TradeTheNews.com Weekly
Market Update: Rising Rates Hold Investors' Focus
Fri, 07 Jul 2017 16:10 PM EST
- For the second straight week rising interest rates continued to overshadow
global trading and geopolitical developments. North Korea's successful test of
an ICBM on the July 4th holiday may have spurred some risk off sentiment when
trading resumed on Wednesday, but most pointed to a sustained rise in Treasury
yields as the culprit. The European economic data continued to surpass
expectations broadly, resulting in the German 10-year Bund yield moving back
above 0.5% to levels not seen since early last year. US rates tracked European
yields higher and in a move that appeared justified by the release of another
robust June jobs report on Friday. The Euro moved to a 1-month high while the
Pound suffered after UK economic releases significantly lagged that of
continental Europe's. The Dollar also rose to the highest level since early May
against the Yen, and buyers were rewarded on Friday when the BOJ was forced to
offer an unlimited amount of bids in its fixed-rate bond operation to stem the
rise in JGB bond yields. Crude oil prices rolled over mid-week giving back half
of gains seen since the June 21st low while by Friday gold prices dropped to
levels not seen since March likely hurt by the back up in rates.
- Banks and financials maintained a leadership role as higher rates and
steepening curves kept demand strong. The XLF closed the week above 25 for the
first time since late 2007 heading into next week's Q2 bank earnings reports.
The Dow Jones Transports hit a fresh all time highs for the first time since
early March though Dow theorists were quick to point out the Industrials were
unable to confirm with a new high of its own. The energy complex largely served
as a headwind slipping along with oil prices. The NASDAQ maintained entrenched
in a notably skittish trading pattern. After under performing early in the week
technology shares exhibited significant relative strength to close out trade.
For the week the S&P was up less than 0.1%, the Dow gained 0.3% and the
NASDAQ rose 0.2%.
- In terms of corporate news during this holiday-shortened week, the auto
industry reported another drop in sales for the month of June, though GM said
it expects the second half of 2017 will be stronger than the first. Tesla
disappointed investors with Q2 deliveries that came in below consensus
estimates, though CEO Musk forecasts Model 3 production at 20K vehicles per
month in December. Volvo said it plans to completely phase out vehicles with
conventional engines, moving towards production of hybrid and battery-powered
models only by 2019. Berkshire Hathaway announced it would acquire Energy
Future Holdings, the parent company of Oncor Electric, in a $9B all-cash
transaction, which would give Berkshire control of one of the largest
electricity transmission firms in the US.
SUNDAY 7/2
*(JP) JAPAN Q2 TANKAN LARGE MANUFACTURING INDEX: 17 V 15E; MANUFACTURERS
OUTLOOK: 15 V 14E; ALL-INDUSTRY CAPEX: 8.0% V 7.2%E
(HK) Macau Jun casino revenue 19.99B Patacas, y/y: 25.9% v 30%e (update)
MONDAY 7/3
(DE) GERMANY JUN FINAL MANUFACTURING PMI: 59.6 V 59.3E (31th month of
expansion)
(UK) JUN MANUFACTURING PMI: 54.3 V 56.3E (11th month of expansion, 3-month low)
(EU) EURO ZONE MAY UNEMPLOYMENT RATE: 9.3% V 9.3%E
(UK) FSB Chairman Carney: Calls on G20 to 'Urgently' complete new Basel Bank
Capital rules; Reform fatigue poses threat to crisis response
GM Reports June US sales -4.7% y/y, to 243.2K units v 250.7Ke
*(US) JUNE FINAL MARKIT MANUFACTURING PMI: 52.0 V 52.1 PRELIM (lowest since Sep
2016)
(US) Atlanta Fed raises Q2 GDP to 3.0% from 2.7% on 6/30
TSLA Reports Q2 deliveries just over 22.0K v 24.2Ke v just over 25.0K q/q
(update)
(HK) Macau Monetary Authority says Unionpay cardholders can only get cash at
KYC ATMs in Macau, effective from July 4th
(HK) Hong Kong Jun Homes Sales (HK$): 59.1B v 32.6B y/y
TUESDAY 7/4
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50%
(AS EXPECTED)
(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT -0.50%; AS
EXPECTED; MAINTAINS QE BOND BUYING PROGRAM (As decided in April)
(CN) China PBoC: Economic downward pressure remains large in 2017; Affirms to
pursue prudent neutral monetary policy - PBOC 2017 report
*(CN) CHINA JUN CAIXIN PMI SERVICES: 51.6 V 52.8 PRIOR (13-month low)
WEDNESDAY 7/5
*(TH) THAILAND CENTRAL BANK (BOT) LEAVES BENCHMARK INTEREST RATE UNCHANGED AT
1.50%; AS EXPECTED
*(FR) FRANCE JUN FINAL SERVICES PMI: 56.9 V 55.3E (confirms 12 months of
expansion)
(ZA) South Africa ANC party leader Godongwana: proposal to make SARB
state-owned is not imminent; there is no fiscal space to pay SARB owners
*(US) MAY FINAL DURABLE GOODS ORDERS: -0.8% V -1.0%E; DURABLES EX
TRANSPORTATION: -0.3% V +0.1% PRELIM
(US) Association of American Railroads weekly rail traffic report for week
ending July 1st: 546.4K carloads and intermodal units, +3.2% y/y (25th straight
week of gains)
VOLVA.SE Plans all post-2019 vehicle models to be either hybrid or battery
powered - press (update)
*(US) FOMC MINUTES FROM JUNE 14 MEETING: OFFICIALS DIVIDED OVER WHEN TO START
BALANCE SHEET RUNOFF
(JP) 30-yr JGB yield highest since late Feb at 0.875%
*(AU) AUSTRALIA MAY TRADE BALANCE (A$): +2.47B V +1.0BE (7th consecutive
surplus)
THURSDAY 7/6
*(ES) SPAIN DEBT AGENCY (TESORO) SELLS TOTAL €3.65B VS. €3.0-4.0B INDICATED
RANGE IN 2022, 2040 AND 2046 BONDS
*(EU) ECB ACCOUNT OF THE MONETARY POLICY MEETING (JUN) MINUTES: ECB OFFICIALS
DISCUSSED DROPPING QE EASING BIAS IN JUNE, BUT DECIDED PRUDENCE REMAINED
WARRANTED
*(US) JUN ADP EMPLOYMENT CHANGE: 158K V 188KE
*(US) MAY TRADE BALANCE: -$46.5B V -$46.3BE
*(US) JUN FINAL MARKIT SERVICES PMI: 54.2 V 53.0E (highest since Jan)
(US) Atlanta Fed lowers Q2 GDP to 2.7% from 3.0% on 7/3
(US) Illinois House overrides Gov veto of budget bills; enacting $5B tax hike
into law; passes budget for first time in over two years
005930.KR Guides Q2 Op profit KRW14.0T (quarterly record) v KRW13.0Te, Rev
KRW60.0T v KRW58.4Te
(JP) BoJ Offers to buy unlimited amount in fixed-rate bond operation, gets No
Bids again; Details amounts to buy in upcoming QE operation
FRIDAY 7/7
*(FR) FRANCE MAY INDUSTRIAL PRODUCTION M/M: 1.9% V 0.6%E; Y/Y: 3.2% V 1.4%E
*(UK) JUN HALIFAX HOUSE PRICE M/M: -1.0% V +0.2%E; 3M/Y: 2.6% V 3.1%E
*(CN) CHINA JUN FOREIGN RESERVES: $3.057T V $3.061TE (5th straight increase)
(UK) MAY INDUSTRIAL PRODUCTION M/M: -0.1% V 0.4%E; Y/Y: -0.2% V 0.2%E
*(US) JUN UNEMPLOYMENT RATE: 4.4% V 4.3%E
(US) JUN CHANGE IN NONFARM PAYROLLS: +222K V +178KE
*(CA) CANADA JUN NET CHANGE IN EMPLOYMENT: +45.3K V +10.0KE; UNEMPLOYMENT RATE:
6.5% V 6.6%E
*(US) JUN AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 2.5% V 2.6%E; AVERAGE
WEEKLY HOURS: 34.5 V 34.4E
(MX) MEXICO JUN CPI M/M: 0.3% V 0.3%E; Y/Y: 6.3% V 6.3%E; CORE CPI Y/Y: 0.3% V
0.3%E
(US) FED RELEASES JULY 2017 MONETARY POLICY REPORT: FURTHER GRADUAL REMOVAL OF
ACCOMMODATION IS APPROPRIATE
(US) New York Fed Nowcast: raises Q2 GDP forecast to 2.0% from 1.9% on 6/30;
raises Q3 GDP forecast to 1.8% from 1.5% on 6/30
Friday, July 7, 2017
Monday, July 3, 2017
July-August 2017 Market Outlook
July-August
2017 Outlook: On the CB (Central Bank)
Mon, 03 Jul 2017 6:48 AM EST
The beginning of the financial crisis is now nearly ten years in the rear view mirror, but central banks keep on trucking at or near historic levels of easy policy. However, with the global economy improving and the threat of deflation subsiding, the CBs are crackling with chatter about downshifting from emergency accommodation. But as long as the conversation is still focused on what the central banks are providing, the improving economic fundamental will not get their due attention.
The Fed has taken the lead in moving rates off the zero bound and starting the discussion about shrinking a balance sheet that was quadrupled during the crisis. To varying degrees over the last year, other central banks have also been broadcasting that the era of ever higher stimulus is done. The delicate task ahead for the CBs is to tap the brakes on extraordinary accommodation gently enough to prevent the global economy from jackknifing in the middle of the process.
Today’s undulating political landscape, exemplified by the Brexit, could still throw up new and unexpected roadblocks that could change the course of monetary policy. But it appears that the convoy of monetary stimulus is rolling into its final destination, preparing to unload its accommodation and start the process of normalization.
Fed: “Over and Out”
The US economic recovery has been motoring ahead of most other major economies. Amid this improved economic footing the Fed‘s accommodative stance is starting to shift, even as the woman in the driver’s seat, Janet Yellen, will be out of office by February.
But a lot of policy changes are still expected to occur before Chair Yellen signs off from the CB. For now, the policy path seems to be locked in on a two step process later this year: a likely September announcement on the balance sheet reduction plan, and then a third rate hike predicted for December.
The public discussions of the balance sheet normalization process have showed a fairly collegial view at the Fed about the process. The consensus at the Fed is that it should start this year and that it should work via a roll off of maturing instruments, rather than actively selling holdings, so that the process can operate quietly in the “background.” This gradual process should work the $4.5 trillion balance sheet down over several years toward a new normalized level that is around half its current size. A recent NY Fed paper suggested this process might take until late 2021, at which point the balance sheet could be trimmed to some $2.8 trillion in bonds and a smattering of MBS.
Markets have taken all of this normalization talk without a hitch – a sign of general confidence in the Fed roadmap. Clear communication will be more important than ever to ensure that markets are not taken off guard by the unwinding process.Aside from the July 26 FOMC policy announcement (which has no scheduled press conference), Yellen will have a few other opportunities to broadcast her intentions. On July 12, she will appear before the House Financial Services Committee, and will convene with a Senate committee the next day. She might also use the annual Jackson Hole symposium (August 24-26) to give color on the balance sheet plan. The theme of this year’s symposium is "Fostering a Dynamic Global Economy."
The Trump circus in Washington may influence how Fed decisions play out. All year the Fed has been cautious about the D.C. agenda, with FOMC members deferring the addition of potential new fiscal policy measures into their monetary policy calculus. Fed officials have repeatedly cautioned that the timing and scope of fiscal policy is too uncertain to calculate yet.
It appears that level of caution was warranted as the legislative agenda of the Trump administration has been delayed by party infighting and harried by weekly revelations in the Russia probe, dashing the early promises of rapid fire reforms. The Senate healthcare bill is the latest item to hit a stumbling block. The bill, centered on a major tax cut, has found critics on the conservative and moderate sides of the Republican Party, causing party leaders to delay a vote by at least a week as they seek enough support for passage. GOP senators are between a rock and a hard place as the unpopular bill could hurt many working-class constituents, while they remain dead set on their longstanding promise to repeal Obamacare.
Currently the healthcare bill appears more likely to fail than to pass, which would leave another hole in the Trump agenda. It would also erode confidence in the potential for passage of the most important policy issue for the markets, namely tax reform, which stuck in first gear at the moment. The White House tried to kick off its tax reform campaign with a press conference in April, but the underwhelming one-page list of bullet points didn’t add any new information. Since then, the administration has rolled back expectations of a tax reform bill from this summer, and is now tentatively hoping to see legislation by the end of the year.
Therefore the earliest we may see the impacts of fiscal reform on the economy will be later in 2018. So far markets have taken the setbacks in stride, but it remains to be seen if additional delays in the Republican legislative agenda or deeper intrigues in the Russia case will be met with calm.
BOE: “Mayday, May Day”
The Bank of England was once only a step behind the Fed in considering removal of accommodation, but any action in that regard was sidetracked by the surprising affirmative Brexit vote last June. Now, a year later, the BOE is looking over the horizon at a path toward normalizing policy. Late last month, the BOE’s chief economist Haldane said that while rates are at an appropriate level for the moment, the bank needs to take a serious look at tightening policy. He suggested that it would be prudent to remove some of last year’s stimulus in second half of 2017.
That was not idle commentary, as the monetary policy committee (MPC) saw two more voters join a hawkish dissent at the June 8 meeting (Forbes, and now McCafferty and Saunders joining). That 5-3 vote to raise rates off of 0.25% demonstrates that the BOE is not far from a decision to follow the Fed down the off-ramp toward normalization.
Since that vote, BOE governor Carney has confirmed that the committee will debate issues around raising rates in coming months. He has stipulated that the decision on the central bank’sreadiness to raise rates depends on how much weaker consumption is offset by business investment, as well as and unit labor costs and the economy's reaction to Brexit. Carney also made it clear that if the MPC agrees to tighter rates, any change would be limited and gradual.
To an even greater extent than the Fed, the BOE will be boxed in by political events. Last month’s snap election meant to strengthen Prime Minister May’s grip on the wheel ahead of Brexit negotiations had the opposite effect. Thanks to a bungled campaign and perhaps some Brexit vote remorse (aka ‘Bremorse’), the Conservatives lost their outright majority and were forced into a dubious alliance with Northern Ireland’s DUP. Thus, PM May goes into the Brexit talks with a weaker hand than before. This could ultimately lead toward a “bad deal” or out of political desperation a “no deal” scenario, uncertainties which could roil markets. The PM’s days at the head of government may also be limited. There have already been some rumblings within the Conservative Party that May should be tossed to the curb after the embarrassing setback in the snap election. Though support has not coalesced around a clear successor yet, some political analysts believe May’s days at Number 10 Downing Street are numbered, speculating that she could be out within six months. The guessing game about UK leadership will add another layer of uncertainty to the already difficult and unprecedented Brexit process.
Mon, 03 Jul 2017 6:48 AM EST
The beginning of the financial crisis is now nearly ten years in the rear view mirror, but central banks keep on trucking at or near historic levels of easy policy. However, with the global economy improving and the threat of deflation subsiding, the CBs are crackling with chatter about downshifting from emergency accommodation. But as long as the conversation is still focused on what the central banks are providing, the improving economic fundamental will not get their due attention.
