Trade Tensions Simmer; OPEC Adjusts Coordinated Supply Agreement

TradeTheNews.com Weekly Market Update: Trade Tensions Simmer; OPEC Adjusts Coordinated Supply Agreement
Fri, 22 Jun 2018 16:08 PM EST

Trade and tariffs continued to loom large over markets this week as the US administration held the line in ongoing negotiations with China and western allies alike. Nowhere was it more evident than the Dow Jones Industrial average which carried an eight session losing streak into Friday. The weakness in large cap industrial names and their potential exposure to an escalating trade spat was juxtaposed against new all-time highs in the NASDAQ and small cap Russel 2000. US treasury markets largely traded sideways but yield differentials in the belly of the curve held perilously close to inverting before rates lifted on Friday. US Jun manufacturing data softened and missed expectations lending to modest selling in the Greenback. Most notably the British Pound appreciated after the BOE indicated rates could rise again as soon as next month. Finally oil producers meet in Vienna, where OPEC leaders cajoled various members and reached an agreement that could potentially bring an additional ~600K bpd onto the market. The decision largely met market expectations but nevertheless WTI crude popped above the 50 moving average to a one month high.

In corporate news this week, Sarepta soared higher on positive DMD drug early trial results that analysts said “meaningfully beat even the highest of expectations.” Tesla ended lower after an odd week that included fires on its factory floor, speculated sabotage from a former technician, and the closing of some solar facilities. Starbucks shares cooled after cutting guidance and shuttering some underperforming stores. E-commerce names saw relatively muted reaction to a Supreme Court online sales tax ruling. Disney improved its bid to acquire Fox assets to $38/shr, up from its prior offer of $28/shr and ahead of Comcast’s $35/shr proposal. Perry Ellis agreed to be taken private for $27.50/shr, while Rent-A-Center accepted a raised acquisition offer from Vintage Capital at $15/shr.

MON 6/18
SQ New York Dept of Financial Services (DFS) has granted Square a virtual currency license
(UK) PM May defeated in House of Lords over plans to give lawmakers "meaningful vote" over final Brexit agreement - press (as expected)
Ministerial meeting of the 33 member Global Forum on Excess Steel Capacity scheduled for Wednesday in Paris has been cancelled due to trade tensions - Nikkei
AAPL Trump said to have told CEO Cook that iPhones will be excluded from China tariffs - NYT
(CN) China Commerce Ministry (MOFCOM): US threats on $200B tariffs list disobeys negotiation and consensus reached previously between the two countries: to take qualitative and quantitative measures if US publishes additional tariffs list

TUES 6/19
*(US) MAY HOUSING STARTS: 1.350M V 1.311ME; BUILDING PERMITS: 1.301M V 1.350ME
(US) Atlanta Fed cuts Q2 GDP forecast to 4.7% from 4.8% prior
ORCL Reports Q4 $0.99 v $0.94e, Rev $11.3B v $11.2Be
SBUX Guides Q3 SSS +1% y/y v +2.9%e; Raises Quarterly dividend 20% to $0.36 from $0.30 (indicated yield 2.51%)
FDX Reports Q4 $5.91 v $5.72e, Rev $17.3B v $17.2Be

WEDS 6/20
MU Reports Q3 $3.15 v $3.14e, Rev $7.80B v $7.70Be
(UK) UK govt wins vote in parliament, defeating Brexit 'meaningful vote' amendment (As expected after compromise made earlier)
(US) Association of American Railroads weekly rail traffic report for week ending June 16th: 558.1K, +4.1% y/y
(TH) THAILAND CENTRAL BANK (BOT) LEAVES BENCHMARK INTEREST RATE UNCHANGED AT 1.50%, AS EXPECTED
(US) Atlanta Fed cuts Q2 GDP forecast to 4.7% from 4.8% prior
ORCL Reports Q4 $0.99 v $0.94e, Rev $11.3B v $11.2Be
SBUX Guides Q3 SSS +1% y/y v +2.9%e; Raises Quarterly dividend 20% to $0.36 from $0.30 (indicated yield 2.51%)
FDX Reports Q4 $5.91 v $5.72e, Rev $17.3B v $17.2Be

THURS 6/21
(FR) FRANCE JUN BUSINESS CONFIDENCE: 106 V 106E; MANUFACTURING CONFIDENCE: 110 V 108E
*(CH) SWISS NATIONAL BANK (SNB) LEAVES SIGHT DEPOSIT INTEREST RATE UNCHANGED AT -0.75%; AS EXPECTED
(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS EXPECTED
*(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.50%; AS EXPECTED
(UK) BOE JUN MINUTES: VOTED 6-3 TO KEEP POLICY STEADY (McCafferty, Saunders again dissented calling for 25bps hike, chief economist Haldane joins ranks to hike)
(US) JUN PHILADELPHIA FED BUSINESS OUTLOOK: 19.9 V 29.0E (lowest since Nov 2016)
(US) Supreme Court rules that states can require collection of sales taxes on all online purchases, even if companies have no physical presence in a state
FED BANK STRESS TEST RESULTS: ALL 35 BANKS EXCEED MINIMUM CAPITAL REQUIREMENTS
OPEC+ committee supports 1M bpd production increase "on paper" - press
(JP) JAPAN MAY NATIONAL CPI Y/Y: 0.7% V 0.6%E; CPI EX FRESH FOOD (CORE): 0.7% V 0.7%E

FRI 6/22
(FR) FRANCE JUN PRELIMINARY MANUFACTURING PMI: 53.1V 54.0E (21st month of expansion)
(DE) GERMANY JUN PRELIMINARY MANUFACTURING PMI: 55.9 V 56.3E (42nd month of expansion and lowest since Dec 2016)
(EU) EURO ZONE JUN PRELIMINARY MANUFACTURING PMI: 55.0 V 55.0E (59th straight month of growth but lowest since Dec 2016)
(EU) ECB: banks to repay early €11B in TLTRO-2 loans - press
*(US) JUN PRELIMINARY MARKIT MANUFACTURING PMI: 54.6 V 56.1E (7-month low)
(US) Trump tweets: "Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!"

Barrons weekend summary

Barrons weekend summary: Cover story on Berkshire Hathaway succession planning; positive feature on AXL; concerns about a trade war 

Cover story: After 35 years at the helm of Berkshire Hathaway, Warren Buffett needs to share the limelight with his likely successor and the company’s many managers—because the company’s future success depends in part on removing doubts about future leadership. 

Features: 1) A global trade war seems likely, posing a major risk to the stock market, and though little of the threat is reflected in stock and bond prices, investors need to pay attention and take steps to avoid a worst-case scenario; 2) An increase in media mergers is being driven by desperate attempts to catch up to NFLX, which many media giants could have easily acquired a few years ago—before its current $170B market cap; 3) Positive on AXL: Concerns about the company—including high debt, reliance on GM, and exposure to a near-term slowdown in North American vehicle demand amid electric-car growth—appear overstated of misplaced.

 Tech Trader: Cautious on FB: Despite recent problems related to privacy and data-sharing, and low approval ratings in some consumer polls, Wall Street continues to love the stock, and much of the world continues to treat the site as indispensable. 

Trader: Jason Pride of Glenmede says investors should focus on what’s good (the economy and earnings) and not on what’s bad (tariffs and rate hikes); Debt markets are giving off mixed signals, with high-yield corporate debt rallying while safe bonds languish, and returns are being driven not by outside forces but by factors specific to each asset class; Cautious on ELY: Shares could have more upside, says JPM analyst Steven Zaccone, but Barron’s says traders should think carefully before buying shares. 

Profile: James Hamel, managing director at Artisan Partners and head of the Artisan Global Opportunities fund, looks for companies with franchise characteristics and improving profitability (top 10 holdings: INFO, V, Shiseido, BAC, STT, NBL, APTV, PXD, Temenos, BSX). 

Interview: Diana Strandberg and Charles Pohl, who oversee the Dodge & Cox Global Stock fund, recently undertook a rigorous scrub-down of the fund’s investing thesis on nearly every stock (picks: Itau Unibanco Holding, Naspers, SNY, DISH, GOOGL). 

Follow-Up: Cautious on CRSP, EDIT, NTLA: It’s hard to say whether the market is over- or under-valuing companies that use the gene-editing technology, but for now there’s no reason to sell. European Trader: With Italy’s political situation in turmoil, investors may want to buy beaten-down European banking shares that will likely jump when the clouds over the sector evaporate. 

Emerging Markets: Some investors are growing bullish about emerging markets fixed income, saying much of the gloom and doom this year has been driven by idiosyncratic stories that mask strong fundamentals. 

Commodities: “OPEC can claim success in its roughly 18-month-old effort to curb production, easing a global glut of supply and raising oil prices. 

Streetwise: A sudden change of chief executive won’t necessarily harm a stock, but “prudent investors should keep a sharp eye on what’s happening in the C-suite.” Cover story: After 35 years at the helm of Berkshire Hathaway, Warren Buffett needs to share the limelight with his likely successor and the company’s many managers—because the company’s future success depends in part on removing doubts about future leadership.

