jumping more than 20%. The 6-month production cut that goes into effect with the New Year is seen as a potential boon for well capitalized US producers who will not be participating in any quotas.
Global economic data continued to paint a solid picture heading into the final month of the year, particularly here in the US. November manufacturing readings largely topped estimates while new orders saw growth. Friday's Labor Department report saw several surprises in the details but the bottom line did not differ greatly from expectations. Job growth was steady, labor market slack continues to diminish, and the case for a December rate hike remains intact.
US Treasury yields hit fresh highs mid-week propelled by a continuation of the post-election reflation trade and the surge in oil prices. After making a run at 2.5% in the benchmark 10-year yield, Treasury prices were firming into the jobs numbers on Friday. Yields moved down despite the lowest print in the unemployment rate since 2007. The Dollar index drifted back below 101, but as with most asset classes, price action remains well within recent ranges and suggests post-election trends remain entrenched. Overall, stocks trended lower for the first time since the US election, and for the week the S&P500 dropped 1.1% and the Nasdaq fell 2.7%, while the DJIA eked out a 0.1% gain.
In corporate news, Caterpillar threw some dirt on the rotation into the infrastructure play, cautioning that FY17 analyst earnings consensus is overly optimistic given the expected headwinds. Starbucks shares took a hit after CEO Howard Schultz said he would cede the CEO role to his lieutenant Kevin Johnson in April. Luxury retailer Tiffany Co. blew out expectations for Q3, but merely affirmed FY16 guidance in part due to the drag on sales at its New York flagship store caused by security cordon around the adjacent Trump Tower.
MONDAY 11/28
STAN.UK: Reportedly set to unveil wider global job cuts as early as this week - financial press
*(EU) EURO ZONE OCT M3 MONEY SUPPLY Y/Y: 4.4% V 5.0%E
TUESDAY 11/29
*(EU) EURO ZONE NOV BUSINESS CLIMATE INDICATOR: 0.42 V 0.60E; CONSUMER CONFIDENCE (FINAL): -6.1 V -6.1E
(IT) ECB ready to temporarily step up purchases of Italian government bonds if Dec 4th Referendum drives up borrowing costs- financial press
*(DE) GERMANY NOV PRELIMINARY CPI M/M: 0.1% V 0.1%E; Y/Y: 0.8% V 0.8%E
*(US) Q3 PRELIMINARY GDP PRICE INDEX: 1.4% V 1.5%E; CORE PCE Q/Q: 1.7% V 1.7%E
TIF: Reports Q3 $0.76 v $0.67e, R$949M v $923Me
*(US) Q3 PRELIMINARY GDP ANNUALIZED Q/Q: 3.2% V 3.0%E; PERSONAL CONSUMPTION: 2.8% V 2.3%E
(IR) Iran Oil Min Zanganeh: Iran will NOT cut oil production
*(US) NOV CONSUMER CONFIDENCE: 107.1 V 101.5E (highest since July 2007)
WEDNESDAY 11/30
*(EU) EURO ZONE NOV ADVANCE CPI ESTIMATE Y/Y: 0.6% V 0.6%E (Highest level since Apr 2014); CPI CORE Y/Y: 0.8% V 0.8%E
*(IN) INDIA Q3 GDP Y/Y: 7.3% V 7.5%E
*(US) NOV ADP EMPLOYMENT CHANGE: +216K V +170KE
*(US) OCT PCE CORE M/M: 0.1% V 0.1%E; Y/Y: 1.7% V 1.7%E
*(US) OCT PCE DEFLATOR M/M: 0.2% V 0.3%E; Y/Y: 1.4% V 1.5%E
*(US) OCT PERSONAL INCOME: 0.6% V 0.4%E; PERSONAL SPENDING: 0.3% V 0.5%E
*(US) NOV CHICAGO PURCHASING MANAGER: 57.6 V 52.5E (highest since Jan 2015)
(US) Atlanta Fed GDPNow: cuts Q4 GDP forecast to 2.4% from 3.6% on Nov 23rd
*OPEC Ministers comment after meeting concludes: confirms cutting output to 32.5M bpd, 6 month agreement starts in Jan and could extend it another 6 months at May meeting; seeks 600K bpd in cuts from non-OPEC producers
*(BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 25BPS TO 13.75%; AS EXPECTED
*(AU) AUSTRALIA Q3 PRIVATE CAPITAL EXPENDITURE (CAPEX) Q/Q: -4.0% V -3.0%E
*(CN) CHINA NOV MANUFACTURING PMI (Gov't official): 51.7 V 51.0E (4th consecutive expansion and highest since July 2014)
*(CN) CHINA NOV CAIXIN PMI MANUFACTURING: 50.9 V 51.0E; 5th consecutive expansion
(HK) Macau Nov Casino Rev 18.8B Patacas v 18.4B m/m, +14.4% y/y (4th consecutive increase, largest gain since Feb 2014) v 8.8% prior
THURSDAY 12/1
GLEN.UK: Trading update: Raises FY16 Marketing EBIT at upper end of $2.5-2.7B; Guides initial FY17 illustrative cash flow $6.5B, EBITDA $14.0B; Cuts Long-term EBIT $2.2-3.2B (prior $2.7-3.7B)
*(UK) NOV PMI MANUFACTURING: 53.4 V 54.4E (4th month of expansion)
*(EU) EURO ZONE OCT UNEMPLOYMENT RATE: 9.8% V 10.0%E (lowest since Sept 2011)
*(US) INITIAL JOBLESS CLAIMS: 268K V 253KE; CONTINUING CLAIMS: 2.08M V 2.03ME
*(US) NOV FINAL MARKIT MANUFACTURING PMI: 54.1 V 53.9E (highest since Oct 2015)
*(US) NOV ISM MANUFACTURING: 53.2 V 52.5E; PRICES PAID: 54.5 V 54.5E
CAT: Guides FY17 R$38B v $38.1Be, sees FY17 EPS $3.25 consensus ex restructuring as too optimistic considering expected headwinds (Zack's FY17 consensus estimates is $3.36e) - investor presentation
(US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 2.9% from 2.4% on Nov 30th
SBUX: *CEO Howard Schultz to step down, to become exec Chairman; COO Kevin Johnson to take over as CEO; effective April 3, 2017
FRIDAY 12/2
*(US) NOV UNEMPLOYMENT RATE: 4.6% V 4.9%E (lowest since 2007)
*(US) NOV CHANGE IN NONFARM PAYROLLS: +178K V +180KE
*(US) NOV AVERAGE HOURLY EARNINGS M/M: -0.1% V +0.2%E; Y/Y: 2.5% V 2.8%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
*(CA) CANADA NOV NET CHANGE IN EMPLOYMENT: +10.7K V -15.0KE; UNEMPLOYMENT RATE: 6.8% V 7.0%E
DAL: Reports Nov Load factor 85% v 84.1% y/y; Affirms Q4 metrics guidance
(US) CMS report: 2015 US health care spending +5.8% y/y to $3.2T
Sunday, November 27, 2016
Barrons weekend summary
Barrons weekend summary: positive on BHI, MGM
Cover story: Donald Trump's proposal to slash the corporate tax rate form 35% to 15% might be too much, since it could significantly reduce the government's tax haul and add to the country's large debt burden, but a cut to 22% would be revenue-neutral, allowing businesses to produce just enough additional taxable income to offset the effect of the lower rate.
Features:
1) Profile of Michael Petry, chief portfolio manager for Danske Invest Hedge Fixed Income Strategies, believes global bond investors will have to navigate markets in which more interest-rate hikes will follow the one likely to occur in December;
2) Positive on BHI: The logic behind Baker Hughes' planned merger with GE's oil-and-gas unit makes sense, and could set up the new company-which would be less tied to oil-price cycles-to profit as energy prices rise;
3) Under a Trump administration, more merger deals are likely to succeed, and M&A arbitrate could remain a profitable investment strategy, yielding annualized double-digit percentage returns;
4) Positive on MGM: Company stands to benefit from Las Vegas' move to diversify beyond gambling into areas such as entertainment and professional sports, and it should continue to see strong earnings and cash flow.
Tech Trader: Positive on PSTG, NMBL, NTNX: Promising flash-based data-storage-equipment vendors could be takeover targets for larger tech companies that are falling behind in innovation, such as HPE and CSCO; VEEV, TEAM, and NOW could also be of interest to bigger rivals.
Trader: A cut of six to seven percentage points in corporate tax rates should result in a 10% increase in earnings-per-share for small caps, says Jason Pride of Glenmede; Short-sellers have been taken by surprise by the post-election rally, and don't seem as if they're going to fight the new upward trend for now; Cautious on AXP: Card company has lagged in boosting its rewards program and could be squeezed by a trend in which consumers are paying off their balances each month.