The Fed has taken the lead in moving rates off the zero bound and starting the discussion about shrinking a balance sheet that was quadrupled during the crisis. To varying degrees over the last year, other central banks have also been broadcasting that the era of ever higher stimulus is done. The delicate task ahead for the CBs is to tap the brakes on extraordinary accommodation gently enough to prevent the global economy from jackknifing in the middle of the process.
Today’s undulating political landscape, exemplified by the Brexit, could still throw up new and unexpected roadblocks that could change the course of monetary policy. But it appears that the convoy of monetary stimulus is rolling into its final destination, preparing to unload its accommodation and start the process of normalization.
Fed: “Over and Out”
The US economic recovery has been motoring ahead of most other major economies. Amid this improved economic footing the Fed‘s accommodative stance is starting to shift, even as the woman in the driver’s seat, Janet Yellen, will be out of office by February.
But a lot of policy changes are still expected to occur before Chair Yellen signs off from the CB. For now, the policy path seems to be locked in on a two step process later this year: a likely September announcement on the balance sheet reduction plan, and then a third rate hike predicted for December.
The public discussions of the balance sheet normalization process have showed a fairly collegial view at the Fed about the process. The consensus at the Fed is that it should start this year and that it should work via a roll off of maturing instruments, rather than actively selling holdings, so that the process can operate quietly in the “background.” This gradual process should work the $4.5 trillion balance sheet down over several years toward a new normalized level that is around half its current size. A recent NY Fed paper suggested this process might take until late 2021, at which point the balance sheet could be trimmed to some $2.8 trillion in bonds and a smattering of MBS.
Markets have taken all of this normalization talk without a hitch – a sign of general confidence in the Fed roadmap. Clear communication will be more important than ever to ensure that markets are not taken off guard by the unwinding process.Aside from the July 26 FOMC policy announcement (which has no scheduled press conference), Yellen will have a few other opportunities to broadcast her intentions. On July 12, she will appear before the House Financial Services Committee, and will convene with a Senate committee the next day. She might also use the annual Jackson Hole symposium (August 24-26) to give color on the balance sheet plan. The theme of this year’s symposium is "Fostering a Dynamic Global Economy."
The Trump circus in Washington may influence how Fed decisions play out. All year the Fed has been cautious about the D.C. agenda, with FOMC members deferring the addition of potential new fiscal policy measures into their monetary policy calculus. Fed officials have repeatedly cautioned that the timing and scope of fiscal policy is too uncertain to calculate yet.
It appears that level of caution was warranted as the legislative agenda of the Trump administration has been delayed by party infighting and harried by weekly revelations in the Russia probe, dashing the early promises of rapid fire reforms. The Senate healthcare bill is the latest item to hit a stumbling block. The bill, centered on a major tax cut, has found critics on the conservative and moderate sides of the Republican Party, causing party leaders to delay a vote by at least a week as they seek enough support for passage. GOP senators are between a rock and a hard place as the unpopular bill could hurt many working-class constituents, while they remain dead set on their longstanding promise to repeal Obamacare.
Currently the healthcare bill appears more likely to fail than to pass, which would leave another hole in the Trump agenda. It would also erode confidence in the potential for passage of the most important policy issue for the markets, namely tax reform, which stuck in first gear at the moment. The White House tried to kick off its tax reform campaign with a press conference in April, but the underwhelming one-page list of bullet points didn’t add any new information. Since then, the administration has rolled back expectations of a tax reform bill from this summer, and is now tentatively hoping to see legislation by the end of the year.
Therefore the earliest we may see the impacts of fiscal reform on the economy will be later in 2018. So far markets have taken the setbacks in stride, but it remains to be seen if additional delays in the Republican legislative agenda or deeper intrigues in the Russia case will be met with calm.
BOE: “Mayday, May Day”
The Bank of England was once only a step behind the Fed in considering removal of accommodation, but any action in that regard was sidetracked by the surprising affirmative Brexit vote last June. Now, a year later, the BOE is looking over the horizon at a path toward normalizing policy. Late last month, the BOE’s chief economist Haldane said that while rates are at an appropriate level for the moment, the bank needs to take a serious look at tightening policy. He suggested that it would be prudent to remove some of last year’s stimulus in second half of 2017.
That was not idle commentary, as the monetary policy committee (MPC) saw two more voters join a hawkish dissent at the June 8 meeting (Forbes, and now McCafferty and Saunders joining). That 5-3 vote to raise rates off of 0.25% demonstrates that the BOE is not far from a decision to follow the Fed down the off-ramp toward normalization.
Since that vote, BOE governor Carney has confirmed that the committee will debate issues around raising rates in coming months. He has stipulated that the decision on the central bank’sreadiness to raise rates depends on how much weaker consumption is offset by business investment, as well as and unit labor costs and the economy's reaction to Brexit. Carney also made it clear that if the MPC agrees to tighter rates, any change would be limited and gradual.
To an even greater extent than the Fed, the BOE will be boxed in by political events. Last month’s snap election meant to strengthen Prime Minister May’s grip on the wheel ahead of Brexit negotiations had the opposite effect. Thanks to a bungled campaign and perhaps some Brexit vote remorse (aka ‘Bremorse’), the Conservatives lost their outright majority and were forced into a dubious alliance with Northern Ireland’s DUP. Thus, PM May goes into the Brexit talks with a weaker hand than before. This could ultimately lead toward a “bad deal” or out of political desperation a “no deal” scenario, uncertainties which could roil markets. The PM’s days at the head of government may also be limited. There have already been some rumblings within the Conservative Party that May should be tossed to the curb after the embarrassing setback in the snap election. Though support has not coalesced around a clear successor yet, some political analysts believe May’s days at Number 10 Downing Street are numbered, speculating that she could be out within six months. The guessing game about UK leadership will add another layer of uncertainty to the already difficult and unprecedented Brexit process.
ECB: “Breaker, Breaker” The Brexit vote
last year tested the resilience of the EU, raising concerns that the
cornerstone of European cooperation could come undone. Since then, the populist
movement in Europe has experienced some setbacks – most notably the defeat of
Marine Le Pen in the French election – and economic data has improved. That has
eased concerns about the EU unraveling. Now the ECB has turned a corner, breaking
with a decade of dovish talk. In a late June speech ECB President Draghi
essentially declared the threat of deflation dead. Draghi announced that the
factors impacting inflation “are on the whole temporary and should not cause
inflation to deviate from its trend over the medium term, so long as monetary
policy continues to maintain the solid anchoring of inflation expectations.”
This echo of the Fed’s language on “transitory” factors surrounding weak
inflation was enough to send the euro to a six-month high against the dollar as
markets took Draghi’s statement to mean he is ready to contemplate the end of
the era of extreme accommodation. The immediate one percent move in the EUR/USD
in reaction to what was a fairly subtle shift in language by Draghi leaves us
with the question of how much are central banks at the mercy of the markets.
The European version of the ‘taper tantrum’ could be the next traumatic event
for the markets, as they anticipate an end to the ECB’s quantitative easing
program in 2018. To that point, earlier this year Janus' Bill Gross switched on
the hazard lights, warning that when the ECB starts to taper QE it may signal
the end of the bull market. So we will have to watch for outsized moves in
response to policy shifts. If the markets are still stimulus addicted then
there could be some surprising volatility (and maybe even some opportunities to
back up the truck). Even before Draghi’s more hawkish remarks, the early June
ECB policy meeting was a blaring horn sounding a possible lane change in
monetary policy. Based on data confirming stronger economic momentum, the ECB
revised its policy stance with an eye toward the road to normalization. The key
move was a revision in the description of the risks to growth, now seen as
“broadly balanced” (revised from “tilted to the downside”). Still the ECB
continues to provide extensive accommodation with the quantitative easing
program set to continue at a €60 billion per month pace at least through
December and interest rates remaining at the present level “well past” the end
of QE. Geopolitics could sideswipe the ECB’s policy schemes as the G20 meeting
in early July may put more stresses on old alliances. Chancellor Merkel, the
host of the leaders’ summit (July 7-8), has tried to put a good face on the
meeting after the frictions felt during President Trump’s last European trip
which ended in the US withdrawing from the Paris climate accord. Russian
President Putin will also be stalking the sidelines of the G20, meeting with
other heads of state, no doubt looking to drive more wedges between NATO
allies.
BOJ: “Keep on Trucking” Following the trend seen in most G7
nations lately, political uncertainty is taking a toll in Japan. Since assuming
office in 2012, Prime Minister Abe has generally enjoyed strong poll numbers as
he brought stability to a government that had seen nearly annual turnover in
leadership for several years. His ambitious ‘three arrows’ plan for beating
deflation and revitalizing the economy won him broad support from the electorate.
But four years into the plan, core CPI readings are only just edging into
positive territory and Q1 annualized GDP hit a three quarter low of only 1.0%.
With the data still not validating ‘Abenomics’ the PM’s poll numbers have
slipped. Approval ratings for the cabinet dropped by double digits in June,
falling below 50% for the first time more than a year. If they continue to slip
toward 40% – the low hit in the summer of 2015 amidst a currency devaluation
and stock market swoon in neighboring China – it could send confidence in
Japanese markets downhill as well. For its part the BOJ is still riding ‘hammer
down’ on easy policy. In his latest commentary BOJ governor Kuroda noted there
is still a “long way to go” before achieving the 2% inflation target, and that
perhaps they are only half way there. The governor does claim progress, with
the Japanese economy on firmer footing and the financial system still stable.
Yet the slow headway on inflation confirms that strong easing remains warranted
in Kuroda’s eyes. Indeed reports say that the BOJ is contemplating a cut in the
inflation outlook at its next meeting (July 19). Even with Kuroda’s foot still
firmly all the way down on the accelerator, the BOJ is reportedly feeling the
pressure of all the CB chatter about normalization. A press report in early
June said that the BOJ was looking at a recalibration of communications to
acknowledge the increasing global discussion of reversing accommodation. Such a
communication would reportedly entail a declaration the BOJ is conducting
simulations about ending QE, but also to convey that it will not be on the
policy agenda any time soon. This sort of monetary ‘double clutching’ will
require skillful communication from the CB.
Friday, June 30, 2017
Firmer Inflation and Hawkish Talk Push Rates Higher
TradeTheNews.com Weekly
Market Update: Firmer Inflation and Hawkish Talk Push Rates Higher
Fri, 30 Jun 2017 16:06 PM EST
An aggressive backup in global interest rates headlined a week that also saw a significant rebound in oil prices and bifurcated trading in US stocks. Hawkish central bank commentary complemented hotter than expected CPI readings in Europe, which induced a mid-week rotation out of sovereign bond markets, driving up yields. The spread between European and US Treasury yields narrowed, pressuring the Dollar Index, and pushing the Euro to a 1-year high. Higher rates and encouraging CCAR announcements powered equity flows into the banks and financials. In Washington, doubts about the fate of the Senate healthcare bill injected more uncertainty about the Republican legislative agenda, as GOP leaders continued to woo votes from their own caucus and were forced to push back the vote until after the 4th of July break.
By Friday, WTI crude extended to a 7-day winning streak, adding 6.5% on the week, and buoyed equity flows. Despite the positive sentiment in those sectors, continued aggressive selling in the high beta, high profile technology stocks resulted in another notable spike in NASDAQ volatility, allowing for a mid-week dip in US stock trade. Much of the equities weakness was blamed on the likelihood that algorithmic trading along with thin quarter end/holiday conditions exacerbated a rotation out of big-cap tech into other areas of the stock market. Ultimately, stock indices were lower on the week, with the DJIA off 0.2%, the S&P500 down 0.6%, and the Nasdaq falling 2%.
In corporate news, European Union regulators issued a record €2.4B fine against Google to penalize the tech giant over improper search ordering of shopping results. The amount surpassed the prior record €1.06B fine against Intel in 2009. FedEx and Maersk were among numerous multinationals who had operations disrupted due to the spread of a ransomware virus known as GoldenEye or Petya. No data breach is said to have occurred, but the event was among the largest disruptions to ever hit global shipping. Micron delivered a solid beat on quarterly earnings and revenue, and its CEO noted cost reduction plans and favorable pricing were a boost to profits. Nike earnings topped Street expectations amid strong international growth, and the sportswear giant confirmed a new pilot program to sell a limited assortment of products on the Amazon platform.
