TradeTheNews.com Weekly
Market Update: Political clashes in D.C. and Rome strain markets as Fed
tightens rate
Fri, 28 Sep 2018 16:04 PM EST
Major US stock indices stabilized just below last week’s new highs, partially
capped by the latest leg up in rates and the increasing likelihood that the
US/China trade spat will carry on for an extended period of time. Before
Wednesday’s FOMC statement the US 10-year yield briefly tested above 3.11%, the
May high for the year. Yields backed off after the Fed raised rates 25 bps, as
expected, and also removed the term “accommodative” from the description of
monetary policy. Brent crude prices remained on an upward trajectory and by
Friday tested through this summer’s high to a level not seen since 2015,
signaling traders have yet to believe reports that the Saudis will be able to
bring additional barrels onto the market to offset Iranian supply lost to US
tariffs.
An emotionally charged US Senate hearing on some of the allegations made
against Supreme Court nominee Kavanaugh heightened political tensions in
Washington with implications for the November election. Europe remained
preoccupied with the looming Brexit deadline as well as Italian political
wrangling over the 2019 budget. By Friday, word that an agreement was reached
on a budget including a deficit at 2.4% of GDP was not received well by the
markets. Italian rates ratcheted up and the FTSE MIB had its worst day since
the Brexit vote in 2016. The Euro traded off late in the week in the wake of
the Italian budget news as well as softer than expected core Eurozone CPI
figures. Separately the firming Greenback resulted in softness in the Japanese
Yen which helped propel the Nikkei to a 27-year high. For the week, the
S&P500 fell 0.5%, the DJIA lost 1.1%, while the Nasdaq rose 0.7%.
In corporate news this week, the Fox-Comcast-Disney saga came to a close as
Comcast beat out Fox in the auction for control of the UK’s Sky with a $39B bid
and Fox sold the remainder of its ownership to Comcast for $15B. Amazon made
its first move into the homebuilding sector as its Alexa Fund arm invested in
prefabricated construction firm Plant Prefab. Sonic announced it would be
acquired by Arby’s owner Inspire Brands for $43.50/share in cash, in a $2.3B
transaction. Thyssenkrupp shares rose on the announcement it would split into
two companies, separating its industrial and materials units, after pressure
from investors. The SEC sued Tesla CEO Musk asserting he falsely claimed that
he could take the company private at $420/share. Further reports indicated the
SEC had offered a settlement to Musk that would have required he step down as
chairman for two years, though he could remain as CEO, but Musk rejected the
offer. Facebook disclosed that its engineering team found a security bug that
affected 50M accounts which allowed potential hackers to take over people’s
accounts. The company claimed they have patched the issue and have reached out
to law enforcement to determine whether these accounts were misused or any
information illicitly accessed.
MONDAY 9/24
*(CN) US TARIFFS ON $200B IN CHINA GOODS TAKE EFFECT: THE TARIFF RATE IS
EXPECTED TO START AT 10% AND GO UP TO 25% AT THE END OF 2018
SKY.UK Confirms to be acquired by Comcast for £17.28/shr valued at £30.6B
(DE) GERMANY SEPT IFO BUSINESS CLIMATE: 103.7 V 103.2E; CURRENT ASSESSMENT:
106.4 V 106.0E
*(US) SEPT DALLAS FED MANUFACTURING ACTIVITY: 28.1 V 31.0E
(TR) Sec of State Pompeo: Pastor Brunson may be released in Turkey later this
month
(EU) EU Foreign Policy Head Mogherini: EU will establish a legal entity to
facilitate legitimate financial transactions with Iran to allow continued trade
TUESDAY 9/25
*(FR) FRANCE SEPT BUSINESS CONFIDENCE: 106 V 105E; MANUFACTURING CONFIDENCE:107
V 109E
*(SE) SWEDISH PARLIAMENT: OUST PM LOFVEN (204 of 349 voted against PM)
US 10-year Treasury yield tests May 2018 high above 3.11% (above 2018 high
close)
SONC To be acquired by Inspire Brands for $43.50/shr in cash, in a $2.3B
transaction
BMW.DE Cuts FY18 Automotive PBT to moderately decrease (prior on par y/y),
Automotive Rev slightly lower y/y (prior slightly Higher) as a result of
requirement of WLTP regulations
(AR) Argentina Central Bank governor Luis Caputo has tendered his resignation,
citing personal reasons - press
AMZN Alexa Fund invests in prefabricated homebuilder Plant Prefab - CNBC
NKE Reports Q1 $0.67 v $0.62e, Rev $9.95B v $9.88Be
(UK) Prime Min May reportedly to lay out in speech tomorrow plans to cut UK
corporate tax rates to lowest in the G20 - The Telegraph
WEDNESDAY 9/26
(CN) China to cut import tariffs for some goods from Nov 1st (in-line with
earlier comments) - press
*(CZ) CZECH CENTRAL BANK (CNB) RAISES 2-WEEK REPURCHASE RATE BY 25BPS TO 1.50%;
AS EXPECTED (third rate hike in a row)
(UK) PM May: Post-Brexit Britain will be pro-business; confirms plan for UK to
lower taxes, post-Brexit UK should have the lowest corporate tax rate in the
G20 - Global Business Forum
(US) Pres Trump: wants Venezuela to be 'straightened out'; every option is
open; we're going to take care of people of Venezuela - Q&A at UN
*(US) AUG NEW HOME SALES: 629K V 630KE
(US) Association of American Railroads weekly rail traffic report for week
ending Sep 22nd: 567.1K, +4.9% y/y
*(US) FOMC RAISES TARGET RATE RANGE 25BPS TO 2.00-2.25% (AS EXPECTED); FED
STATEMENT REMOVES DESCRIPTION OF ACCOMMODATIVE
*(US) FOMC SUMMARY OF ECONOMIC PROJECTIONS (SEP) FOR SEPT MEETING (V. JUN)
(US) Fed Chair Powell: our economy is strong, inflation is stable - FOMC press
conf
(US) Fed Chair Powell: more businesses are raising concerns about trade policy;
don't expect much impact from tariffs unless they are in place long term - FOMC
press conf Q&A
BBBY Reports Q2 $0.36 v $0.49e, Rev $2.94B v $2.95Be
THURSDAY 9/27
*(ID) INDONESIA CENTRAL BANK (BI) RAISES 7-DAY REVERSE REPO BY 25BPS TO 5.75%;
AS EXPECTED
*(PH) PHILIPPINES CENTRAL BANK (BSP) RAISES OVERNIGHT BORROWING RATE BY 50BPS
TO 4.50%, AS EXPECTED
(SA) Saudi Arabia said to plan boosting oil supply by 200-300Kbpd in next 2
months to compensate for lower Iran output - press
*(EU) EURO ZONE SEPT BUSINESS CLIMATE INDICATOR: 1.21 v 1.19e; CONSUMER
CONFIDENCE(Final): -2.9 v -2.9e
*(DE) GERMANY SEPT PRELIMINARY CPI M/M: 0.4% V 0.1%E; Y/Y: 2.3% V 2.0%E
*(US) AUG PRELIMINARY DURABLE GOODS ORDERS: 4.5% V 2.0%E; DURABLES EX-TRANSPORTATION:
0.1% V 0.4%E
*(US) Q2 FINAL GDP ANNUALIZED Q/Q: 4.2% V 4.2%E; PERSONAL CONSUMPTION: 3.8% V
3.8%E
*(US) Q2 FINAL GDP PRICE INDEX: 3.0% V 3.0%E; CORE PCE Q/Q: 2.1% V 2.0%E
(US) Nevada reports Aug casino gaming Rev $913M, -7.7% y/y; Las Vegas strip Rev
$477.9M, -12.4% y/y
*(US) AUG PENDING HOME SALES M/M: -1.8% V -0.5%E; Y/Y: -2.5% V -1.0%E
TKA.DE Confirms plans to split group into two independent, listed companies; to
split into Materials AG and Industrials AG
(US) Atlanta Fed cuts Q3 GDP forecast to 3.8% from 4.4% prior
*(IT) Italy Interior Min Salvini: agreed on 2019 deficit at 2.4% of GDP; tax
cuts and pension reforms are agreed upon; will not raise sales tax in budget
plan
TSLA CEO Musk sued by the SEC, which will seek civil penalties - press
FRIDAY 9/28
*(DE) GERMANY SEPT UNEMPLOYMENT CHANGE: -23K V -9KE; UNEMPLOYMENT CLAIMS RATE:
5.1% V 5.2%E
*(EU) EURO ZONE SEPT ADVANCE CPI ESTIMATE Y/Y: 2.1% V 2.1%E; CPI CORE Y/Y: 0.9%
V 1.1%E
*(CA) CANADA JUL GDP M/M: 0.2% V 0.1%E; Y/Y: 2.4% V 2.2%E
(US) Atlanta Fed cuts Q3 GDP forecast to 3.6% from 3.8% prior
FB Discloses engineering team found security issue affecting nearly 50M
accounts; issue has been fixed and have informed law enforcement
(US) Senate Judiciary panel votes to advance the Kavanaugh nomination 11-10
along party lines; Sen Flake urges one week delay in full floor vote to allow
FBI investigation
Friday, September 28, 2018
Saturday, September 22, 2018
Barrons weekend summary
Barrons weekend summary: cover story on gold; also discusses Bitcoin and cannabis stocks
Cover story: Gold, “long seen as the investment choice of the cranky and fearful” and out-of-favor because it doesn’t yield anything, now deserves a place in investment portfolios; Compared with stocks and other financial assets, gold looks inexpensive, and provides a hedge against rising inflation.
Features:
1) Bitcoin could be a potential threat to gold bulls—some investors believe that as it becomes more mainstream, the cryptocurrency could replace gold in some portfolios, though others say gold is less volatile and is a well-understood commodity;
2) Positive on AMAT, BWA, CAT, KEY, PH: Barron’s screened for promising companies in the capital goods, financial, auto, and semiconductor sectors, and found five stocks with below-average valuations and healthy growth prospects;
3) Cautious on BX, TRI: Much of the $17B buyout of Thomson Reuters’ financial data business by a Blackstone-led consortium will be financed by debt, which makes it reminiscent of 2007—though it has several distinctly modern features;
4) Interval funds, which provide access to illiquid assets and which have long been on the market, are gaining new ground among some fund managers.
Tech Trader: Positive on BSX, ISRG: Companies are hot performers in the medical-device sector, which has been one of the year’s strongest gainers—and though valuations are high, it’s likely many of the sector’s shares will stay aloft.
Trader: Rising yields could signal a lasting shift away from tech stocks, says Thomas Lee of Fundstrat Global Advisors, and turn some of this year’s winners into losers; Investors need to approach bank shares with caution—the spaces remains healthy, says Ken Zerbe of MS, but things are getting weaker on the loan-growth side; Cautious on BA, LMT: “The defense sector has benefited from forces that are now starting to reverse, at a time when valuations are historically high,” and investors may see less-robust returns.
Profile: Howard Greene and Jeff Given, co-managers of the John Hancock Bond fund, invest in multiple sectors of the bond market and aren’t afraid to take credit risk, most recently in securities backed by prime auto loans.
Interview: Bill McGlashan, founder and managing partner of TPG Growth, talks about investing for a cleaner, healthier, and more equitable world through his Rise fund, which raised $2.1B last year. Follow-Up: Positive on Berkshire Hathaway: The company may no be a “screaming bargain,” says David Rolfe of Wedgewood Partners, but the shares are still undervalued.