Interview: Larry Jeddeloh, founder of TIS Group and publisher of the firm's Institutional Strategist newsletter, likes pipelines, defense stocks, and the dollar, and is betting against 10-year Treasuries (picks: UUP, ENB, ETP, ITA, GD, TBF).
Small Caps: Positive on TRCO: Chicago-based broadcaster took a hit because of a drop in political advertising during the presidential election, but the company is asset-rich, the market doesn't appear to appreciate the value of its properties-and its asset value could be twice its current share price.
Follow-Up:
1) Cautious on PG: Company has narrowed its focus with the sale of many of its brands, but the shares, which are up since last November, could stall if these efforts don't prove sufficient, and investors may want to take profits;
2) Puerto Rico's new governor, Ricardo Rossello, is viewed on Wall Street as a serious leader who wants to put the island on stronger financial footing, and his efforts to restructure its debt could benefit municipal bond holders.
European Trader: Italy's December 4 constitutional referendum-which seeks to strip the upper house of much of its power-could fail, leading to the fall of prime minister Matteo Renzi's government, which would endanger banks and put more pressure on the plummeting euro.
Asian Trader: The execution of the Indian government's unprecedented decision to take 500- and 1,000-rupee notes out of circulation was badly flawed, a situation that could derail the country's growth next year.
Emerging Markets: A stronger dollar resulting from the election of Donald Trump means emerging market currencies are likely to weaken, traders will flee risky assets, and emerging-market stocks and bonds should get cheaper.
Commodities: The cotton market has been heating up as winter "sweater season" approaches, but prices are likely to drop amid a global oversupply that hasn't been dented by shortfalls in India and bad weather in China.
Streetwise: Sentiment is crucial to the way the market operates; the fact that it matters can be seen in a recent CivicScience consumer survey, which found that American voters changed their holiday-gift plans after the election.
Cover story: Donald Trump's proposal to slash the corporate tax rate form 35% to 15% might be too much, since it could significantly reduce the government's tax haul and add to the country's large debt burden, but a cut to 22% would be revenue-neutral, allowing businesses to produce just enough additional taxable income to offset the effect of the lower rate.
Features:
1) Profile of Michael Petry, chief portfolio manager for Danske Invest Hedge Fixed Income Strategies, believes global bond investors will have to navigate markets in which more interest-rate hikes will follow the one likely to occur in December;
2) Positive on BHI: The logic behind Baker Hughes' planned merger with GE's oil-and-gas unit makes sense, and could set up the new company-which would be less tied to oil-price cycles-to profit as energy prices rise;
3) Under a Trump administration, more merger deals are likely to succeed, and M&A arbitrate could remain a profitable investment strategy, yielding annualized double-digit percentage returns;
4) Positive on MGM: Company stands to benefit from Las Vegas' move to diversify beyond gambling into areas such as entertainment and professional sports, and it should continue to see strong earnings and cash flow.
Tech Trader: Positive on PSTG, NMBL, NTNX: Promising flash-based data-storage-equipment vendors could be takeover targets for larger tech companies that are falling behind in innovation, such as HPE and CSCO; VEEV, TEAM, and NOW could also be of interest to bigger rivals.
Trader: A cut of six to seven percentage points in corporate tax rates should result in a 10% increase in earnings-per-share for small caps, says Jason Pride of Glenmede; Short-sellers have been taken by surprise by the post-election rally, and don't seem as if they're going to fight the new upward trend for now; Cautious on AXP: Card company has lagged in boosting its rewards program and could be squeezed by a trend in which consumers are paying off their balances each month.
Interview: Larry Jeddeloh, founder of TIS Group and publisher of the firm's Institutional Strategist newsletter, likes pipelines, defense stocks, and the dollar, and is betting against 10-year Treasuries (picks: UUP, ENB, ETP, ITA, GD, TBF).
Small Caps: Positive on TRCO: Chicago-based broadcaster took a hit because of a drop in political advertising during the presidential election, but the company is asset-rich, the market doesn't appear to appreciate the value of its properties-and its asset value could be twice its current share price.
Follow-Up:
1) Cautious on PG: Company has narrowed its focus with the sale of many of its brands, but the shares, which are up since last November, could stall if these efforts don't prove sufficient, and investors may want to take profits;
2) Puerto Rico's new governor, Ricardo Rossello, is viewed on Wall Street as a serious leader who wants to put the island on stronger financial footing, and his efforts to restructure its debt could benefit municipal bond holders.
European Trader: Italy's December 4 constitutional referendum-which seeks to strip the upper house of much of its power-could fail, leading to the fall of prime minister Matteo Renzi's government, which would endanger banks and put more pressure on the plummeting euro.
Asian Trader: The execution of the Indian government's unprecedented decision to take 500- and 1,000-rupee notes out of circulation was badly flawed, a situation that could derail the country's growth next year.
Emerging Markets: A stronger dollar resulting from the election of Donald Trump means emerging market currencies are likely to weaken, traders will flee risky assets, and emerging-market stocks and bonds should get cheaper.
Commodities: The cotton market has been heating up as winter "sweater season" approaches, but prices are likely to drop amid a global oversupply that hasn't been dented by shortfalls in India and bad weather in China.
Streetwise: Sentiment is crucial to the way the market operates; the fact that it matters can be seen in a recent CivicScience consumer survey, which found that American voters changed their holiday-gift plans after the election.
Saturday, November 19, 2016
Barron's weekend update
Barron's weekend update: positive on KMX
Cover story: To help support his administration's ambitious spending and tax-cut plans at a time when the nation faces massive debt, Donald Trump may want to consider issuing Treasury bonds for the longest possible term, perhaps 100 years, as some other countries have done.
Features:
1) In the wake of Donald Trump's victory, bonds have sold off sharply, making prices more attractive for a variety of municipal-bond close- and open-end funds, taxable closed-ends, and preferred stocks;
2) Positive on KMX: Country's largest used-car seller is likely to benefit from dropping prices for used cars and a flood of off-lease vehicles about to hit the market; shares could see 20% upside;
3) Cautious on YERR: Company has secured $1B in financing from U.S. conglomerate Amanda Enterprises, but investors should be wary of the suspect track record of its CEO, George Wight.
Tech Trader: Positive on Tectonic Audio Labs: Washington-based startup has developed a technology for small speakers that can produce brilliantly clear sound, which could help the streaming-music sector.
Trader: The combination of better jobless claims and retail sales numbers with Donald Trump's stimulus plan could drive economic growth up by 3% or more in Q4; Small-cap stocks may slow down a bit after a recent rally, but they could outperform large-caps in the next year; Positive on UAL: Shares of the airline look to be the strongest in its sector based on fundamentals, and operating profit margins should continue to rise because of reduced costs and better hub management.
Profile: Danton Goei, manager of the Davis Globalfund, is concentrated, with 54 holdings versus more than 2,000 for its benchmark (top 10 holdings: AMZN, GOOGL, Encana, APA, Berkshire Hathaway, WFC, Naspers, Did Chuxing Series A, JPM, JD). Barron's Roundtable: Four top investors-Phil Blancato of Ladenburg Thalmann Asset Management, Bill Roach of Globalt Investments, Keith Goddard of Capital Advisors, and Ben Johnson of Morningstar - say investors will continue to face the same big issues even under a Trump administration.
Small Caps: Positive on ATRO: Shares of aerospace-parts maker are down because of problems at an ancillary unit, giving investors a chance to take advantage of the weakness.
Follow-Up: Positive on NVDA, AMD: Shares of chip makers are benefiting from the companies' growing strength in the cloud market and have more upside, while earlier optimism about MU has yet to pan out; Positive on HAR: Samsung's acquisition of the dashboard electronics company implies a 5% annualized return for Harman investors who hold on to their shares; Positive on SAVE: Shares still have 20% upside as new chief executive Robert Fornaro continues to make changes.
European Trader: "Technology stocks have fallen out of favor in Europe in recent weeks, but the sector still offers value for long-term investors," and shares such as Temenos, SAP, and Legrand are good long-term plays.
Asian Trader: CS global chief investment officer Michael Strobaek says Australian shares are reasonably priced, and that it isn't fair to call China a currency manipulator.
Emerging Markets: In the long term, Turkey can expand its export base, and the weak Turkish lira only helps on that score.
Commodities: The prolonged bear market in corn could soon end, because supply may be reaching a peak while demand is still growing.
Streetwise: Donald Trump's election notwithstanding, "the dynamics that keep Treasury yields low haven't gone away. Inflation can't be willed into existence."