SUN 6/25
06/25 ISP.IT Italy approves emergency decree for Intesa acquisition, commits up to €17B to buoy Veneto banks
MON 6/26
(DE) GERMANY JUN IFO BUSINESS CLIMATE: 115.1 (fresh record high) V 114.5E; CURRENT ASSESSMENT: 124.1 V 123.2%E
(UK) PM May reaches governing deal to get Northern Irish DUP support for minority government; govt to supply £1B in extra funding for Northern Ireland as part of agreement - financial press
(US) Fed’s Dudley (dove, FOMC voter): Fed's taken very measured and careful approach to shrinking bond portfolio - prepared remarks
(US) MAY PRELIMINARY DURABLE GOODS ORDERS: -1.1% V -0.6E; DURABLES EX TRANSPORTATION: 0.1% V +0.4%E
(UK) Prime Min May: no EU citizen will be asked to leave after Brexit; EU citizens lawfully in Britain will be treated as British citizens
(US) Atlanta Fed maintains Q2 GDP at 2.9%, unchanged from 6/16
(CN) China President Xi: Reform panel says offshore investment a matter of national security, need enhanced statistics and monitoring of overseas investments to strengthen supervision - Xinhua
TUES 6/27
(EU) ECB Chief Draghi: Sees Factors impacting inflation being temporary and typically ones which the central bank can look through - Speaking at ECB Forum
(UK) Bank of England to raise counter cyclical buffer to 1% from 0.5% in Novmeber - Biannual Financial Stability Report
GOOGL EU confirms issue record fine of €2.4B related to search ordering of shopping results
(US) JUN RICHMOND FED MANUFACTURING INDEX: 7 V 5E
(US) JUN CONSUMER CONFIDENCE: 118.9 V 116.0E
(US) Fed Vice Chair Fischer: would be foolish to think all risks have been eliminated; calls for close monitoring of rising risk appetites
(US) Sen Leader McConnell tells Senate GOP colleagues he will delay healthcare vote until after July 4th break - CNN
(CN) China National Petroleum Corporation (CNPC) suspends fuel sales to North Korea over concerns that it won’t get paid
WEDS 6/28
(EU) EURO ZONE MAY M3 MONEY SUPPLY Y/Y: 5.0% V 5.0%E
(EU) ECB Sources believe market misjudged Draghi comments yesterday - press
(UK) BOE Gov Carney: will debate issues around raising rates in coming months; some removal of BOE stimulus may be necessary
(US) MAY PENDING HOME SALES M/M: -0.8% V +1.0%E; Y/Y: 0.5% V 0.5%E
FDX TNT Express operations disrupted due to computer virus; no data breach known to have occurred; operations of all other FedEx companies are unaffected
(US) Association of American Railroads weekly rail traffic report for week ending June 24th: 544.7K carloads and intermodal units, +3.6% y/y (24th straight week of gains)
(US) FEDERAL RESERVE COMPREHENSIVE CAPITAL ANALYSIS AND REVIEW (CCAR): 34 OF 34 CAPITAL PLANS APPROVED
APRN Confirms 30M share IPO priced at $10/shr v $10.00-11.00/shr indicated range
THURS 6/29
(DE) GERMANY JULY GFK CONSUMER CONFIDENCE: 10.6 V 10.4E (highest since 2001)
(DE) GERMANY JUN CPI SAXONY M/M: 0.2% V -0.1% PRIOR; Y/Y: 1.7% V 1.6% PRIOR
(ES) SPAIN JUN PRELIMINARY CPI M/M: 0.0% V 0.0%E; Y/Y: 1.5% V 1.6%E
(EU) EURO ZONE JUN BUSINESS CLIMATE INDICATOR: 1.15 V 0.94E, FINAL CONSUMER CONFIDENCE -1.3 V -1.3E
(CZ) CZECH CENTRAL BANK (CNB) LEAVES REPURCHASE RATE UNCHANGED AT 0.05%; AS UNCHANGED AT 0.05%
(DE) GERMANY JUN PRELIMINARY CPI M/M: 0.2% V 0.0%E; Y/Y: 1.6% V 1.4%E
(US) Q1 FINAL GDP PRICE INDEX: 1.9% V 2.2%E; CORE PCE Q/Q: 2.0% V 2.1%E
(US) Q1 FINAL GDP ANNUALIZED (3RD READING) Q/Q: 1.4% V 1.2%E; PERSONAL CONSUMPTION: 1.1% V 0.6%E
(US) Fed's Bullard (non-voter, dovish): Sees a small effect on inflation if unemployment falls - comments in London
MU Reports Q3 $1.62 v $1.49e, Rev $5.57B v $5.37Be; Expects healthy industry demand to persist into 2018
NKE Reports Q4 $0.60 v $0.49e, Rev $8.68B v $8.61Be
(JP) JAPAN MAY NATIONAL CPI Y/Y: 0.4% V 0.5%E ; CPI EX FRESH FOOD (CORE) Y/Y: 0.4% (2-year high, 5th straight month of increase) V 0.4%E
(JP) JAPAN MAY JOBLESS RATE: 3.1% V 2.8%E (5-month high)
(CN) CHINA JUNE MANUFACTURING PMI (GOVT OFFICIAL): 51.7 (3-month high) V 51.0E; NON-MANUFACTURING PMI: 54.9 (3-month high) V 54.5 PRIOR
FRI 6/30
(FR) FRANCE JUN PRELIMINARY CPI M/M: 0.0% V 0.0%E; Y/Y: 0.7% V 0.7%E
(DE) GERMANY JUN UNEMPLOYMENT CHANGE: +7K V -10KE; UNEMPLOYMENT RATE: 5.7%E V 5.7%E
(UK) Q1 FINAL GDP Q/Q: 0.2% V 0.2%E; Y/Y: 2.0% V 2.0%E
(EU) EURO ZONE JUN CPI ESTIMATE Y/Y: 1.3% V 1.3%E; CPI CORE Y/Y: 1.1% V 1.0%E
(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL OF €6.35B V €5.5-6.5B INDICATED IN 5-YEAR AND 10-YEAR BTP BONDS
(JP) Bank of Japan said to be considering lowering inflation outlook in July - press
(US) MAY PCE DEFLATOR M/M: -0.1% V -0.1%E; Y/Y: 1.4% V 1.5%E
(US) MAY PERSONAL INCOME: 0.4% V 0.3%E; PERSONAL SPENDING: 0.1% V 0.1%E
(US) MAY PCE CORE M/M: 0.1% V 0.1%E; Y/Y: 1.4% V 1.4%E
(US) Atlanta Fed cuts Q2 GDP to 2.7% from 2.9% on 6/26
(US) New York Fed Nowcast: maintains Q2 GDP forecast at 1.9%, unchanged from 6/23; raises Q3 GDP forecast to 1.6% from 1.5% on 6/23
(US) Weekly Baker Hughes US Rig Count: 940 v 941 w/w (-0.1%) (first decline in 24 weeks)
Fri, 30 Jun 2017 16:06 PM EST
An aggressive backup in global interest rates headlined a week that also saw a significant rebound in oil prices and bifurcated trading in US stocks. Hawkish central bank commentary complemented hotter than expected CPI readings in Europe, which induced a mid-week rotation out of sovereign bond markets, driving up yields. The spread between European and US Treasury yields narrowed, pressuring the Dollar Index, and pushing the Euro to a 1-year high. Higher rates and encouraging CCAR announcements powered equity flows into the banks and financials. In Washington, doubts about the fate of the Senate healthcare bill injected more uncertainty about the Republican legislative agenda, as GOP leaders continued to woo votes from their own caucus and were forced to push back the vote until after the 4th of July break.
By Friday, WTI crude extended to a 7-day winning streak, adding 6.5% on the week, and buoyed equity flows. Despite the positive sentiment in those sectors, continued aggressive selling in the high beta, high profile technology stocks resulted in another notable spike in NASDAQ volatility, allowing for a mid-week dip in US stock trade. Much of the equities weakness was blamed on the likelihood that algorithmic trading along with thin quarter end/holiday conditions exacerbated a rotation out of big-cap tech into other areas of the stock market. Ultimately, stock indices were lower on the week, with the DJIA off 0.2%, the S&P500 down 0.6%, and the Nasdaq falling 2%.
In corporate news, European Union regulators issued a record €2.4B fine against Google to penalize the tech giant over improper search ordering of shopping results. The amount surpassed the prior record €1.06B fine against Intel in 2009. FedEx and Maersk were among numerous multinationals who had operations disrupted due to the spread of a ransomware virus known as GoldenEye or Petya. No data breach is said to have occurred, but the event was among the largest disruptions to ever hit global shipping. Micron delivered a solid beat on quarterly earnings and revenue, and its CEO noted cost reduction plans and favorable pricing were a boost to profits. Nike earnings topped Street expectations amid strong international growth, and the sportswear giant confirmed a new pilot program to sell a limited assortment of products on the Amazon platform.
SUN 6/25
06/25 ISP.IT Italy approves emergency decree for Intesa acquisition, commits up to €17B to buoy Veneto banks
MON 6/26
(DE) GERMANY JUN IFO BUSINESS CLIMATE: 115.1 (fresh record high) V 114.5E; CURRENT ASSESSMENT: 124.1 V 123.2%E
(UK) PM May reaches governing deal to get Northern Irish DUP support for minority government; govt to supply £1B in extra funding for Northern Ireland as part of agreement - financial press
(US) Fed’s Dudley (dove, FOMC voter): Fed's taken very measured and careful approach to shrinking bond portfolio - prepared remarks
(US) MAY PRELIMINARY DURABLE GOODS ORDERS: -1.1% V -0.6E; DURABLES EX TRANSPORTATION: 0.1% V +0.4%E
(UK) Prime Min May: no EU citizen will be asked to leave after Brexit; EU citizens lawfully in Britain will be treated as British citizens
(US) Atlanta Fed maintains Q2 GDP at 2.9%, unchanged from 6/16
(CN) China President Xi: Reform panel says offshore investment a matter of national security, need enhanced statistics and monitoring of overseas investments to strengthen supervision - Xinhua
TUES 6/27
(EU) ECB Chief Draghi: Sees Factors impacting inflation being temporary and typically ones which the central bank can look through - Speaking at ECB Forum
(UK) Bank of England to raise counter cyclical buffer to 1% from 0.5% in Novmeber - Biannual Financial Stability Report
GOOGL EU confirms issue record fine of €2.4B related to search ordering of shopping results
(US) JUN RICHMOND FED MANUFACTURING INDEX: 7 V 5E
(US) JUN CONSUMER CONFIDENCE: 118.9 V 116.0E
(US) Fed Vice Chair Fischer: would be foolish to think all risks have been eliminated; calls for close monitoring of rising risk appetites
(US) Sen Leader McConnell tells Senate GOP colleagues he will delay healthcare vote until after July 4th break - CNN
(CN) China National Petroleum Corporation (CNPC) suspends fuel sales to North Korea over concerns that it won’t get paid
WEDS 6/28
(EU) EURO ZONE MAY M3 MONEY SUPPLY Y/Y: 5.0% V 5.0%E
(EU) ECB Sources believe market misjudged Draghi comments yesterday - press
(UK) BOE Gov Carney: will debate issues around raising rates in coming months; some removal of BOE stimulus may be necessary
(US) MAY PENDING HOME SALES M/M: -0.8% V +1.0%E; Y/Y: 0.5% V 0.5%E
FDX TNT Express operations disrupted due to computer virus; no data breach known to have occurred; operations of all other FedEx companies are unaffected
(US) Association of American Railroads weekly rail traffic report for week ending June 24th: 544.7K carloads and intermodal units, +3.6% y/y (24th straight week of gains)
(US) FEDERAL RESERVE COMPREHENSIVE CAPITAL ANALYSIS AND REVIEW (CCAR): 34 OF 34 CAPITAL PLANS APPROVED
APRN Confirms 30M share IPO priced at $10/shr v $10.00-11.00/shr indicated range
THURS 6/29
(DE) GERMANY JULY GFK CONSUMER CONFIDENCE: 10.6 V 10.4E (highest since 2001)
(DE) GERMANY JUN CPI SAXONY M/M: 0.2% V -0.1% PRIOR; Y/Y: 1.7% V 1.6% PRIOR
(ES) SPAIN JUN PRELIMINARY CPI M/M: 0.0% V 0.0%E; Y/Y: 1.5% V 1.6%E
(EU) EURO ZONE JUN BUSINESS CLIMATE INDICATOR: 1.15 V 0.94E, FINAL CONSUMER CONFIDENCE -1.3 V -1.3E
(CZ) CZECH CENTRAL BANK (CNB) LEAVES REPURCHASE RATE UNCHANGED AT 0.05%; AS UNCHANGED AT 0.05%
(DE) GERMANY JUN PRELIMINARY CPI M/M: 0.2% V 0.0%E; Y/Y: 1.6% V 1.4%E
(US) Q1 FINAL GDP PRICE INDEX: 1.9% V 2.2%E; CORE PCE Q/Q: 2.0% V 2.1%E
(US) Q1 FINAL GDP ANNUALIZED (3RD READING) Q/Q: 1.4% V 1.2%E; PERSONAL CONSUMPTION: 1.1% V 0.6%E
(US) Fed's Bullard (non-voter, dovish): Sees a small effect on inflation if unemployment falls - comments in London
MU Reports Q3 $1.62 v $1.49e, Rev $5.57B v $5.37Be; Expects healthy industry demand to persist into 2018
NKE Reports Q4 $0.60 v $0.49e, Rev $8.68B v $8.61Be
(JP) JAPAN MAY NATIONAL CPI Y/Y: 0.4% V 0.5%E ; CPI EX FRESH FOOD (CORE) Y/Y: 0.4% (2-year high, 5th straight month of increase) V 0.4%E
(JP) JAPAN MAY JOBLESS RATE: 3.1% V 2.8%E (5-month high)
(CN) CHINA JUNE MANUFACTURING PMI (GOVT OFFICIAL): 51.7 (3-month high) V 51.0E; NON-MANUFACTURING PMI: 54.9 (3-month high) V 54.5 PRIOR
FRI 6/30
(FR) FRANCE JUN PRELIMINARY CPI M/M: 0.0% V 0.0%E; Y/Y: 0.7% V 0.7%E
(DE) GERMANY JUN UNEMPLOYMENT CHANGE: +7K V -10KE; UNEMPLOYMENT RATE: 5.7%E V 5.7%E
(UK) Q1 FINAL GDP Q/Q: 0.2% V 0.2%E; Y/Y: 2.0% V 2.0%E
(EU) EURO ZONE JUN CPI ESTIMATE Y/Y: 1.3% V 1.3%E; CPI CORE Y/Y: 1.1% V 1.0%E
(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL OF €6.35B V €5.5-6.5B INDICATED IN 5-YEAR AND 10-YEAR BTP BONDS
(JP) Bank of Japan said to be considering lowering inflation outlook in July - press
(US) MAY PCE DEFLATOR M/M: -0.1% V -0.1%E; Y/Y: 1.4% V 1.5%E
(US) MAY PERSONAL INCOME: 0.4% V 0.3%E; PERSONAL SPENDING: 0.1% V 0.1%E
(US) MAY PCE CORE M/M: 0.1% V 0.1%E; Y/Y: 1.4% V 1.4%E
(US) Atlanta Fed cuts Q2 GDP to 2.7% from 2.9% on 6/26
(US) New York Fed Nowcast: maintains Q2 GDP forecast at 1.9%, unchanged from 6/23; raises Q3 GDP forecast to 1.6% from 1.5% on 6/23
(US) Weekly Baker Hughes US Rig Count: 940 v 941 w/w (-0.1%) (first decline in 24 weeks)
Sunday, June 25, 2017
Barrons weekend summary
Barrons weekend summary: Positive on ORCL, CI, WHR, NCR, RHT, AIZ; Cautious on FL
Cover story: With the fiduciary rule becoming law, sales of annuities are down, and the slump is likely to continue, but innovation at annuity companies is likely to benefit investors; Barron’s looks at 50 of the most competitive contracts across different categories.
Tech Trader: Positive on ORCL: Company has put to rest fears it will be rendered obsolete by cloud computing; its cloud offerings are doing better than many observers expected, while its traditional software isn’t faring as poorly as many believe.
Trader: “The bond market is telling you one thing and the stock market is telling you something else,” says Barry Kupferberg of Trilogy Capital Management; “The latest biotech rally looks to be about something more than the group’s retirement as Washington’s punching bag,” and investors should buy on the dips; Positive on WHR: As chief Jeff Fettig prepares to step down after transforming the company into an international powerhouse, the shares still look cheap. Profile: Afsaneh Beschloss, chief executive of Rock Creek Group, discusses the outlook for hedge funds and opportunities in emerging markets (equity holdings: Aarti Drugs, TAL, EDU, Safaricom, Tenent Holdings, China Mobile, Sino-Thai Engineering and Construction, Beijing Enterprises Water Group).
Features:
1) The underperformance of Canadian stocks relative to the S&P 500 this year has drawn both long and short investors from the U.S., who need to heed differences in regulation and liquidity;
2) Cautious on Exchange Income Corp.: Canadian company, which began as a tax-sheltered income trust and still markets itself as a dividend play, has become the latest target of U.S. short sellers;
3) Positive on NCR: Software company’s shares are down this year on news a key investor sold a large stake, but earnings are up and shares—which could gain 30% this year—offer tech exposure at a decent price;
4) Positive on AIZ: Firm is in the midst of a transformation, focusing more on fee-based businesses rather than taking on more risk through underwriting, and shares could still double in price.
Follow Up: Positive on RHT: Company is benefiting from major cloud deals and shares are rising, but investors should hold off on taking profits given the potential for double-digit returns this year; Cautious on FL: A potential deal between AMZN and NKE could continue to dent the shoe retailer’s growth amid slowing same-store sales; Positive on CI: Although the fate of the Senate healthcare plan is unclear, an overhaul of the Affordable Care Act would help the company by removing a $14B tax in 2018 unrelated to any broad corporate tax cuts.
European Trader: Positive on Munich Re: Firm, “one of the world’s largest reinsurance companies, could be poised to deliver solid investment returns after weathering tough market conditions in recent years.”
Asian Trader: Chinese companies are increasingly looking for overseas opportunities; GS sees a number of good plays for investors on this theme, including BABA, Nexteer Automotive Group, and Han’s Laser Technology Industry Group.
Emerging Markets: Poland is the best-performing emerging market in the MSCI Emerging Markts ETF, followed by Turkey and South Korea; Russia, Qatar, and Pakistan round out the bottom.