Trade Tensions Escalate; Central Bank Decisions Strengthen Greenback

TradeTheNews.com Weekly Market Update: Trade Tensions Escalate; Central Bank Decisions Strengthen Greenback
Fri, 15 Jun 2018 16:06 PM EST

A turbulent week was bookended by trade war concerns: a contentious G7 meeting last weekend ended with Canadian PM Trudeau promising to meet US tariffs with an equivalent response, and then on Friday the US administration slapped $50B in new tariffs on China. The Chinese government retaliated in kind and the US has reportedly identified another $100B in tariffs, threatening to set off tit-for-tat tariffs. Markets were more pleased that the nuclear summit in Singapore apparently went smoothly, with President Trump hailing his new strong personal relationship with North Korea’s Kim.

Central bank divergence became more pronounced as the Fed moved rates up another 25 basis points, while the ECB further delayed its first rate hike. The yield curve flattened further after the Fed move, as the policy statement dropped its forward guidance and as Chairman Powell spent a lot of time discussing the potential for inflation to spend some time above the 2% target. The euro tumbled on Thursday in the wake of the ECB announcement that rates would stay at zero at least until the summer of next year, which overshadowed a concurrent announcement that the QE program will be tapered in Q4. Meanwhile emerging markets remained troubled, emblemized by the Argentine peso hitting fresh record lows despite a $50B credit agreement signed with the IMF last week. Commodity price weakness accelerated through the end of the week, as crude tumbled 3% and copper fell more than 2% on Friday. For the week the DJIA dropped 0.9%, the S&P500 was flat, while the Nasdaq gained 1.3%.

In corporate news this week, the Time Warner-AT&T merger received long-sought-after approval from a federal judge, and the two completed their transaction on Friday after the DOJ said it would not seek a stay of the ruling. Seeing an all-clear signal from the court decision, Comcast made its anticipated proposal to acquire Twenty-First Century Fox assets in an all-cash $35/share deal, in a play to outbid Disney. Construction materials firm USG accepted a $7B bid from a German construction company after several months of talks involving shareholder Warren Buffett. Tesla announced 3K layoffs, about 9% of its workforce, largely directed at the company’s salaried employees and avoiding cuts to those in the production process.

SUN 6/10
(CH) SWITZERLAND VOLLGELD REFERENDUM RESULTS: VOTERS REJECT MOTION TO ABOLISH TRADITIONAL BANK LENDING AND ALLOW ONLY MONEY CREATED BY THE SNB (as expected)

TUES 6/12
(KR) Trump/Kim Document: US and North Korea commit to working towards complete denuclearization of the Korean peninsula
(UK) APR AVERAGE WEEKLY EARNINGS 3M/Y: 2.5% V 2.5%E; WEEKLY EARNINGS (EX BONUS) 3M/Y: 2.8% V 2.9%E
(UK) MAY JOBLESS CLAIMS CHANGE: -7.7K V +28.2K PRIOR; CLAIMANT COUNT RATE: 2.5% V 2.5% PRIOR
(UK) APR ILO UNEMPLOYMENT RATE: 4.2% V 4.2%E
(DE) GERMANY JUN ZEW CURRENT SITUATION: 80.6 V 85.0E; EXPECTATIONS SURVEY: -16.1 V -14.0E
(US) MAY CPI M/M: 0.2% V 0.2%E; CPI EX FOOD AND ENERGY M/M: 0.2% V 0.2%E; CPI NSA: 251.588 V 251.570E
TSLA Plans to cut 9% of total workforce as part of reorganization plan (cuts could amount to about 3,000 employees)
TWX *US JUDGE RULES AT&T/TWX MERGER CAN GO FORWARD; IMPOSES NO CONDITIONS ON THE MERGER - PRESS

WEDS 6/13
(UK) MAY CPI M/M: 0.4% V 0.4%E; Y/Y: 2.4% V 2.4%E; CPI CORE Y/Y: 2.1% v 2.1%E (matches the lowest annual pace in a year)
(US) MAY PPI FINAL DEMAND M/M: 0.5% V 0.3%E; Y/Y: 3.1% V 2.8%E
CAT Reports May dealer statistics: Total Machines +24% y/y
(US) Association of American Railroads weekly rail traffic report for week ending June 9th: 561.1K, +4.2% y/y
(US) FOMC UPDATED ECONOMIC FORECAST FOR JUNE MEETING (V. MAR): now forecasts 4 rate hikes in 2018
(US) US govt reportedly readying a specific list of goods from China that will be subject to tariffs on Friday - press
FOXA Comcast makes all-cash $35/shr proposal to acquire Twenty-First Century Fox after spinoff of "New Fox", values 21CF at $65B

THURS 6/14
(UK) MAY RETAIL SALES (EX AUTO/FUEL) M/M: 1.3% V 0.3%E; Y/Y: 4.4% V 2.5%E
(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%, AS EXPECTED
(EU) ECB REVISES QE BOND BUYING PROGRAM: QE to be reduced to €15B/month from Oct until Dec
Euro gives back initial taper gains as traders focus on ECB announcement that rates to be held steady until at least summer 2019
(EU) ECB's Draghi: Decision was unanimous; did not discuss when to raise interest rates - Q&A
(KR) US govt official: major military exercises on Korean peninsula have been 'suspended indefinitely' - press
(US) Atlanta Fed raises Q2 GDP forecast to 4.8% from 4.6% prior
(CN) White House said to put tariffs on a smaller list of 800 to 900 products from China tomorrow (trimmed from original list of 1,300 products) - CNBC
AT&T reaches deal with US govt on merger with Time Warner; DOJ will not seek a stay in merger; deal removes 6-day waiting period to close merger - press
(MX) Mexico govt said to consider possible tariffs on US corn and soybean imports if trade conflict escalates - press

FRI 6/15
TSCO.UK Reports Q1 UK LFL (ex VAT, ex-fuel) +2.1% v +1.9%e
US ANNOUNCES TARGET LIST OF CHINESE GOODS; to pursue more tariffs if China retaliates in imposing new tariffs or take punitive action against American companies
(CN) US said to be nearing completion of a 2nd tariff list comprising of $100B in Chinese goods, subject to same hearing conditions of approx 60 days - financial press
(US) JUN EMPIRE MANUFACTURING: 25.0 V 18.8E
(US) MAY INDUSTRIAL PRODUCTION M/M: -0.1% V +0.2%E; CAPACITY UTILIZATION: 77.9% V 78.1%E
(US) JUN PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 99.3 V 98.5E
(CN) China govt announces $50B in retaliatory tariffs on US goods, implementation to start on July 6th - press

Barrons weekend summary

Barrons weekend summary: positive features on LUV; cautious on Lowes 

Cover story: High-power batteries, which are set to disrupt the car industry in the coming decades, are quickly multiplying across the U.S. power grid, which will allow consumers to save on energy, towns to cut pollution and add jobs, and utilities to enjoy lucrative growth. 

Feature: 1) Positive on LUV: A recent midair accident, high fuel prices, and rivals’ expansion have pushed down the carrier’s shares, but with its strong business model and share buyback plans, the dip poses an opportunity for investors; 2) Hedge funds including BlueMountain Capital, Citadel, Apollo Global Management, Elliott Management, and Anchorage Capital Partners have been working together for months to fix credit-default-swap contracts; 3) Cautious on L: Conglomerate’s disclosure it may buy out the limited partners of BWP, which it controls, has prompted angry reactions from some minority investors who fear Loews will exercise its call right at an unfair price. 

Tech Trader: “These days the difference between expensive and inexpensive tech stocks is misleading. Many companies are having a hard time holding onto any valuation premium, whether or not their shares are relatively cheap or relatively pricey.” 

Trader: Michael Hartnett, chief investment strategist at BAC/Merrill Lynch, says it’s possible markets will see the return of “1998 risk,” in which the problems in emerging markets grow and eventually force investors in the U.S. to take defensive action; Positive on AABA: The company “remains a good proxy for investors seeking exposure to BABA” because of Altaba’s 15% stake in the e-commerce giant; In a new MIT working paper, researchers say that “managers seem tempted to overstate earnings as their companies gain attention and the rewards for lying increase.” 

Interview: Jenny Van Leeuwen Harrington, portfolio manager and CEO of Gilman Hill Asset Management, says a company’s dividend should be sacrosanct, even in tough economic times (picks: SIX, LB, QCOM). 

Profile: Magnus Larsson, lead manager of the AMG TimesSquare International Small Cap fund, says international small-mid-cap stocks are one of the few market sectors where active management can consistency add value. The Top 100 Women Financial Advisors: Barron’s annual list is topped by Karen McDonald of Morgan Stanley Wealth Management, Kimberlee Orth of Ameriprise Financial, and Valerie Newell of RiverPoint Capital Management. 

Follow-Up: Cautious on SBUX: With chairman Howard Schultz stepping down, “the time might be right for an activist investor to push for change—and presumably push Starbucks shares higher,” a move that would have to focus on capital allocation. 

European Trader: Uncertainty related to Trump administration auto tariffs has dented shares of German car makers, but they should quickly regain lost ground. 

Emerging Markets: The real problem for the Chinese stock market isn’t U.S. tariffs, but the nearly 170% of GDP in debt piled up by Chinese corporations, five times the proportion for U.S. companies. 

Commodities: “Copper has shown promise in recent weeks, and the long-term outlook is bright as global demand gradually strengthens, but realizing that potential may take time.” 