Cover story: To help support his administration's ambitious spending and tax-cut plans at a time when the nation faces massive debt, Donald Trump may want to consider issuing Treasury bonds for the longest possible term, perhaps 100 years, as some other countries have done.
Features:
1) In the wake of Donald Trump's victory, bonds have sold off sharply, making prices more attractive for a variety of municipal-bond close- and open-end funds, taxable closed-ends, and preferred stocks;
2) Positive on KMX: Country's largest used-car seller is likely to benefit from dropping prices for used cars and a flood of off-lease vehicles about to hit the market; shares could see 20% upside;
3) Cautious on YERR: Company has secured $1B in financing from U.S. conglomerate Amanda Enterprises, but investors should be wary of the suspect track record of its CEO, George Wight.
Tech Trader: Positive on Tectonic Audio Labs: Washington-based startup has developed a technology for small speakers that can produce brilliantly clear sound, which could help the streaming-music sector.
Trader: The combination of better jobless claims and retail sales numbers with Donald Trump's stimulus plan could drive economic growth up by 3% or more in Q4; Small-cap stocks may slow down a bit after a recent rally, but they could outperform large-caps in the next year; Positive on UAL: Shares of the airline look to be the strongest in its sector based on fundamentals, and operating profit margins should continue to rise because of reduced costs and better hub management.
Profile: Danton Goei, manager of the Davis Globalfund, is concentrated, with 54 holdings versus more than 2,000 for its benchmark (top 10 holdings: AMZN, GOOGL, Encana, APA, Berkshire Hathaway, WFC, Naspers, Did Chuxing Series A, JPM, JD). Barron's Roundtable: Four top investors-Phil Blancato of Ladenburg Thalmann Asset Management, Bill Roach of Globalt Investments, Keith Goddard of Capital Advisors, and Ben Johnson of Morningstar - say investors will continue to face the same big issues even under a Trump administration.
Small Caps: Positive on ATRO: Shares of aerospace-parts maker are down because of problems at an ancillary unit, giving investors a chance to take advantage of the weakness.
Follow-Up: Positive on NVDA, AMD: Shares of chip makers are benefiting from the companies' growing strength in the cloud market and have more upside, while earlier optimism about MU has yet to pan out; Positive on HAR: Samsung's acquisition of the dashboard electronics company implies a 5% annualized return for Harman investors who hold on to their shares; Positive on SAVE: Shares still have 20% upside as new chief executive Robert Fornaro continues to make changes.
European Trader: "Technology stocks have fallen out of favor in Europe in recent weeks, but the sector still offers value for long-term investors," and shares such as Temenos, SAP, and Legrand are good long-term plays.
Asian Trader: CS global chief investment officer Michael Strobaek says Australian shares are reasonably priced, and that it isn't fair to call China a currency manipulator.
Emerging Markets: In the long term, Turkey can expand its export base, and the weak Turkish lira only helps on that score.
Commodities: The prolonged bear market in corn could soon end, because supply may be reaching a peak while demand is still growing.
Streetwise: Donald Trump's election notwithstanding, "the dynamics that keep Treasury yields low haven't gone away. Inflation can't be willed into existence."
Friday, November 18, 2016
Post-Election Reflation Trade Continues
TradeTheNews.com Weekly
Market Update: Post-Election Reflation Trade Continues
Fri, 18 Nov 2016 16:04 PM EST
The post US election money flows largely extended into a second week, but moderation was seen across various sectors and asset classes. The Trump reflation trade continued to push interest rates higher and was aided by economic data and Federal Reserve commentary that essentially clinched a rate hike is coming at next month's monetary policy meeting. Outside of the chatter surrounding the President-elect's rumored cabinet picks, the question markets shifted most of their focus onto was just how many more hikes could follow in 2017. Against that backdrop the US benchmark 10-year yield rose above 2.3% for the first time since ealry 2015. The spread over the comparable German 10-year yield widened to levels not seen since the late 1980's. The US Dollar continued to surge, particularly against emerging market currencies, including another 1% move against the Chinese Yuan this week. Currency traders prepared for seasonal FX liquidity to ebb which could allow for further aggressive moves. The Euro is within striking distance of the post financial crisis low of 1.0460 and after that potentially parity. Japan's Nikkei touched a fresh 10-month high powered by the USD/JPY which rose to a level not seen since June. WTI crude futures bounced 6% off a Monday low to surpass $46 as producers met in Doha on Friday and by most accounts remained adamant an output deal will be reached by the November 30th meeting.
The Dow Jones Industrial average largely traded sideways, consolidating the outsized move into banks and financials since the election. Transports have traded up 15 of the last 18 sessions, emboldening bullishness by Dow theorists. The rotation into small caps continued, exhibited by the Russell 2000 which bumped up against lifetime highs at 1313. The NASDAQ saw money slosh back to many of the large cap tech names that so severely underperformed in the wake of the Trump victory and thus the overall index played a bit of catch up. The S&P encountered some resistance just below new all-time highs as traders try to handicap just how much and how fast Trump's pro-growth agenda can be enacted. Corporate bond issuance picked up to the most active levels in a couple weeks spurred by the move up in rates along with the calendar. For the week, the DJIA gained 0.1%, the S&P500 rose 0.8%, and the Nasdaq added 1.6%.
The last of the major quarterly earnings reports continued to paint a mixed picture. Cisco Systems reported solid results but shares dropped 5% after guiding next quarter down on lower spending by service provider customers. Shares of Home Depot and Lowe's fell after their earnings reports and Lowe's cuts its guidance for the year. Discount retailer TJX beat expectations and raised guidance, sending shares to their best level in two months. On the M&A front, Samsung jumped into the automotive technology segment with the $8 billion acquisition of Harman International.
SUNDAY 11/13
(JP) JAPAN Q3 PRELIMINARY GDP Q/Q: 0.5% (matches 6-quarter high) V 0.2%E; ANNUALIZED GDP Q/Q: 2.2% (6-quarter high) V 0.8%E
MONDAY 11/14
HAR: To be acquired by Samsung Electronics for $112/shr cash; deal valued at $8.0B
(RU) Kremlin spokesperson: Russia President Putin and President-elect Trump agree on phone call that Russia-US relations are unsatisfactory, aim to normalize relationship - Russia press
TUESDAY 11/15
(UK) Govt said to have no common Brexit strategy due to divisions within Cabinet - financial press (DE) GERMANY Q3 PRELIMINARY GDP Q/Q: 0.2% V 0.3%E; Y/Y: 1.7% V 1.8%E; GDP NSA Y/Y: 1.5% V 1.6%E
VOD.UK: Reports H1 EBITDA €7.91B v €8.04B y/y, Rev €27.1B v €28.2B y/y, Organic Service Revenue Growth: +2.4% y/y
(UK) OCT PPI INPUT M/M: 4.6% V 2.0%E; Y/Y: 12.2% V 9.3%E
(EU) EURO ZONE Q3 PRELIMINARY GDP Q/Q: 0.3% V 0.3%E; Y/Y: 1.6% V 1.6%E (2nd reading of data)
(DE) GERMANY NOV ZEW CURRENT SITUATION SURVEY: 58.8 V 61.6E; EXPECTATIONS SURVEY: 13.8 V 8.1E
HD: Reports Q3 $1.60 v $1.58e, R$23.2B v $23.0Be
(US) OCT IMPORT PRICE INDEX M/M: 0.5% V 0.4%E; Y/Y: -0.2% V -0.3%E
(US) OCT ADVANCE RETAIL SALES M/M: 0.8% V 0.6%E ; RETAIL SALES EX AUTO M/M: 0.8% V 0.5%E
TJX: Reports Q3 $0.91 v $0.87e, R$8.29B v $8.27Be
(US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 3.3% from 3.1% on Nov 9th
WEDNESDAY 11/16
700.HK: Reports Q3 Net CNY10.6B v CNY10.7Be, Rev CNY40.4B v CNY26.6B y/y
(UK) SEPT ILO UNEMPLOYMENT RATE 3M/3M: 4.8% V 4.9%E
(UK) OCT JOBLESS CLAIMS CHANGE: 9.8K V +2.0KE; CLAIMANT COUNT RATE: 2.3% V 2.3%E