Commodities: Iron ore prices are set to drop, primarily because of the situation in China, where the economy is slowing down, reducing demand for steel.
Streetwise: Low inflation can be good for stocks, but investors may be overlooking the corporate-profit squeeze that can occur if wages climb faster than prices.
Friday, June 23, 2017
Negotiations on Brexit and Senate Healthcare Bill Begin; Market Reaction Mixed
TradeTheNews.com Weekly
Market Update: Negotiations on Brexit and Senate Healthcare Bill Begin; Market
Reaction Mixed
Fri, 23 Jun 2017 16:03 PM EST
The markets had a mixed week, with the S&P and Dow ending about flat while the Nasdaq lifted nearly 2%, boosted by the best week for biotech and hospitals since the election, as the Republican Obamacare replacement bill hit some legislative snags in the Senate. US new and existing home sales data was a bright spot, coming in higher than expected and with record high home prices in May. Also the 34 largest financial institutions monitored by the Fed all passed their annual stress tests. Oil price declines dragged the energy sector to its worst week since February, with crude finishing lower for a fifth consecutive week and WTI closing at a 10-month low on Wednesday. Small-cap stocks gained Friday for the third time this week, and the Russell 2000 pared earlier losses to close the week almost flat amid the annual reconstitution of the Russell US Indexes. Despite higher volumes in the Nasdaq, volatility remained muted, with the VIX hitting a four-day low on Friday. For the week, the S&P rose 0.2%, the DJIA gained less than 0.1%, and the Nasdaq added 1.8%.
On the political front, Senate Republicans unveiled their ACA replacement bill on Thursday, but several members of the GOP caucus expressed reservations that it didn't go far enough, while others were concerned with what they saw as overly harsh cuts to Medicaid. The Senate majority leader is pushing for a quick vote, but can’t get the bill passed if he loses more than two Republican votes. Markets seemed to anticipate the status quo going forward, sending the S&P healthcare sector to its biggest weekly gain since late last year. Across the pond, the UK government remains in a state of flux, as Prime Minister May's Tory Party has yet to broker a deal with Northern Ireland's Democratic Unionist Party, despite Conservative Party sources many times indicating a deal would be announced soon. Amid the inter-party wrangling, PM May began Brexit divorce negotiations with her EU partners and laid out her proposal on citizens' rights post-Brexit, which German Chancellor Merkel deemed 'a good start' but noted there are many issues still to resolve. In France, President Macron’s upstart En Marche party won a large majority in National Assembly elections, endorsing his centrist reform platform.
In corporate news, MSCI announced it will include China A shares in its Emerging Markets Index next year, a landmark moment in Beijing's long-fought endeavor to draw international funds to its shores, and the news sent Chinese stocks to an 18-month high. Lennar shares hit a 52-week high after the homebuilder posted an earnings and revenue beat, riding the wave of surging prices and accelerating home sales. American Airlines announced it received a notice from Qatar Airways advising the stateside carrier of its intent to acquire up to a 10% stake. American executives were unenthused by the 'puzzling' offer.
SUNDAY 6/18
(CN) CHINA MAY PROPERTY PRICES M/M: RISE IN 56 OUT OF 70 CITIES VS 58 PRIOR; Y/Y: RISE IN 69 OUT OF 70 CITIES V 69 PRIOR
(FR) President Macron’s "En Marche" party (with centrist ally) said to take 361 out of the 577 seats in the National Assembly following 2nd round of parliamentary elections
MONDAY 6/19
(US) Fed’s Dudley (dove, FOMC voter): Confident that the current expansion has quite a long way to go; generally pleased with US economy
UPS Establishes new surge pricing surcharge for Nov-Dec residential, large packages and packages over maximum limits
(UK) UK and EU agree on terms of reference for Brexit talks - joint statement following first day of official discussions
TUESDAY 6/20
LEN Reports Q2 $0.91 v $0.78e, Rev $3.26B v $2.89Be
FDX Reports Q4 $4.25 v $3.89e, Rev $15.7B v $15.6Be
(CN) MSCI will include China A shares in Emerging Markets Index; sees adding 222 China A large cap stocks - press
WEDNESDAY 6/21
(US) MAY EXISTING HOME SALES: 5.62M V 5.55ME
(US) Association of American Railroads weekly rail traffic report for week ending June 17th: 543.2K carloads and intermodal units, +5.2% y/y (23nd straight week of gains)
IBB Biotech names break out to levels not seen since 2015
ORCL Reports Q4 $0.89 v $0.79e, Rev $10.9B v $10.5Be
(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 1.75%; AS EXPECTED
(US) Discussion draft of Senate healthcare bill reportedly is largely similar to the House bill, but would link insurance subsidies to age and cuts Medicaid expansion more gradually - Wash Post
HCG.CA Berkshire Hathaway to invest up to C$400M (42% of market cap) in Common Equity and provide new C$2B Credit Facility; Berkshire acquires 16M shares, representing 19.99% stake
THURSDAY 6/22
WANDA.IPO Dalian Wanda: operations are sound, refutes earlier speculation banks are dumping Wanda bonds
(FR) FRANCE JUN BUSINESS CONFIDENCE: 106 V 105E; MANUFACTURING CONFIDENCE: 108 V 109E
(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS EXPECTED
(PH) PHILIPPINES CENTRAL BANK (BSP) LEAVES OVERNIGHT BORROWING RATE UNCHANGED AT 3.00%; AS EXPECTED
(TW) TAIWAN CENTRAL BANK (CBC) LEAVES BENCHMARK INTEREST RATE UNCHANGED AT 1.375%; AS EXPECTED
(UK) JUN CBI INDUSTRIAL TRENDS TOTAL ORDERS: 16 V 7E
AAL Received an unsolicited notice from Qatar Airways indicating intention to make a significant investment of ~10%
(US) MAY LEADING INDEX: 0.3% V 0.3%E
(MX) MEXICO CENTRAL BANK (BANXICO) RAISES OVERNIGHT RATE BY 25BPS TO 7.00%; AS EXPECTED
BBBY Reports Q1 $0.58 adj v $0.66e, Rev $2.74B v $2.80Be
FED BANK STRESS TEST RESULTS: ALL 34 BANKS EXCEED MINIMUM CAPITAL REQUIREMENTS
(JP) JAPAN JUNE PRELIMINARY PMI MANUFACTURING: 52.0 V 53.1 PRIOR; 9th straight month of expansion; 6-month low
FRIDAY
(FR) FRANCE JUN PRELIMINARY MANUFACTURING PMI: 55.0 V 54.0E (9th month of expansion)
(DE) GERMANY JUN PRELIMINARY MANUFACTURING PMI: 59.3 V 59.0E (31st month of expansion)
(EU) EURO ZONE JUN PRELIMINARY MANUFACTURING PMI: 57.3 V 56.8E (47th month of expansion)
(US) JUN PRELIMINARY MARKIT MANUFACTURING PMI: 52.1 V 53.0E
(US) MAY NEW HOME SALES: 610K V 590KE
Fri, 23 Jun 2017 16:03 PM EST
The markets had a mixed week, with the S&P and Dow ending about flat while the Nasdaq lifted nearly 2%, boosted by the best week for biotech and hospitals since the election, as the Republican Obamacare replacement bill hit some legislative snags in the Senate. US new and existing home sales data was a bright spot, coming in higher than expected and with record high home prices in May. Also the 34 largest financial institutions monitored by the Fed all passed their annual stress tests. Oil price declines dragged the energy sector to its worst week since February, with crude finishing lower for a fifth consecutive week and WTI closing at a 10-month low on Wednesday. Small-cap stocks gained Friday for the third time this week, and the Russell 2000 pared earlier losses to close the week almost flat amid the annual reconstitution of the Russell US Indexes. Despite higher volumes in the Nasdaq, volatility remained muted, with the VIX hitting a four-day low on Friday. For the week, the S&P rose 0.2%, the DJIA gained less than 0.1%, and the Nasdaq added 1.8%.
On the political front, Senate Republicans unveiled their ACA replacement bill on Thursday, but several members of the GOP caucus expressed reservations that it didn't go far enough, while others were concerned with what they saw as overly harsh cuts to Medicaid. The Senate majority leader is pushing for a quick vote, but can’t get the bill passed if he loses more than two Republican votes. Markets seemed to anticipate the status quo going forward, sending the S&P healthcare sector to its biggest weekly gain since late last year. Across the pond, the UK government remains in a state of flux, as Prime Minister May's Tory Party has yet to broker a deal with Northern Ireland's Democratic Unionist Party, despite Conservative Party sources many times indicating a deal would be announced soon. Amid the inter-party wrangling, PM May began Brexit divorce negotiations with her EU partners and laid out her proposal on citizens' rights post-Brexit, which German Chancellor Merkel deemed 'a good start' but noted there are many issues still to resolve. In France, President Macron’s upstart En Marche party won a large majority in National Assembly elections, endorsing his centrist reform platform.
In corporate news, MSCI announced it will include China A shares in its Emerging Markets Index next year, a landmark moment in Beijing's long-fought endeavor to draw international funds to its shores, and the news sent Chinese stocks to an 18-month high. Lennar shares hit a 52-week high after the homebuilder posted an earnings and revenue beat, riding the wave of surging prices and accelerating home sales. American Airlines announced it received a notice from Qatar Airways advising the stateside carrier of its intent to acquire up to a 10% stake. American executives were unenthused by the 'puzzling' offer.
SUNDAY 6/18
(CN) CHINA MAY PROPERTY PRICES M/M: RISE IN 56 OUT OF 70 CITIES VS 58 PRIOR; Y/Y: RISE IN 69 OUT OF 70 CITIES V 69 PRIOR
(FR) President Macron’s "En Marche" party (with centrist ally) said to take 361 out of the 577 seats in the National Assembly following 2nd round of parliamentary elections
MONDAY 6/19
(US) Fed’s Dudley (dove, FOMC voter): Confident that the current expansion has quite a long way to go; generally pleased with US economy
UPS Establishes new surge pricing surcharge for Nov-Dec residential, large packages and packages over maximum limits
(UK) UK and EU agree on terms of reference for Brexit talks - joint statement following first day of official discussions
TUESDAY 6/20
LEN Reports Q2 $0.91 v $0.78e, Rev $3.26B v $2.89Be
FDX Reports Q4 $4.25 v $3.89e, Rev $15.7B v $15.6Be
(CN) MSCI will include China A shares in Emerging Markets Index; sees adding 222 China A large cap stocks - press
WEDNESDAY 6/21
(US) MAY EXISTING HOME SALES: 5.62M V 5.55ME
(US) Association of American Railroads weekly rail traffic report for week ending June 17th: 543.2K carloads and intermodal units, +5.2% y/y (23nd straight week of gains)
IBB Biotech names break out to levels not seen since 2015
ORCL Reports Q4 $0.89 v $0.79e, Rev $10.9B v $10.5Be
(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 1.75%; AS EXPECTED
(US) Discussion draft of Senate healthcare bill reportedly is largely similar to the House bill, but would link insurance subsidies to age and cuts Medicaid expansion more gradually - Wash Post
HCG.CA Berkshire Hathaway to invest up to C$400M (42% of market cap) in Common Equity and provide new C$2B Credit Facility; Berkshire acquires 16M shares, representing 19.99% stake
THURSDAY 6/22
WANDA.IPO Dalian Wanda: operations are sound, refutes earlier speculation banks are dumping Wanda bonds
(FR) FRANCE JUN BUSINESS CONFIDENCE: 106 V 105E; MANUFACTURING CONFIDENCE: 108 V 109E
(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS EXPECTED
(PH) PHILIPPINES CENTRAL BANK (BSP) LEAVES OVERNIGHT BORROWING RATE UNCHANGED AT 3.00%; AS EXPECTED
(TW) TAIWAN CENTRAL BANK (CBC) LEAVES BENCHMARK INTEREST RATE UNCHANGED AT 1.375%; AS EXPECTED
(UK) JUN CBI INDUSTRIAL TRENDS TOTAL ORDERS: 16 V 7E
AAL Received an unsolicited notice from Qatar Airways indicating intention to make a significant investment of ~10%
(US) MAY LEADING INDEX: 0.3% V 0.3%E
(MX) MEXICO CENTRAL BANK (BANXICO) RAISES OVERNIGHT RATE BY 25BPS TO 7.00%; AS EXPECTED
BBBY Reports Q1 $0.58 adj v $0.66e, Rev $2.74B v $2.80Be
FED BANK STRESS TEST RESULTS: ALL 34 BANKS EXCEED MINIMUM CAPITAL REQUIREMENTS
(JP) JAPAN JUNE PRELIMINARY PMI MANUFACTURING: 52.0 V 53.1 PRIOR; 9th straight month of expansion; 6-month low
FRIDAY
(FR) FRANCE JUN PRELIMINARY MANUFACTURING PMI: 55.0 V 54.0E (9th month of expansion)
(DE) GERMANY JUN PRELIMINARY MANUFACTURING PMI: 59.3 V 59.0E (31st month of expansion)
(EU) EURO ZONE JUN PRELIMINARY MANUFACTURING PMI: 57.3 V 56.8E (47th month of expansion)
(US) JUN PRELIMINARY MARKIT MANUFACTURING PMI: 52.1 V 53.0E
(US) MAY NEW HOME SALES: 610K V 590KE
Saturday, June 17, 2017
Barrons weekend summary
Barrons weekend summary: Positive on AMZN, GE, DLR, Wall Street banks
Cover story: Though Wall Street is concerned tech stocks are too pricey, too popular, and comprise too large a portion of the Nasdaq, the sector has delivered strong earnings growth for years and will continue to do so as tech encroaches into more areas of the economy.
Features:
1) Positive on AMZN: The e-commerce giant’s acquisition of WFM is likely to shake up the retail sector, affecting heavyweights such as KR, COST, TGT, WBA, WMT, as well as tangential companies such as MKC, CAG, and GIS;
2) Positive on GE: New chief executive John Flannery seems well suited to the job, and shares could top $32 in a year as he improves operating results and restores faith in guidance;
3) Positive on BAC, C, GS, JPM, MS: Large banks are likely to pass stress tests and announce plans for share buybacks and dividends, while earnings are rising, and shares are cheap.
Tech Trader: Positive on DLR: Company stands out as an alternative to the ‘FANG’ tech stocks; the REIT’s data centers are the foundation of online commerce, cloud computing, artificial intelligence, and other trends.
Trader: Investors seeking to make sense of the current market should step back and focus on fundamentals and valuations, says DB strategist Binky Chadha; Positive on GIS: For contrarian investors seeking a counterweight to tech and fast growth, the food giant could return 20% during the next 18 to 24 months, with little volatility; Positive on GWR: Railway provides another option for investors avoiding the tech sector; global growth, even if slow, should eventually give the moribund shares a boost.
Interview: Famed investor Sam Zell talks about real estate, Donald Trump, and how his immigrant parents gave him the foundation for success.