European Trader: Turkey’s stock and currency have taken a hit, but the recent stabilization of the Turkish lira may be paving the way for a bounceback in the shares; Investors seeking to profit from the potential upturn should consider TUR.
Emerging Markets: Emerging markets are going through a “slow motion crisis,” says Harvard international finance professor Carmen Reinhart—and it’s not just hot spots such as Argentina, Brazil, and Turkey.
Commodities: “There are still several weeks before U.S. sanctions on Iranian oil actually kick in, but expectations of tight crude inventories already have contributed to much of this year’s gains in global prices.”
Streetwise: “It’s hard to understand why TLRY is valued above large, more established rivals like Aurora Cannabis and CGC” in the marijuana sector, whose “stocks are the new bitcoin,” says Barron’s columnist Bill Alpert.
Cover story: Gold, “long seen as the investment choice of the cranky and fearful” and out-of-favor because it doesn’t yield anything, now deserves a place in investment portfolios; Compared with stocks and other financial assets, gold looks inexpensive, and provides a hedge against rising inflation.
Features:
1) Bitcoin could be a potential threat to gold bulls—some investors believe that as it becomes more mainstream, the cryptocurrency could replace gold in some portfolios, though others say gold is less volatile and is a well-understood commodity;
2) Positive on AMAT, BWA, CAT, KEY, PH: Barron’s screened for promising companies in the capital goods, financial, auto, and semiconductor sectors, and found five stocks with below-average valuations and healthy growth prospects;
3) Cautious on BX, TRI: Much of the $17B buyout of Thomson Reuters’ financial data business by a Blackstone-led consortium will be financed by debt, which makes it reminiscent of 2007—though it has several distinctly modern features;
4) Interval funds, which provide access to illiquid assets and which have long been on the market, are gaining new ground among some fund managers.
Tech Trader: Positive on BSX, ISRG: Companies are hot performers in the medical-device sector, which has been one of the year’s strongest gainers—and though valuations are high, it’s likely many of the sector’s shares will stay aloft.
Trader: Rising yields could signal a lasting shift away from tech stocks, says Thomas Lee of Fundstrat Global Advisors, and turn some of this year’s winners into losers; Investors need to approach bank shares with caution—the spaces remains healthy, says Ken Zerbe of MS, but things are getting weaker on the loan-growth side; Cautious on BA, LMT: “The defense sector has benefited from forces that are now starting to reverse, at a time when valuations are historically high,” and investors may see less-robust returns.
Profile: Howard Greene and Jeff Given, co-managers of the John Hancock Bond fund, invest in multiple sectors of the bond market and aren’t afraid to take credit risk, most recently in securities backed by prime auto loans.
Interview: Bill McGlashan, founder and managing partner of TPG Growth, talks about investing for a cleaner, healthier, and more equitable world through his Rise fund, which raised $2.1B last year. Follow-Up: Positive on Berkshire Hathaway: The company may no be a “screaming bargain,” says David Rolfe of Wedgewood Partners, but the shares are still undervalued.
European Trader: Turkey’s stock and currency have taken a hit, but the recent stabilization of the Turkish lira may be paving the way for a bounceback in the shares; Investors seeking to profit from the potential upturn should consider TUR.
Emerging Markets: Emerging markets are going through a “slow motion crisis,” says Harvard international finance professor Carmen Reinhart—and it’s not just hot spots such as Argentina, Brazil, and Turkey.
Commodities: “There are still several weeks before U.S. sanctions on Iranian oil actually kick in, but expectations of tight crude inventories already have contributed to much of this year’s gains in global prices.”
Streetwise: “It’s hard to understand why TLRY is valued above large, more established rivals like Aurora Cannabis and CGC” in the marijuana sector, whose “stocks are the new bitcoin,” says Barron’s columnist Bill Alpert.
Markets Climb Another Rung Higher on the Wall of Worry
TradeTheNews.com Weekly
Market Update: Markets Climb Another Rung Higher on the Wall of Worry
Fri, 21 Sep 2018 16:07 PM EST
Key US stock indices finally broke into new uncharted territory despite no headway being made in either US trade or Brexit negotiations. Investors hardly batted an eye at the Trump administration’s announcement that another $200B in Chinese imports would subject to tariffs beginning next week, or China’s promise to retaliate when those new US tariffs take effect. Stocks moved up along with interest rates as bond markets saw a modest decline resulting in marginal curve steepening. The US 10-year yield neared the May high stopping just shy of 3.1% while emerging market stability and an overall improvement in investor risk appetite enveloped markets. Copper prices along with overseas stocks rallied aggressively into the week’s end. The BOJ left rates on hold on Wednesday but the 30-year JGB touched the highest level about a year on Friday after the central bank trimmed daily purchases. Crude prices held a bid keeping WTI above $70 heading into this weekend’s OPEC+ meeting where some speculation emerged producers could allow more barrels to reach the market. For the week, the S&P500 gained 0.8%, the DJIA rose 2.2%, and the Nasdaq added 0.3%.
In corporate news this week, the DOJ granted clearance to Cigna’s acquisition of Express Scripts, which bodes positively for the other proposed merger in the pharmacy space currently before the Justice Department, the Aetna-CVS deal. The DOJ also reportedly opened a criminal probe over Tesla CEO Musk’s tweets in August about securing funding for a go-private transaction. EU antitrust chief Vestager said her agency has opened a preliminary probe of Amazon data collection practices from rival retailers and merchants. Adobe announced plans to acquire Marketo for $4.75B in a bid to strengthen its position in the enterprise marketing space to better compete with Salesforce, Oracle, and Microsoft. FedEx shares slumped on earnings call comments that pointed to a slowing in European and Chinese economies and tariff disputes putting a damper on activity. Oracle’s stock dropped after missing revenue estimates and guiding Q2 slightly below consensus. The recent furor in cannabis stocks was stoked by a report that Coca-Cola has opened talks with Canada’s Aurora Cannabis to develop drinks infused with CBD, a non-psychoactive cannabis-based chemical.
MONDAY 9/17
ACB.CA Reportedly Coca Cola in to talks with Co to develop drinks infused with CBD (cannabis) - press
(US) SEPT EMPIRE MANUFACTURING: 19.0 V 23.0E
(SY) Russia Pres Putin: In discussion with Turkey Pres Erdogan we decided to create a DMZ between rebels and Syrian govt forces in Idlib; Russian and Turkish forces will patrol the DMZ
(US) Pres Trump tweets supports for legislation to remove pharmacy gag clauses, urges congressional action
ESRX DOJ grants clearance to Cigna’s acquisition of Express Scripts
ORCL Reports Q1 $0.71 v $0.68e, Rev $9.20B v $9.28Be; increases share repuchase authorization by $12B (6% of market cap)
FDX Reports Q1 $3.46 v $3.78e, Rev $17.1B v $16.9Be
(CN) WHITE HOUSE CONFIRMS WILL IMPOSE TARIFFS ON $200B OF CHINA IMPORTS, EFFECTIVE SEPT 24TH: tariff rate will start at 10% and go up to 25% at the end of 2018
TUESDAY 9/18
(CN) China Commerce Ministry (MOFCOM): To levy US retaliatory tariffs, forced to retaliate, simultaneously with the US; tariffs bring new uncertainties to talks between the two countries
(CN) China reportedly to levy tariffs on $60B worth of US goods at 5-10% rates effective Sept 24th
TSLA US DOJ reportedly opens criminal probe over Musk going private tweets - press
(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%, AS EXPECTED
WEDNESDAY 9/19
(JP) Japan BOJ Gov Kuroda: Will maintain negative yield policy, 10 year yield target - post rate decision press conference
DANSKE.DK Investigations report findings related to branch in Estonia
(UK) AUG CPI M/M: 0.7% V 0.5%E; Y/Y: 2.7% V 2.4%E (6-month high)
(UK) UK PM May reportedly rejecting EU Barnier's improved Irish Border offer - press
SKY.UK Reportedly take over for company may end in one-day auction - press
(US) AUG HOUSING STARTS: 1.28M V 1.24ME; BUILDING PERMITS: 1.23M V 1.31ME
AMZN EU antitrust chief Vestager: have opened a preliminary probe of Amazon data collection from rival retailers, merchants
(US) Atlanta Fed maintains Q3 GDP forecast at 4.4%, unchanged from prior
(UK) EU's Juncker: EU and UK are still far away from a Brexit deal - press
AMZN Reportedly aims to open as many as 3,000 'Amazon Go' cashierless stores by 2021 - press
(BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC TARGET RATE UNCHANGED AT 6.50%; AS EXPECTED
(US) Pres Trump to nominate former Fed economist Nellie Liang for Board of Governors seat - press
(UK) Prime Min May reportedly told EU leaders that extending Brexit talks is not an option; there will not be a second referendum; Northern Ireland cannot have a separate customs regime
THURSDAY 9/20
(CN) China said to plan a 'broad' import tax cut as soon as October for the majority of its trading partners - press
DGE.UK Issues Q1 trading update: trading in line with forecasts: sees Op and Rev impact from currencies, affirms medium-term organic Op margin outlook
(CH) SWISS NATIONAL BANK (SNB) LEAVES SIGHT DEPOSIT INTEREST RATE UNCHANGED AT -0.75%; AS EXPECTED
(NO) NORWAY CENTRAL BANK (NORGES) RAISES DEPOSIT RATES 25BP TO 0.75%, AS EXPECTED
(TR) Turkey Fin Min Albayrak announces Medium-Term Economic Plan: Expects inflation to keep surging, cuts GDP growth forecasts
(UK) AUG RETAIL SALES (EX AUTO FUEL) M/M: 0.3% V -0.2%E; Y/Y: 3.5% V 2.4%E
SKY.UK UK's takeover panel reportedly announces maximum three rounds for announced auction takes place on Sept 21-22
(IT) Italy Economy Ministry reportedly will Cut 2018 and 2019 GDP forecasts materially - press
005930.KR Reportedly looking at cutting memory chip growth next year to keep supply tight - press
(US) SEPT PHILADELPHIA FED BUSINESS OUTLOOK: 22.9 V 18.0E
(ZA) SOUTH AFRICA CENTRAL BANK (SARB) LEAVES INTEREST RATES UNCHANGED AT 6.50%; AS EXPECTED
(UK) EU President Tusk: Chequers plan won't work; reiterates there will be no Brexit agreement without an Irish backstop; Oct 18th is the moment of truth - Salzburg press conf
(UK) Prime Min May: we had a productive summit; EU's Tusk confirmed commitment to reach a deal; EU has provided no counter-proposal - post Salzburg meeting comments
(US) AUG EXISTING HOME SALES: 5.34M V 5.37ME
(US) Fed Reports Q2 Financial Accounts: Household Change in Net Worth: $2.191T v $1.028T prior
MU Reports Q4 $3.53 v $3.32e, Rev $8.44B v $8.25Be
ADBE Confirms to acquire Marketo for $4.75B
FRIDAY 9/21
(FR) France Q2 Final GDP Q/Q: 0.2% v 0.2%e; Y/Y: 1.7% v 1.7%e
(FR) FRANCE SEPT PRELIMINARY MANUFACTURING PMI: 52.5 V 53.3E (3 Month low)
(DE) GERMANY SEPT PRELIMINARY MANUFACTURING PMI: 53.7 V 55.7E
(EU) EURO ZONE SEPT PRELIMINARY MANUFACTURING PMI: 53.3 V 54.5E
(ZA) South Africa President Ramaphosa announces details of stimulus package (confirms setup of ZAR400B infrastructure fund)
(EU) ECB: banks to repay early €3.6B in TLTRO-2 loans - press
(UK) PM May: Brexit talks are at an impasse; both sides still want a deal; EU shouldn't reject proposal with no explanation or counteroffer - Brexit negotiations statement
(US) SEPT PRELIMINARY MARKIT MANUFACTURING PMI: 55.6 V 55.0E (4-month high)
OPEC source: OPEC and non-OPEC countries are mulling potential production boost by another 500K bpd - press
(UK) EU President Tusk: the EU position on Chequers plan was known to the British govt for weeks ahead of summit; UK's stance at Salzburg summit was uncompromising
(US) Deputy AG Rosenstein reportedly suggested that he secretly recorded Pres Trump to expose chaos in administration; discussed seeking to recruit cabinet members to invoke 25th Amendment to remove Trump from office - NY Times
Weekly Market Update: Markets Climb Another Rung Higher on the Wall of Worry
Fri, 21 Sep 2018 16:07 PM EST
Key US stock indices finally broke into new uncharted territory despite no headway being made in either US trade or Brexit negotiations. Investors hardly batted an eye at the Trump administration’s announcement that another $200B in Chinese imports would subject to tariffs beginning next week, or China’s promise to retaliate when those new US tariffs take effect. Stocks moved up along with interest rates as bond markets saw a modest decline resulting in marginal curve steepening. The US 10-year yield neared the May high stopping just shy of 3.1% while emerging market stability and an overall improvement in investor risk appetite enveloped markets. Copper prices along with overseas stocks rallied aggressively into the week’s end. The BOJ left rates on hold on Wednesday but the 30-year JGB touched the highest level about a year on Friday after the central bank trimmed daily purchases. Crude prices held a bid keeping WTI above $70 heading into this weekend’s OPEC+ meeting where some speculation emerged producers could allow more barrels to reach the market. For the week, the S&P500 gained 0.8%, the DJIA rose 2.2%, and the Nasdaq added 0.3%.