(US) OCT PPI FINAL DEMAND M/M: 0.0% V 0.3%E; Y/Y: 0.8% V 1.2%E
(US) OCT INDUSTRIAL PRODUCTION M/M: 0.0% V 0.2%E; CAPACITY UTILIZATION: 75.3% V 75.5%E
(US) NOV NAHB HOUSING MARKET INDEX: 63 V 63E
(US) Association of American Railroads weekly rail traffic report for week ending Nov 12th: 541.1K carloads and intermodal units, -0.5% y/y
CSCO: Reports Q1 $0.61 v $0.59e, R$12.4B v $12.3Be
(JP) BOJ CONDUCTS FIXED-RATE JGB PURCHASE OPERATION (1st time under new policy framework) FOR JGBs WITH 1-5 YEAR MATURITIES
THURSDAY 11/17
(ID) INDONESIA CENTRAL BANK (BI) LEAVES 7-DAY REVERSE REPO UNCHANGED AT 4.75%, AS EXPECTED
(UK) OCT RETAIL SALES EX AUTO FUEL M/M: 2.0% V 0.4%E; Y/Y: 7.6% V 5.4%E
(UK) OCT RETAIL SALES INC AUTO FUEL M/M: 1.9% V 0.5%E; Y/Y: 7.4% V 5.3%E (highest annual pace since 2002)
(EU) EURO ZONE OCT CPI M/M: 0.2% V 0.3%E; Y/Y (FINAL): 0.5% V 0.5%E; CPI CORE Y/Y (FINAL): 0.8% V 0.8%E
BBY: Reports Q3 $0.62 v $0.47e, R$8.95B v $8.84Be
(US) OCT CPI M/M: 0.4% V 0.4%E; CPI EX FOOD AND ENERGY M/M: 0.1% V 0.2%E; CPI NSA INDEX: 241.729 V 241.785E
(US) INITIAL JOBLESS CLAIMS: 235K (lowest since 1973) V 257KE; CONTINUING CLAIMS: 1.98M V 2.03ME (lowest since 2000)
(US) OCT HOUSING STARTS: 1.323M V 1.156ME; BUILDING PERMITS: 1.229M V 1.193ME
(US) NOV PHILADELPHIA FED BUSINESS OUTLOOK: 7.6 V 7.8E
(US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 3.6% from 3.3% on Nov 15th
(MX) MEXICO CENTRAL BANK (BANXICO) RAISES OVERNIGHT RATE BY 50BPS TO 5.25%; AS EXPECTED
(CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 3.50%; AS EXPECTED
AMAT: Reports Q4 $0.66 v $0.66e, R$3.30B v $3.31Be
CRM: Reports Q3 $0.24 v $0.21e, R$2.14B v $2.12Be
GPS: Reports Q3 $0.60 v $0.59e, R$3.80B v $3.77Be
(CN) CHINA OCT PROPERTY PRICES M/M: RISE IN 62 OUT OF 70 CITIES VS 63 PRIOR; Y/Y: RISE IN 65 OUT OF 70 CITIES V 64 PRIOR
FRIDAY 11/18
(IR) Iran OPEC Gov Kazempour: Remains optimistic for an OPEC deal after talks with Russia
(IQ) Iraq Oil Min Luaibi: optimistic OPEC will clinch output deal; differences are narrowing over OPEC output data - press
(US) New York Fed Nowcast: raises Q4 GDP forecast to 2.4% from 1.6% on 11/4
Fri, 18 Nov 2016 16:04 PM EST
The post US election money flows largely extended into a second week, but moderation was seen across various sectors and asset classes. The Trump reflation trade continued to push interest rates higher and was aided by economic data and Federal Reserve commentary that essentially clinched a rate hike is coming at next month's monetary policy meeting. Outside of the chatter surrounding the President-elect's rumored cabinet picks, the question markets shifted most of their focus onto was just how many more hikes could follow in 2017. Against that backdrop the US benchmark 10-year yield rose above 2.3% for the first time since ealry 2015. The spread over the comparable German 10-year yield widened to levels not seen since the late 1980's. The US Dollar continued to surge, particularly against emerging market currencies, including another 1% move against the Chinese Yuan this week. Currency traders prepared for seasonal FX liquidity to ebb which could allow for further aggressive moves. The Euro is within striking distance of the post financial crisis low of 1.0460 and after that potentially parity. Japan's Nikkei touched a fresh 10-month high powered by the USD/JPY which rose to a level not seen since June. WTI crude futures bounced 6% off a Monday low to surpass $46 as producers met in Doha on Friday and by most accounts remained adamant an output deal will be reached by the November 30th meeting.
The Dow Jones Industrial average largely traded sideways, consolidating the outsized move into banks and financials since the election. Transports have traded up 15 of the last 18 sessions, emboldening bullishness by Dow theorists. The rotation into small caps continued, exhibited by the Russell 2000 which bumped up against lifetime highs at 1313. The NASDAQ saw money slosh back to many of the large cap tech names that so severely underperformed in the wake of the Trump victory and thus the overall index played a bit of catch up. The S&P encountered some resistance just below new all-time highs as traders try to handicap just how much and how fast Trump's pro-growth agenda can be enacted. Corporate bond issuance picked up to the most active levels in a couple weeks spurred by the move up in rates along with the calendar. For the week, the DJIA gained 0.1%, the S&P500 rose 0.8%, and the Nasdaq added 1.6%.
The last of the major quarterly earnings reports continued to paint a mixed picture. Cisco Systems reported solid results but shares dropped 5% after guiding next quarter down on lower spending by service provider customers. Shares of Home Depot and Lowe's fell after their earnings reports and Lowe's cuts its guidance for the year. Discount retailer TJX beat expectations and raised guidance, sending shares to their best level in two months. On the M&A front, Samsung jumped into the automotive technology segment with the $8 billion acquisition of Harman International.
SUNDAY 11/13
(JP) JAPAN Q3 PRELIMINARY GDP Q/Q: 0.5% (matches 6-quarter high) V 0.2%E; ANNUALIZED GDP Q/Q: 2.2% (6-quarter high) V 0.8%E
MONDAY 11/14
HAR: To be acquired by Samsung Electronics for $112/shr cash; deal valued at $8.0B
(RU) Kremlin spokesperson: Russia President Putin and President-elect Trump agree on phone call that Russia-US relations are unsatisfactory, aim to normalize relationship - Russia press
TUESDAY 11/15
(UK) Govt said to have no common Brexit strategy due to divisions within Cabinet - financial press (DE) GERMANY Q3 PRELIMINARY GDP Q/Q: 0.2% V 0.3%E; Y/Y: 1.7% V 1.8%E; GDP NSA Y/Y: 1.5% V 1.6%E
VOD.UK: Reports H1 EBITDA €7.91B v €8.04B y/y, Rev €27.1B v €28.2B y/y, Organic Service Revenue Growth: +2.4% y/y
(UK) OCT PPI INPUT M/M: 4.6% V 2.0%E; Y/Y: 12.2% V 9.3%E
(EU) EURO ZONE Q3 PRELIMINARY GDP Q/Q: 0.3% V 0.3%E; Y/Y: 1.6% V 1.6%E (2nd reading of data)
(DE) GERMANY NOV ZEW CURRENT SITUATION SURVEY: 58.8 V 61.6E; EXPECTATIONS SURVEY: 13.8 V 8.1E
HD: Reports Q3 $1.60 v $1.58e, R$23.2B v $23.0Be
(US) OCT IMPORT PRICE INDEX M/M: 0.5% V 0.4%E; Y/Y: -0.2% V -0.3%E
(US) OCT ADVANCE RETAIL SALES M/M: 0.8% V 0.6%E ; RETAIL SALES EX AUTO M/M: 0.8% V 0.5%E
TJX: Reports Q3 $0.91 v $0.87e, R$8.29B v $8.27Be
(US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 3.3% from 3.1% on Nov 9th
WEDNESDAY 11/16
700.HK: Reports Q3 Net CNY10.6B v CNY10.7Be, Rev CNY40.4B v CNY26.6B y/y
(UK) SEPT ILO UNEMPLOYMENT RATE 3M/3M: 4.8% V 4.9%E
(UK) OCT JOBLESS CLAIMS CHANGE: 9.8K V +2.0KE; CLAIMANT COUNT RATE: 2.3% V 2.3%E
(US) OCT PPI FINAL DEMAND M/M: 0.0% V 0.3%E; Y/Y: 0.8% V 1.2%E
(US) OCT INDUSTRIAL PRODUCTION M/M: 0.0% V 0.2%E; CAPACITY UTILIZATION: 75.3% V 75.5%E
(US) NOV NAHB HOUSING MARKET INDEX: 63 V 63E
(US) Association of American Railroads weekly rail traffic report for week ending Nov 12th: 541.1K carloads and intermodal units, -0.5% y/y
CSCO: Reports Q1 $0.61 v $0.59e, R$12.4B v $12.3Be
(JP) BOJ CONDUCTS FIXED-RATE JGB PURCHASE OPERATION (1st time under new policy framework) FOR JGBs WITH 1-5 YEAR MATURITIES
THURSDAY 11/17
(ID) INDONESIA CENTRAL BANK (BI) LEAVES 7-DAY REVERSE REPO UNCHANGED AT 4.75%, AS EXPECTED
(UK) OCT RETAIL SALES EX AUTO FUEL M/M: 2.0% V 0.4%E; Y/Y: 7.6% V 5.4%E
(UK) OCT RETAIL SALES INC AUTO FUEL M/M: 1.9% V 0.5%E; Y/Y: 7.4% V 5.3%E (highest annual pace since 2002)
(EU) EURO ZONE OCT CPI M/M: 0.2% V 0.3%E; Y/Y (FINAL): 0.5% V 0.5%E; CPI CORE Y/Y (FINAL): 0.8% V 0.8%E
BBY: Reports Q3 $0.62 v $0.47e, R$8.95B v $8.84Be
(US) OCT CPI M/M: 0.4% V 0.4%E; CPI EX FOOD AND ENERGY M/M: 0.1% V 0.2%E; CPI NSA INDEX: 241.729 V 241.785E
(US) INITIAL JOBLESS CLAIMS: 235K (lowest since 1973) V 257KE; CONTINUING CLAIMS: 1.98M V 2.03ME (lowest since 2000)
(US) OCT HOUSING STARTS: 1.323M V 1.156ME; BUILDING PERMITS: 1.229M V 1.193ME
(US) NOV PHILADELPHIA FED BUSINESS OUTLOOK: 7.6 V 7.8E
(US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 3.6% from 3.3% on Nov 15th
(MX) MEXICO CENTRAL BANK (BANXICO) RAISES OVERNIGHT RATE BY 50BPS TO 5.25%; AS EXPECTED
(CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 3.50%; AS EXPECTED
AMAT: Reports Q4 $0.66 v $0.66e, R$3.30B v $3.31Be