Streetwise: A potential presidential run by departing SBUX chairman Howard Schultz would have to reckon with a crowded field, and some of his ideas don’t match up with core Democratic Party ideas.-

Investors risk appetite unfettered by G7 sparring or key events next week

TradeTheNews.com Weekly Market Update: Investors risk appetite unfettered by G7 sparring or key events next week
Fri, 08 Jun 2018 16:03 PM EST

US stock markets pushed higher this week, easily scaling a wall of worry heading into the G7 meeting this weekend. Both President Trump and his counterparts steadily escalated rhetoric heading into what are expected to be contentious trade talks between allies. Investors also had to contend with the run-up to the US/North Korea summit and Brexit negotiations that seem to be heading nowhere fast. US data, though, remained at robust levels, with manufacturing and services PMIs topping expectations, potentially giving the Trump Administration further ammunition to play hardball in trade negotiations. Major US indices broke out to the best levels since March in some cases, while the Russell 2000 and the NASDAQ continued to touch fresh all-time highs. For the week the DJIA gained 2.8%, the S&P500 rose 1.6%, and the Nasdaq added 1.2%.

US Treasury yields moved up, helped by the release of solid growth figures and receding pessimism around rising yields in Southern Europe. The US dollar continued to retreat modestly in what some viewed as positioning ahead of key central bank meetings next week. The Euro surpassed 1.18 briefly as many expect the ECB to announce an exit to QE next week. Emerging market currencies stayed in focus, with central banks in Turkey and Brazil taking aggressive actions to fight declining exchange rates. Copper prices edged higher for six straight sessions, helped by Chilean supply concerns and data that showed Chinese imports jumped to an 18-month high in May.

In corporate news this week, Microsoft announced a $7.5B acquisition of cloud source code repository GitHub, a move that signals a further warming by the software giant towards open source. AthenaHealth initiated a process to explore strategic alternatives and also announced its CEO would step down amid the company’s fight against a takeover offer from activist Elliott Management. Reports emerged that the EU is set to announce in July a fine against Google as part of its market dominance probe into Android’s mobile OS platform. Apple shares dropped after Nikkei reported that the tech giant has warned suppliers of 20% fewer component orders for iPhones debuting in the latter half of 2018. Twitter lifted on news that its stock would be added to the S&P 500 index, and the company subsequently announced a $1B convertible notes offering. Tesla CEO Musk affirmed at a shareholder meeting that the auto manufacturer would reach its Model 3 production target of five thousand units/week this month. Starbucks Chairman Schultz announced he was stepping down from his post, igniting speculation that the politically minded executive may initiate a presidential run in the near future.


SUN JUNE 3
(CN) 3rd round of trade talks between China and US end without a deal: China comments: two sides have made "concrete progress"; any move by the US to impose punitive tariffs would derail the negotiations

MON JUNE 4
(EU) EURO ZONE JUN SENTIX INVESTOR CONFIDENCE: 9.3 V 18.5E
BHP.AU Escondida mine workers reportedly have not ruled out strike action at start of wage talks - press

TUES JUNE 5
(UK) MAY SERVICES PMI: 54.0 V 53.0E (22nd month of expansion)
HDS Reports Q1 $0.70 v $0.63e, Rev $1.39B v $1.35Be; May daily net sales tracking ~ +19% y/y
*(US) MAY ISM NON-MANUFACTURING COMPOSITE: 58.6 V 57.6E

WED JUNE 6
*(IN) INDIA CENTRAL BANK (RBI) RAISES REPURCHASE RATE BY 25BPS TO 6.25%; NOT EXPECTED (1st rate hike since Jan 2014)
FAST Reports May Net Sales $431.4M, +12.5% y/y
*(US) Q1 FINAL NONFARM PRODUCTIVITY: 0.4% V 0.6%E; UNIT LABOR COSTS: 2.9% V 2.8%E
(US) APR TRADE BALANCE: -$46.2B V -$49.0BE
ATHN Initiates process to explore strategic alternatives; CEO Bush steps down, effective immediately; Jeff Immelt appointed executive chairman
(US) Association of American Railroads weekly rail traffic report for week ending June 2nd: 509.7K, +3.2% y/y
GOOGL EU reportedly set to release negative finding in its Google investigation - FT
(JP) Japan Investors Net Buying of Foreign Bonds: -¥1.67T v -¥700.2B prior week (largest net sales in over 1-year); Foreign Net Buying of Japan Stocks: -¥527.6B v -¥380.0B prior week
COST Reports May SSS (ex-gas) 8.0%; US SSS (ex-gas) 8.7% v 5.6%e

THURS JUNE 7
*(EU) EURO ZONE Q1 FINAL GDP Q/Q: 0.4% V 0.4%E; Y/Y: 2.5% V 2.5%E
(IE) UK Govt publishes backstop proposal (as anticipated): Expects future trade deal in place by Dec 2021; range of options on how time limit would be done on Irish backstop
*(US) INITIAL JOBLESS CLAIMS: 222K V 220KE; CONTINUING CLAIMS: 1.741M V 1.74ME
(US) Fed Reports Q1 Financial Accounts: Household Change in Net Worth: $1.028T v $2.076T prior
*(US) APR CONSUMER CREDIT: $9.3B V $14.0BE (smallest in seven months)
(CN) China 2018 trade surplus may narrow by about 10% (implies surplus of about $380.3B*) - China Securities Journal
(AR) Argentina signed 36-month stand-by agreement with the IMF, provides for preliminary financing amount of $50B (above the $40B credit line that was speculated)
(JP) JAPAN Q1 FINAL GDP Q/Q: -0.2% V -0.1%E; ANNUALIZED Q/Q: -0.6% V -0.4%E
ANT.IPO Series C equity funding round said to close; co. said to raise ~$14.0B (above expectations, world's largest ever fundraising) - US financial press

FRI JUNE 8
AAPL Reportedly warns suppliers of 20% fewer component orders for iPhones debuting in the latter half of 2018 - Japan press
DPW.DE Cuts FY18 EBIT €3.2B (prior €4.18B), FCF >€1.0B (prior >€1.5B), Affirms FY20 Adj EBIT >€5B; Announces restructuring to PeP division
(CH) Swiss referendum on Sunday, Jun 10th that could abolish traditional bank lending and allow only money created by the SNB
(CA) CANADA MAY NET CHANGE IN EMPLOYMENT: -7.5K V +23.5KE (2nd straight decline); UNEMPLOYMENT RATE: 5.8% V 5.8%E
(SA) Saudi Arabia reportedly has increased oil production by 100K bpd in June ahead of implementation of Iran sanctions - press

Barrons weekend summary

Barrons weekend summary: Positive feature on LNC; cautious on DLTR 

Cover story: The current situation for recent and near-retirees is dicey, even for those with solid savings; “Retirement calculators often use historical average market returns—as much as 12% for stocks and 6% for bonds—but even the rosiest of optimists don’t expect anything near that over the next decade.” 

Features: 

1) Political risks aside, Europe’s fundamentals look decent, and the loss of confidence in the euro could be a boon for the region’s multinational corporations, lifting exports and profits; 

2) Positive on LNC: Despite an industry downturn, the firm, which specializes in variable annuities, has delivered respectable returns, and shares remain a bargain; 

3) Cautious on ETCG, GBTC: Digital currency securities have made millions for investors who got in early, but they trade at huge premiums to their underlying net asset value and could be affected by future regulatory shifts; 

4) Cautious on AAPL: At this year’s Worldwide Developers Conference, Apple could unveil augmented reality, artificial intelligence, and cross-platform app features that might allay investor concerns about the iPhone. 

Tech Trader: “Cloud computing is altering how the Street looks at company financials and what it will pay for stocks;” The upside is that companies can sell more to the same customers over years, but the risk is that firms become too inward looking and miss new trends. 

Trader: One of the problems the market faces is that leadership is too narrow, says Satya Pradhuman of Cirrus Research, noting the high valuation of the best-performing large-cap stocks relative to the market; Cautious on DLTR: Shares are down, and while investors could hold on in hopes of a bounce, they may be better off cutting their losses and closing out their positions; The promise of managed-futures strategies in a portfolio is that they generate uncorrelated returns, but that doesn’t matter if returns are consistently negative. 

Interview: Rob Arnott, founder of Research Affiliates, says index-fund managers can do better by going after overlooked alpha, and that AAPL shouldn’t be in the S&P 500. 

Profile: Eddie Yoon, manager of Fidelity Select Medical Technology and Devices Portfolio (FSMEX) and Fidelity Select Health Care Portfolio (FSPHX), doesn’t view healthcare as a defensive sector and invests for “secular growth” (FSPHX top 10 holdings: UNH, BDX, BSX, HUM, AMGN, VRTX, AZN, SYK, BAX, ISRG). 

Follow-Up: Positive on CRM: One of Salesforce’s strengths is that its customers are “sticky” because the software pairs so well with so many applications from other vendors. 

European Trader: Many of the world’s largest metal producers already have operations in the U.S. and can shift production there to avoid Donald Trump’s recently imposed tariffs, and they have substantial markets elsewhere to draw on. 