In corporate news this week, the DOJ granted clearance to Cigna’s acquisition of Express Scripts, which bodes positively for the other proposed merger in the pharmacy space currently before the Justice Department, the Aetna-CVS deal. The DOJ also reportedly opened a criminal probe over Tesla CEO Musk’s tweets in August about securing funding for a go-private transaction. EU antitrust chief Vestager said her agency has opened a preliminary probe of Amazon data collection practices from rival retailers and merchants. Adobe announced plans to acquire Marketo for $4.75B in a bid to strengthen its position in the enterprise marketing space to better compete with Salesforce, Oracle, and Microsoft. FedEx shares slumped on earnings call comments that pointed to a slowing in European and Chinese economies and tariff disputes putting a damper on activity. Oracle’s stock dropped after missing revenue estimates and guiding Q2 slightly below consensus. The recent furor in cannabis stocks was stoked by a report that Coca-Cola has opened talks with Canada’s Aurora Cannabis to develop drinks infused with CBD, a non-psychoactive cannabis-based chemical.
MONDAY 9/17
ACB.CA Reportedly Coca Cola in to talks with Co to develop drinks infused with CBD (cannabis) - press
(US) SEPT EMPIRE MANUFACTURING: 19.0 V 23.0E
(SY) Russia Pres Putin: In discussion with Turkey Pres Erdogan we decided to create a DMZ between rebels and Syrian govt forces in Idlib; Russian and Turkish forces will patrol the DMZ
(US) Pres Trump tweets supports for legislation to remove pharmacy gag clauses, urges congressional action
ESRX DOJ grants clearance to Cigna’s acquisition of Express Scripts
ORCL Reports Q1 $0.71 v $0.68e, Rev $9.20B v $9.28Be; increases share repuchase authorization by $12B (6% of market cap)
FDX Reports Q1 $3.46 v $3.78e, Rev $17.1B v $16.9Be
(CN) WHITE HOUSE CONFIRMS WILL IMPOSE TARIFFS ON $200B OF CHINA IMPORTS, EFFECTIVE SEPT 24TH: tariff rate will start at 10% and go up to 25% at the end of 2018
TUESDAY 9/18
(CN) China Commerce Ministry (MOFCOM): To levy US retaliatory tariffs, forced to retaliate, simultaneously with the US; tariffs bring new uncertainties to talks between the two countries
(CN) China reportedly to levy tariffs on $60B worth of US goods at 5-10% rates effective Sept 24th
TSLA US DOJ reportedly opens criminal probe over Musk going private tweets - press
(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%, AS EXPECTED
WEDNESDAY 9/19
(JP) Japan BOJ Gov Kuroda: Will maintain negative yield policy, 10 year yield target - post rate decision press conference
DANSKE.DK Investigations report findings related to branch in Estonia
(UK) AUG CPI M/M: 0.7% V 0.5%E; Y/Y: 2.7% V 2.4%E (6-month high)
(UK) UK PM May reportedly rejecting EU Barnier's improved Irish Border offer - press
SKY.UK Reportedly take over for company may end in one-day auction - press
(US) AUG HOUSING STARTS: 1.28M V 1.24ME; BUILDING PERMITS: 1.23M V 1.31ME
AMZN EU antitrust chief Vestager: have opened a preliminary probe of Amazon data collection from rival retailers, merchants
(US) Atlanta Fed maintains Q3 GDP forecast at 4.4%, unchanged from prior
(UK) EU's Juncker: EU and UK are still far away from a Brexit deal - press
AMZN Reportedly aims to open as many as 3,000 'Amazon Go' cashierless stores by 2021 - press
(BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC TARGET RATE UNCHANGED AT 6.50%; AS EXPECTED
(US) Pres Trump to nominate former Fed economist Nellie Liang for Board of Governors seat - press
(UK) Prime Min May reportedly told EU leaders that extending Brexit talks is not an option; there will not be a second referendum; Northern Ireland cannot have a separate customs regime
THURSDAY 9/20
(CN) China said to plan a 'broad' import tax cut as soon as October for the majority of its trading partners - press
DGE.UK Issues Q1 trading update: trading in line with forecasts: sees Op and Rev impact from currencies, affirms medium-term organic Op margin outlook
(CH) SWISS NATIONAL BANK (SNB) LEAVES SIGHT DEPOSIT INTEREST RATE UNCHANGED AT -0.75%; AS EXPECTED
(NO) NORWAY CENTRAL BANK (NORGES) RAISES DEPOSIT RATES 25BP TO 0.75%, AS EXPECTED
(TR) Turkey Fin Min Albayrak announces Medium-Term Economic Plan: Expects inflation to keep surging, cuts GDP growth forecasts
(UK) AUG RETAIL SALES (EX AUTO FUEL) M/M: 0.3% V -0.2%E; Y/Y: 3.5% V 2.4%E
SKY.UK UK's takeover panel reportedly announces maximum three rounds for announced auction takes place on Sept 21-22
(IT) Italy Economy Ministry reportedly will Cut 2018 and 2019 GDP forecasts materially - press
005930.KR Reportedly looking at cutting memory chip growth next year to keep supply tight - press
(US) SEPT PHILADELPHIA FED BUSINESS OUTLOOK: 22.9 V 18.0E
(ZA) SOUTH AFRICA CENTRAL BANK (SARB) LEAVES INTEREST RATES UNCHANGED AT 6.50%; AS EXPECTED
(UK) EU President Tusk: Chequers plan won't work; reiterates there will be no Brexit agreement without an Irish backstop; Oct 18th is the moment of truth - Salzburg press conf
(UK) Prime Min May: we had a productive summit; EU's Tusk confirmed commitment to reach a deal; EU has provided no counter-proposal - post Salzburg meeting comments
(US) AUG EXISTING HOME SALES: 5.34M V 5.37ME
(US) Fed Reports Q2 Financial Accounts: Household Change in Net Worth: $2.191T v $1.028T prior
MU Reports Q4 $3.53 v $3.32e, Rev $8.44B v $8.25Be
ADBE Confirms to acquire Marketo for $4.75B
FRIDAY 9/21
(FR) France Q2 Final GDP Q/Q: 0.2% v 0.2%e; Y/Y: 1.7% v 1.7%e
(FR) FRANCE SEPT PRELIMINARY MANUFACTURING PMI: 52.5 V 53.3E (3 Month low)
(DE) GERMANY SEPT PRELIMINARY MANUFACTURING PMI: 53.7 V 55.7E
(EU) EURO ZONE SEPT PRELIMINARY MANUFACTURING PMI: 53.3 V 54.5E
(ZA) South Africa President Ramaphosa announces details of stimulus package (confirms setup of ZAR400B infrastructure fund)
(EU) ECB: banks to repay early €3.6B in TLTRO-2 loans - press
(UK) PM May: Brexit talks are at an impasse; both sides still want a deal; EU shouldn't reject proposal with no explanation or counteroffer - Brexit negotiations statement
(US) SEPT PRELIMINARY MARKIT MANUFACTURING PMI: 55.6 V 55.0E (4-month high)
OPEC source: OPEC and non-OPEC countries are mulling potential production boost by another 500K bpd - press
(UK) EU President Tusk: the EU position on Chequers plan was known to the British govt for weeks ahead of summit; UK's stance at Salzburg summit was uncompromising
(US) Deputy AG Rosenstein reportedly suggested that he secretly recorded Pres Trump to expose chaos in administration; discussed seeking to recruit cabinet members to invoke 25th Amendment to remove Trump from office - NY Times
Fri, 21 Sep 2018 16:07 PM EST
Key US stock indices finally broke into new uncharted territory despite no headway being made in either US trade or Brexit negotiations. Investors hardly batted an eye at the Trump administration’s announcement that another $200B in Chinese imports would subject to tariffs beginning next week, or China’s promise to retaliate when those new US tariffs take effect. Stocks moved up along with interest rates as bond markets saw a modest decline resulting in marginal curve steepening. The US 10-year yield neared the May high stopping just shy of 3.1% while emerging market stability and an overall improvement in investor risk appetite enveloped markets. Copper prices along with overseas stocks rallied aggressively into the week’s end. The BOJ left rates on hold on Wednesday but the 30-year JGB touched the highest level about a year on Friday after the central bank trimmed daily purchases. Crude prices held a bid keeping WTI above $70 heading into this weekend’s OPEC+ meeting where some speculation emerged producers could allow more barrels to reach the market. For the week, the S&P500 gained 0.8%, the DJIA rose 2.2%, and the Nasdaq added 0.3%.
In corporate news this week, the DOJ granted clearance to Cigna’s acquisition of Express Scripts, which bodes positively for the other proposed merger in the pharmacy space currently before the Justice Department, the Aetna-CVS deal. The DOJ also reportedly opened a criminal probe over Tesla CEO Musk’s tweets in August about securing funding for a go-private transaction. EU antitrust chief Vestager said her agency has opened a preliminary probe of Amazon data collection practices from rival retailers and merchants. Adobe announced plans to acquire Marketo for $4.75B in a bid to strengthen its position in the enterprise marketing space to better compete with Salesforce, Oracle, and Microsoft. FedEx shares slumped on earnings call comments that pointed to a slowing in European and Chinese economies and tariff disputes putting a damper on activity. Oracle’s stock dropped after missing revenue estimates and guiding Q2 slightly below consensus. The recent furor in cannabis stocks was stoked by a report that Coca-Cola has opened talks with Canada’s Aurora Cannabis to develop drinks infused with CBD, a non-psychoactive cannabis-based chemical.