CRM: Reports Q3 $0.24 v $0.21e, R$2.14B v $2.12Be
GPS: Reports Q3 $0.60 v $0.59e, R$3.80B v $3.77Be
(CN) CHINA OCT PROPERTY PRICES M/M: RISE IN 62 OUT OF 70 CITIES VS 63 PRIOR; Y/Y: RISE IN 65 OUT OF 70 CITIES V 64 PRIOR
FRIDAY 11/18
(IR) Iran OPEC Gov Kazempour: Remains optimistic for an OPEC deal after talks with Russia
(IQ) Iraq Oil Min Luaibi: optimistic OPEC will clinch output deal; differences are narrowing over OPEC output data - press
(US) New York Fed Nowcast: raises Q4 GDP forecast to 2.4% from 1.6% on 11/4
Monday, November 14, 2016
November-December 2016 Outlook: Trumping All Expectations
November-December
2016 Outlook: Trumping All Expectations
Mon, 14 Nov 2016 13:22 PM EST
After the shocking Brexit vote result this summer markets were a little better hedged for the surprise Trump victory, but it was still astonishing to see the pollsters get it so wrong again. Instead of four more years of the same government gridlock in Washington, the prospect of a united US government initially raised hopes that a pro-business agenda could emerge. For the time being, markets have ignored the "temperament" issue and the question of whether a President Trump will remain a maverick or go along with the Republican Congress that shunned him during the entire campaign.
In the immediate aftermath of the surprise Trump victory, interest rates rose and stocks moved back toward record highs on optimism that the US will have functional government that that President Trump will keep an an even keel. In the days since the election, Mr. Trump has been more subdued than he was on the campaign trail and has so far kept his famous outbursts in check. Between now and his inauguration in January, every move he makes will be closely scrutinized, and other major world events will have to be viewed through a prism of how the new Administration might react to it. Uncertainty will persist for months to come until the Trump White House starts to fall into a clear pattern. Until then it won't be clear as to whether Trump will flout the Washington establishment (after all, Trump's mandate was to dismantle the old order in Washington and he ran against the establishment of BOTH parties) or if he will quickly fall in line with Republican orthodoxy in order to get a pro-growth, anti-regulation agenda passed quickly.
Early indications will come from Trump's choices to fill top posts. The first big tell may be the selection for Chief of Staff which is coming down to Republican National Committee Chairman Reince Priebus or Steve Bannon, the Trump campaign CEO and executive chairman of the "alt-right" Breitbart News. Choosing Priebus to be his closest White House advisor would give Republicans some assurance that the new President wants to work with them, while naming Bannon to the position would be another shot across the bow of the establishment [Update: press reports now say Priebus will be chief of staff, but Bannon will be kept on call as "chief strategist"] . Another question is whether Trump will push his own legislative agenda or if he will allow Congress to set the tone. If Trump is content with just being a figurehead for the "Make American Great Again" movement, the Congress may run roughshod over the White House.
Trump has stated his early focus will be on three top priorities: health care, border control, and jobs. Congress seems likely to support a long-overdue spending on infrastructure and jobs growth, and Republicans will help pass legislation on immigration, healthcare, and tax reform, including a tax holiday for repatriation of corporate earnings from overseas. Republicans will also welcome the Trump Administration rolling back numerous executive orders that President Obama used to implement environmental regulations and other policies that could not be squeezed through the obstructionist Congress.
Trump may come into conflict with the GOP establishment when it comes to trade policy, where the Administration has a lot of authority that is independent of Congress. His election mandate was largely built on vague promises to renegotiate trade deals including NAFTA which could put the new Administration in direct conflict with a Republican Party establishment that overwhelmingly supports free trade. The President-elect's pledge to name China a currency manipulator "on day one" could also draw focus away from the domestic agenda. In response to the Trump victory, China's vice finance minister Shi calculating stated that it remains to be seen if Trump will implement his campaign rhetoric and that the president-elect should be aware of the benefits of economic cooperation with China. If Trump delivers on his protectionist rhetoric, markets could shudder at the prospect of a trade war damaging the global economy. He could also make waves for individual companies that move production jobs overseas by imposing tariffs on goods that they produce outside of the US. Fiscal conservatives may also cringe at efforts by the Trump Administration to finance big spending projects.
Populism Trumps Polls
The early days of the Trump Administration will coincide with the next phase of the UK's Brexit drama. The Bank of England has just diminished uncertainty about its policy future, but that was offset by new uncertainties about the Brexit process. Shortly before the November policy meeting, BOE Governor Carney turned aside speculation that he might resign early and instead announced that he would stay on through 2019 to guide the central bank through the entire Brexit process. Then at the meeting, the policy committee essentially stated that it had taken the prospect of another rate hike off the table.
The same day, the mechanics of the Brexit were thrown into question as a UK court ruled that the Parliament should have a say in the government's plans for disentangling itself from the EU, raising the prospects for a "soft Brexit" which would retain certain agreements with the EU including adherence to free movement of people rules. Specifically the court said the government must get Parliamentary approval to invoke Article 50 which triggers the two-year process of leaving the EU.
Members of the May government have increasingly hinted that they'll push for a "hard Brexit" that would allow the UK to control immigration from the European Union, even if that means giving up membership of the European common market. The government is in the process of appealing ruling on Parliamentary oversight to the nation's highest judicial body and a decision is anticipated before the year end. If that timeframe stays true, the government has said it will remain on track to invoke Article 50 by the end of March.
Some political observers are concerned that starting the Brexit process in March will play into the hands of populists across Europe, whose fortunes appear to be on the rise after the votes on Brexit and the US Presidency. France and Germany will hold national elections in 2017 - France in the spring and Germany probably in late September. In France, Marine Le Pen and her National Front (FN) are running competitively with the candidates of the two traditional leading parties, positioning the anti-immigrant populist to be one of the two choices in the run- off election for President in May. Meanwhile in Germany, the right wing populist and euroskeptic Alternative for Germany (AfD) is poised to gain seats in Bundestag for the first time after running strong in several state elections this year.
OPEC Self-Interest Trumps Cooperation
Outside of rise of populist politics, probably the biggest uncertainty in the weeks ahead is the fate of the "oil freeze" deal that was tentatively agreed upon in Algiers a month ago. That preliminary agreement helped oil prices get back above $50/bbl for a time, but the price has eroded again as OPEC members continue to bicker over who should participate in a freeze or cut, and as non-OPEC producers have also wavered. With just a few weeks to go before the November 30th semi-annual OPEC meeting that was to usher in the finalized production deal, market watchers are starting to lay odds against a final accord being enacted.