Profile: Lori Keith and Matthew Gershuny of the Parnassus Mid-Cap fund look for high-quality companies that generate high returns on capital and aren’t overburdened with debt (top 10 holdings: MSI, CRSK, CAH, XYL, CLX, PX, XRAY, PNR, SJR, FISV). Penta: Barron’s list of the top 100 hedge funds is topped by EQMC Europe Development Capital, Margrove Partners, and Segantii Asia-Pacific Equity Multi-Strategy; Interview with Francisco de Juan and Jacobo Llanza of EQMC; Andy Saperstein and Shelley O’Connor of Morgan Stanley Wealth Management talk about how they’re focused on reinventing the firm’s digital platform; “Proposed cuts in the pass-through tax rate will benefit the very rich more than small businesses”; Fiduciaries may be setting themselves up for lawsuits, and litigation targeting estate-related trusts and trustees is on the rise; “Luxury watch rentals have become a fast-growing business due to a generational difference in lifestyle priorities and interests”; Prices for vintage airplanes are dropping, making it a good time to buy; A look at three next-generation helicopters that are futuristically styled and feature smart technology.
Follow-Up: Positive on STRA, LOPE: Shares of for-profit education companies are on the rise under the Trump administration, and they have an ally in education secretary Betsy DeVos; Positive on ABB, ROBO, Kuku, Yaskawa Electronics, ROK: Shares of robotics companies remain attractive for long-term investors despite some concerns about the sector.
European Trader: Positive on Siemens, Schneider Electric: Companies provide investors with exposure to the growing robotics and automation business.
Asian Trader: Investors seem confident that the MSCI index will approve the inclusion of Chinese stocks in its widely tracked indexes.
Emerging Markets: Emerging markets will be the investment growth vehicle for the next decade, says PGIM, based on three key themes: the jump into the digital age, modernization of infrastructure and local markets, and spending by the EM middle class.
Commodities: With sugar supplies outstripping demand, prices have fallen by more then 30 percent this year, and a rebound isn’t likely on the horizon.
CEO Spotlight: KMB chief Thomas Falk has trimmed bureaucracy, resulting in $3B in cost savings, leaving the company well-positioned to deal with future challenges.
Streetwise: AMZN’s purchase of WFM should put heat on grocers to improve their operations, because the deal is likely to lead to slimmer profits in a sector where margins are already razor-thin.
Friday, June 16, 2017
Fed and BOE Get More Hawkish; Retail Stunned by Amazon Swallowing Whole Foods
TradeTheNews.com Weekly
Market Update: Fed and BOE Get More Hawkish; Retail Stunned by Amazon
Swallowing Whole Foods
Fri, 16 Jun 2017 16:04 PM EST
Global stock markets drifted higher during the first few trading sessions this week, shaking off fallout from the UK elections and lingering volatility in high-profile NASDAQ stocks. Even a horrific shooting at a congressional baseball practice on Wednesday did little to sway sentiment. US Treasury markets continued to march to their own beat, and yields touched the lowest levels since November after May CPI data was softer than expected. The soft data did little to sway the Fed though, who later that day raised rates and outlined a plan to begin shrinking its balance sheet sometime later this year. In her press conference Chair Yellen stressed she still held a high degree of confidence inflation readings would turn back higher towards the Fed target which will enable the continued normalization of policy. Rates bottomed and the Greenback firmed, a move that was aided by better than expected manufacturing data. The Bank of England leaned more hawkish than expected, disclosing two more dissenters joined the ranks of MPC members pushing for a cutback in stimulus when they met on Thursday.
Crude markets remained under pressure as faith in global oil markets coming into balance this year appears to be waning. Both the monthly OPEC and IEA reports forecast increased supply, accompanied with stable demand. Brent prices briefly dropped below the May low, while WTI stopped just above it. With that, the energy complex served as anchor for the S&P for much of the week. Banks and financials moved up into the Fed meeting. On Friday, equity markets were roiled by Amazon's surprise purchase of Whole Foods, putting pressure of a host of sectors tied to the supermarket space. For the week the DJIA gained 0.5%, the S&P500 added less than 0.1%, and the Nasdaq lost 0.9%.
In corporate news, GE started off the week with the announcement that longtime CEO Jeff Immelt would be stepping down to be succeeded by current healthcare division president John Flannery. Flannery is best known for overseeing a turnaround at GE’s $18B healthcare unit. Nike shares slipped Thursday after announcing a company reorganization and 2% workforce reduction. Booz Allen Hamilton shares plunged following their disclosure of a DOJ civil and criminal probe into cost accounting practices. Kroger dropped on a disappointing cut to FY guidance and a weak earnings report, with executives citing commodity cost deflation and intense price pressures in the quarter. And Amazon finished off the week with the bombshell $13.7B deal to acquire Whole Foods for $42/share in cash, signaling in a grand way the e-commerce behemoth’s entrance into the $300B grocery market and sending ripples throughout an array of sectors.
MONDAY JUNE 12
(FR) BANK OF FRANCE MAY BUSINESS SENTIMENT: 105 V 105E
GE Names John Flannery (55) Chairman and CEO; effective Aug 1st; Affirms FY17 forecast
(IN) INDIA MAY CPI Y/Y: 2.2% V 2.4%E (record low reading)
(CA) BOC's Wilkins: Bank of Canada to assess whether reduced stimulus is needed
(CN) China Ministry of Industry and Information Technology(MIIT) releases latest draft on New energy vehicle (NEV) credit policy/quota for comment
TUESDAY JUNE 13
(UK) MAY CPI M/M: 0.3% V 0.2%E; Y/Y: 2.9% V 2.7%E; CPI CORE Y/Y: 2.6% V 2.3%E
(DE) GERMANY JUN ZEW CURRENT SITUATION SURVEY: 88.0 V 85.0E; EXPECTATION SURVEY: 18.6 V 21.7E
(US) MAY PPI FINAL DEMAND M/M: 0.0% V 0.0%E; Y/Y: 2.4% V 2.3%E
(CN) China Finance Ministry (MOF) announced plan to issue CNY2.0B in USD-denominated bonds (China’s first USD-denominated bond sale since 2004) – financial press (Update)
*(CN) CHINA MAY RETAIL SALES Y/Y: 10.7% V 10.7%E; YTD Y/Y: 10.3% V 10.3%E
(CN) CHINA MAY INDUSTRIAL PRODUCTION Y/Y: 6.5% V 6.4%E; YTD Y/Y: 6.7% V 6.6%E
(CN) CHINA MAY FIXED ASSETS EX RURAL YTD Y/Y: 8.6% (4-month low) V 8.8%E
WEDNESDAY JUNE 14
(UK) APR AVERAGE WEEKLY EARNINGS 3M/Y: 2.1% V 2.4%E; WEEKLY EARNINGS (EX BONUS) 3M/Y: 1.7% V 2.0%E (5th straight slowing of data to it lowest pace in two years)
*(UK) MAY JOBLESS CLAIMS CHANGE: +7.3K V +22.0K PRIOR; CLAIMANT COUNT RATE: 2.3% V 2.3%PRIOR
*(UK) APR ILO UNEMPLOYMENT RATE 3M/3M: 4.6% V 4.6%E
(IS) ICELAND CENTRAL BANK (SEDABANKI) CUTS 7-DAY TERM DEPOSIT RATE BY 25BPS TO 4.50%
(US) Reports of shooting at GOP congressional baseball practice in VA; suspect believed to be in custody
(US) MAY ADVANCE RETAIL SALES M/M: -0.3% V 0.0%E; RETAIL SALES EX AUTO M/M: -0.3% V 0.1%E
(US) MAY CPI M/M: -0.1% V 0.0%E (2nd negative reading in last 3 months); CPI EX FOOD AND ENERGY M/M: 0.1% V 0.2%E; CPI INDEX NSA: 251.329 V 251.580E
(US) Atlanta Fed raises Q2 GDP to 3.2% from 3.0% on 6/9
(US) FOMC RAISES FED FUNDS TARGET RANGE 25BPS TO 1.00-1.25%(AS EXPECTED); CUT TO REINVESTMENT STARTING THIS YEAR IS SEEN EXPANDING ON QUARTERLY BASIS UNTIL IT REACHES $30M FOR TREASURIES AND $20B PER MONTH IN MORTAGAGE-BACKED SECURITIES
(US) Fed Chair Yellen: economic growth appears to have rebounded after first quarter slowdown - post rate decision conf
US Dollar firms as Yellen highlights "one off" catagories that have pressured recent core inflation readings; Notes weakness in cellular phone contracts and some prescription drugs
(US) Association of American Railroads weekly rail traffic report for week ending June 10th: 545.3K carloads and intermodal units, +6.2% y/y (22nd straight week of gains)
(AU) AUSTRALIA MAY EMPLOYMENT CHANGE: +42.0K (3rd straight increase) V +10.0KE; UNEMPLOYMENT RATE: 5.5% (4-year low) V 5.7%E
THURSDAY JUNE 15
*(CH) SWISS NATIONAL BANK (SNB) LEAVES DEPOSIT INTEREST RATE UNCHANGED AT -0.75%; AS EXPECTED
*(UK) MAY RETAIL SALES (EX AUTO FUEL) M/M: -1.6% V -1.0%E; Y/Y: 0.6% V 1.9%E
*(ID) INDONESIA CENTRAL BANK (BI) LEAVES REVERSE REPO RATE UNCHANGED AT 4.75% (as expected)
(UK) BANK OF ENGLAND BANK (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS EXPECTED
(UK) BOE MINUTES: VOTED 5 TO 3 TO LEAVE INTEREST RATES UNCHANGED
*(TR) TURKEY CENTRAL BANK (CBRT) LEAVES BENCHMARK REPURCHASE RATE UNCHANGED AT 8.00%; AS EXPECTED
(RU) Russia President Putin: No reason for US to tighten sanctions; not considering US an enemy - Annual question and answer session
*(US) JUN EMPIRE MANUFACTURING: 19.8 V 5.0E
(US) MAY IMPORT PRICE INDEX M/M: -0.3% V -0.1%E; Y/Y: 2.1% V 2.9%
(US) JUN PHILADELPHIA FED BUSINESS OUTLOOK: 27.6 V 24.9E
(US) MAY INDUSTRIAL PRODUCTION M/M: 0.0% V 0.2%E; CAPACITY UTILIZATION: 76.6% V 76.8%E
(US) JUN NAHB HOUSING MARKET INDEX: 67 V 70E
BlackHat security conference in July 22-27 to demonstrate significant compromises in major systems
(US) White House reportedly preparing an executive order on drug pricing; to hold meetings with budget and health officials
(CN) Chinese banks said to have taken steps to limit Anbang exposure - press
(GR) Eurogroup's Dijsselbloem: we have achievements on all elements on Greece; agreed on €8.5B loan to Greece
(US) APR TOTAL NET TIC FLOWS: $65.8B V $9.3B PRIOR; LONG-TERM TIC FLOWS: $1.8B V $59.8B PRIOR
BAH Discloses civil and criminal investigation by Dept of Justice into cost accounting practices - filing
(CN) PBOC to inject combined CNY290B v CNY150B prior in 7-day, 14-day and 28-day reverse repos
(JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED; maintains its Economic Assessment
FRIDAY 6/16
TSCO.UK Reports Q1 UK LFL (ex VAT, ex-fuel) 2.3% v 1.9%e
- Group sales (ex VAT, ex-fuel, cc):1.0% v 1.6%e
(EU) EURO ZONE MAY CPI M/M: -0.1% V -0.1%E; Y/Y: 1.4% V 1.4%E; CPI CORE Y/Y: 0.9% V 0.9%E
(RU) RUSSIA CENTRAL BANK (CBR) CUTS KEY 1-WEEK AUCTION RATE BY 25BPS TO 9.00%; AS EXPECTED
FCAU CEO: Q2 in line with expectations, Affirms FY17 outlook; Does not expect Diesel issues in the US to impact 2018 targets
(US) MAY HOUSING STARTS: 1.09M V 1.22ME (lowest since Sept); BUILDING PERMITS: 1.17M V 1.25ME (lowest since Aug)
WFM Amazon to acquire Whole Foods Market for $42/shr in cash in $13.7B deal
*(US) JUN PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 94.5 V 97.0E
(US) Deputy AG Rosenstein reportedly indicates he may need to recuse himself from Russia investigation - ABC News
Fri, 16 Jun 2017 16:04 PM EST
Global stock markets drifted higher during the first few trading sessions this week, shaking off fallout from the UK elections and lingering volatility in high-profile NASDAQ stocks. Even a horrific shooting at a congressional baseball practice on Wednesday did little to sway sentiment. US Treasury markets continued to march to their own beat, and yields touched the lowest levels since November after May CPI data was softer than expected. The soft data did little to sway the Fed though, who later that day raised rates and outlined a plan to begin shrinking its balance sheet sometime later this year. In her press conference Chair Yellen stressed she still held a high degree of confidence inflation readings would turn back higher towards the Fed target which will enable the continued normalization of policy. Rates bottomed and the Greenback firmed, a move that was aided by better than expected manufacturing data. The Bank of England leaned more hawkish than expected, disclosing two more dissenters joined the ranks of MPC members pushing for a cutback in stimulus when they met on Thursday.
Crude markets remained under pressure as faith in global oil markets coming into balance this year appears to be waning. Both the monthly OPEC and IEA reports forecast increased supply, accompanied with stable demand. Brent prices briefly dropped below the May low, while WTI stopped just above it. With that, the energy complex served as anchor for the S&P for much of the week. Banks and financials moved up into the Fed meeting. On Friday, equity markets were roiled by Amazon's surprise purchase of Whole Foods, putting pressure of a host of sectors tied to the supermarket space. For the week the DJIA gained 0.5%, the S&P500 added less than 0.1%, and the Nasdaq lost 0.9%.
In corporate news, GE started off the week with the announcement that longtime CEO Jeff Immelt would be stepping down to be succeeded by current healthcare division president John Flannery. Flannery is best known for overseeing a turnaround at GE’s $18B healthcare unit. Nike shares slipped Thursday after announcing a company reorganization and 2% workforce reduction. Booz Allen Hamilton shares plunged following their disclosure of a DOJ civil and criminal probe into cost accounting practices. Kroger dropped on a disappointing cut to FY guidance and a weak earnings report, with executives citing commodity cost deflation and intense price pressures in the quarter. And Amazon finished off the week with the bombshell $13.7B deal to acquire Whole Foods for $42/share in cash, signaling in a grand way the e-commerce behemoth’s entrance into the $300B grocery market and sending ripples throughout an array of sectors.