MONDAY 9/17
ACB.CA Reportedly Coca Cola in to talks with Co to develop drinks infused with CBD (cannabis) - press
(US) SEPT EMPIRE MANUFACTURING: 19.0 V 23.0E
(SY) Russia Pres Putin: In discussion with Turkey Pres Erdogan we decided to create a DMZ between rebels and Syrian govt forces in Idlib; Russian and Turkish forces will patrol the DMZ
(US) Pres Trump tweets supports for legislation to remove pharmacy gag clauses, urges congressional action
ESRX DOJ grants clearance to Cigna’s acquisition of Express Scripts
ORCL Reports Q1 $0.71 v $0.68e, Rev $9.20B v $9.28Be; increases share repuchase authorization by $12B (6% of market cap)
FDX Reports Q1 $3.46 v $3.78e, Rev $17.1B v $16.9Be
(CN) WHITE HOUSE CONFIRMS WILL IMPOSE TARIFFS ON $200B OF CHINA IMPORTS, EFFECTIVE SEPT 24TH: tariff rate will start at 10% and go up to 25% at the end of 2018
TUESDAY 9/18
(CN) China Commerce Ministry (MOFCOM): To levy US retaliatory tariffs, forced to retaliate, simultaneously with the US; tariffs bring new uncertainties to talks between the two countries
(CN) China reportedly to levy tariffs on $60B worth of US goods at 5-10% rates effective Sept 24th
TSLA US DOJ reportedly opens criminal probe over Musk going private tweets - press
(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%, AS EXPECTED
WEDNESDAY 9/19
(JP) Japan BOJ Gov Kuroda: Will maintain negative yield policy, 10 year yield target - post rate decision press conference
DANSKE.DK Investigations report findings related to branch in Estonia
(UK) AUG CPI M/M: 0.7% V 0.5%E; Y/Y: 2.7% V 2.4%E (6-month high)
(UK) UK PM May reportedly rejecting EU Barnier's improved Irish Border offer - press
SKY.UK Reportedly take over for company may end in one-day auction - press
(US) AUG HOUSING STARTS: 1.28M V 1.24ME; BUILDING PERMITS: 1.23M V 1.31ME
AMZN EU antitrust chief Vestager: have opened a preliminary probe of Amazon data collection from rival retailers, merchants
(US) Atlanta Fed maintains Q3 GDP forecast at 4.4%, unchanged from prior
(UK) EU's Juncker: EU and UK are still far away from a Brexit deal - press
AMZN Reportedly aims to open as many as 3,000 'Amazon Go' cashierless stores by 2021 - press
(BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC TARGET RATE UNCHANGED AT 6.50%; AS EXPECTED
(US) Pres Trump to nominate former Fed economist Nellie Liang for Board of Governors seat - press
(UK) Prime Min May reportedly told EU leaders that extending Brexit talks is not an option; there will not be a second referendum; Northern Ireland cannot have a separate customs regime
THURSDAY 9/20
(CN) China said to plan a 'broad' import tax cut as soon as October for the majority of its trading partners - press
DGE.UK Issues Q1 trading update: trading in line with forecasts: sees Op and Rev impact from currencies, affirms medium-term organic Op margin outlook
(CH) SWISS NATIONAL BANK (SNB) LEAVES SIGHT DEPOSIT INTEREST RATE UNCHANGED AT -0.75%; AS EXPECTED
(NO) NORWAY CENTRAL BANK (NORGES) RAISES DEPOSIT RATES 25BP TO 0.75%, AS EXPECTED
(TR) Turkey Fin Min Albayrak announces Medium-Term Economic Plan: Expects inflation to keep surging, cuts GDP growth forecasts
(UK) AUG RETAIL SALES (EX AUTO FUEL) M/M: 0.3% V -0.2%E; Y/Y: 3.5% V 2.4%E
SKY.UK UK's takeover panel reportedly announces maximum three rounds for announced auction takes place on Sept 21-22
(IT) Italy Economy Ministry reportedly will Cut 2018 and 2019 GDP forecasts materially - press
005930.KR Reportedly looking at cutting memory chip growth next year to keep supply tight - press
(US) SEPT PHILADELPHIA FED BUSINESS OUTLOOK: 22.9 V 18.0E
(ZA) SOUTH AFRICA CENTRAL BANK (SARB) LEAVES INTEREST RATES UNCHANGED AT 6.50%; AS EXPECTED
(UK) EU President Tusk: Chequers plan won't work; reiterates there will be no Brexit agreement without an Irish backstop; Oct 18th is the moment of truth - Salzburg press conf
(UK) Prime Min May: we had a productive summit; EU's Tusk confirmed commitment to reach a deal; EU has provided no counter-proposal - post Salzburg meeting comments
(US) AUG EXISTING HOME SALES: 5.34M V 5.37ME
(US) Fed Reports Q2 Financial Accounts: Household Change in Net Worth: $2.191T v $1.028T prior
MU Reports Q4 $3.53 v $3.32e, Rev $8.44B v $8.25Be
ADBE Confirms to acquire Marketo for $4.75B
FRIDAY 9/21
(FR) France Q2 Final GDP Q/Q: 0.2% v 0.2%e; Y/Y: 1.7% v 1.7%e
(FR) FRANCE SEPT PRELIMINARY MANUFACTURING PMI: 52.5 V 53.3E (3 Month low)
(DE) GERMANY SEPT PRELIMINARY MANUFACTURING PMI: 53.7 V 55.7E
(EU) EURO ZONE SEPT PRELIMINARY MANUFACTURING PMI: 53.3 V 54.5E
(ZA) South Africa President Ramaphosa announces details of stimulus package (confirms setup of ZAR400B infrastructure fund)
(EU) ECB: banks to repay early €3.6B in TLTRO-2 loans - press
(UK) PM May: Brexit talks are at an impasse; both sides still want a deal; EU shouldn't reject proposal with no explanation or counteroffer - Brexit negotiations statement
(US) SEPT PRELIMINARY MARKIT MANUFACTURING PMI: 55.6 V 55.0E (4-month high)
OPEC source: OPEC and non-OPEC countries are mulling potential production boost by another 500K bpd - press
(UK) EU President Tusk: the EU position on Chequers plan was known to the British govt for weeks ahead of summit; UK's stance at Salzburg summit was uncompromising
(US) Deputy AG Rosenstein reportedly suggested that he secretly recorded Pres Trump to expose chaos in administration; discussed seeking to recruit cabinet members to invoke 25th Amendment to remove Trump from office - NY Times
Weekly Market Update: Markets Climb Another Rung Higher on the Wall of Worry
Fri, 21 Sep 2018 16:07 PM EST
Key US stock indices finally broke into new uncharted territory despite no headway being made in either US trade or Brexit negotiations. Investors hardly batted an eye at the Trump administration’s announcement that another $200B in Chinese imports would subject to tariffs beginning next week, or China’s promise to retaliate when those new US tariffs take effect. Stocks moved up along with interest rates as bond markets saw a modest decline resulting in marginal curve steepening. The US 10-year yield neared the May high stopping just shy of 3.1% while emerging market stability and an overall improvement in investor risk appetite enveloped markets. Copper prices along with overseas stocks rallied aggressively into the week’s end. The BOJ left rates on hold on Wednesday but the 30-year JGB touched the highest level about a year on Friday after the central bank trimmed daily purchases. Crude prices held a bid keeping WTI above $70 heading into this weekend’s OPEC+ meeting where some speculation emerged producers could allow more barrels to reach the market. For the week, the S&P500 gained 0.8%, the DJIA rose 2.2%, and the Nasdaq added 0.3%.
In corporate news this week, the DOJ granted clearance to Cigna’s acquisition of Express Scripts, which bodes positively for the other proposed merger in the pharmacy space currently before the Justice Department, the Aetna-CVS deal. The DOJ also reportedly opened a criminal probe over Tesla CEO Musk’s tweets in August about securing funding for a go-private transaction. EU antitrust chief Vestager said her agency has opened a preliminary probe of Amazon data collection practices from rival retailers and merchants. Adobe announced plans to acquire Marketo for $4.75B in a bid to strengthen its position in the enterprise marketing space to better compete with Salesforce, Oracle, and Microsoft. FedEx shares slumped on earnings call comments that pointed to a slowing in European and Chinese economies and tariff disputes putting a damper on activity. Oracle’s stock dropped after missing revenue estimates and guiding Q2 slightly below consensus. The recent furor in cannabis stocks was stoked by a report that Coca-Cola has opened talks with Canada’s Aurora Cannabis to develop drinks infused with CBD, a non-psychoactive cannabis-based chemical.