As the case has been since the oil freeze idea was conceived, the main tension has been between Saudi Arabia's block of Gulf producers and Iran, which wants to recoup all of the market share it lost due to anti-nuclear sanctions. Technical level meetings over the last few weeks have not achieved a breakthrough, though more meetings are scheduled. It's clear the frustration level is high, exemplified by a press leak that suggested the Gulf nations threatened to INCREASE production if Iran didn't get on board with plan (that threat was later walked back to a suggestion that the Gulf producers would shift capacity to "meet market demand"). For its part, Iran's oil minister just recently commented that it does not see November 30th as a hard deadline for reaching an accord, calling into doubt whether producers can come to an agreement at all this year.
Given these circumstances, there is a good chance the freeze deal will not come to pass, or at least get delayed. In that case WTI crude could easily sink back to the low $30s, dragging down the energy sector with it and taking some more air out of equities. It could also give headaches to central banks that had been elated to see the downward inflation pressure exerted by low oil prices finally abating over the spring and summer.
Fed Tightening Finally Trumps Accommodation
The US Fed is hoping that inflation will continue to rise enough to justify another rate hike. The December 14 FOMC meeting will be a crucial moment for Fed credibility. When the Fed raised rates last December the dot plot projections suggested there could be FOUR rate hikes during the course of 2016. Since then, the Fed has found excuses to keep rates on hold, ranging from stagnant growth in Q1, to the Brexit uncertainty over the summer. By intimating for the last year that the next rate hike is coming soon, the Fed has lost a lot of the benefits of keeping rate policy unchanged for the last 10 months, and it would be a major blow to the Fed's reputation if it holds off on a rate hike yet again in December.
Additionally, the voting membership will change after the December meeting - in 2017 all three of the recent hawkish dissenters will rotate out and will be replaced by a decidedly more moderate group of Fed presidents. Chair Yellen has already indicated a willingness to let the economy "run hot," so as long as there is no sign of runaway inflation, the Fed may be even more reluctant to raise rates next year.
The November statement edged the Fed closer to a December rate hike, announcing that the case for a hike "continued" to strengthen. But until the FOMC actually pulls the trigger on another 25 basis point move, markets are right to be skeptical of hawkish signals. Though some Fed watchers may be worried that the 'era of cheap money' is over, the promise of a "gradual pace" of rate hikes may well mean that the market opinion starts coalescing around the one-and-done rate hike view of St Louis Fed President Bullard. So far, markets have been unperturbed by the prospect of a December rate hike, and may even take it as positive development if the Fed framed the hike as a vote of confidence in the economy.
The Trump Administration will also exert some influence on the Fed. Trump has been broadly critical of the Fed and said earlier this year that he wants to replace Chair Yellen because she is political and "not a Republican," though he also declared that both she and he are "low rates" people. Unless the Chair chooses to tender her resignation and triggers an earlier succession, the new President will have the option to name a replacement at the end of Yellen's term in early 2018. In the meantime, two vacancies on the seven-member board of governors will allow Trump to put his imprint on the Fed immediately.
The Republican controlled Congress may also try to persuade Trump to support legislation to reform the central bank. Last year the House passed a bill that would require the Fed to set a policy rule, and the 2016 GOP party platform called for an annual audit of interest rate decisions. The central bank has argued that the 'audit the Fed' legislation would put undue political pressure on monetary policy decisions, but that may just be the new reality in the era of America's first modern populist president.
CALENDAR
NOVEBMER
1: UK Manufacturing PMI; US ISM Manufacturing PMI
2: UK Construction PMI; FOMC policy statement; China Caixin Services PMI
3: UK Services PMI; BOE policy statement; US ISM Manufacturing; US Factory Orders
4: US Payrolls & Unemployment
7: German Factory Orders; China Trade Balance (tentative)
8: Japan Current Account; China CPI & PPI; US ELECTION DAY
9: UK Manufacturing Production; US JOLTS Jobs Openings
10:
11: US Prelim University of Michigan Sentiment
13: China Industrial Production; Japan Prelim Q3 GDP
14:
15: UK CPI & PPI; Euro Zone Prelim Q3 GDP; German ZEW Economic Sentiment; US Retail Sales
16: UK Claimant Count & Unemployment; US PPI; US Industrial Production & Capacity Utilization
17: UK Retail Sales; Euro Zone Final CPI; ECB Minutes; US Housing Starts & Building Permits; US CPI; Philadelphia Fed Manufacturing Index
18:
21: Various Euro Zone Manufacturing & Services PMIs
22: US Existing Home Sales
23: US Durable Goods Orders; US New Home Sales; FOMC Minutes
24: German Ifo Business Climate; Tokyo Core CPI; US THANKSGIVING HOLIDAY
25: UK Q3 GDP Second Estimate
28: Japan Household Spending
29: German Unemployment; BOE Financial Stability Report; US Prelim Q3 GDP; US Consumer Confidence
30: OPEC Semi-Annual Meeting; German Retail Sales; Euro Zone Prelim CPI Estimate; US Personal Income & Spending; Chicago PMI; China Manufacturing & Non-Manufacturing PMIs; China Caixin Manufacturing PMI
DECEMBER
1: UK Bank Stress Test Results; UK Manufacturing PMI; US ISM Manufacturing PMI
2: UK Construction PMI; US Payrolls & Unemployment
4: Italy Referendum on Constitutional Reform; China Caixin Services PMI
5: UK Services PMI; US ISM Non-Manufacturing
6: German Factory Orders; US Trade Balance; US Factory Orders
7: UK Manufacturing Production; Japan Final Q3 GDP; China Trade Balance (tentative)
8: ECB Policy Statement & Press Conf; US JOLT Job Openings; China CPI & PPI
9: Prelim University of Michigan Sentiment
12: China Industrial Production
13: UK CPI & PPI; German ZEW Economic Sentiment; Japan Tankan Manufacturing & Non-Manufacturing Indices
14: UK Claimant Count & Unemployment; US Retail Sales; US PPI; US Industrial Production & Capacity Utilization; FOMC Policy Statement & Updated Economic Projections; FOMC press conference
15: UK Retail Sales; BOE Policy Statement; US CPI; Philadelphia Fed Manufacturing Index
16: Euro Zone Final CPI; US Housing Starts & Building Permits
18: BOJ Policy Statement (tentative)
19: German Ifo Business Climate
20:
21: Various Euro Zone Prelim Manufacturing & Services PMIs; US Existing Home Sales
22: US Final Q3 GDP; US Personal Spending
23: US Durable Goods Orders; US New Home Sales
26: Japan Household Spending; Tokyo Core CPI
27: UK Current Account; UK Final Q3 GDP; US Consumer Confidence
28:
29:
30: Chicago PMI
31: China Manufacturing & Non-Manufacturing PMIs
Mon, 14 Nov 2016 13:22 PM EST
After the shocking Brexit vote result this summer markets were a little better hedged for the surprise Trump victory, but it was still astonishing to see the pollsters get it so wrong again. Instead of four more years of the same government gridlock in Washington, the prospect of a united US government initially raised hopes that a pro-business agenda could emerge. For the time being, markets have ignored the "temperament" issue and the question of whether a President Trump will remain a maverick or go along with the Republican Congress that shunned him during the entire campaign.
In the immediate aftermath of the surprise Trump victory, interest rates rose and stocks moved back toward record highs on optimism that the US will have functional government that that President Trump will keep an an even keel. In the days since the election, Mr. Trump has been more subdued than he was on the campaign trail and has so far kept his famous outbursts in check. Between now and his inauguration in January, every move he makes will be closely scrutinized, and other major world events will have to be viewed through a prism of how the new Administration might react to it. Uncertainty will persist for months to come until the Trump White House starts to fall into a clear pattern. Until then it won't be clear as to whether Trump will flout the Washington establishment (after all, Trump's mandate was to dismantle the old order in Washington and he ran against the establishment of BOTH parties) or if he will quickly fall in line with Republican orthodoxy in order to get a pro-growth, anti-regulation agenda passed quickly.
Early indications will come from Trump's choices to fill top posts. The first big tell may be the selection for Chief of Staff which is coming down to Republican National Committee Chairman Reince Priebus or Steve Bannon, the Trump campaign CEO and executive chairman of the "alt-right" Breitbart News. Choosing Priebus to be his closest White House advisor would give Republicans some assurance that the new President wants to work with them, while naming Bannon to the position would be another shot across the bow of the establishment [Update: press reports now say Priebus will be chief of staff, but Bannon will be kept on call as "chief strategist"] . Another question is whether Trump will push his own legislative agenda or if he will allow Congress to set the tone. If Trump is content with just being a figurehead for the "Make American Great Again" movement, the Congress may run roughshod over the White House.