MONDAY JUNE 12
(FR) BANK OF FRANCE MAY BUSINESS SENTIMENT: 105 V 105E
GE Names John Flannery (55) Chairman and CEO; effective Aug 1st; Affirms FY17 forecast
(IN) INDIA MAY CPI Y/Y: 2.2% V 2.4%E (record low reading)
(CA) BOC's Wilkins: Bank of Canada to assess whether reduced stimulus is needed
(CN) China Ministry of Industry and Information Technology(MIIT) releases latest draft on New energy vehicle (NEV) credit policy/quota for comment
TUESDAY JUNE 13
(UK) MAY CPI M/M: 0.3% V 0.2%E; Y/Y: 2.9% V 2.7%E; CPI CORE Y/Y: 2.6% V 2.3%E
(DE) GERMANY JUN ZEW CURRENT SITUATION SURVEY: 88.0 V 85.0E; EXPECTATION SURVEY: 18.6 V 21.7E
(US) MAY PPI FINAL DEMAND M/M: 0.0% V 0.0%E; Y/Y: 2.4% V 2.3%E
(CN) China Finance Ministry (MOF) announced plan to issue CNY2.0B in USD-denominated bonds (China’s first USD-denominated bond sale since 2004) – financial press (Update)
*(CN) CHINA MAY RETAIL SALES Y/Y: 10.7% V 10.7%E; YTD Y/Y: 10.3% V 10.3%E
(CN) CHINA MAY INDUSTRIAL PRODUCTION Y/Y: 6.5% V 6.4%E; YTD Y/Y: 6.7% V 6.6%E
(CN) CHINA MAY FIXED ASSETS EX RURAL YTD Y/Y: 8.6% (4-month low) V 8.8%E
WEDNESDAY JUNE 14
(UK) APR AVERAGE WEEKLY EARNINGS 3M/Y: 2.1% V 2.4%E; WEEKLY EARNINGS (EX BONUS) 3M/Y: 1.7% V 2.0%E (5th straight slowing of data to it lowest pace in two years)
*(UK) MAY JOBLESS CLAIMS CHANGE: +7.3K V +22.0K PRIOR; CLAIMANT COUNT RATE: 2.3% V 2.3%PRIOR
*(UK) APR ILO UNEMPLOYMENT RATE 3M/3M: 4.6% V 4.6%E
(IS) ICELAND CENTRAL BANK (SEDABANKI) CUTS 7-DAY TERM DEPOSIT RATE BY 25BPS TO 4.50%
(US) Reports of shooting at GOP congressional baseball practice in VA; suspect believed to be in custody
(US) MAY ADVANCE RETAIL SALES M/M: -0.3% V 0.0%E; RETAIL SALES EX AUTO M/M: -0.3% V 0.1%E
(US) MAY CPI M/M: -0.1% V 0.0%E (2nd negative reading in last 3 months); CPI EX FOOD AND ENERGY M/M: 0.1% V 0.2%E; CPI INDEX NSA: 251.329 V 251.580E
(US) Atlanta Fed raises Q2 GDP to 3.2% from 3.0% on 6/9
(US) FOMC RAISES FED FUNDS TARGET RANGE 25BPS TO 1.00-1.25%(AS EXPECTED); CUT TO REINVESTMENT STARTING THIS YEAR IS SEEN EXPANDING ON QUARTERLY BASIS UNTIL IT REACHES $30M FOR TREASURIES AND $20B PER MONTH IN MORTAGAGE-BACKED SECURITIES
(US) Fed Chair Yellen: economic growth appears to have rebounded after first quarter slowdown - post rate decision conf
US Dollar firms as Yellen highlights "one off" catagories that have pressured recent core inflation readings; Notes weakness in cellular phone contracts and some prescription drugs
(US) Association of American Railroads weekly rail traffic report for week ending June 10th: 545.3K carloads and intermodal units, +6.2% y/y (22nd straight week of gains)
(AU) AUSTRALIA MAY EMPLOYMENT CHANGE: +42.0K (3rd straight increase) V +10.0KE; UNEMPLOYMENT RATE: 5.5% (4-year low) V 5.7%E
THURSDAY JUNE 15
*(CH) SWISS NATIONAL BANK (SNB) LEAVES DEPOSIT INTEREST RATE UNCHANGED AT -0.75%; AS EXPECTED
*(UK) MAY RETAIL SALES (EX AUTO FUEL) M/M: -1.6% V -1.0%E; Y/Y: 0.6% V 1.9%E
*(ID) INDONESIA CENTRAL BANK (BI) LEAVES REVERSE REPO RATE UNCHANGED AT 4.75% (as expected)
(UK) BANK OF ENGLAND BANK (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS EXPECTED
(UK) BOE MINUTES: VOTED 5 TO 3 TO LEAVE INTEREST RATES UNCHANGED
*(TR) TURKEY CENTRAL BANK (CBRT) LEAVES BENCHMARK REPURCHASE RATE UNCHANGED AT 8.00%; AS EXPECTED
(RU) Russia President Putin: No reason for US to tighten sanctions; not considering US an enemy - Annual question and answer session
*(US) JUN EMPIRE MANUFACTURING: 19.8 V 5.0E
(US) MAY IMPORT PRICE INDEX M/M: -0.3% V -0.1%E; Y/Y: 2.1% V 2.9%
(US) JUN PHILADELPHIA FED BUSINESS OUTLOOK: 27.6 V 24.9E
(US) MAY INDUSTRIAL PRODUCTION M/M: 0.0% V 0.2%E; CAPACITY UTILIZATION: 76.6% V 76.8%E
(US) JUN NAHB HOUSING MARKET INDEX: 67 V 70E
BlackHat security conference in July 22-27 to demonstrate significant compromises in major systems
(US) White House reportedly preparing an executive order on drug pricing; to hold meetings with budget and health officials
(CN) Chinese banks said to have taken steps to limit Anbang exposure - press
(GR) Eurogroup's Dijsselbloem: we have achievements on all elements on Greece; agreed on €8.5B loan to Greece
(US) APR TOTAL NET TIC FLOWS: $65.8B V $9.3B PRIOR; LONG-TERM TIC FLOWS: $1.8B V $59.8B PRIOR
BAH Discloses civil and criminal investigation by Dept of Justice into cost accounting practices - filing
(CN) PBOC to inject combined CNY290B v CNY150B prior in 7-day, 14-day and 28-day reverse repos
(JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED; maintains its Economic Assessment
FRIDAY 6/16
TSCO.UK Reports Q1 UK LFL (ex VAT, ex-fuel) 2.3% v 1.9%e
- Group sales (ex VAT, ex-fuel, cc):1.0% v 1.6%e
(EU) EURO ZONE MAY CPI M/M: -0.1% V -0.1%E; Y/Y: 1.4% V 1.4%E; CPI CORE Y/Y: 0.9% V 0.9%E
(RU) RUSSIA CENTRAL BANK (CBR) CUTS KEY 1-WEEK AUCTION RATE BY 25BPS TO 9.00%; AS EXPECTED
FCAU CEO: Q2 in line with expectations, Affirms FY17 outlook; Does not expect Diesel issues in the US to impact 2018 targets
(US) MAY HOUSING STARTS: 1.09M V 1.22ME (lowest since Sept); BUILDING PERMITS: 1.17M V 1.25ME (lowest since Aug)
WFM Amazon to acquire Whole Foods Market for $42/shr in cash in $13.7B deal
*(US) JUN PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 94.5 V 97.0E
(US) Deputy AG Rosenstein reportedly indicates he may need to recuse himself from Russia investigation - ABC News
Sunday, June 11, 2017
Barrons weekend summary
Barrons weekend summary: positive on LRCX, DBD, select energy sector names, select banks \Cover story: Mid-year picks from panelists on the Barron's 2017 Roundtable: William Priest (COHR, CYBR, DIS, JCI); Jeffrey Gundlach (PPT, EEM); Meryl Witmer (DLTR, Howden Joinery Group); Scott Black (TSEM, ICHR); Oscar Schafer (COMM, Cellnex Telecom); Abby Joseph Cohen (Schneider Electric, Clariant, Omron, ARMK); Mario Gabelli (VVV, COT, MICC, CNHI, Liberty Braves Group, RHP, MWA).
Features:
1) Positive on CNQ, CVX, EOG, NBL: The struggling energy sector could be near a bottom after a drop in U.S. crude-oil inventories sent prices to a new low for the year, and the stocks should see nice gains;
2) Positive on CMA, SIVB, ZION: The three banks, which have large variable-rate commercial loan portfolios and non-interest-bearing checking accounts, should continue to benefit from short-term rate hikes;
3) Positive on LRCX: Company is benefiting from the spread of NAND hard drives and the growth in popularity of smart devices such as refrigerators and watches; shares could gain 20% during the coming year;
4) Positive on DBD: Though Wall Street believes online and mobile payment systems will render cash obsolete, Diebold continues to make cutting-edge ATMs and is a contrarian opportunity for investors.
Tech Trader: Cautious on AAPL: Tech giant’s recently unveiled HomePod “shows up Apple’s shortcomings in cloud computing and the related fields of machine learning and artificial intelligence,” and isn’t likely to supplant AMZN’s Alexa or GOOGL’s Assistant.
Trader: “If Fed chief Janet Yellen can pull off a hike and convince markets that the U.S. economy is still growing steadily, Friday’s tech wreck could be just a hiccup on the way to higher stock markets”; The tools in the activist investor playbook are getting old, with most activists simply focusing on getting companies to buy back shares and pay dividends; If KR is forced to cut guidance again, it could lead to another industry price war in which margins are sacrificed for sales growth.
Profile: Peter Kwiatkowski of the Touchstone Flexible Income fund looks for stable income in a global portfolio with a low correlation to traditional stocks and bonds (top 10 preferred holdings: GE, RBS, LYG, Australia and New Zealand Banking Group, JPM, Societe Generale, ING, USB, VIA, Catlin Insurance).
Follow-Up: Positive on REGN: Shares may look expensive relative to near-term earnings forecasts, but the company has more long-term potential for hits than its peers; Cautious on EXAS: Tests of the company’s colorectal cancer medication seem positive, but profits are years away and much of the optimism is already priced into the stock.
European Trader: For investors, the outcome of the recent British elections was the worst possible, “potentially plunging the U.K. into a period of political uncertainty that could weaken the economy.”
Asian Trader: Positive on Inventec, Primax Electronics, Sunny Optical Technology, Largan Precision: AAPL’s home-speaker device is likely to boost several companies in the Asian tech sector.
Emerging Markets: Positive on BAP: Shares of the Peruvian bank are up, and should continue to benefit from economic growth under Peru’s market-friendly president, Pedro Pablo Kuczynski.
Commodities: “Palladium prices surged to multiyear highs last week, but more pessimism in the auto industry and a pile-in by speculators suggest the rally is getting exhausted.”
Streetwise: Fundstrat’s Thomas Lee sees opportunity in unloved sectors, and he likes MKTX, SCHW, WAL, TMUS, FANG, LNG.
Friday, June 9, 2017
Political Turmoil Hits FX; Big Tech Sells Off on Friday
TradeTheNews.com Weekly
Market Update: Political Turmoil Hits FX; Big Tech Sells Off on Friday
Fri, 09 Jun 2017 16:12 PM EST
US stock markets digested a host of headline risk late in the week, with the Dow remaining at lofty levels while the Nasdaq sold off into Friday afternoon. Geopolitics largely ruled the roost, with terrorist attacks in London and Tehran, a Saudi rift with Qatar, former FBI Director Comey's testimony, and a surprise result in the UK election all registering on traders' radar screens. The ECB boosted its economic growth outlook for the Eurozone midweek, but kept interest rates on hold, though Mario Draghi said the ECB would continue its bond-buying program and will remain in the market for 'a long time.' The EUR/USD fell below 1.1200 on Thursday to hit its lowest point in June, and later that evening the pound weakened sharply when it became clear the UK election would result in a hung parliament. Crude was down ~3% on the week, hurt by US inventory builds, despite diplomatic turmoil between the Gulf states. Treasury yields lifted marginally and gold pared back its recent gains as safe haven assets came under pressure.Stocks were mostly higher, but large cap tech sold off on heavy volume on Friday, with profit-taking apparently triggered by a short seller note on Nvidia. The late drop in stocks lifted the VIX volatility index off of a two-decade low.For the week, the DJIA gained 0.3%, while the S&P slipped 0.3% and the Nasdaq lost 1.6%.
On the political front, Mexico came to agreement with the US government to cut its exports of refined sugar, a deal that bodes well for upcoming NAFTA renegotiation talks later in the summer. The House of Representatives passed a repeal of Dodd-Frank financial regulation on a party-line vote, though the replacement bill will likely have trouble in its current form in the Senate as it would be subject to filibuster rules. There was also some chatter this week that a GOP Obamacare replacement health care bill was making progress behind the scenes in the Senate, but no timeline was announced.
In corporate news, Macy's shares dipped on Tuesday along with other department store retailers after its CFO talked down margins at its analyst day. Nordstrom popped higher Thursday on word the Nordstrom family is considering taking the retailer private. Airlines climbed on continued softness in oil and Delta comments that it's on track to expand margins over the balance of the year. And NVIDIA led the Nasdaq lower on Friday after Citron's Andrew Left reiterated his cautious comments and said over-optimism has led people to discount the tech manufacturer's competition.