MONDAY 9/17
ACB.CA Reportedly Coca Cola in to talks with Co to develop drinks infused with CBD (cannabis) - press
(US) SEPT EMPIRE MANUFACTURING: 19.0 V 23.0E
(SY) Russia Pres Putin: In discussion with Turkey Pres Erdogan we decided to create a DMZ between rebels and Syrian govt forces in Idlib; Russian and Turkish forces will patrol the DMZ
(US) Pres Trump tweets supports for legislation to remove pharmacy gag clauses, urges congressional action
ESRX DOJ grants clearance to Cigna’s acquisition of Express Scripts
ORCL Reports Q1 $0.71 v $0.68e, Rev $9.20B v $9.28Be; increases share repuchase authorization by $12B (6% of market cap)
FDX Reports Q1 $3.46 v $3.78e, Rev $17.1B v $16.9Be
(CN) WHITE HOUSE CONFIRMS WILL IMPOSE TARIFFS ON $200B OF CHINA IMPORTS, EFFECTIVE SEPT 24TH: tariff rate will start at 10% and go up to 25% at the end of 2018
TUESDAY 9/18
(CN) China Commerce Ministry (MOFCOM): To levy US retaliatory tariffs, forced to retaliate, simultaneously with the US; tariffs bring new uncertainties to talks between the two countries
(CN) China reportedly to levy tariffs on $60B worth of US goods at 5-10% rates effective Sept 24th
TSLA US DOJ reportedly opens criminal probe over Musk going private tweets - press
(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%, AS EXPECTED
WEDNESDAY 9/19
(JP) Japan BOJ Gov Kuroda: Will maintain negative yield policy, 10 year yield target - post rate decision press conference
DANSKE.DK Investigations report findings related to branch in Estonia
(UK) AUG CPI M/M: 0.7% V 0.5%E; Y/Y: 2.7% V 2.4%E (6-month high)
(UK) UK PM May reportedly rejecting EU Barnier's improved Irish Border offer - press
SKY.UK Reportedly take over for company may end in one-day auction - press
(US) AUG HOUSING STARTS: 1.28M V 1.24ME; BUILDING PERMITS: 1.23M V 1.31ME
AMZN EU antitrust chief Vestager: have opened a preliminary probe of Amazon data collection from rival retailers, merchants
(US) Atlanta Fed maintains Q3 GDP forecast at 4.4%, unchanged from prior
(UK) EU's Juncker: EU and UK are still far away from a Brexit deal - press
AMZN Reportedly aims to open as many as 3,000 'Amazon Go' cashierless stores by 2021 - press
(BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC TARGET RATE UNCHANGED AT 6.50%; AS EXPECTED
(US) Pres Trump to nominate former Fed economist Nellie Liang for Board of Governors seat - press
(UK) Prime Min May reportedly told EU leaders that extending Brexit talks is not an option; there will not be a second referendum; Northern Ireland cannot have a separate customs regime
THURSDAY 9/20
(CN) China said to plan a 'broad' import tax cut as soon as October for the majority of its trading partners - press
DGE.UK Issues Q1 trading update: trading in line with forecasts: sees Op and Rev impact from currencies, affirms medium-term organic Op margin outlook
(CH) SWISS NATIONAL BANK (SNB) LEAVES SIGHT DEPOSIT INTEREST RATE UNCHANGED AT -0.75%; AS EXPECTED
(NO) NORWAY CENTRAL BANK (NORGES) RAISES DEPOSIT RATES 25BP TO 0.75%, AS EXPECTED
(TR) Turkey Fin Min Albayrak announces Medium-Term Economic Plan: Expects inflation to keep surging, cuts GDP growth forecasts
(UK) AUG RETAIL SALES (EX AUTO FUEL) M/M: 0.3% V -0.2%E; Y/Y: 3.5% V 2.4%E
SKY.UK UK's takeover panel reportedly announces maximum three rounds for announced auction takes place on Sept 21-22
(IT) Italy Economy Ministry reportedly will Cut 2018 and 2019 GDP forecasts materially - press
005930.KR Reportedly looking at cutting memory chip growth next year to keep supply tight - press
(US) SEPT PHILADELPHIA FED BUSINESS OUTLOOK: 22.9 V 18.0E
(ZA) SOUTH AFRICA CENTRAL BANK (SARB) LEAVES INTEREST RATES UNCHANGED AT 6.50%; AS EXPECTED
(UK) EU President Tusk: Chequers plan won't work; reiterates there will be no Brexit agreement without an Irish backstop; Oct 18th is the moment of truth - Salzburg press conf
(UK) Prime Min May: we had a productive summit; EU's Tusk confirmed commitment to reach a deal; EU has provided no counter-proposal - post Salzburg meeting comments
(US) AUG EXISTING HOME SALES: 5.34M V 5.37ME
(US) Fed Reports Q2 Financial Accounts: Household Change in Net Worth: $2.191T v $1.028T prior
MU Reports Q4 $3.53 v $3.32e, Rev $8.44B v $8.25Be
ADBE Confirms to acquire Marketo for $4.75B
FRIDAY 9/21
(FR) France Q2 Final GDP Q/Q: 0.2% v 0.2%e; Y/Y: 1.7% v 1.7%e
(FR) FRANCE SEPT PRELIMINARY MANUFACTURING PMI: 52.5 V 53.3E (3 Month low)
(DE) GERMANY SEPT PRELIMINARY MANUFACTURING PMI: 53.7 V 55.7E
(EU) EURO ZONE SEPT PRELIMINARY MANUFACTURING PMI: 53.3 V 54.5E
(ZA) South Africa President Ramaphosa announces details of stimulus package (confirms setup of ZAR400B infrastructure fund)
(EU) ECB: banks to repay early €3.6B in TLTRO-2 loans - press
(UK) PM May: Brexit talks are at an impasse; both sides still want a deal; EU shouldn't reject proposal with no explanation or counteroffer - Brexit negotiations statement
(US) SEPT PRELIMINARY MARKIT MANUFACTURING PMI: 55.6 V 55.0E (4-month high)
OPEC source: OPEC and non-OPEC countries are mulling potential production boost by another 500K bpd - press
(UK) EU President Tusk: the EU position on Chequers plan was known to the British govt for weeks ahead of summit; UK's stance at Salzburg summit was uncompromising
(US) Deputy AG Rosenstein reportedly suggested that he secretly recorded Pres Trump to expose chaos in administration; discussed seeking to recruit cabinet members to invoke 25th Amendment to remove Trump from office - NY Times
Sunday, September 16, 2018
Reports of progress on trade and Brexit deals maintain positive tone in markets
TradeTheNews.com Weekly
Market Update: Reports of progress on trade and Brexit deals maintain positive
tone in markets
Fri, 14 Sep 2018 16:10 PM EST
Stocks lifted this week on a global basis helped modestly by hopes that US and China were set to resume trade negotiations in earnest, and amid signals of a potential softening on both sides of the key impasse holding up Brexit negotiations. The ECB and BOE left rates unchanged with little fanfare while the Fed’s Beige book suggested despite the threat of tariffs and rising corporate costs the US economy remains robust. The Turkish and Russian Central banks raised rates in somewhat surprising moves that helped suppress fears of contagion related to emerging market FX volatility. Rates moved up, sending the US 10-year yield back to 3% for the first time in more than a month despite benign CPI and PPI data. Though the 3% print followed data indicating August saw US government outlays jump 30% y/y while receipts fell, resulting in one of the largest monthly deficits in decades. WTI crude prices moved up early in the week with the approach of Hurricane Florence but retreated back to the 50-day moving average ahead of a technical meeting between OPEC and non-OPEC members on September 23rd. For the week, the DJIA gained 0.9%, the S&P500 added 1.2%, and the Nasdaq rose 1.4%.
In corporate news this week, CBS announced a settlement with National Amusements to dismiss pending litigation in its long-running dispute, and the company also confirmed Chairman and CEO Les Moonves would depart amid sexual misconduct allegations. Jack Ma surprised investors by saying he would step down as chairman from Alibaba to pursue philanthropy, but also said he would remain on the board to mentor company management going forward. Hershey reached an agreement to acquire Pirate Brands from B&G Foods for $420M, in a bid to further expand its healthier snacks portfolio after last year’s acquisition of Amplify Snack Brands. Kroger shares fell after missing same store sales consensus estimates, noting pricing pressures and increased competition as particular headwinds. Verizon announced that customers can now order 5G service in four US markets for $50/month. Apple held its annual fall product event, revealing new iPhone models and an updated Apple Watch with new health tracking features, which sent Fitbit shares lower.
SUNDAY 9/9
CBS Confirms Moonves to depart as Chairman and CEO, effective immediately; CFO Ianniello to be named as acting CEO; Confirms it and National Amusements agreed to dismiss pending litigation, National Amusements agrees not to propose CBS-Viacom merger for at least 2 years
BABA Follow Up: Current CEO Daniel Zhang to succeed Jack Ma as Executive Chairman, effective Sept 10 2019
MONDAY 9/10
(KR) North Korea Leader Kim said to promise nuclear inspections after declaring the end of war with South Korea - South Korean Press
(UK) JULY INDUSTRIAL PRODUCTION M/M: 0.1% V 0.2%E; Y/Y: 0.9% V 1.1%E
(UK) JULY GDP M/M: 0.3% V 0.1%E
(EU) EURO ZONE SEPT SENTIX INVESTOR CONFIDENCE: 12.0 V 14.3E
(UK) EU Brexit negotiator Barnier: Realistic and possible that we can reach a Brexit agreement in the next 6-8 weeks
(US) JULY CONSUMER CREDIT: $16.6B V $14.4BE
TUESDAY 9/11
(UK) JULY AVERAGE WEEKLY EARNINGS 3M/Y: 2.6% V 2.4%E; WEEKLY EARNINGS (EX-BONUS) 3M/Y: 2.9% V 2.8%E
(UK) AUG JOBLESS CLAIMS CHANGE: +8.7K V +10.2K PRIOR; CLAIMANT COUNT RATE: 2.6% V 2.5% PRIOR
(DE) GERMANY SEPT ZEW CURRENT SITUATION: 76.0 V 72.0E; EXPECTATIONS SURVEY: -10.6 V -13.5E
(UK) Chancellor of the Exchequer Hammond (Fin Min): BOE Carney has agreed to extend his term (by an additional 7-months) until end-Jan 2020 (as speculated)
(SY) Chemical weapon provocation said to have occurred in Idlib; Syria - Russia press
(US) Atlanta Fed cuts Q3 GDP forecast to 3.8% from 4.4% prior
(CA) Canada reportedly prepared to include talks regarding dairy in NAFTA negotiations - press
WEDNESDAY 9/12
(UK) Tories openly discussing ousting May at an ERG meeting last night: Brexiteers clearly split between those who want a true Brexiteer in power (some Johnson supporters and those who want to chuck Chequers not here (the @DavidDavisMP camp) - Sky News
(EU) EU's Juncker: UK can't stay a member in parts of single markets only; welcomes PM May's proposal on EU partnership
(EU) ECB Technical Committee: said to keep inflation outlook unchanged; Sees downside risks to growth (prior view broadly balance)
(HU) European Parliament votes to trigger Article 7 (nuclear option) sanctions procedure against Hungary
(US) AUG PPI FINAL DEMAND M/M: -0.1% V +0.2%E; Y/Y: 2.8% V 3.2%E
(US) DOE CRUDE: -5.3M V -1.5ME; GASOLINE: +1.3M V +0.5ME; DISTILLATE: +6.2M V +1ME
(US) FEDERAL RESERVE BEIGE BOOK: ECONOMY EXPANDED AT MODERATE PACE THROUGH END OF AUGUST; 9 of 12 districts reported modest to moderate growth
BGS Hershey to acquire Pirate Brands from B&G Foods for $420M
THURSDAY 9/13
(TR) Turkey President Erdogan: we should cut high interest rate; inflation is result of CB's wrong steps
(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.75%; AS EXPECTED
(UK) BOE SEPT MINUTES: VOTED 9-0 TO KEEP POLICY STEADY
(TR) TURKEY CENTRAL BANK (CBRT) RAISES ONE-WEEK REPO RATE BY 625BPS TO 24%; More than expected
(EU) ECB LEAVES 7-DAY MAIN REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
(US) AUG CPI M/M: 0.2% V 0.3%E; CPI EX FOOD AND ENERGY M/M: 0.1% V 0.2%E; CPI NSA: 252.146 V 252.396E
(EU) ECB UPDATES STAFF PROJECTIONS
VZ CEO: Customers can order 5G service as of this morning; hoping for 5G compatible phones in early 2019 - Goldman conf comments
(CN) Pres Trump: We're under no pressure to make deal with China; they're under pressure to make deal with us
(US) Aug Monthly Budget Statement: -$214.1B v -$187.0Be
FRIDAY 9/14
(TR) Turkey President Erdogen: Lira decline proves economic assassination attempt; Central bank has made a very high rate increase, his patience is up to a point on Central bank rates
(US) AUG INDUSTRIAL PRODUCTION M/M: 0.4% V 0.3%E; CAPACITY UTILIZATION: 78.1% V 78.2%E
(US) SEPT PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 100.8 V 96.6E (highest since March)
(US) Prosecutors say former Trump campaign manager Manafort is cooperating with Special Counsel Mueller's investigation
(US) Atlanta Fed raises Q3 GDP forecast to 4.4% from 3.8% prior
(CN) Pres Trump reportedly told advisers to proceed with $200B tariffs on China - press
(US) Weekly Baker Hughes US Rig Count: 1,055 v 1,048 w/w (+0.7% w/w)
Fri, 14 Sep 2018 16:10 PM EST
Stocks lifted this week on a global basis helped modestly by hopes that US and China were set to resume trade negotiations in earnest, and amid signals of a potential softening on both sides of the key impasse holding up Brexit negotiations. The ECB and BOE left rates unchanged with little fanfare while the Fed’s Beige book suggested despite the threat of tariffs and rising corporate costs the US economy remains robust. The Turkish and Russian Central banks raised rates in somewhat surprising moves that helped suppress fears of contagion related to emerging market FX volatility. Rates moved up, sending the US 10-year yield back to 3% for the first time in more than a month despite benign CPI and PPI data. Though the 3% print followed data indicating August saw US government outlays jump 30% y/y while receipts fell, resulting in one of the largest monthly deficits in decades. WTI crude prices moved up early in the week with the approach of Hurricane Florence but retreated back to the 50-day moving average ahead of a technical meeting between OPEC and non-OPEC members on September 23rd. For the week, the DJIA gained 0.9%, the S&P500 added 1.2%, and the Nasdaq rose 1.4%.