Trump has stated his early focus will be on three top priorities: health care, border control, and jobs. Congress seems likely to support a long-overdue spending on infrastructure and jobs growth, and Republicans will help pass legislation on immigration, healthcare, and tax reform, including a tax holiday for repatriation of corporate earnings from overseas. Republicans will also welcome the Trump Administration rolling back numerous executive orders that President Obama used to implement environmental regulations and other policies that could not be squeezed through the obstructionist Congress.
Trump may come into conflict with the GOP establishment when it comes to trade policy, where the Administration has a lot of authority that is independent of Congress. His election mandate was largely built on vague promises to renegotiate trade deals including NAFTA which could put the new Administration in direct conflict with a Republican Party establishment that overwhelmingly supports free trade. The President-elect's pledge to name China a currency manipulator "on day one" could also draw focus away from the domestic agenda. In response to the Trump victory, China's vice finance minister Shi calculating stated that it remains to be seen if Trump will implement his campaign rhetoric and that the president-elect should be aware of the benefits of economic cooperation with China. If Trump delivers on his protectionist rhetoric, markets could shudder at the prospect of a trade war damaging the global economy. He could also make waves for individual companies that move production jobs overseas by imposing tariffs on goods that they produce outside of the US. Fiscal conservatives may also cringe at efforts by the Trump Administration to finance big spending projects.
Populism Trumps Polls
The early days of the Trump Administration will coincide with the next phase of the UK's Brexit drama. The Bank of England has just diminished uncertainty about its policy future, but that was offset by new uncertainties about the Brexit process. Shortly before the November policy meeting, BOE Governor Carney turned aside speculation that he might resign early and instead announced that he would stay on through 2019 to guide the central bank through the entire Brexit process. Then at the meeting, the policy committee essentially stated that it had taken the prospect of another rate hike off the table.
The same day, the mechanics of the Brexit were thrown into question as a UK court ruled that the Parliament should have a say in the government's plans for disentangling itself from the EU, raising the prospects for a "soft Brexit" which would retain certain agreements with the EU including adherence to free movement of people rules. Specifically the court said the government must get Parliamentary approval to invoke Article 50 which triggers the two-year process of leaving the EU.
Members of the May government have increasingly hinted that they'll push for a "hard Brexit" that would allow the UK to control immigration from the European Union, even if that means giving up membership of the European common market. The government is in the process of appealing ruling on Parliamentary oversight to the nation's highest judicial body and a decision is anticipated before the year end. If that timeframe stays true, the government has said it will remain on track to invoke Article 50 by the end of March.
Some political observers are concerned that starting the Brexit process in March will play into the hands of populists across Europe, whose fortunes appear to be on the rise after the votes on Brexit and the US Presidency. France and Germany will hold national elections in 2017 - France in the spring and Germany probably in late September. In France, Marine Le Pen and her National Front (FN) are running competitively with the candidates of the two traditional leading parties, positioning the anti-immigrant populist to be one of the two choices in the run- off election for President in May. Meanwhile in Germany, the right wing populist and euroskeptic Alternative for Germany (AfD) is poised to gain seats in Bundestag for the first time after running strong in several state elections this year.
OPEC Self-Interest Trumps Cooperation
Outside of rise of populist politics, probably the biggest uncertainty in the weeks ahead is the fate of the "oil freeze" deal that was tentatively agreed upon in Algiers a month ago. That preliminary agreement helped oil prices get back above $50/bbl for a time, but the price has eroded again as OPEC members continue to bicker over who should participate in a freeze or cut, and as non-OPEC producers have also wavered. With just a few weeks to go before the November 30th semi-annual OPEC meeting that was to usher in the finalized production deal, market watchers are starting to lay odds against a final accord being enacted.
As the case has been since the oil freeze idea was conceived, the main tension has been between Saudi Arabia's block of Gulf producers and Iran, which wants to recoup all of the market share it lost due to anti-nuclear sanctions. Technical level meetings over the last few weeks have not achieved a breakthrough, though more meetings are scheduled. It's clear the frustration level is high, exemplified by a press leak that suggested the Gulf nations threatened to INCREASE production if Iran didn't get on board with plan (that threat was later walked back to a suggestion that the Gulf producers would shift capacity to "meet market demand"). For its part, Iran's oil minister just recently commented that it does not see November 30th as a hard deadline for reaching an accord, calling into doubt whether producers can come to an agreement at all this year.
Given these circumstances, there is a good chance the freeze deal will not come to pass, or at least get delayed. In that case WTI crude could easily sink back to the low $30s, dragging down the energy sector with it and taking some more air out of equities. It could also give headaches to central banks that had been elated to see the downward inflation pressure exerted by low oil prices finally abating over the spring and summer.
Fed Tightening Finally Trumps Accommodation
The US Fed is hoping that inflation will continue to rise enough to justify another rate hike. The December 14 FOMC meeting will be a crucial moment for Fed credibility. When the Fed raised rates last December the dot plot projections suggested there could be FOUR rate hikes during the course of 2016. Since then, the Fed has found excuses to keep rates on hold, ranging from stagnant growth in Q1, to the Brexit uncertainty over the summer. By intimating for the last year that the next rate hike is coming soon, the Fed has lost a lot of the benefits of keeping rate policy unchanged for the last 10 months, and it would be a major blow to the Fed's reputation if it holds off on a rate hike yet again in December.
Additionally, the voting membership will change after the December meeting - in 2017 all three of the recent hawkish dissenters will rotate out and will be replaced by a decidedly more moderate group of Fed presidents. Chair Yellen has already indicated a willingness to let the economy "run hot," so as long as there is no sign of runaway inflation, the Fed may be even more reluctant to raise rates next year.
The November statement edged the Fed closer to a December rate hike, announcing that the case for a hike "continued" to strengthen. But until the FOMC actually pulls the trigger on another 25 basis point move, markets are right to be skeptical of hawkish signals. Though some Fed watchers may be worried that the 'era of cheap money' is over, the promise of a "gradual pace" of rate hikes may well mean that the market opinion starts coalescing around the one-and-done rate hike view of St Louis Fed President Bullard. So far, markets have been unperturbed by the prospect of a December rate hike, and may even take it as positive development if the Fed framed the hike as a vote of confidence in the economy.
The Trump Administration will also exert some influence on the Fed. Trump has been broadly critical of the Fed and said earlier this year that he wants to replace Chair Yellen because she is political and "not a Republican," though he also declared that both she and he are "low rates" people. Unless the Chair chooses to tender her resignation and triggers an earlier succession, the new President will have the option to name a replacement at the end of Yellen's term in early 2018. In the meantime, two vacancies on the seven-member board of governors will allow Trump to put his imprint on the Fed immediately.
The Republican controlled Congress may also try to persuade Trump to support legislation to reform the central bank. Last year the House passed a bill that would require the Fed to set a policy rule, and the 2016 GOP party platform called for an annual audit of interest rate decisions. The central bank has argued that the 'audit the Fed' legislation would put undue political pressure on monetary policy decisions, but that may just be the new reality in the era of America's first modern populist president.