Emerging Markets: Very little is clear about Brazil’s short-term outlook, given years of corruption scandals affecting all of the established political parties, but many investors still aren’t fleeing. 

Commodities: “The Atlantic hurricane season has just begun, raising the potential for disruptions in a variety of commodities markets, from oil and natural gas to crops such as oranges and cotton.” 

Streetwise: Banks should avoid getting involved in social causes such as gun control, says Vito Racanelli, and their fiduciary duty is to earn the best return for shareholders by servicing legal businesses.

European Political Upheaval and Trump Trade Spat No Problem for Humming US Economy

TradeTheNews.com Weekly Market Update: European Political Upheaval and Trump Trade Spat No Problem for Humming US Economy
Fri, 01 Jun 2018 16:04 PM EST

Investors returned from the US holiday break to find markets under siege from threats in the European political apparatus. Italy looked headed for another election and Spanish PM Rajoy’s fate looked bleak sparking a risk off rally out of stocks into the core European and US Treasury bonds. The president stoked trade war concerns when he suggested they were moving forward with the process that will result in $50B in tariffs on additional Chinese products ahead of talks in Beijing . The administration doubled down on Thursday slapping steel and aluminum tariffs on partners in Europe and North America. The decision sparked swift backlash and counter tariffs announcements from friends on both sides of the Atlantic, but the market reaction was relatively muted. By Friday the political winds laid down after Italian politician obtained approval for a populist government to take the reins and Spain saw socialist leader Sanchez ascend to PM.

US indices briefly tested the 50-day moving average on Tuesday before navigating through global trade headlines for much of the week. Friday’s stronger than expected May employment report and solid ISM data gave investors increased confidence that the US economy has gained momentum and is unlikely to be deterred by geopolitics. The US 10-year yield careened towards 2.75% in the Italy induced safe have flows before backing up above 2.9% post jobs report. The Dollar largely stabilized at higher levels as European inflation figures showed some signs of life but questions remain on how the political winds in Europe will affect ECB thinking. Crude oil prices consolidated near 1.5 month lows ahead of this month’s highly anticipated OPEC producers meeting. For the week the S&P rose 0.5%, the Dow backtracked 0.5% and the NASDAQ gained 1.6%.

In corporate news, a report early in the week that Apple was set to employ only OLED screens in its future iPhone models sent OLED names higher, though analysts quickly cast doubt on the feasibility of such a move. Michael Kors shares slipped after reporting and guiding its SSS flat, despite beating on top and bottom line guidance. GM rose on a report that SoftBank Vision Fund planned to invest $2.25B in its GM Cruise self-driving unit. American steel names saw late-week strength on the US administration's implementation of tariffs against major allies. May US auto sales topped expectations, continuing to be buoyed by SUV and pickup demand. And Petrobras shares sputtered Friday on news that its CEO resigned in response to the government’s move to lower diesel prices amid trucker strikes.

SUNDAY 5/27
(IT) Italy President Mattarella said to have blocked the formation of a new government amid concerns that the coalition could hurt the country's membership in the Euro; Italy President and Cottarelli expected to meet on Monday - US financial press
(CN) PBOC RAISES OPEN MARKET OPERATION (OMO ) RATE ON 28-DAY REVERSE REPO BY 5BPS TO 2.85% FROM 2.80% (AS EXPECTED)

MONDAY 5/28
(IT) ITALY DEBT AGENCY (TESORO) SELLS €1.75B VS. €1.25-1.75B INDICATED RANGE IN ZERO COUPON MAR 2020 CTZ; AVG YIELD: +0.35% V -0.275% PRIOR; BID-TO-COVER: 1.86X V 1.58X PRIOR
(ES) Spain Ciudadanos Party leader Rivera (opposition): Legislature is over; has abandoned his agreement with PM Rajoy (as expected) - speech
(EU) EU Industrial policy chief Bienkowska: Seeing the end of the road for diesel cars, European Union consumers may do as much as regulators to propel the the region's car sector into the electricity-powered age - press

TUESDAY 5/29
(CN) White House to proceed with plans to impose 25% tariffs on $50B worth of imported goods from China - press
(US) MAY DALLAS FED MANUFACTURING ACTIVITY: 26.8 V 23.0E
CRM Reports Q1 $0.74 v $0.43e, Rev $3.01B v $2.94Be

WEDNESDAY 5/30
(FR) FRANCE Q1 PRELIMINARY GDP Q/Q: 0.2% V 0.3%E; Y/Y: 2.2% V 2.1%
(DE) GERMANY MAY CPI SAXONY M/M: 0.5% V 0.0% PRIOR; Y/Y: 2.2% V 1.6% PRIOR
(ID) INDONESIA CENTRAL BANK (BI) RAISES 7-DAY REVERSE REPO RATE BY 25BPS TO 4.75%; AS EXPECTED
(DE) GERMANY MAY UNEMPLOYMENT CHANGE: -11K V -10KE; UNEMPLOYMENT CLAIMS RATE: 5.2% (record low) V 5.3%E
(EU) EURO ZONE MAY BUSINESS CLIMATE INDICATOR: 1.45 V 1.29E; CONSUMER CONFIDENCE (FINAL): 0.2 V 0.2E
(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL €3.571B VS. €2.5-4.0B INDICATED RANGE IN 5-YEAR AND 10-YEAR BTP BONDS
(DE) GERMANY MAY PRELIMINARY CPI M/M: 0.5% V 0.3%E; Y/Y: 2.2% V 1.9%E
(US) MAY ADP EMPLOYMENT CHANGE: +178K V +190KE
(US) Q1 PRELIMINARY GDP ANNUALIZED Q/Q: 2.2% V 2.3%E; PERSONAL CONSUMPTION: 1.0% V 1.2%E
(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATE UNCHANGED AT 1.25%; AS EXPECTED
(US) Conference Board May Total online job ads 4.70M v 4.75M m/m v 4.80M y/y; New ads 1.87M v 2.01M m/m v 2.01M y/y
(US) Association of American Railroads weekly rail traffic report for week ending May 26th: 565.5K, +4.4% y/y
(US) FEDERAL RESERVE BEIGE BOOK: ECONOMIC ACTIVITY ROSE AT A MODERATE OR BETTER PACE IN ALL 12 FED DISTRICTS
(EU) US said to plan to go ahead with tariffs on European Union steel and aluminum - press
(HK) Press speculates that Macau gaming Rev in May will be +15% y/y

THURSDAY 5/31
(FR) FRANCE MAY PRELIMINARY CPI M/M: 0.4% V 0.3%E; Y/Y: 2.0% V 1.9%E
GM SoftBank Vision Fund to invest $2.25B in GM Cruise, the company's self-driving unit
(US) INITIAL JOBLESS CLAIMS: 221K V 228KE; CONTINUING CLAIMS: 1.726M V 1.73ME
(US) APR PERSONAL INCOME: 0.3% V 0.3%E; PERSONAL SPENDING: 0.6% V 0.4%E
(US) Nevada reports April casino gaming Rev $953.7M, +7.6% y/y; Las Vegas strip Rev $499.5M, +5.1% y/y
(US) Commerce Sec Ross: Trump administration imposes metal tariffs on Canada, Mexico and EU as of midnight (as speculated)
(US) APR PENDING HOME SALES M/M: -1.3% V +0.4%E; Y/Y: +0.4% V -4.3% PRIOR
(US) Atlanta Fed raises Q2 GDP forecast to 4.7% from 4.0% prior
(IT) Five Star official: League and Five Star parties have reached agreement on coalition govt - press
COST Reports Q3 $1.70 v $1.68e, Rev $31.6B v $31.7Be
(JP) BoJ announcement related to daily bond buying operation; Trims planned 5-10 year JGB purchase to ¥430B v ¥450B prior

FRIDAY 6/1
(HK) Macau May Gaming Rev MOP25.49B, Y/Y: 12.1% v 17%e
(UK) MAY MANUFACTURING PMI: 54.4 V 53.5E (22nd month of expansion)
(US) MAY CHANGE IN NONFARM PAYROLLS: +223K V +190KE
(CA) Pres Trump tweets: "Canada has treated our Agricultural business and Farmers very poorly for a very long period of time. Highly restrictive on Trade! They must open their markets and take down their trade barriers! They report a really high surplus on trade with us. Do Timber & Lumber in U.S.?"

North Korea Summit Sidetracked; Euro Fate Back on the Radar

TradeTheNews.com Weekly Market Update: North Korea Summit Sidetracked; Euro Fate Back on the Radar
Fri, 25 May 2018 16:04 PM EST

- Investors opened the week bidding up risk assets on news that the Trump administration had at least for now, put on hold $150B in tariffs aimed at Chinese goods. The positive vibes were short lived though. Wednesday the administration revealed they were studying a plan for new tariffs on imported vehicles, based on national security grounds that could run as high as 25%. Then the next day Trump disclosed he had notified North Korean officials that the June summit was off for now, sparking speculation that China hawks would use the setback as ammunition to take a harder line in ongoing trade negotiations. Wednesday’s FOMC minutes were viewed in a more dovish light than many had expected and that along with the consternation surrounding geopolitics resulted in a significant decline in US Treasury yields sending the 10-year back below 3%. By Thursday risk off flows had gained momentum as uneasiness surrounding the incoming populist government in Italy continued to send Italian bond yields higher. By Friday the contagion had spread to Spain as questions around PM Rojoy’s government sent spreads to German government bond yields to some the widest levels seen since the European debt crisis early this decade. The Euro dropped below 1.17 for the first time since Dec. Crude prices were slammed late in the week, falling 4% on Friday alone, as oil producers all but confirmed they were likely to allow production rates to rise next month when they meet in order to keep markets balanced. For the week the S&P rose 0.3%, the Dow added 0.2% and the NASDAQ was up more than 1%.