In corporate news this week, CBS announced a settlement with National Amusements to dismiss pending litigation in its long-running dispute, and the company also confirmed Chairman and CEO Les Moonves would depart amid sexual misconduct allegations. Jack Ma surprised investors by saying he would step down as chairman from Alibaba to pursue philanthropy, but also said he would remain on the board to mentor company management going forward. Hershey reached an agreement to acquire Pirate Brands from B&G Foods for $420M, in a bid to further expand its healthier snacks portfolio after last year’s acquisition of Amplify Snack Brands. Kroger shares fell after missing same store sales consensus estimates, noting pricing pressures and increased competition as particular headwinds. Verizon announced that customers can now order 5G service in four US markets for $50/month. Apple held its annual fall product event, revealing new iPhone models and an updated Apple Watch with new health tracking features, which sent Fitbit shares lower.
SUNDAY 9/9
CBS Confirms Moonves to depart as Chairman and CEO, effective immediately; CFO Ianniello to be named as acting CEO; Confirms it and National Amusements agreed to dismiss pending litigation, National Amusements agrees not to propose CBS-Viacom merger for at least 2 years
BABA Follow Up: Current CEO Daniel Zhang to succeed Jack Ma as Executive Chairman, effective Sept 10 2019
MONDAY 9/10
(KR) North Korea Leader Kim said to promise nuclear inspections after declaring the end of war with South Korea - South Korean Press
(UK) JULY INDUSTRIAL PRODUCTION M/M: 0.1% V 0.2%E; Y/Y: 0.9% V 1.1%E
(UK) JULY GDP M/M: 0.3% V 0.1%E
(EU) EURO ZONE SEPT SENTIX INVESTOR CONFIDENCE: 12.0 V 14.3E
(UK) EU Brexit negotiator Barnier: Realistic and possible that we can reach a Brexit agreement in the next 6-8 weeks
(US) JULY CONSUMER CREDIT: $16.6B V $14.4BE
TUESDAY 9/11
(UK) JULY AVERAGE WEEKLY EARNINGS 3M/Y: 2.6% V 2.4%E; WEEKLY EARNINGS (EX-BONUS) 3M/Y: 2.9% V 2.8%E
(UK) AUG JOBLESS CLAIMS CHANGE: +8.7K V +10.2K PRIOR; CLAIMANT COUNT RATE: 2.6% V 2.5% PRIOR
(DE) GERMANY SEPT ZEW CURRENT SITUATION: 76.0 V 72.0E; EXPECTATIONS SURVEY: -10.6 V -13.5E
(UK) Chancellor of the Exchequer Hammond (Fin Min): BOE Carney has agreed to extend his term (by an additional 7-months) until end-Jan 2020 (as speculated)
(SY) Chemical weapon provocation said to have occurred in Idlib; Syria - Russia press
(US) Atlanta Fed cuts Q3 GDP forecast to 3.8% from 4.4% prior
(CA) Canada reportedly prepared to include talks regarding dairy in NAFTA negotiations - press
WEDNESDAY 9/12
(UK) Tories openly discussing ousting May at an ERG meeting last night: Brexiteers clearly split between those who want a true Brexiteer in power (some Johnson supporters and those who want to chuck Chequers not here (the @DavidDavisMP camp) - Sky News
(EU) EU's Juncker: UK can't stay a member in parts of single markets only; welcomes PM May's proposal on EU partnership
(EU) ECB Technical Committee: said to keep inflation outlook unchanged; Sees downside risks to growth (prior view broadly balance)
(HU) European Parliament votes to trigger Article 7 (nuclear option) sanctions procedure against Hungary
(US) AUG PPI FINAL DEMAND M/M: -0.1% V +0.2%E; Y/Y: 2.8% V 3.2%E
(US) DOE CRUDE: -5.3M V -1.5ME; GASOLINE: +1.3M V +0.5ME; DISTILLATE: +6.2M V +1ME
(US) FEDERAL RESERVE BEIGE BOOK: ECONOMY EXPANDED AT MODERATE PACE THROUGH END OF AUGUST; 9 of 12 districts reported modest to moderate growth
BGS Hershey to acquire Pirate Brands from B&G Foods for $420M
THURSDAY 9/13
(TR) Turkey President Erdogan: we should cut high interest rate; inflation is result of CB's wrong steps
(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.75%; AS EXPECTED
(UK) BOE SEPT MINUTES: VOTED 9-0 TO KEEP POLICY STEADY
(TR) TURKEY CENTRAL BANK (CBRT) RAISES ONE-WEEK REPO RATE BY 625BPS TO 24%; More than expected
(EU) ECB LEAVES 7-DAY MAIN REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
(US) AUG CPI M/M: 0.2% V 0.3%E; CPI EX FOOD AND ENERGY M/M: 0.1% V 0.2%E; CPI NSA: 252.146 V 252.396E
(EU) ECB UPDATES STAFF PROJECTIONS
VZ CEO: Customers can order 5G service as of this morning; hoping for 5G compatible phones in early 2019 - Goldman conf comments
(CN) Pres Trump: We're under no pressure to make deal with China; they're under pressure to make deal with us
(US) Aug Monthly Budget Statement: -$214.1B v -$187.0Be
FRIDAY 9/14
(TR) Turkey President Erdogen: Lira decline proves economic assassination attempt; Central bank has made a very high rate increase, his patience is up to a point on Central bank rates
(US) AUG INDUSTRIAL PRODUCTION M/M: 0.4% V 0.3%E; CAPACITY UTILIZATION: 78.1% V 78.2%E
(US) SEPT PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 100.8 V 96.6E (highest since March)
(US) Prosecutors say former Trump campaign manager Manafort is cooperating with Special Counsel Mueller's investigation
(US) Atlanta Fed raises Q3 GDP forecast to 4.4% from 3.8% prior
(CN) Pres Trump reportedly told advisers to proceed with $200B tariffs on China - press
(US) Weekly Baker Hughes US Rig Count: 1,055 v 1,048 w/w (+0.7% w/w)
Barrons weekend summary
Barrons weekend summary: Positive feature on big insurance names; cautious on cement producers
Cover story: “Debt held by the public, a conservative tally of what America owes, will swell from $15.7T at the end of September, or 78% of GDP, to $28.8T in a decade, or 95% of GDP”; The U.S. “is using the future for a fiscal dumping ground,” says Robert Bixby of the Concord Coalition—and, says Barron’s, at some point the country may reach a point where it loses control of its finances.
Features:
1) Positive on ALL, AIG, TRV: Shares of the insurance giants have declined as Hurricane Florence gains strength, but they are sitting on roughly half a trillion dollars in available capital, and should be able to ride out the storm;
2) Cautious on CX, EXP, MLM, SUM, USCR, VMC: Bad weather and political gridlock have hit stocks of cement, concrete, asphalt, and aggregates producers, but the slump isn’t likely to last, absent a recession, as states shore up crumbling infrastructure;
3) The SEC will end this month a government experiment called the Tick Size Pilot Program to help small-company stocks, because instead of delivering the promised benefits, it stunted trading volumes in the nearly 2,000 stocks involved.
Tech Trader: Cautious on AAPL: Last week when Apple unveiled new iPhones, NVDA announced plans for bringing artificial intelligence to autonomous robots and healthcare, while HPQ announced a 3-D printer capable of mass-producing metal parts—upstaging Apple.
Trader: In late September, industrials and companies that ship products should have a good idea if they will make their quarterly numbers—and investors should be ready for negative pre-announcements; Positive on MMM: Company seems priced right for patient income investors looking for steady growth from a diversified American giant with a track record of raising its dividend; Positive on OI: The largest glass-bottle and package maker in the world “is a steady but slow grower whose shares are at historic lows,” and have more upside than downside.
Interviews:
1) In a Q&A, former Treasury secretary Hank Paulson says the financial crisis could have been much worse, and that the Bear Stearns rescue helped the U.S. dodge a bullet and avoid a devastating chain reaction;
2) Former BCS chief Bob Diamond, who led the firm’s buyout of most of Lehman Brothers at the height of the financial crisis, talks about his current work at Atlas Merchant Capital.
Advisor Rankings: Top Independents: Barron’s list of the Top 100 Independent Advisors is topped by Spuds Powell of Kayne Anderson Rudnick Investment Management, Greg Miller of Wellesley Asset Management, and Robert Skinner II of First Republic Investment Management; In a related story, top advisors talks about the challenges their firms face delivering results for clients.
European Trader: Positive on OBSV: “Small Swiss biotech focused on women’s reproductive health has three promising treatments reaching key development stages in the next few months that could pay off for investors.”
Emerging Markets: Cautious on BABA: The retirement of executive chairman and co-founder Jack Ma raises questions concerning timing and how well the collective governing structure is suited to the complex strategic choices facing the company.
Commodities: Low silver prices have attracted investors seeking bargains, prompting a temporary sellout of the 2018 American Silver Eagle bullion coins at the U.S. Mint this month, a sign buyers may be seeking physical assets ahead of a recession.
Streetwise: CBS may have seemed surprised when sexual harassment accusations against former chief Les Moonves became public, but inside the company concerns had been expressed much earlier—making CBS one of many companies whose directors are overmatched by executives.
Wednesday, September 12, 2018
September-October 2018 Outlook: Deadlines
TradeTheNews.com September-October
2018 Outlook: Deadlines
Tue, 11 Sep 2018 20:49 PM EST
The next few months will see the culmination of a number of geopolitical issues that have been building a ‘wall of worry’ for the financial markets. A cluster of hard and soft deadlines will hit from now through the end of the year that will realign the global political and economic landscape for years to come. From the impending US Congressional election, to the due date for a Brexit deal, to looming ultimatums on trade deals, these deadline will mark binary moments that could either give markets the footholds to keep climbing or cause the first stumble toward the next recession. These key unresolved risks along with the historical trend for the September-October period to be especially volatile are a recipe for some unnerving gyrations during the next couple of months. If progress is demonstrated on these time-sensitive issues, then equity markets may continue to melt up on the strength of corporate earnings reports amid stronger fiscal stimulus and what is still a highly accommodative interest rate environment globally.
The D.C. Political Calendar
In the US, the growing intensity of the political divide between Democrats and Trump’s Republican Party may hit a crescendo in the next few months. With control of Congress the President has been able to shape an agenda of lower taxes, increased military spending, and cutting regulation. But Trump’s chaotic personality has maybe made these victories harder than they should have been and has contributed to consistently low poll numbers for the President outside of his core supporters. The installation of another conservative jurist on the Supreme Court this fall may be his last victory in a while as all indications are the Democrats should retake the House in the mid-term elections (November 6).
While a Democrat-controlled House may provide the President with a foil to grouse about obstructionism, it will effectively stall any further legislative planks in his agenda. Assuming a Democratic win, the new Congress will not be taking up additional tax cuts or discussing funding for a border wall. Democratic committee leaders will also seek more oversight of Executive activities and may even be emboldened to start impeachment proceedings (even if it’s a lost cause without a supermajority in the Senate).