SUNDAY JUNE 4
World Bank maintains both 2017 and 2018 global GDP growth forecast; Warns on emerging market growth
*(HK) HONG KONG MAY COMPOSITE PMI: 50.5 V 51.1 PRIOR (2nd straight expansion)
(CN) CHINA MAY CAIXIN PMI SERVICES: 52.8 V 51.5 PRIOR (4 month high)
MONDAY JUNE 5
(FR) FRANCE MAY FINAL SERVICES PMI: 57.2 V 58.0E (confirms 11th month of expansion)
Evergrande reports May contracted sales CNY38.2B v CNY21.7B y/y
(US) Q1 FINAL NONFARM PRODUCTIVITY: 0.0% V -0.2%E; LABOR COST: 2.2% V 2.4%E
(US) MAY FINAL MARKIT SERVICES PMI: 53.6 V 54.0 PRELIM
(US) APR FINAL DURABLE GOODS ORDERS: -0.8% V -0.5%E; DURABLES EX TRANSPORTATION: -0.5% V -0.4% PRELIM
TUESDAY JUNE 6
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50% (AS EXPECTED)
*(EU) EURO ZONE JUN SENTIX INVESTOR CONFIDENCE: 28.4 V 27.4E (highest reading since July 2007)
FAST Reports May Net Sales $383.5M, +14.9% y/y
August gold future approachs April high of $1300
(US) APR JOLTS JOB OPENINGS: 6.044M V 5.75ME (record high, first time above 6M)
*(US) S&P AFFIRMS UNITED STATES OF AMERICA SOVEREIGN RATING AT AA+; OUTLOOK STABLE
(AU) AUSTRALIA Q1 GDP Q/Q: 0.3% V 0.3%E; Y/Y: 1.7% V 1.6%E (ties longest expansion on record but at slowest annual pace since 2009)
WEDNESDAY JUNE 7
(IR) Shooting reported inside Iran Parliament and reports of hostages taken - Twitter sources
(UK) MAY HALIFAX HOUSE PRICE M/M: +0.4% V -0.2%E; 3M/Y: 3.3% V 3.0%E
(CH) CHINA MAY FOREIGN RESERVES: $3.054T V $3.046TE (4th straight increase and longest streak since Jun 2014)
(EU) OECD Economic Outlook; Raises 2017 Global GDP forecasts from 3.3% to 3.5% (highest since 2011)
(IN) INDIA CENTRAL BANK (RBI) LEAVES REPURCHASE RATE UNCHANGED AT 6.25%; AS EXPECTED
(IR) Iran Revolutionary Guards spokesperson: Saudi Arabia was behind terrorist attacks in Tehran today - press
(US) Association of American Railroads weekly rail traffic report for week ending June 3rd: 500.2K carloads and intermodal units, +9.8% y/y (21st straight week of gains)
(QA) Pres Trump reportedly told Qatari leaders in a phone call that he is ready to find a solution to Gulf crisis - Qatar press
(US) Senate Intel Committee posts former FBI Dir Comey's opening statement for tomorrow's Senate testimony
(US) Freedom Caucus' Meadows (R-NC): if Dems to vote for clean debt limit, let's vote now
(JP) JAPAN Q1 FINAL GDP Q/Q: 0.3% V 0.6%E; ANNUALIZED GDP: 1.0% (3-quarter low) V 2.4%E
(AU) AUSTRALIA APR TRADE BALANCE (A$): +0.56B V +2.00BE (6th consecutive surplus, smallest surplus in 6 months)
(CN) CHINA MAY TRADE BALANCE (CNY): 281.6B V 324.1BE
(CN) China Passenger Car Association (PCA): May vehicle sales 1.78M units, +1.2% y/y; YTD sales 9.05M units, -0.9% y/y
(CN) CHINA MAY TRADE BALANCE: $40.8B V $47.8BE
THURSDAY JUNE 8
(EU) EURO ZONE Q1 FINAL GDP Q/Q: 0.6% V 0.5%E; Y/Y: 1.9% V 1.7%E (highest annual pace since 2015)
(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
(EU) ECB STATEMENT AMENDS ITS FORWARD GUIDANCE: Removes "lower" on interest rate outlook
(EU) ECB's Draghi: Sees interest rates at present level well past end of QE; to preserve favorable conditions needed
UBI.IT Priced €400M rights offering share offering at 26% discount
(EU) ECB's Draghi: Council did not vote on language change; did not hear any dissent - Q&A
(EU) ECB's Draghi: Could still cut interest rates if necessary should the situation worsen - ECB press conf Q&A
(MX) MEXICO MAY CPI M/M: -0.1% V -0.1%E; Y/Y: 6.2% V 6.2%E; CORE CPI M/M: 0.3% V 0.3%E
(US) Former FBI Dir Comey: the shifting explanations of firing confused and concerned him; Trump had repeatedly said he was doing a good job - testimony to Congress
(US) Fed reports Q1 Financial Accounts: Household Change in Net Worth: $2.347T v $2.043T prior
(JP) BOJ's Kuroda: Japan is no longer experiencing deflation; long way to go until Japan price stability target is achieved - comments in UK
(US) Pres Trump's attorney: Comey hearing established that Trump was not being investigated for colluding or attempting to obstruct FBI investigation
(US) House passes Dodd-Frank financial law replacement bill - press
(UK) UK exit poll shows Prime Min May's Conservative Party set to win 314 seats; may fall short of majority and could be a hung parliament - NOP/Ipsos MORI poll
(PE) PERU CENTRAL BANK (BRCP) LEAVES REFERENCE RATE UNCHANGED AT 4.00%
(CN) CHINA MAY CPI M/M: -0.1% V 0.1% PRIOR; Y/Y: 1.5% (4-month high) V 1.5%E
(CN) CHINA MAY PPI Y/Y: 5.5% V 5.6%E; 5-month low
FRIDAY 6/9
(FR) FRANCE APR INDUSTRIAL PRODUCTION M/M: -0.5% V +0.2%E; Y/Y: 0.6% V 1.2%E
(UK) APR INDUSTRIAL PRODUCTION M/M: 0.2% V 0.7%E; Y/Y: -0.8% V -0.3%E
(UK) PM May: I will now form a government; Brexit talks to start in 10 days as expected
(CA) CANADA MAY NET CHANGE IN EMPLOYMENT: +54.5K V +15.0KE; UNEMPLOYMENT RATE: 6.6% V 6.6%E
(US) New York Fed Nowcast: raises Q2 GDP forecast to 2.3% from 2.2% on 6/2; maintains Q3 GDP forecast at 1.8%, unchanged from 6/2
NVDA Citron makes cautious comments again; sets $130 price target
Fri, 09 Jun 2017 16:12 PM EST
US stock markets digested a host of headline risk late in the week, with the Dow remaining at lofty levels while the Nasdaq sold off into Friday afternoon. Geopolitics largely ruled the roost, with terrorist attacks in London and Tehran, a Saudi rift with Qatar, former FBI Director Comey's testimony, and a surprise result in the UK election all registering on traders' radar screens. The ECB boosted its economic growth outlook for the Eurozone midweek, but kept interest rates on hold, though Mario Draghi said the ECB would continue its bond-buying program and will remain in the market for 'a long time.' The EUR/USD fell below 1.1200 on Thursday to hit its lowest point in June, and later that evening the pound weakened sharply when it became clear the UK election would result in a hung parliament. Crude was down ~3% on the week, hurt by US inventory builds, despite diplomatic turmoil between the Gulf states. Treasury yields lifted marginally and gold pared back its recent gains as safe haven assets came under pressure.Stocks were mostly higher, but large cap tech sold off on heavy volume on Friday, with profit-taking apparently triggered by a short seller note on Nvidia. The late drop in stocks lifted the VIX volatility index off of a two-decade low.For the week, the DJIA gained 0.3%, while the S&P slipped 0.3% and the Nasdaq lost 1.6%.
On the political front, Mexico came to agreement with the US government to cut its exports of refined sugar, a deal that bodes well for upcoming NAFTA renegotiation talks later in the summer. The House of Representatives passed a repeal of Dodd-Frank financial regulation on a party-line vote, though the replacement bill will likely have trouble in its current form in the Senate as it would be subject to filibuster rules. There was also some chatter this week that a GOP Obamacare replacement health care bill was making progress behind the scenes in the Senate, but no timeline was announced.
In corporate news, Macy's shares dipped on Tuesday along with other department store retailers after its CFO talked down margins at its analyst day. Nordstrom popped higher Thursday on word the Nordstrom family is considering taking the retailer private. Airlines climbed on continued softness in oil and Delta comments that it's on track to expand margins over the balance of the year. And NVIDIA led the Nasdaq lower on Friday after Citron's Andrew Left reiterated his cautious comments and said over-optimism has led people to discount the tech manufacturer's competition.
SUNDAY JUNE 4
World Bank maintains both 2017 and 2018 global GDP growth forecast; Warns on emerging market growth
*(HK) HONG KONG MAY COMPOSITE PMI: 50.5 V 51.1 PRIOR (2nd straight expansion)
(CN) CHINA MAY CAIXIN PMI SERVICES: 52.8 V 51.5 PRIOR (4 month high)
MONDAY JUNE 5
(FR) FRANCE MAY FINAL SERVICES PMI: 57.2 V 58.0E (confirms 11th month of expansion)
Evergrande reports May contracted sales CNY38.2B v CNY21.7B y/y
(US) Q1 FINAL NONFARM PRODUCTIVITY: 0.0% V -0.2%E; LABOR COST: 2.2% V 2.4%E
(US) MAY FINAL MARKIT SERVICES PMI: 53.6 V 54.0 PRELIM
(US) APR FINAL DURABLE GOODS ORDERS: -0.8% V -0.5%E; DURABLES EX TRANSPORTATION: -0.5% V -0.4% PRELIM
TUESDAY JUNE 6
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50% (AS EXPECTED)
*(EU) EURO ZONE JUN SENTIX INVESTOR CONFIDENCE: 28.4 V 27.4E (highest reading since July 2007)
FAST Reports May Net Sales $383.5M, +14.9% y/y
August gold future approachs April high of $1300
(US) APR JOLTS JOB OPENINGS: 6.044M V 5.75ME (record high, first time above 6M)
*(US) S&P AFFIRMS UNITED STATES OF AMERICA SOVEREIGN RATING AT AA+; OUTLOOK STABLE
(AU) AUSTRALIA Q1 GDP Q/Q: 0.3% V 0.3%E; Y/Y: 1.7% V 1.6%E (ties longest expansion on record but at slowest annual pace since 2009)
WEDNESDAY JUNE 7
(IR) Shooting reported inside Iran Parliament and reports of hostages taken - Twitter sources
(UK) MAY HALIFAX HOUSE PRICE M/M: +0.4% V -0.2%E; 3M/Y: 3.3% V 3.0%E
(CH) CHINA MAY FOREIGN RESERVES: $3.054T V $3.046TE (4th straight increase and longest streak since Jun 2014)
(EU) OECD Economic Outlook; Raises 2017 Global GDP forecasts from 3.3% to 3.5% (highest since 2011)
(IN) INDIA CENTRAL BANK (RBI) LEAVES REPURCHASE RATE UNCHANGED AT 6.25%; AS EXPECTED
(IR) Iran Revolutionary Guards spokesperson: Saudi Arabia was behind terrorist attacks in Tehran today - press
(US) Association of American Railroads weekly rail traffic report for week ending June 3rd: 500.2K carloads and intermodal units, +9.8% y/y (21st straight week of gains)
(QA) Pres Trump reportedly told Qatari leaders in a phone call that he is ready to find a solution to Gulf crisis - Qatar press
(US) Senate Intel Committee posts former FBI Dir Comey's opening statement for tomorrow's Senate testimony
(US) Freedom Caucus' Meadows (R-NC): if Dems to vote for clean debt limit, let's vote now
(JP) JAPAN Q1 FINAL GDP Q/Q: 0.3% V 0.6%E; ANNUALIZED GDP: 1.0% (3-quarter low) V 2.4%E
(AU) AUSTRALIA APR TRADE BALANCE (A$): +0.56B V +2.00BE (6th consecutive surplus, smallest surplus in 6 months)
(CN) CHINA MAY TRADE BALANCE (CNY): 281.6B V 324.1BE
(CN) China Passenger Car Association (PCA): May vehicle sales 1.78M units, +1.2% y/y; YTD sales 9.05M units, -0.9% y/y
(CN) CHINA MAY TRADE BALANCE: $40.8B V $47.8BE
THURSDAY JUNE 8
(EU) EURO ZONE Q1 FINAL GDP Q/Q: 0.6% V 0.5%E; Y/Y: 1.9% V 1.7%E (highest annual pace since 2015)
(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
(EU) ECB STATEMENT AMENDS ITS FORWARD GUIDANCE: Removes "lower" on interest rate outlook
(EU) ECB's Draghi: Sees interest rates at present level well past end of QE; to preserve favorable conditions needed
UBI.IT Priced €400M rights offering share offering at 26% discount
(EU) ECB's Draghi: Council did not vote on language change; did not hear any dissent - Q&A
(EU) ECB's Draghi: Could still cut interest rates if necessary should the situation worsen - ECB press conf Q&A
(MX) MEXICO MAY CPI M/M: -0.1% V -0.1%E; Y/Y: 6.2% V 6.2%E; CORE CPI M/M: 0.3% V 0.3%E
(US) Former FBI Dir Comey: the shifting explanations of firing confused and concerned him; Trump had repeatedly said he was doing a good job - testimony to Congress
(US) Fed reports Q1 Financial Accounts: Household Change in Net Worth: $2.347T v $2.043T prior
(JP) BOJ's Kuroda: Japan is no longer experiencing deflation; long way to go until Japan price stability target is achieved - comments in UK
(US) Pres Trump's attorney: Comey hearing established that Trump was not being investigated for colluding or attempting to obstruct FBI investigation
(US) House passes Dodd-Frank financial law replacement bill - press
(UK) UK exit poll shows Prime Min May's Conservative Party set to win 314 seats; may fall short of majority and could be a hung parliament - NOP/Ipsos MORI poll
(PE) PERU CENTRAL BANK (BRCP) LEAVES REFERENCE RATE UNCHANGED AT 4.00%
(CN) CHINA MAY CPI M/M: -0.1% V 0.1% PRIOR; Y/Y: 1.5% (4-month high) V 1.5%E
(CN) CHINA MAY PPI Y/Y: 5.5% V 5.6%E; 5-month low
FRIDAY 6/9
(FR) FRANCE APR INDUSTRIAL PRODUCTION M/M: -0.5% V +0.2%E; Y/Y: 0.6% V 1.2%E
(UK) APR INDUSTRIAL PRODUCTION M/M: 0.2% V 0.7%E; Y/Y: -0.8% V -0.3%E
(UK) PM May: I will now form a government; Brexit talks to start in 10 days as expected
(CA) CANADA MAY NET CHANGE IN EMPLOYMENT: +54.5K V +15.0KE; UNEMPLOYMENT RATE: 6.6% V 6.6%E
(US) New York Fed Nowcast: raises Q2 GDP forecast to 2.3% from 2.2% on 6/2; maintains Q3 GDP forecast at 1.8%, unchanged from 6/2
NVDA Citron makes cautious comments again; sets $130 price target
Sunday, June 4, 2017
Barrons weekend summary
Barrons weekend summary: positive on TWX, ACN
Cover story: Consumers should be spending amid low unemployment and a strong stock market, but a massive credit expansion may have taken them as far as they can go; Uncertainty about tax cuts and regulatory reform also come into play in the current climate.
Features:
1) Starting on June 9, firms must comply with the new fiduciary rule, as well as provisions concerning conflicts of interest and impartial conduct;
2) Positive on Atlantia, BAC, BDX, CME, JNJ, Royal Dutch Shell: These six companies could thrive in an inflationary environment because of their pricing power and/or interest-rate sensitivity;
3) Positive on GOOGL, AAPL, AMZN, Berkshire Hathaway, MSFT: Companies top Barron’s 2017 ranking of America’s most respected companies based on a poll of money managers; JNJ, No. 1 on the list last year, fell to No. 7 this year;
4) Positive on TWX: Media giant’s shares could return 20% this year, buoyed by the success of movies such as “Wonder Woman” and divisions such as HBO and Turner;
5) Positive on ACN: Doubts about the technology consultant’s prospects have grown recently, but investors may be misreading the changing nature of its global opportunities.
Tech Trader: Positive on NVDA, AMD, INTC, CEVA, CDNS: Companies stand to benefit from growing demand for artificial intelligence, though some experts say the hype about AI is overblown; It’s “a very general term for a still-evolving collection of technologies, and no one knows exactly where it’s going,” says Tiernan Ray.
Trader: The market’s rally is quiet broad, says Doug Ramsey of Leuthold Group, despite concerns too many recent gains have come from giants such as AAPL and AMZN; There’s no doubt that economic data are worrisome, says Barron’s, “but we’d be far more concerned if economically sensitive stocks were underperforming overseas”; Positive on ESV, DO, RIG: Offshore drillers have taken a hit lately, but it’s time for investors to get back into the sector, which has probably hit bottom.
Interview: Jason Trennert and Daniel Clifton of Strategas Research, which predicted Donald Trump’s election victory, talk about market opportunities for the second half of 2017.
Profile: Jonas Krumplys, co-manager of the Ivy Emerging Markets Equity fund, which holds 50 to 80 stocks and averaged an annual return of 5.3% during the past three years (top five holdings: Samsung Electronics, Tencent Holdings, BABA, Sberbank of Russia, TSM). Advisor Rankings: Barron’s list of the top 100 women advisors is topped by Karen McDonald and Colleen O’Callaghan of Morgan Stanley Private Wealth Management, Kimberly Orth of Ameriprise Financial, Valerie Newell of RiverPoint Capital Management, and Stephanie Stiefel of Neuberger Berman.
Follow-Up: Cautious on ESRX: Company’s lawsuit against Kaleo Pharma and the potential loss of a contract with ANTM continue to concern investors, keeping the share price down; Positive on GT: “The tire maker has an opportunity to transform itself into an asset-light supplier for future autonomous fleets.”
European Trader: Positive on International Consolidated Airlines Group: British Airways is struggling to contain the fallout from a computer outage, which raised questions about its strategy, but a range of positives at the parent company make it a good time to buy shares.
Asian Trader: Cautious on China Evergrande: A recent rally has been painful for shorts, but they could have the last laugh because of the company’s bloated balance sheet and high valuation.
Emerging Markets: For India to continue growing, the World Bank recommends it add more regular, salaried jobs for women and provide more incentives for female entrepreneurs.