- In corporate news this week, Wabtec rose on plans to merge with GE’s Transportation unit, in a deal valued at $11B. Comcast shares fell after confirming it was readying a bid to rival Disney's for Fox assets. Micron surged towards all-time highs on a buyback announcement and a guidance raise. In the retail space, Tiffany beat consensus and reported 9% America comp sales growth; Best Buy shares were hurt by lackluster guidance; L Brands fell on a disappointing outlook; and Gap missed on its bottom line. Deutsche Bank said it planned to cut back its US and CEMEA equities groups, with overall job reductions that could reach 10,000 positions. Foreign automakers were weighed down by reports that the White House was looking into new tariffs on imported vehicles. And Fiat Chrysler dropped on Friday after announcing a 4.8M vehicle recall in the US due to malfunctions with its cruise-control software.

SUNDAY 5/20
(US) Treasury Sec Mnuchin: planned tariffs on Chinese steel and aluminum, as well as $150 billion worth of other Chinese goods, would be put on hold as talks with China proceed - press
(US) Treasury Sec Mnuchin: President Trump is more interested in striking a good deal with Canada and Mexico than quickly finishing NAFTA talks in order to get a vote from Congress this year - press

MONDAY 5/21
WAB Confirms to merge with GE transportation in deal valued at $11.1B; To receive $2.9B in cash upfront
(TW) Chipmakers expected to raise prices for 8NM process - Digitimes

TUESDAY 5/22
(CN) China Govt plans to cut the import duty on cars from 25% to 15%, effective July 1st - financial press
(US) MAY RICHMOND FED MANUFACTURING INDEX: 16 V 10E
(CN) Treasury Sec Mnuchin: steel and aluminum tariffs will remain in force against China - remarks in congressional hearing
FB CEO: Facebook is ready to make significant investments to keep people safe; improvements will significantly impact profitability - remarks to EU
(CN) President Trump: not pleased with how trade talks went with China; talks were a start but am not satisfied
(US) FDA Commissioner Gottlieb: FDA could allow for easier path for gene therapy approval; first focus to be on hemophilia products in pipeline
Reportedly OPEC may consider raising production at the June meeting to offset production decline in Venezuela and Iran export disruptions due to US sanctions - press
(US) President Trump said to aim for 10% cut in European steel and aluminum exports to the US - press

WEDNESDAY 5/23
*(FR) FRANCE MAY PRELIMINARY MANUFACTURING PMI: 55.1 V 53.7E (20th month of expansion)
*(DE) GERMANY MAY PRELIMINARY MANUFACTURING PMI: 56.8 V 57.9E (41st month of expansion)
(EU) EURO ZONE MAY PRELIMINARY MANUFACTURING PMI: 55.5 V 56.1E (58th month of expansion)
(UK) APR CPI M/M: 0.4% V 0.5%E; Y/Y: 2.4% V 2.5%E; CPI CORE Y/Y: 2.1% V 2.2%E (lowest annual reading in a year)
TGT Reports Q1 $1.32 v $1.38e, Rev $16.8B v $16.5Be
TIF Reports Q1 $1.14 v $0.84e, Rev $1.03B v $961Me; Authorizes $1B share repurchase program (7.8% of market cap)
(US) Casino workers union votes to authorize a strike at any time starting June 1st (first time in 3 decades)
(US) MAY PRELIMINARY MARKIT MANUFACTURING PMI: 56.6 V 56.5E (44-month high)
(US) APR NEW HOME SALES: 662K V 680KE
PPB.UK Announces combination of Betfair US with FanDuel; to contribute its existing US assets along with $158M in cash
(TR) Turkey Central Bank held extraordinary rate meeting to evaluate developments in recent period - press
(US) Association of American Railroads weekly rail traffic report for week ending May 19th: 546.4K, +3.6% y/y
(TR) Turkey Central Bank (CBRT): raises Late Liquidity Window (LLW) by 300bps to 16.50% (intra-meeting move)
(IR) Iran Supreme Leader announces 7 conditions for European nations if they want Iran to remain in the nuclear accord
(US) US President Trump: Confirms has given Commerce Dept the order to consider probe on auto imports under Section 232 review (as speculated)
*(KR) BANK OF KOREA (BOK) LEAVES REPO RATE UNCHANGED AT 1.50%; AS EXPECTED

THURSDAY 5/24
992.HK Reports Q4 Net $33M v $107M y/y, Rev $10.6B v $9.60B y/y
DB Finalizes equities business review; to reduce Equities Sales & Trading business headcount by ~25% (total full-time positions to fall from over 97K to well below 90K (over 7K in cuts, in-line with earlier reports)
(DE) GERMANY JUN GFK CONSUMER CONFIDENCE: 10.7 V 10.8E
*(DE) GERMANY Q1 FINAL GDP Q/Q: 0.3% V 0.3%E; Y/Y: 2.3% V 2.3%E; GDP NSA Y/Y: 1.6% V 1.6%E
(FR) FRANCE MAY BUSINESS CONFIDENCE 106 V 108E; MANUFACTURING CONFIDENCE: 109 V 108E
(US) Department of Justice (DOJ) said to weigh criminal probe of Bitcoin price rigging - press
*(UK) APR RETAIL SALES (EX AUTO FUEL) M/M: 1.3% V 0.5%E; Y/Y: 1.5% V 0.1%E
(NK) North Korea said to have carried out the demolition of one of its nuclear test sites - financial press
BBY Reports Q1 $0.82 v $0.75e, Rev $9.11B v $8.78Be
(US) INITIAL JOBLESS CLAIMS: 234K V 220KE; CONTINUING CLAIMS: 1.741M V 1.75ME
(KR) President Trump sends letter to North Korea's Kim: says inappropriate to have June 12th summit at this time; looks forward very much to meeting some day
GPS Reports Q1 $0.42 v $0.45e, Rev $3.78B v $3.61Be; affirms FY18 guidance
(KR) North Korea Vice Foreign Min Kim Kye Gwan: Willing to talk with US at 'any time'; no change in will to do the best for peace - KCNA
486.HK Says Oleg Deripaska resigns as non-executive board member; effective May 25 2018

FRIDAY 5/25
MAERSKB.DK Said to introduce 'emergency' bunker surcharge in order to deal with the higher costs of marine fuel - FT
(ES) Spain Ciudadanos Party said to be willing to back a no-confidence measure unless PM Rajoy calls for a snap election
(US) APR PRELIMINARY DURABLE GOODS ORDERS: -1.7% V -1.3%E; DURABLES EX TRANSPORTATION: 0.9% V 0.5%E
FCAU To recall 4.8M vehicles in the US over software in powertrain control modules; in certain vehicles drivers 'could be unable to cancel cruise-control'
(KR) Pres Trump: we'll see what happens about Korea summit after North Korea's 'nice statement'; summit could still be on for June 12th
(US) MAY FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 98.0 V 98.8E
763.HK Pres Trump reportedly has reached 'tentative deal' with China over ZTE - Fox Business
(US) Atlanta Fed cuts Q2 GDP forecast to 4.0% from 4.1% prior

Barrons weekend summary

Barrons weekend summary: positive on consumer stocks PEP, KO and PG 

Cover story: Profile of Jack Bogle, founder of the Vanguard Group and inventor of the index fund; Bogle addresses criticisms that indexing has destabilized the market, suggests how the ETF might come to an end, and says that if the market faces a long bout of underperformance, the necessity of lower costs will increase. 

Features: 1) Profile of Donald Trump’s chief economic advisor, Larry Kudlow, who “may be the last great hope for those still trying to reconcile Trump’s policies with old-school conservative economic principles”; 2) Asset managers, proprietary trading firms, bitcoin miners, and retail investors are growing more comfortable with bitcoin, despite a recent price drop of 58% since December; 3) Positive on PEP, KO, PG: Consumer stocks make sense for income-hungry investors—with the potential for mid-single-digit earnings growth ahead and decent yields, ten percent one-year total returns are within reach. 

Tech Trader: ROKU is shifting from a hardware company to a graphical user interface for TV brands that don’t want to make their own software, becoming a home page for viewers and a portal for 6,000 channels; its shares are a bet on the future of TV. 

Trader: A good part of the recent improvements in the market, such as supercharged earnings growth, may already have been baked into the market high of January 26; Cautious on LOW: Company has trailed rival HD in important metrics such as same-store sales and profit margins, but is taking steps in the right direction, such as the addition of three new board members; Cautious on AVAV, KTOS: Drone makers face a range of challenges, including a whistleblower suit at AeroVironment and cash-flow problems at Kratos, and activist investor Ben Axler has criticized both companies. 