The other political shoe that could drop in the next few months is the conclusion of Robert Mueller’s investigation of election meddling by Russia. With a handful of Trump associates already facing jail time it has yet to be seen if Mueller or federal prosecutors will net any bigger fish. The timeframe on when the investigation will close remains murky, but the pressure is growing with Trump’s lawyers threatening to cry foul if Mueller makes any major announcements in the two months leading up to the election, and the President himself saying since June that “he may get involved” in the FBI probe.
It should be noted that as part of his electioneering the President is also threatening another government shutdown if he does not get the border wall funding he desires. Current funding expires at the end of September, so if the Trump holds fast there could be a temporary disruption of some government services. Democrats will pounce on this as material for political ads, while the President will hope that it burnishes his reputation as a tough negotiator who is ready to shutdown “the swamp.”
Countdown to Trade War
Trump’s best hope at improving chances for the GOP in November would be to cobble together one or more significant trade deals. US trade negotiators reached a handshake deal with Mexico, but are having a harder time integrating Canada into the accord. Canada seeks a win-win-win agreement, but has said that no NAFTA is better than a bad agreement. PM Trudeau has stated outright that Canada wants to keep the dispute resolution mechanism (‘Chapter 19’) and that his country will not give in to US demands that it abandon dairy supply management (which results in high tariffs on US dairy products). Negotiators have given the impression that they are making slow progress, and if they can overcome these two points of contention it seems possible a deal could be reached by the end of September.
Markets have not reacted much to the Trump Administration’s tough talk on trade, largely on the belief that no one wants a trade war and that all sides will come to terms in the months ahead. That conviction may be tested if the US moves forward with $200 billion in additional tariffs on China that are now cleared and ready to go at any moment. President Trump appears to be holding the new tariffs in reserve as leverage to get some movement out of Beijing, and he recently threatened that another $267 billion could be teed up rapidly, which would effectively be putting duties on just about all Chinese imports.
All of this gamesmanship with tariffs does not appear to be benefitting anyone. Even though US metals manufacturers made upbeat comments about the trade restrictions, shares of US Steel have dropped 40% from the moment the metals tariffs were officially announced.
China is definitely feeling the pinch: the China Securities Journal recently forecast that export growth in the second half of 2018 may decline to 2% (after reporting July exports rising 12.2% y/y), and the Shanghai Composite Index and Hang Seng have tumbled into a bear market. Amid these circumstances, China has shown patience and has thus far given signals that it does not intend to use currency as a weapon in the trade war. Nor has there been any sign of either side giving concessions, and by all reports there is currently minimal high-level contact between Beijing and Washington.
The lack of progress on US/China trade talks is also hampering negotiations with North Korea. President Trump effectively stopped the countdown clock on the ‘denuclearization’ of the Korean peninsula, canceling his Secretary of State’s visit on the grounds that China is no longer helping the cause. The implication is that North Korea will be put on the back burner until the Sino-American trade dispute is resolved.
The US also continues to tangle with Europe and emerging market countries on tariffs, with a large focus on the automobile and steel industries. The US and EU announced a temporary ceasefire in late July with an agreement to discuss WTO reforms and to work toward zero tariffs on non-auto industrial goods. The two sides agreed to resist implementing any new tariffs while talks are ongoing. Trade representatives from both sides will meet again at the end of September with the goal of finalizing agreements on at least some areas of trade by November.
Emerging markets are struggling with US trade pressures coupled with the strong dollar, which have exacerbated already difficult local conditions in places like Turkey and Argentina. Elections in Brazil (first round October 7, runoff October 28) will be a chance to stabilize Latin America’s biggest economy, maybe providing footing for the emerging markets. After years of the political establishment being overrun by corruption, this election could be a seen as a break with the past, though markets participants are not that keen on the expected victory by one of the more left-leaning candidates.
World leaders will have several opportunities to hash out their differences (or clash further) in the coming months. The UN General Assembly in New York, scheduled for September 25, is often used by politicians as a platform for policy speeches and a chance for bilateral meetings, and leaders will gather again in Buenos Aires on November 30 and December 1 for the G20 summit.
Brexit Deadlines Loom
The clock is running out on Brexit talks, which appear to be moving along in fits and starts, with some recent headlines indicating that EU and the UK have eased some of their redlines in hopes of getting closer to a deal. The days ahead will come down to whether the EU accepts the ‘Chequers’ proposal formulated by UK PM May as a compromise. If Chequers can be used as a framework, then an exit arrangement may still be reached by the legislative deadline that has reportedly already been pushed out a month to mid-November. If all goes well, an EU summit could be held in that timeframe to seal the deal.
Things get much more complicated, however, if the EU explicitly rejects the Chequers proposal. The BOE’s chief economist Haldane recently noted the markets are putting chances of a ‘no deal’ Brexit at about one-in-four, but that may rise dramatically if the EU says ‘no’ to Chequers.
Should Chequers be spurned, pro-Brexit ministers are urging the PM to take a harder tack, endorsing an agreement framed on the EU’s trade agreement with Canada. The “Canada-plus” model envisions allowing nearly all goods to be traded without tariffs, but, just as with the Chequers plan, this new idea does not solve the most nettlesome issue in the talks: a resolution for the Irish border that prevents the reintroduction of fixed customs checks at the border that would undermine Ireland’s Good Friday Agreement. Unless UK and EU negotiators find an answer to avoid a hard border in Northern Ireland soon, they may not be able to get a withdrawal agreement in place by March.
In recent days the EU’s chief Brexit negotiator Barnier stated that he sees a realistic possibility of reaching an agreement in the next 6-8 weeks. That comes on the heels of reports that the EU was instructing Barnier to get a deal done to avoid a ‘hard Brexit.’ An informal meeting of the EU 27 in Salzburg on September 19 may be the first indicator that this timeframe is on track. Current expectations are that the Salzburg meeting could report more Brexit progress and confirm plans for a formal leaders’ summit on Brexit, likely on November 13…if all goes well.
End of an Era
All of the short term deadlines of the next few months described above are coming due in the context of the end of an era of extremely accommodative monetary policy. The global economy is starting to hum again, but it is not clear how long that will continue once the unprecedented central bank accommodation is withdrawn.
Most major central banks have now made minor adjustments to edge away from ultra-easy policy, but rates largely remain stuck near zero. The BOE is only planning one more rate hike between now and 2020, the ECB is not expected to start raising rates until September 2019, and the BOJ may not raise rates for years.
Meanwhile, the Federal Reserve will extend its divergence from other global central banks with another 25 basis point rate hike at the September 26 FOMC meeting. That will take the key rate to over 2.00% for the first time since 2008, and bring it closer to the ‘neutral’ rate which is being estimated somewhere in the 2.50-3.00% range. The September hike is locked in, but there is still some dove/hawk debate over a fourth 2018 rate hike in December. The Fed appears to be ignoring President Trump’s gripes about rates rising too fast, and that may even stiffen the Fed’s resolve to move higher again in December to demonstrate the central bank’s independence.
Markets have taken higher US rates in stride and that may continue as the Fed works its way back to the ‘neutral’ rate. As this process continues, there seems to be little discomfort with the flattening yield curve, perhaps in part because Japanese and German bonds are holding down the long end of the curve. The theory goes that the 2-10 year curve may not be as good a signal for recession as in the past because of extraordinary global rate accommodation over the last decade. However, it is possible that a yield curve inversion could still trigger a stock market reversal, becoming a self-fulfilling prophecy as traders who are trained to watch for the inversion react to it.
It appears that US economic outperformance and the strong dollar will be the dominant themes in the global economy for the rest of the year. America’s economic strength has allowed the Fed to get far ahead of other central banks in policy normalization, and now the market perspective may be shifting toward predictions of how high rates will go. Fed Chairman Powell has signaled that, with inflation looking very stable, once rates get to ‘neutral’ the Fed will be more cautious about taking rates higher from that point, even if the economy remains very strong. Barring any new shocks developing from missing one of the geopolitical ‘deadlines’ described earlier, that should give comfort to the markets that the next recession is not due any time soon.
Calendar
SEPTEMBER
3: UK Manufacturing PMI; US ISM Manufacturing PMI
4: UK Construction PMI
5: UK Services PMI; US ISM Non-Manufacturing PMI
6: China Trade Balance
7: US Payrolls & Unemployment
9: China CPI
10: UK Q2 GDP; UK Manufacturing Production
11: UK Goods Trade Balance
12: UK Claimant Count & Unemployment; US PPI
13: BOE Policy Statement; ECB Policy Statement & Press Conference; US CPI; China Industrial Production
14: US Retail Sales; Preliminary Univ. of Michigan Consumer Sentiment
17: EU Final CPI; Empire State Manufacturing Index
18: UK CPI & PPI; German ZEW Economic Sentiment; BOJ Policy Statement
19: US Housing Starts & Building Permits; EU 27 meeting in Salzburg
20: UK Retail Sales; Philadelphia Fed Manufacturing Index; US Existing Home Sales
21:
24: Various EU Flash Manufacturing & Services PMIs; German Ifo Business Climate
25: US Conference Board Consumer Confidence; UN General Assembly in NYC
26: FOMC Policy Statement & Press Conference
27: German CPI; US Final Q2 GDP; US Durable Goods Orders
28: German Retail Sales; UK Current Account; UK Final Q2 GDP; EU Flash CPI; US Personal Income & Spending; Chicago PMI
29: China Manufacturing & Non-Manufacturing PMIs
OCTOBER
1: UK Manufacturing PMI; US ISM Manufacturing PMI
2: UK Construction PMI
3: UK Services PMI; US ISM Non-Manufacturing PMI
4:
5: US Payrolls & Unemployment
7: Brazil election (1st round)
8: China Trade Balance
9:
10: UK Q3 GDP; UK Trade Balance; US PPI
11: UK Manufacturing Production; ECB Minutes; US CPI
12: Preliminary Univ. of Michigan Consumer Sentiment
15: US Retail Sales; Empire Manufacturing; China Q3 GDP; China CPI; China Industrial Production
16: UK CPI & PPI; German ZEW Economic Sentiment
17: UK Claimant Count & Unemployment; EU Final CPI; US Housing Starts & Building Permits; FOMC Minutes
18: UK Retail Sales; Philadelphia Fed Manufacturing Index
19: US Existing Home Sales
22:
23:
24: Various EU Manufacturing & Services PMIs
25: German Ifo Business Climate; ECB Policy Statement & Press Conference; US Durable Goods Orders; UN General Assembly in NYC
26: US Advance Q3 GDP
28: Brazil election (2nd round)
29: German Retail Sales; US Personal Income & Spending
30: German Preliminary CPI; EU Flash Q3 GDP; US Conference Board Consumer Confidence; BOJ Policy Statement & Outlook Report
31: EU Flash CPI; Chicago PMI; China Manufacturing & Non-Manufacturing PMIs
NOVEMBER
1: UK Manufacturing PMI; BOE Policy Decision & Inflation Report; US ISM Manufacturing PMI
2: UK Construction PMI; US Payrolls & Unemployment
6: US Midterm Election
Tue, 11 Sep 2018 20:49 PM EST
The next few months will see the culmination of a number of geopolitical issues that have been building a ‘wall of worry’ for the financial markets. A cluster of hard and soft deadlines will hit from now through the end of the year that will realign the global political and economic landscape for years to come. From the impending US Congressional election, to the due date for a Brexit deal, to looming ultimatums on trade deals, these deadline will mark binary moments that could either give markets the footholds to keep climbing or cause the first stumble toward the next recession. These key unresolved risks along with the historical trend for the September-October period to be especially volatile are a recipe for some unnerving gyrations during the next couple of months. If progress is demonstrated on these time-sensitive issues, then equity markets may continue to melt up on the strength of corporate earnings reports amid stronger fiscal stimulus and what is still a highly accommodative interest rate environment globally.