Commodities: Natural gas faces more threats as fracking into shale and other new technologies have unleashed a record amount of gas onto the market, and a slowdown is likely to endure.
Streetwise: “Banks may have had a mediocre trading quarter, but other trends are favorable, including widening net interest margins, loan growth, and regulatory relief.”
Friday, June 2, 2017
Stocks Rise, Bond Yields Flatten Amid Lukewarm Data and Central Banks’ Eyeing Normalization
TradeTheNews.com Weekly
Market Update: Stocks Rise, Bond Yields Flatten Amid Lukewarm Data and Central
Banks’ Eyeing Normalization
Fri, 02 Jun 2017 16:12 PM EST
Global stock markets pushed out to new highs this week despite continued buying in government bond markets. By Friday the FTSE 100, DAX, S&P 500, Dow and NASDAQ Composite all reached new all-time highs. Economic figures continued to point at better relative growth outside the US, but overall solid footing for Central Banks and their policy prescriptions. The narrative that Fed would continue to raise rates like in June was unswayed while more focus was given to the upcoming ECB meeting and the cover the next round of staff projections may give to officials seeking to start reshaping expectations. By the end of the week, President Trump’s decision to pull out of the Paris climate accord, a continued retreat in crude oil prices, and a lower than forecasted May nonfarm payroll figure did little to derail global stock markets.
Recent sellers in the Greenback and buyers of US Treasuries were rewarded by the May jobs report on Friday. The Dollar Index dipped back below 97 and gold rallied 1% to a fresh one-month high. The Euro touched a fresh 7-month high, while the 10-year US Treasury yield fell to a new 2017 low below the 200-day moving average. The 2-10 spread narrowed by ~4 bps to the flattest levels since before the US election in November. The VIX finished the week back below 10. For the week, the DJIA gained 0.6%, the S&P added 0.9%, and the Nasdaq rose 1.5%.
In corporate news, financial executives tempered Q2 banking expectations at an investor conference this week. Wells Fargo CEO Sloan said Q2 loan growth has not been as robust as everyone would have hoped, while BofA’s Moynihan noted Q2 earnings would be squeezed by a 10-12% drop in trading revenues, and JPMorgan CFO Lake added she doesn’t see a reason for down trends to change in June. Shares in Lululemon surged after reporting a beat on profit and revenue, boosted by positive trends that materialized late in Q1 and are seen as continuing into Q2. On the M&A front, First Data agreed to acquire credit card payment processor CardConnect for $15/share in a $750M all-cash deal, which will add $26B worth of payments a year to First Data’s books. And media outlets indicated ConAgra had made an approach to acquire Pinnacle Foods, but CNBC’s Faber poured cold water on the report, pointing to sources that say merger talks have ended and are unlikely to be restarted.
SUNDAY 5/28
(EU) Official G7 communique from meeting May 26-27 in Taormina, Italy
MONDAY 5/29
(EU) EURO ZONE APR M3 MONEY SUPPLY Y/Y: 4.9% V 5.2%E
(JP) JAPAN APR JOBLESS RATE: 2.8% V 2.8%E (matches lowest rate since Jun 1994)
TUESDAY 5/30
(FR) FRANCE Q1 PRELIMINARY GDP Q/Q: 0.4% V 0.3%E; Y/Y: 1.0% V 0.8%E
(DE) GERMANY MAY CPI SAXONY M/M: -0.1% V -0.1% PRIOR; Y/Y: 1.6% V 2.1% PRIOR
(ES) SPAIN MAY PRELIMINARY CPI M/M: -0.1% V 0.0%E; Y/Y: 1.9% V 2.1%E
(EU) EURO ZONE MAY BUSINESS CLIMATE INDICATOR: 0.90 V 1.11E; CONSUMER CONFIDENCE (FINAL): -3.3 V -3.3E
(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL €5.75B VS. 4.75-5.75B INDICATED RANGE IN 5-YEAR AND 10-YEAR BTP BONDS
(DE) GERMANY MAY PRELIMINARY CPI M/M: -0.2% V -0.1%E; Y/Y: 1.5% V 1.6%E
(US) APR PCE DEFLATOR M/M: 0.2% V 0.2%E; Y/Y: 1.7% V 1.7%E
(US) APR PCE CORE M/M: 0.2% V 0.1%E ; Y/Y: 1.5% V 1.5%E
(US) APR PERSONAL INCOME: 0.4% V 0.4%E ; PERSONAL SPENDING: 0.4% V 0.4%E
(US) MAY CONSUMER CONFIDENCE: 117.9 V 119.5E
(US) Atlanta Fed raises Q2 GDP to 3.8% from 3.7% on 5/26
(EU) European Commission paper proposes packaging different countries' debt into new sovereign bond-backed securities - FT
(CN) CHINA MAY MANUFACTURING PMI (GOVT OFFICIAL): 51.2 (matches 7-month low; 10th month of expansion) V 51.0E; NON-MANUFACTURING PMI: 54.5 V 54.0 PRIOR
(HK) Macau Apr Hotel Occupancy Rate: 86.1% v 82.7% prior
WEDNESDAY 5/31
(FR) FRANCE MAY PRELIMINARY CPI M/M: 0.1% V 0.1%E; Y/Y: 0.8% V 0.9%E
(DE) GERMANY MAY UNEMPLOYMENT CHANGE: -9K V -15KE; UNEMPLOYMENT RATE: 5.7% V 5.7%E
(EU) EURO ZONE MAY CPI ESTIMATE Y/Y: 1.4% V 1.5%E (2nd month remaining below ECB target); CPI CORE Y/Y: 0.9% V 1.0%E
(EU) EURO ZONE APR UNEMPLOYMENT RATE: 9.3% V 9.4%E (lowest since 2009)
JPM CFO: seeing resonably active capital markets activity in Q2 - DB conf comments
(US) May Chicago Purchasing Manager corrected to 59.4 from erroneously reported 55.2 (v 57.0e)
(US) Association of American Railroads weekly rail traffic report for week ending May 27th: 548.1K carloads and intermodal units, +6.7% y/y (20th straight week of gains)
(US) Weekly API Oil Inventories: Crude: -8.7M v -1.5M prior (biggest draw since Sept 2016)
(BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 100BPS TO 10.25%; AS EXPECTED
(CN) PBOC SETS YUAN MID POINT AT 6.8090 V 6.8633 PRIOR; Biggest margin of increase since Jan 6th; Strongest Yuan fix since Nov 10th
(CN) CHINA MAY CAIXIN PMI MANUFACTURING: 49.6 V 50.1E (1st contraction in 11 months)
THURSDAY 6/1
(HK) Macau May Gaming Rev MOP22.7B v MOP20.2B prior; +23.7% y/y v 16.2%e
(DE) GERMANY MAY FINAL MANUFACTURING PMI: 59.5 V 59.4E (confirms 30th month of expansion and highest since Apr 2011)
(UK) MAY MANUFACTURING PMI: 56.7 V 56.5E (10th month of expansion)
(US) MAY ADP EMPLOYMENT CHANGE: +253K V +180KE
WFC CEO: overall, credit is "very strong"; auto loan market started getting out of sorts about a year ago, was the right decision to pull back from auto market - Bernstein conf comments
GM Reports May US sales -1% y/y, to 237.3K units v 254.1Ke
(US) MAY FINAL MARKIT MANUFACTURING PMI: 52.7 V 52.5E (lowest since Sept)
(US) MAY ISM MANUFACTURING: 54.9 V 54.8E; PRICES PAID: 60.5 V 67.0E
(US) Atlanta Fed raises Q2 GDP to 4.0% from 3.8% on 5/30
FRIDAY 6/2
(US) MAY UNEMPLOYMENT RATE: 4.3% V 4.4%E (lowest since May 2001)
(US) MAY CHANGE IN NONFARM PAYROLLS: +138K V +182KE
(US) MAY AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.2%E; Y/Y: 2.5% V 2.6%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
(US) APR TRADE BALANCE: -$47.6B V -$46.1BE
EUR at 7-month highs following disappointing US payroll data; tested 1.1270 level
Fri, 02 Jun 2017 16:12 PM EST
Global stock markets pushed out to new highs this week despite continued buying in government bond markets. By Friday the FTSE 100, DAX, S&P 500, Dow and NASDAQ Composite all reached new all-time highs. Economic figures continued to point at better relative growth outside the US, but overall solid footing for Central Banks and their policy prescriptions. The narrative that Fed would continue to raise rates like in June was unswayed while more focus was given to the upcoming ECB meeting and the cover the next round of staff projections may give to officials seeking to start reshaping expectations. By the end of the week, President Trump’s decision to pull out of the Paris climate accord, a continued retreat in crude oil prices, and a lower than forecasted May nonfarm payroll figure did little to derail global stock markets.
Recent sellers in the Greenback and buyers of US Treasuries were rewarded by the May jobs report on Friday. The Dollar Index dipped back below 97 and gold rallied 1% to a fresh one-month high. The Euro touched a fresh 7-month high, while the 10-year US Treasury yield fell to a new 2017 low below the 200-day moving average. The 2-10 spread narrowed by ~4 bps to the flattest levels since before the US election in November. The VIX finished the week back below 10. For the week, the DJIA gained 0.6%, the S&P added 0.9%, and the Nasdaq rose 1.5%.
In corporate news, financial executives tempered Q2 banking expectations at an investor conference this week. Wells Fargo CEO Sloan said Q2 loan growth has not been as robust as everyone would have hoped, while BofA’s Moynihan noted Q2 earnings would be squeezed by a 10-12% drop in trading revenues, and JPMorgan CFO Lake added she doesn’t see a reason for down trends to change in June. Shares in Lululemon surged after reporting a beat on profit and revenue, boosted by positive trends that materialized late in Q1 and are seen as continuing into Q2. On the M&A front, First Data agreed to acquire credit card payment processor CardConnect for $15/share in a $750M all-cash deal, which will add $26B worth of payments a year to First Data’s books. And media outlets indicated ConAgra had made an approach to acquire Pinnacle Foods, but CNBC’s Faber poured cold water on the report, pointing to sources that say merger talks have ended and are unlikely to be restarted.
SUNDAY 5/28
(EU) Official G7 communique from meeting May 26-27 in Taormina, Italy
MONDAY 5/29
(EU) EURO ZONE APR M3 MONEY SUPPLY Y/Y: 4.9% V 5.2%E
(JP) JAPAN APR JOBLESS RATE: 2.8% V 2.8%E (matches lowest rate since Jun 1994)
TUESDAY 5/30
(FR) FRANCE Q1 PRELIMINARY GDP Q/Q: 0.4% V 0.3%E; Y/Y: 1.0% V 0.8%E
(DE) GERMANY MAY CPI SAXONY M/M: -0.1% V -0.1% PRIOR; Y/Y: 1.6% V 2.1% PRIOR
(ES) SPAIN MAY PRELIMINARY CPI M/M: -0.1% V 0.0%E; Y/Y: 1.9% V 2.1%E
(EU) EURO ZONE MAY BUSINESS CLIMATE INDICATOR: 0.90 V 1.11E; CONSUMER CONFIDENCE (FINAL): -3.3 V -3.3E
(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL €5.75B VS. 4.75-5.75B INDICATED RANGE IN 5-YEAR AND 10-YEAR BTP BONDS
(DE) GERMANY MAY PRELIMINARY CPI M/M: -0.2% V -0.1%E; Y/Y: 1.5% V 1.6%E
(US) APR PCE DEFLATOR M/M: 0.2% V 0.2%E; Y/Y: 1.7% V 1.7%E
(US) APR PCE CORE M/M: 0.2% V 0.1%E ; Y/Y: 1.5% V 1.5%E
(US) APR PERSONAL INCOME: 0.4% V 0.4%E ; PERSONAL SPENDING: 0.4% V 0.4%E
(US) MAY CONSUMER CONFIDENCE: 117.9 V 119.5E
(US) Atlanta Fed raises Q2 GDP to 3.8% from 3.7% on 5/26
(EU) European Commission paper proposes packaging different countries' debt into new sovereign bond-backed securities - FT
(CN) CHINA MAY MANUFACTURING PMI (GOVT OFFICIAL): 51.2 (matches 7-month low; 10th month of expansion) V 51.0E; NON-MANUFACTURING PMI: 54.5 V 54.0 PRIOR
(HK) Macau Apr Hotel Occupancy Rate: 86.1% v 82.7% prior
WEDNESDAY 5/31
(FR) FRANCE MAY PRELIMINARY CPI M/M: 0.1% V 0.1%E; Y/Y: 0.8% V 0.9%E
(DE) GERMANY MAY UNEMPLOYMENT CHANGE: -9K V -15KE; UNEMPLOYMENT RATE: 5.7% V 5.7%E
(EU) EURO ZONE MAY CPI ESTIMATE Y/Y: 1.4% V 1.5%E (2nd month remaining below ECB target); CPI CORE Y/Y: 0.9% V 1.0%E
(EU) EURO ZONE APR UNEMPLOYMENT RATE: 9.3% V 9.4%E (lowest since 2009)
JPM CFO: seeing resonably active capital markets activity in Q2 - DB conf comments
(US) May Chicago Purchasing Manager corrected to 59.4 from erroneously reported 55.2 (v 57.0e)
(US) Association of American Railroads weekly rail traffic report for week ending May 27th: 548.1K carloads and intermodal units, +6.7% y/y (20th straight week of gains)
(US) Weekly API Oil Inventories: Crude: -8.7M v -1.5M prior (biggest draw since Sept 2016)
(BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 100BPS TO 10.25%; AS EXPECTED
(CN) PBOC SETS YUAN MID POINT AT 6.8090 V 6.8633 PRIOR; Biggest margin of increase since Jan 6th; Strongest Yuan fix since Nov 10th
(CN) CHINA MAY CAIXIN PMI MANUFACTURING: 49.6 V 50.1E (1st contraction in 11 months)
THURSDAY 6/1
(HK) Macau May Gaming Rev MOP22.7B v MOP20.2B prior; +23.7% y/y v 16.2%e
(DE) GERMANY MAY FINAL MANUFACTURING PMI: 59.5 V 59.4E (confirms 30th month of expansion and highest since Apr 2011)
(UK) MAY MANUFACTURING PMI: 56.7 V 56.5E (10th month of expansion)
(US) MAY ADP EMPLOYMENT CHANGE: +253K V +180KE
WFC CEO: overall, credit is "very strong"; auto loan market started getting out of sorts about a year ago, was the right decision to pull back from auto market - Bernstein conf comments
GM Reports May US sales -1% y/y, to 237.3K units v 254.1Ke
(US) MAY FINAL MARKIT MANUFACTURING PMI: 52.7 V 52.5E (lowest since Sept)
(US) MAY ISM MANUFACTURING: 54.9 V 54.8E; PRICES PAID: 60.5 V 67.0E
(US) Atlanta Fed raises Q2 GDP to 4.0% from 3.8% on 5/30
FRIDAY 6/2
(US) MAY UNEMPLOYMENT RATE: 4.3% V 4.4%E (lowest since May 2001)
(US) MAY CHANGE IN NONFARM PAYROLLS: +138K V +182KE
(US) MAY AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.2%E; Y/Y: 2.5% V 2.6%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
(US) APR TRADE BALANCE: -$47.6B V -$46.1BE
EUR at 7-month highs following disappointing US payroll data; tested 1.1270 level
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