Profile: Andrew Mattock, lead manager of the Matthews China fund, who says China demands that investors be open to new ideas, and be nimble amid constant change in the country (top 10 holdings: BABA, Tencent, Agricultural Bank of China, China Construction Bank, China Life Insurance, Sino Biopharmaceutical, Ping An Insurance Group, China National Building Material, BIDU). 

Follow-Up: A deal between CBS and VIA seems remote, but CBS still holds significant value for shareholders, with NFL games and top-rated prime-time shows both popular by today’s TV standards. 

European Trader: Positive on William Hill, GVC Holdings, 888 Holdings: U.K. companies are a good way for investors to benefit from legalized sports betting, and all likely to see gains ahead. E

merging Market: The complicated and uncertain political situation in Malaysia, where events “are weird even by contemporary global standards,” makes investing in the country difficult. 

Commodities: “Prices for diesel fuel may revisit records within the next year or two affecting many markets, from refiners to transportation to agriculture.” 

Streetwise: Donald Trump deserves more credit than he gets for the strength of the U.S. economy, says Brett Arends, despite the erratic nature of his approach to governing.

Stocks Weather a Breakout in Treasury Yields and Burgeoning Dollar Momentum

TradeTheNews.com Weekly Market Update: Stocks Weather a Breakout in Treasury Yields and Burgeoning Dollar Momentum
Fri, 18 May 2018 16:12 PM EST

Equity markets leaned into several stiff headwinds this week, but ultimately held up relatively well. Indices experienced some turbulence on Tuesday when US Treasury yields finally broke out to fresh multi-year highs highlighted by the benchmark 10-year surpassing the 2014 high of 3.03%. Tuesday also saw the May Empire manufacturing data jump and solid April retail sales figures solidify expectations that the Fed remains on a gradual path to normalization despite another soft first quarter. Subsequently, the greenback saw upside momentum accelerate, which continued to result in pain for a host emerging market currencies and relative weakness in their regional stock markets. European Union jitters re-emerged with the formation of a more populist government in Italy, which once again manifest in the widening of peripheral bond spreads, hearkening back to the Greek crisis earlier this decade. The trade news out of Washington DC wasn’t particularly positive, either: House Speaker Ryan’s imposed NAFTA deadline came and went without any concrete agreements to speak of, while President Trump himself noted he was doubtful China trade talks would be successful just hours before meeting Vice Premier Liu He at the White House. Nevertheless, the Russell 2000 was the first of the US indices to retake fresh all-time higher territory, and for the week the Dow fell 0.5%, S&P lost 0.5%, and the Nasdaq dropped 0.7%.

In corporate news, optical names rallied early in the week on a potential about-face by President Trump to perhaps loosen US sanctions against China’s ZTE. CBS sought to prevent Shari Redstone’s National Amusements from blocking a shareholder vote to dilute her voting power in the company, but a judge denied CBS’s motion for a temporary restraining order, sending CBS shares sharply lower Thurs. Home Depot earnings surprised to the upside, but revenue was weaker than expected, hampered by a long winter. Macy's jumped on an earnings beat and raised guidance, while Nordstrom fell on disappointing outlook. Deere beat and raised its net income outlook amid strengthening demand. Abaxis surged on a $2B Zoetis offer to buy the veterinary point of care instrument manufacturer for $83/shr. Kroger shares popped after inking a partnership deal with the UK’s Ocado Group.
MON MAY 14
(IQ) Nationalist cleric Moqtada al-Sadr (rival to PM Abadi) is leading in Iraq’s parliamentary election (surprise comeback for a Shi’ite leader who had been sidelined by Iran-backed rivals)
(US) No NAFTA meetings are reportedly scheduled before the May 17th deadline set by US Congress - press

TUES MAY 15
TKA.DE Reports Q2 Net €253M v -€870M y/y, adj EBIT €500M v €500Me, Rev €10.8B v €10.7Be
ACA.FR Reports Q1 Underlying Net €788M v €880Me, Rev €4.91B v €5.02Be
VOD.UK Reports FY17/18 Adj EBIT €4.83B v €3.97B y/y, adj EBITDA €14.74B v €14.62Be, Rev €46.6B v €47.6B y/y
*(UK) MAR AVERAGE WEEKLY EARNINGS 3M/Y: 2.6% V 2.6%E; WEEKLY EARNINGS (EX-BONUS) 3M/Y: 2.9% V 2.9%E
(UK) APR JOBLESS CLAIMS CHANGE: 31.2K V +15.7K PRIOR; CLAIMANT COUNT RATE: 2.5% V 2.4% PRIOR
*(UK) MAR ILO UNEMPLOYMENT RATE: 4.2% V 4.2%E
(EU) EURO ZONE Q1 PRELIMINARY GDP Q/Q: 0.4% V 0.4%E; Y/Y: 2.5% V 2.5%E
(DE) GERMANY MAY ZEW CURRENT SITUATION SURVEY: 87.4 V 85.2E; EXPECTATIONS SURVEY: -8.2 V -8.2E
HD Reports Q1 $2.08 v $2.06e, Rev $24.9B v $25.2Be
(US) MAY EMPIRE MANUFACTURING: 20.1 V 15.0E
(US) Atlanta Fed raises Q2 GDP forecast to 4.1% from 4.0% prior
(KR) North Korea cancels Weds high-level talks with South Korea; threatens to cancel Trump-Kim summit over US-South Korea military drills - Korean press
(US) MAR TOTAL NET TIC FLOWS: -$38.5B V $44.7B PRIOR; NET LONG-TERM TIC FLOWS: $61.8B V $49.0B PRIOR
(JP) JAPAN Q1 PRELIM GDP Q/Q -0.2% V % 0.0%E; ANNUALIZED Q/Q: -0.6% V -0.1%E (first contraction in 9 quarters)

WEDS MAY 16
(IT) Italy Five-Star Movement and League Party said to urge a rethink of EU economic governance - financial press
700.HK Reports Q1 (CNY) Net 23.3B v 17.4Be; Rev 73.5B v 70.8Be
M Reports Q1 $0.42 v $0.36e, Rev $5.54B v $5.43Be; raises outlook, ends China JV
(US) APR HOUSING STARTS: 1.287M V 1.310ME; BUILDING PERMITS: 1.352M V 1.350ME
(US) APR INDUSTRIAL PRODUCTION M/M: 0.7% V 0.6%E; CAPACITY UTILIZATION: 78.0% V 78.4%E
CSCO Reports Q3 $0.66 v $0.65e, Rev $12.5B v $12.4Be
(BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC TARGET RATE UNCHANGED AT 6.50%; NOT EXPECTED (1st pause in its year-long easing cycle)

THURS MAY 17
(ID) INDONESIA CENTRAL BANK (BI) RAISES 7-DAY REVERSE REPO RATE BY 25BPS TO 4.50%, AS EXPECTED (1st hike since Nov 2014)
*(US) INITIAL JOBLESS CLAIMS: 222K V 215KE; CONTINUING CLAIMS: 1.707M V 1.78ME
(US) MAY PHILADELPHIA FED BUSINESS OUTLOOK: 34.4 V 21.0E (12 month high)
CBS Judge denies motion for temporary restraining order in CBS v National Amusements
(US) Pres Trump: doubts China trade talks will be successful
AMAT Reports Q2 $1.22 v $1.13e, Rev $4.57B v $4.41Be
(CN) Reportedly China trade delegation offers package to reduce US trade deficit by $200B annually - press

FRI MAY 18
AZN.UK Reports Q1 Core EPS $0.48 v $0.58e, Rev $5.18B v $5.34Be
(IT) Italy 5-Star Movement leader Di Maio: Confirms agreement on govt contract with League
(US) Weekly Baker Hughes US Rig Count: 1,046 v 1,045 w/w (+0.1%) (7th straight rise)

Barrons weekend summary

Barrons weekend summary: positive features on KR, ANET 

Cover story: The growing wave of share buybacks is a good reason for investors to be in stocks at this time; Buybacks offer investors an effective yield of about 3%, which when combined with the 1.9% current dividend yield, provides nearly 5%—which holds up well against alternatives. 

Feature: 1) Positive on KR: Despite AMZN’s move into the grocery sector, Kroger has gained market share in recent years, and remains a top-three player in almost all its market; Consumers tend to prefer a supermarket to other formats, such as grocery delivery; 2) More oil-price increases could be on the horizon as additional Trump administration sanctions on Iran curtail its ability to supply markets, while problems in Venezuela could mean further cuts in production there; 3) Positive on T, XOM, PG, KMB, KO, ED, CAH, LEG, CVX, TGT, FRT, PEP: These 12 stocks have dividend yields of at least 3.3%, well above the S&P 500 average of about 2%, and because many have been beaten down, some could be attractive value plays; 3) Story looks at hedge fund manager Whitney Tilson’s Kase Learning, an educational company that teaches people who to be better investors; 4) Positive on ANET: Company is entering CSCO’s dominant franchise: switches that connect computers on corporate networks, and its success or failure could determine whether its pricey shares continue to rise. 

Tech Trader: Positive on ANET, Innovium: The startups are set to disrupt the dominance of CSCO and AVGO in networking equipment and the chips that power them; As more corporations connect to cloud-computing data centers, they will look to move past decades-old technologies, benefiting Arista and Innovium. 