CALENDAR
NOVEBMER
1: UK Manufacturing PMI; US ISM Manufacturing PMI
2: UK Construction PMI; FOMC policy statement; China Caixin Services PMI
3: UK Services PMI; BOE policy statement; US ISM Manufacturing; US Factory Orders
4: US Payrolls & Unemployment
7: German Factory Orders; China Trade Balance (tentative)
8: Japan Current Account; China CPI & PPI; US ELECTION DAY
9: UK Manufacturing Production; US JOLTS Jobs Openings
10:
11: US Prelim University of Michigan Sentiment
13: China Industrial Production; Japan Prelim Q3 GDP
14:
15: UK CPI & PPI; Euro Zone Prelim Q3 GDP; German ZEW Economic Sentiment; US Retail Sales
16: UK Claimant Count & Unemployment; US PPI; US Industrial Production & Capacity Utilization
17: UK Retail Sales; Euro Zone Final CPI; ECB Minutes; US Housing Starts & Building Permits; US CPI; Philadelphia Fed Manufacturing Index
18:
21: Various Euro Zone Manufacturing & Services PMIs
22: US Existing Home Sales
23: US Durable Goods Orders; US New Home Sales; FOMC Minutes
24: German Ifo Business Climate; Tokyo Core CPI; US THANKSGIVING HOLIDAY
25: UK Q3 GDP Second Estimate
28: Japan Household Spending
29: German Unemployment; BOE Financial Stability Report; US Prelim Q3 GDP; US Consumer Confidence
30: OPEC Semi-Annual Meeting; German Retail Sales; Euro Zone Prelim CPI Estimate; US Personal Income & Spending; Chicago PMI; China Manufacturing & Non-Manufacturing PMIs; China Caixin Manufacturing PMI
DECEMBER
1: UK Bank Stress Test Results; UK Manufacturing PMI; US ISM Manufacturing PMI
2: UK Construction PMI; US Payrolls & Unemployment
4: Italy Referendum on Constitutional Reform; China Caixin Services PMI
5: UK Services PMI; US ISM Non-Manufacturing
6: German Factory Orders; US Trade Balance; US Factory Orders
7: UK Manufacturing Production; Japan Final Q3 GDP; China Trade Balance (tentative)
8: ECB Policy Statement & Press Conf; US JOLT Job Openings; China CPI & PPI
9: Prelim University of Michigan Sentiment
12: China Industrial Production
13: UK CPI & PPI; German ZEW Economic Sentiment; Japan Tankan Manufacturing & Non-Manufacturing Indices
14: UK Claimant Count & Unemployment; US Retail Sales; US PPI; US Industrial Production & Capacity Utilization; FOMC Policy Statement & Updated Economic Projections; FOMC press conference
15: UK Retail Sales; BOE Policy Statement; US CPI; Philadelphia Fed Manufacturing Index
16: Euro Zone Final CPI; US Housing Starts & Building Permits
18: BOJ Policy Statement (tentative)
19: German Ifo Business Climate
20:
21: Various Euro Zone Prelim Manufacturing & Services PMIs; US Existing Home Sales
22: US Final Q3 GDP; US Personal Spending
23: US Durable Goods Orders; US New Home Sales
26: Japan Household Spending; Tokyo Core CPI
27: UK Current Account; UK Final Q3 GDP; US Consumer Confidence
28:
29:
30: Chicago PMI
31: China Manufacturing & Non-Manufacturing PMIs
Sunday, November 13, 2016
Barrons weekend update
Barrons weekend update: Positive on certain steel, financials, and pharma names following election of Trump
Cover story: Donald Trumps agenda as president could promote economic growth, but the big question for investors is whether his pro-growth, tax-reform, and fiscal-stimulus policies will outweigh his protectionist views; On trade, he may end up speaking loudly but carrying a small stick.
Tech Trader: Nobody in the tech sector knows what to expect from a Trump presidency because he has issued conflicting statements on topics such as the H-1B visa program; The biggest payoff for tech giants could be a repatriation of their enormous cash piles stashed overseas.
Trader: Market gains after Donald Trumps election victor werent spread evenly across sectors, and the biggest surprise was that basic price trends remained unchanged for some parts of the stock market; Infrastructure stocks are up on the prospects of more action in that sector under the Trump administration (Positive on VMC, MLM, URI); Large pharmaceutical companies could benefit from Donald Trumps proposals to let companies bring home money trapped overseas.
Profile: Vince Montemaggiore, manager of the Fidelity Overseas fund, retooled the fund from its lower-quality cyclical bent to one focused on high-quality companies with high returns on capital (top 10 holdings: SAP, TOT, BUD, SNY, Nordea Bank, AIA Group, Henkel, Fresenius, Novo Nordisk).
Interview: Howard Penney, managing director at independent research firm Hedgeye Risk Management, talks about what restaurant stocks might benefit under a Trump administration (picks: PNRA, WFM; pans: CMG, PLAY, KR).
Features:
1) Jeffrey Gundlach of DoubleLine Capital, who predicted a Trump victory in January, predicts a rise in bond yields that could lift the yield on the 10-year Treasury note to 6% in the next four or five years;
2) A look at companies likely to be winners and losers under a Trump administration (Positive on X, NUE, MLM, VMC, JPM, BEN, PFE, BMY, CVI, VLO; Mixed on HCA, THC, DUK, VZ);
3) Positive on LOPE, DV, CPLA: Among for-profit colleges that could profit with Donald Trump in the White House, based on hopes federal oversight will ease;
4) Positive on TMO: Shares of the top seller of laboratory gear could benefit from a smoother budget process under a unified government and consolidation in the industry; shares could see 30% upside;
5) Positive on DFS: Even amid growth in subprime lending, the company has shown discipline, and if it can grow its loan book faster, shares could offer a 12% return during the next 12 months.
Small Caps: Positive on AVD: Shares are down in a slow agricultural sector, but the company is launching new products and stands to benefit from acquisitions, which should translate into higher earnings.
Follow-Up: Negative on CVS: Company lacks the tax-dodging opportunities of multinationals, and the growth that originally attracted investors to shares is no longer steadymaking it time to sell; Positive on LVLT, CTL: The companies merger is good for investors, because it should give Level 3 shares 25% upside, while Century has a 9.1% yield.
European Trader: With Donald Trumps presidential victory, the outlook for Europes banks has improved, because he isnt expected to be tough on regulationthough many of his ideas make investors uneasy.
Asian Trader: Asian markets have been unexpectedly tolerant of Donald Trump, and his win probably will extend the value-oriented theme that has prevailed since Brexit.
Emerging Markets: The reordering of markets is happening, absent clarity from Donald Trump on his cabinet, strategy, and foreign policy. But the strengthening dollar is already a sign of tough times ahead for foreign currencies.
Commodities: The price of nickel hit a peak for the year last week, and could rise further on expectations of stronger demand from China and the U.S.
Streetwise: A shift in investor focus from assets that benefit from globalization to those boosted by domestic consumption could portend a Main Street recovery under a Trump administration.
Cover story: Donald Trumps agenda as president could promote economic growth, but the big question for investors is whether his pro-growth, tax-reform, and fiscal-stimulus policies will outweigh his protectionist views; On trade, he may end up speaking loudly but carrying a small stick.
Tech Trader: Nobody in the tech sector knows what to expect from a Trump presidency because he has issued conflicting statements on topics such as the H-1B visa program; The biggest payoff for tech giants could be a repatriation of their enormous cash piles stashed overseas.
Trader: Market gains after Donald Trumps election victor werent spread evenly across sectors, and the biggest surprise was that basic price trends remained unchanged for some parts of the stock market; Infrastructure stocks are up on the prospects of more action in that sector under the Trump administration (Positive on VMC, MLM, URI); Large pharmaceutical companies could benefit from Donald Trumps proposals to let companies bring home money trapped overseas.
Profile: Vince Montemaggiore, manager of the Fidelity Overseas fund, retooled the fund from its lower-quality cyclical bent to one focused on high-quality companies with high returns on capital (top 10 holdings: SAP, TOT, BUD, SNY, Nordea Bank, AIA Group, Henkel, Fresenius, Novo Nordisk).
Interview: Howard Penney, managing director at independent research firm Hedgeye Risk Management, talks about what restaurant stocks might benefit under a Trump administration (picks: PNRA, WFM; pans: CMG, PLAY, KR).
Features:
1) Jeffrey Gundlach of DoubleLine Capital, who predicted a Trump victory in January, predicts a rise in bond yields that could lift the yield on the 10-year Treasury note to 6% in the next four or five years;
2) A look at companies likely to be winners and losers under a Trump administration (Positive on X, NUE, MLM, VMC, JPM, BEN, PFE, BMY, CVI, VLO; Mixed on HCA, THC, DUK, VZ);
3) Positive on LOPE, DV, CPLA: Among for-profit colleges that could profit with Donald Trump in the White House, based on hopes federal oversight will ease;
4) Positive on TMO: Shares of the top seller of laboratory gear could benefit from a smoother budget process under a unified government and consolidation in the industry; shares could see 30% upside;
5) Positive on DFS: Even amid growth in subprime lending, the company has shown discipline, and if it can grow its loan book faster, shares could offer a 12% return during the next 12 months.
Small Caps: Positive on AVD: Shares are down in a slow agricultural sector, but the company is launching new products and stands to benefit from acquisitions, which should translate into higher earnings.
Follow-Up: Negative on CVS: Company lacks the tax-dodging opportunities of multinationals, and the growth that originally attracted investors to shares is no longer steadymaking it time to sell; Positive on LVLT, CTL: The companies merger is good for investors, because it should give Level 3 shares 25% upside, while Century has a 9.1% yield.
European Trader: With Donald Trumps presidential victory, the outlook for Europes banks has improved, because he isnt expected to be tough on regulationthough many of his ideas make investors uneasy.
Asian Trader: Asian markets have been unexpectedly tolerant of Donald Trump, and his win probably will extend the value-oriented theme that has prevailed since Brexit.
Emerging Markets: The reordering of markets is happening, absent clarity from Donald Trump on his cabinet, strategy, and foreign policy. But the strengthening dollar is already a sign of tough times ahead for foreign currencies.
Commodities: The price of nickel hit a peak for the year last week, and could rise further on expectations of stronger demand from China and the U.S.
Streetwise: A shift in investor focus from assets that benefit from globalization to those boosted by domestic consumption could portend a Main Street recovery under a Trump administration.
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