Trader: Volatility is dormant, not dead, says Andrew Slimmon of Morgan Stanley Investment Management, and there is a good chance the S&P 500 will finish roughly flat after seeing large gains; Amid the growth of computer-generated trading, investors are almost guaranteed to see a short-term response to a “death cross” when one finally occurs; Cautious on SEAS: With 12 parks in the U.S., the company has a “fundamentally attractive set of assets,” but has yet to get past bad publicity related to allegations of poor treatment of whales. 

Profile: Jason Brady is manager of the Thornburg Limited Term Income fund, which is structured as a laddered portfolio, holds bonds to maturity, and reinvests them back into the portfolio (top 10 sectors: corporate bonds, asset-backed securities, Treasuries, collateralized mortgage obligations, cash and equivalents, commercial MBS, government agency, municipal bonds, mortgage pass through, foreign treasuries). 

Interview: Chuck Clough and Vince Lorusso of the Clough Global Long/Short fund, “an old fashioned fundamental research asset manager with a global perspective,” make the case for shorting tech and buying India. 

Follow-Up: California’s rule that developers must install solar panels on new residential buildings won’t do much for manufacturers, many of which are overseas, but will boost the installation and development industry. 

European Trader: Investors worried about the performance of major European and American stock benchmarks should consider a broad bet on U.K. stocks, say Bank of America Merrill Lynch strategists ( Positive on BP, BBL, FKU, HEWU). 

Emerging Markets: Investors in China will soon be able move past tech giants BABA, Tencent Holdings, and BIDU as half-a-dozen multibillion-dollar IPOs from the country’s tech sector launch this year—but rewards won’t come without risk. 

Commodities: Lumber prices have risen by more than 300% this year to reach their highest level on record amid tight supplies, but analysts say the trend isn’t likely to last, and a 50% drop could be on the horizon. 

Streetwise: Recent revelations about corporate payments to Donald Trump’s personal attorney, Steven Cohen, underscore that current campaign-finance disclosure laws aren’t enough to ensure good behavior.

Trump Dumps JCPOA; Equities, Oil and the Dollar Lift

TradeTheNews.com Weekly Market Update: Trump Dumps JCPOA; Equities, Oil and the Dollar Lift
Fri, 11 May 2018 16:04 PM EST

US stock indices moved out to the best levels since March this week, after inflation readings remained relatively benign, keeping a lid on Treasury yields and lingering inflationary concerns. Regardless, WTI crude finished the week with a $70 handle for the first time since 2015 after Trump made good on his campaign promise to pull out of the Iran nuclear deal. The Greenback continued to melt up causing consternation for several emerging market currencies and resulted in various central bank interventions. The BOE met and, as expected, ratcheted back expectations for further hikes this year. Brexit, NAFTA, and China trade negotiations wore on with little concrete progress to speak of. North American trading partners met in D.C. and remained hopeful that some kind of agreement can be reached by next week's self-imposed deadline, with some speculation that negotiators might shift toward a ‘skinny’ NAFTA deal as a starting point. For the week the S&P500 rose 2.4%, the DJIA added 2.3%, and the Nasdaq gained 2.7%.

In corporate news this week, Walmart confirmed an agreement to acquire 77% of India’s Flipkart for $16B in order to accelerate its move into commerce in South Asia. Nestle and Starbucks announced a $7.2B partnership to market, sell, and distribute Starbucks’ coffee brands, excluding the ready-to-drink products. AthenaHealth received an unsolicited $160/share cash offer from holder Elliott Management, who see promise for the company in the healthcare IT industry. Nvidia posted a beat on revenue and earnings in its quarterly report, but warned investors that their cryptocurrency-related chip sales will be reduced substantially this quarter. Disney earnings also exceeded top and bottom line estimates thanks to a slew of blockbusters that drove 21% rev growth in its studio division. Wendy's and Papa John’s lost ground following disappointing results once again.


MONDAY MAY 7
(EU) EURO ZONE MAY SENTIX INVESTOR CONFIDENCE: 19.2 V 21.0E
*(US) MAR CONSUMER CREDIT: $11.6B V $15.2BE

TUESDAY MAY 8
DPW.DE Reports Q1 Net €600M v €633M y/y, EBIT €905M v €972Me, Rev €14.8B v €14.9B y/y
(AR) Argentina Pres Macri: have started negotiations with IMF for a flexible credit line
(US) Federal Reserve Apr Senior Loan Officer Survey: banks reported weaker demand for auto and credit card loans; banks eased standards on CRE loans due to competition
DIS Reports Q2 $1.84 v $1.68e, Rev $14.5B v $14.2Be
(KR) China Premier Li: Urges concerned parties to seize opportunity to promote denuclearization, maintain peace and stability on the Korean Peninsula - Xinhua

WEDNESDAY MAY 9
DTE.DE Reports Q1 adj Net €1.19B v €939M y/y, adj EBITDA $5.55B v $5.51Be, Rev €17.9B v €18.1Be
SIE.DE Reports Q2 Net €2.0B* v €1.14Be, Industrial Business profit €2.25B v €2.07Be, Rev €20.2B v €20.5Be
ABI.BE Reports Q1 $0.73 v $0.79e, EBITDA $5.0B v $4.81B y/y, Rev $13.1B v $12.8Be
9984.JP Reports FY17/18 Net ¥1.04T v ¥1.43T y/y, Op ¥1.30T v ¥1.28Te, Rev ¥9.16T v ¥8.90T y/y
(US) APR PPI FINAL DEMAND M/M: 0.1% V 0.2%E; Y/Y: 2.6% V 2.8%E
(IR) Pres Trump: if Iran restarts its nuclear program there will be very severe consequences
(US) Atlanta Fed maintains Q2 GDP forecast at 4.0%, unchanged from May 3rd
(US) Association of American Railroads weekly rail traffic report for week ending May 5th: 545.9K, +7.5% y/y

THURSDAY MAY 10
(PH) PHILIPPINES CENTRAL BANK (BSP) RAISES OVERNIGHT BORROWING RATE BY 25BPS TO 3.25%; AS EXPECTED
(UK) MAR INDUSTRIAL PRODUCTION M/M: 0.1% V 0.2%E; Y/Y: 2.9% V 3.1%E
(UK) BANK OF ENGLAND (BOE) QUARTERLY INFLATION REPORT
(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.50%; AS EXPECTED
*(UK) BOE MAY MINUTES: VOTED 7-2 TO LEAVES INTEREST RATES UNCHANGED (McCafferty, Saunders dissent calling for 25bps hike)
(US) APR CPI M/M: 0.2% V 0.3%E; CPI EX FOOD AND ENERGY M/M: 0.1% V 0.2%E; CPI NSA: 250.546 V 250.700E
NVDA Reports Q1 $2.05 v $1.65e, Rev $3.21B v $2.91Be

FRIDAY MAY 11
MT.NL Reports Q1 $1.17 v $0.98 y/y, EBITDA $2.51B v $2.36Be, Rev $19.2B v $18.5Be
(US) UBS Asset Management's Briscoe: Close to the end of Fed rate hike cycle
*(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL €6.75B VS. €5.25-6.75B IN 2021, 2025 AND 2033 BTP BONDS
(US) APR IMPORT PRICE INDEX M/M: 0.3% V 0.5%E; Y/Y: 3.3% V 3.9%E
(CA) CANADA APR NET CHANGE IN EMPLOYMENT: -1.1K V +20.0KE; UNEMPLOYMENT RATE: 5.8% V 5.8%E
CAT Reports Apr dealer statistics: Total Machines +28% y/y
(US) MAY PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 98.8 V 98.3E
(US) Weekly Baker Hughes US Rig Count: 1,045 v 1,032 w/w (+1.3%) (6th straight rise)
(US) Pres Trump: expects 'much lower prices on drugs' taking effect 'very soon'; the middlemen won't be so rich anymore

Barrons weekend summary

Barrons weekend summary: Cover story on XOM; Cautious feature on WWW 

Cover story: At a time when renewable energy is on the rise, XOM is doubling down on oil and natural-gas production, while rivals are curtailing capital investment and returning cash to shareholders; To capitalize on oil and natural gas, Exxon “has an ambitious plan to increase its energy output by 25% and more than double its earnings by 2025.” 

Features: 1) The current dealmaking boom has gone on for nearly eight years by some estimates, but booms are cyclical and investors are starting to question how long the current cycle will last; 2) Positive on VNQ, BKLN, MUB, NOBL, XLU: As the Fed raises interest rates, income-generating assets may be pressured, but these plays offer decent yields and relative safety; 3) Positive on AEB Pfd, JPM Pfd H, MS Pfd E, KKR Pfd A, APO Pfd A, SSW Pfd E: Amid shifting 10-year Treasury yields and changing corporate and industry credit conditions, these six preferred-stock issues offer high yields and strong protections; 4) “Utility stocks and rising bond yields don’t mix well, but investors can still find companies capable of fighting that headwind with solid growth prospects”; 5) Cautious on WWW: Company has set aside $35M to cover legal and remediation costs for the leak of Scotchguard chemicals into wells and aquifiers, but investors wonder if that amount will be enough. 

Tech Trader: Cautious on AAPL: Warren Buffet’s stake in the company is less a tech investment than an appreciation of cash flow, and the company’s current lineup of products “represents a kind of stagnation for Apple and the mobile tech industry”; “The tech world feels like it’s poised on the edge of its next great leap, but the elements to make that possible are not yet available.” 

Trader: Stifel’s Barry Bannister thinks the market will decline to around 2520 by the end of September as global growth slows, the dollar rises, and the 10-year yield falls—after which it will rise by 10% by year-end; Positive on BA: Aerospace giant is moving more into the aircraft interiors and avionics sector, and could become a major player when it rolls out the B797; Positive on SRPT: Company’s exon-skipping program is going faster than anticipated, says JMP Securities analyst Liisa Bayko. 

Interview: Silicon Valley venture-capital titan John Doerr talks about a corporate approach based on “objectives and key results,” or OKRs, which he would like to bring to government, schools, and nonprofits. 

Follow-Up: Positive on AAPL: While Wall Street worries about iPhone growth, the company is diversifying its business in areas such as the cloud, iTunes, and digital content. 

European Trader: Positive on Continental: Tire company is also a big player in powertrain manufacturing, brake systems, interior-electronics, and other auto components—and should see sturdy growth ahead. 

Emerging Markets: The Fed probably won’t choke off demand for risk assets this time, says Eamon Aghdasi of State Street Global Markets, and currencies will probably remain range-bound with more volatility. 

Commodities: “In a few days, the U.S. will decide whether to extend waivers on economic sanctions against Iran. If it doesn’t, the global market could lose about one million barrels of oil a day” 

Streetwise: Commenting on TSLA, Ben Levisohn says that “when management feels the need to ply investors with made-up metrics and visionary arrogance, they shouldn’t forget that investors have a choice too: they don't have to buy the stock.”-

Indices roller coaster ride ends after unemployment rate finally drops below 4%

TradeTheNews.com Weekly Market Update: Indices roller coaster ride ends after unemployment rate finally drops below 4%
Fri, 04 May 2018 16:06 PM EST

Investor uneasiness towards equities showed throughout much of the trading week. A confluence of decelerating growth readings, particularly in Europe, along with lingering concerns about US trade relations and the new headwind of a suddenly appreciating US dollar led to an increase in volatility. Earnings season rolled on with many of the same themes holding; companies that missed or offered disappointing outlooks got punished while firms like Apple where expectations had already been downgraded significantly saw relief rallies when results topped expectations. The FOMC’s change of inflation language only confirmed the expectation the Fed will be hiking at least two more times this year, including at the next meeting. After touching 3.3% last week the US 10-year yield backed off below three percent when money flowed away from stocks and into bonds. By midweek both the Dow and S&P had retested their respective 200-day moving averages for the second and third times. Buyers stepped in aggressively following the Fed meeting and into Friday’s jobs report which failed to fan an inflation fears while indicating slack in the US job market continues to come out. The Dollar Index closed the week above 92.5 for the first time since mid- December, while WTI crude finished the week at the highest level going back to 2015. For the week the S&P fell 0.2%, the Dow lost 0.2% and the NASDAQ gained 1.25%.

In corporate news this week, markets digested a spate of M&A news. The US’s third- and fourth-largest wireless companies, T-Mobile and Sprint, came to a merger agreement after years of talks, and Sprint CEO Legere intends to take over as CE0 of the new entity. Walmart shares were boosted after reaching a deal to merge Asda with Sainsbury's in a deal valuing Asda at £7.3B. Twitter announces a live programming agreement with Disney that may include new content from ESPN, ABC, Disney Channel and Marvel. Facebook announced it would add new dating features to its platform, which roiled Match Group and IAC shares. Snap disappointed investors by reporting anemic quarterly daily active user growth and a sequential drop in revenue. Kellogg and Kraft were rare earnings bright spots for consumer staples, while Tesla fell after its Q1 report and subsequent confrontational conference call.

SUNDAY APR 29
Sprint confirms agreement to merge with T-Mobile in all stock transaction with enterprise value of $146B; John Legere named CEO

MONDAY APR 30
(HK) Macau Mar Hotel Occupancy Rate: 87.0%, +4.3ppts y/y
WMT Confirms to merge Asda with Sainsbury's in a deal valuing Asda at £7.3B; Walmart to receive £2.98B in cash and hold 42% of combined company
ANDV Confirms be acquired by Marathon Petroleum Corp for ~$152.27/shr in cash or stock deal valued at $23.3B
(DE) GERMANY APR PRELIMINARY CPI M/M: 0.0% V -0.1%E; Y/Y: 1.6% V 1.5%E
(US) MAR PERSONAL INCOME: 0.3% V 0.4%E; PERSONAL SPENDING: 0.4% V 0.4%E
(US) Nevada reports March casino gaming Rev $1.02B, +3.4% y/y; Las Vegas strip Rev $573.9M, +9.1% y/y
(US) MAR PENDING HOME SALES M/M: 0.4% V 0.5%E; Y/Y: -4.4% V -4.7% PRIOR
(US) APR DALLAS FED MANUFACTURING ACTIVITY: 21.8 V 25.0E
(US) Atlanta Fed forecasts initial Q2 GDP at 4.1%
(IR) Israel PM Netanyahu: tonight we will reveal Iran's secret nuclear files: Iran lied about its weapons program after signing the nuclear accord - remarks in Tel Aviv
TWTR Announces live content and ad agreement with Disney; to announce specific live shows in development this week

TUESDAY MAY 1
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50%; AS EXPECTED
CARLB.DK Reports Q1 (DKK) Rev 12.7B v 12.8Be
(HK) Macau Apr Gaming Rev MOP25.7B v MOP24Be, y/y: 27.6% v 20.2%e (21st consecutive month of growth)
BP.UK Reports Q1 Adj Net (underlying RC profit) $2.59B v $2.12Be, Total Rev $68.2B v $67.8B y/y
(UK) APR MANUFACTURING PMI: 53.9 V 54.8E (21st month of expansion but lowest since Nov 2016)
MRK Reports Q1 $1.05 v $0.99e, Rev $10.0B v $10.1Be
AUD/USD AUD currency moves below the 0.75 level, lowest since Jun 2017 - dealers
(US) APR ISM MANUFACTURING: 57.3 V 58.4E; PRICES PAID: 79.3 V 78.5E
(US) Atlanta Fed maintains Q2 GDP forecast at 4.1%
FB CEO: To add features to Facebook around dating and building long-term relationships - F8 conf comments
SNAP Reports Q1 -$0.17 v -$0.17e, Rev $230.7M v $249Me
AAPL Reports Q2 $2.73 v $2.69e, Rev $61.1B v $61.1Be; Raises dividend 16%; Adds $100B to buyback plan (11.6% of market cap), prior $210B buyback to be completed in Q3

WEDNESDAY MAY 2
STAN.UK Reports Q1 Adj Pretax profit $1.26B v $1.3Be, Op Income $3.87B v $3.9Be
(EU) EURO ZONE Q1 ADVANCE GDP Q/Q: 0.4% V 0.4%E; Y/Y: 2.5% V 2.5%E
(US) APR ADP EMPLOYMENT CHANGE: +204K V +198KE
(US) Treasury's to sell $31B 3-year, $25B 10-year notes and $17B 30-year bonds - quarterly refunding announcement
Euro breaks below 200-day exponential moving average
(US) Conference Board April Total online job ads 4.75M v 4.82M m/m v 4.62M y/y; New ads 2.01M v 2.03M m/m v 1.99M y/y
(UK) UK core cabinet said to make no decision on post-Brexit customs during ministers meeting; Hybrid customs union idea appears dead - press
TSLA Reports Q1 -$3.35 v -$3.37e, Rev $3.41B v $3.17Be

THURSDAY MAY 3
BAYN.DE Reports Q1 adj €2.28 v €2.08e, adj EBITDA €2.9B v €2.8Be, Rev €9.14B v €9.3Be
(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS EXPECTED
(UK) APR SERVICES PMI: 52.8 V 53.5E (21st month of expansion)
(US) Q1 PRELIMINARY NONFARM PRODUCTIVITY: 0.7% V 0.9%E; UNIT LABOR COSTS: 2.7% V 3.0%E
(US) MAR TRADE BALANCE: -$49.0B V -$50.0BE
NYT Reports Q1 $0.17 v $0.11 y/y, Rev $413.9M v $398.8M y/y
(US) Mar Factory Orders: 1.6% v 1.4%e
(US) APR ISM NON-MANUFACTURING COMPOSITE: 56.8 V 58.0E (4 month low)
(US) Atlanta Fed cuts Q2 GDP forecast to 4.0% from 4.1% prior

FRIDAY MAY 4
GLE.FR Reports Q1 adj Net €1.20B v €1.39B y/y, Op €1.57B v €1.83B y/y, Rev €6.29B v €6.48Be
BAS.DE Reports Q1 Adj €1.93 v €1.97e, EBIT €2.51B v €2.50Be, Rev €16.6B v €16.9Be
(US) APR NON-FARM PAYROLLS: +164K v +192Ke
(AR) ARGENTINA CENTRAL BANK RAISES 7-DAY REPO REFERENCE RATE BY 675BPS TO 40.00% (third hike within past week)