The D.C. Political Calendar
In the US, the growing intensity of the political divide between Democrats and Trump’s Republican Party may hit a crescendo in the next few months. With control of Congress the President has been able to shape an agenda of lower taxes, increased military spending, and cutting regulation. But Trump’s chaotic personality has maybe made these victories harder than they should have been and has contributed to consistently low poll numbers for the President outside of his core supporters. The installation of another conservative jurist on the Supreme Court this fall may be his last victory in a while as all indications are the Democrats should retake the House in the mid-term elections (November 6).
While a Democrat-controlled House may provide the President with a foil to grouse about obstructionism, it will effectively stall any further legislative planks in his agenda. Assuming a Democratic win, the new Congress will not be taking up additional tax cuts or discussing funding for a border wall. Democratic committee leaders will also seek more oversight of Executive activities and may even be emboldened to start impeachment proceedings (even if it’s a lost cause without a supermajority in the Senate).
The other political shoe that could drop in the next few months is the conclusion of Robert Mueller’s investigation of election meddling by Russia. With a handful of Trump associates already facing jail time it has yet to be seen if Mueller or federal prosecutors will net any bigger fish. The timeframe on when the investigation will close remains murky, but the pressure is growing with Trump’s lawyers threatening to cry foul if Mueller makes any major announcements in the two months leading up to the election, and the President himself saying since June that “he may get involved” in the FBI probe.
It should be noted that as part of his electioneering the President is also threatening another government shutdown if he does not get the border wall funding he desires. Current funding expires at the end of September, so if the Trump holds fast there could be a temporary disruption of some government services. Democrats will pounce on this as material for political ads, while the President will hope that it burnishes his reputation as a tough negotiator who is ready to shutdown “the swamp.”
Countdown to Trade War
Trump’s best hope at improving chances for the GOP in November would be to cobble together one or more significant trade deals. US trade negotiators reached a handshake deal with Mexico, but are having a harder time integrating Canada into the accord. Canada seeks a win-win-win agreement, but has said that no NAFTA is better than a bad agreement. PM Trudeau has stated outright that Canada wants to keep the dispute resolution mechanism (‘Chapter 19’) and that his country will not give in to US demands that it abandon dairy supply management (which results in high tariffs on US dairy products). Negotiators have given the impression that they are making slow progress, and if they can overcome these two points of contention it seems possible a deal could be reached by the end of September.
Markets have not reacted much to the Trump Administration’s tough talk on trade, largely on the belief that no one wants a trade war and that all sides will come to terms in the months ahead. That conviction may be tested if the US moves forward with $200 billion in additional tariffs on China that are now cleared and ready to go at any moment. President Trump appears to be holding the new tariffs in reserve as leverage to get some movement out of Beijing, and he recently threatened that another $267 billion could be teed up rapidly, which would effectively be putting duties on just about all Chinese imports.
All of this gamesmanship with tariffs does not appear to be benefitting anyone. Even though US metals manufacturers made upbeat comments about the trade restrictions, shares of US Steel have dropped 40% from the moment the metals tariffs were officially announced.
China is definitely feeling the pinch: the China Securities Journal recently forecast that export growth in the second half of 2018 may decline to 2% (after reporting July exports rising 12.2% y/y), and the Shanghai Composite Index and Hang Seng have tumbled into a bear market. Amid these circumstances, China has shown patience and has thus far given signals that it does not intend to use currency as a weapon in the trade war. Nor has there been any sign of either side giving concessions, and by all reports there is currently minimal high-level contact between Beijing and Washington.
The lack of progress on US/China trade talks is also hampering negotiations with North Korea. President Trump effectively stopped the countdown clock on the ‘denuclearization’ of the Korean peninsula, canceling his Secretary of State’s visit on the grounds that China is no longer helping the cause. The implication is that North Korea will be put on the back burner until the Sino-American trade dispute is resolved.
The US also continues to tangle with Europe and emerging market countries on tariffs, with a large focus on the automobile and steel industries. The US and EU announced a temporary ceasefire in late July with an agreement to discuss WTO reforms and to work toward zero tariffs on non-auto industrial goods. The two sides agreed to resist implementing any new tariffs while talks are ongoing. Trade representatives from both sides will meet again at the end of September with the goal of finalizing agreements on at least some areas of trade by November.
Emerging markets are struggling with US trade pressures coupled with the strong dollar, which have exacerbated already difficult local conditions in places like Turkey and Argentina. Elections in Brazil (first round October 7, runoff October 28) will be a chance to stabilize Latin America’s biggest economy, maybe providing footing for the emerging markets. After years of the political establishment being overrun by corruption, this election could be a seen as a break with the past, though markets participants are not that keen on the expected victory by one of the more left-leaning candidates.
World leaders will have several opportunities to hash out their differences (or clash further) in the coming months. The UN General Assembly in New York, scheduled for September 25, is often used by politicians as a platform for policy speeches and a chance for bilateral meetings, and leaders will gather again in Buenos Aires on November 30 and December 1 for the G20 summit.
Brexit Deadlines Loom
The clock is running out on Brexit talks, which appear to be moving along in fits and starts, with some recent headlines indicating that EU and the UK have eased some of their redlines in hopes of getting closer to a deal. The days ahead will come down to whether the EU accepts the ‘Chequers’ proposal formulated by UK PM May as a compromise. If Chequers can be used as a framework, then an exit arrangement may still be reached by the legislative deadline that has reportedly already been pushed out a month to mid-November. If all goes well, an EU summit could be held in that timeframe to seal the deal.
Things get much more complicated, however, if the EU explicitly rejects the Chequers proposal. The BOE’s chief economist Haldane recently noted the markets are putting chances of a ‘no deal’ Brexit at about one-in-four, but that may rise dramatically if the EU says ‘no’ to Chequers.
Should Chequers be spurned, pro-Brexit ministers are urging the PM to take a harder tack, endorsing an agreement framed on the EU’s trade agreement with Canada. The “Canada-plus” model envisions allowing nearly all goods to be traded without tariffs, but, just as with the Chequers plan, this new idea does not solve the most nettlesome issue in the talks: a resolution for the Irish border that prevents the reintroduction of fixed customs checks at the border that would undermine Ireland’s Good Friday Agreement. Unless UK and EU negotiators find an answer to avoid a hard border in Northern Ireland soon, they may not be able to get a withdrawal agreement in place by March.
In recent days the EU’s chief Brexit negotiator Barnier stated that he sees a realistic possibility of reaching an agreement in the next 6-8 weeks. That comes on the heels of reports that the EU was instructing Barnier to get a deal done to avoid a ‘hard Brexit.’ An informal meeting of the EU 27 in Salzburg on September 19 may be the first indicator that this timeframe is on track. Current expectations are that the Salzburg meeting could report more Brexit progress and confirm plans for a formal leaders’ summit on Brexit, likely on November 13…if all goes well.
End of an Era
All of the short term deadlines of the next few months described above are coming due in the context of the end of an era of extremely accommodative monetary policy. The global economy is starting to hum again, but it is not clear how long that will continue once the unprecedented central bank accommodation is withdrawn.
Most major central banks have now made minor adjustments to edge away from ultra-easy policy, but rates largely remain stuck near zero. The BOE is only planning one more rate hike between now and 2020, the ECB is not expected to start raising rates until September 2019, and the BOJ may not raise rates for years.
Meanwhile, the Federal Reserve will extend its divergence from other global central banks with another 25 basis point rate hike at the September 26 FOMC meeting. That will take the key rate to over 2.00% for the first time since 2008, and bring it closer to the ‘neutral’ rate which is being estimated somewhere in the 2.50-3.00% range. The September hike is locked in, but there is still some dove/hawk debate over a fourth 2018 rate hike in December. The Fed appears to be ignoring President Trump’s gripes about rates rising too fast, and that may even stiffen the Fed’s resolve to move higher again in December to demonstrate the central bank’s independence.
Markets have taken higher US rates in stride and that may continue as the Fed works its way back to the ‘neutral’ rate. As this process continues, there seems to be little discomfort with the flattening yield curve, perhaps in part because Japanese and German bonds are holding down the long end of the curve. The theory goes that the 2-10 year curve may not be as good a signal for recession as in the past because of extraordinary global rate accommodation over the last decade. However, it is possible that a yield curve inversion could still trigger a stock market reversal, becoming a self-fulfilling prophecy as traders who are trained to watch for the inversion react to it.
It appears that US economic outperformance and the strong dollar will be the dominant themes in the global economy for the rest of the year. America’s economic strength has allowed the Fed to get far ahead of other central banks in policy normalization, and now the market perspective may be shifting toward predictions of how high rates will go. Fed Chairman Powell has signaled that, with inflation looking very stable, once rates get to ‘neutral’ the Fed will be more cautious about taking rates higher from that point, even if the economy remains very strong. Barring any new shocks developing from missing one of the geopolitical ‘deadlines’ described earlier, that should give comfort to the markets that the next recession is not due any time soon.
Calendar
SEPTEMBER
3: UK Manufacturing PMI; US ISM Manufacturing PMI
4: UK Construction PMI
5: UK Services PMI; US ISM Non-Manufacturing PMI
6: China Trade Balance
7: US Payrolls & Unemployment
9: China CPI
10: UK Q2 GDP; UK Manufacturing Production
11: UK Goods Trade Balance
12: UK Claimant Count & Unemployment; US PPI
13: BOE Policy Statement; ECB Policy Statement & Press Conference; US CPI; China Industrial Production
14: US Retail Sales; Preliminary Univ. of Michigan Consumer Sentiment
17: EU Final CPI; Empire State Manufacturing Index
18: UK CPI & PPI; German ZEW Economic Sentiment; BOJ Policy Statement
19: US Housing Starts & Building Permits; EU 27 meeting in Salzburg
20: UK Retail Sales; Philadelphia Fed Manufacturing Index; US Existing Home Sales
21:
24: Various EU Flash Manufacturing & Services PMIs; German Ifo Business Climate
25: US Conference Board Consumer Confidence; UN General Assembly in NYC
26: FOMC Policy Statement & Press Conference
27: German CPI; US Final Q2 GDP; US Durable Goods Orders
28: German Retail Sales; UK Current Account; UK Final Q2 GDP; EU Flash CPI; US Personal Income & Spending; Chicago PMI
29: China Manufacturing & Non-Manufacturing PMIs
OCTOBER
1: UK Manufacturing PMI; US ISM Manufacturing PMI
2: UK Construction PMI
3: UK Services PMI; US ISM Non-Manufacturing PMI
4:
5: US Payrolls & Unemployment
7: Brazil election (1st round)
8: China Trade Balance
9:
10: UK Q3 GDP; UK Trade Balance; US PPI
11: UK Manufacturing Production; ECB Minutes; US CPI
12: Preliminary Univ. of Michigan Consumer Sentiment
15: US Retail Sales; Empire Manufacturing; China Q3 GDP; China CPI; China Industrial Production
16: UK CPI & PPI; German ZEW Economic Sentiment
17: UK Claimant Count & Unemployment; EU Final CPI; US Housing Starts & Building Permits; FOMC Minutes
18: UK Retail Sales; Philadelphia Fed Manufacturing Index
19: US Existing Home Sales
22:
23:
24: Various EU Manufacturing & Services PMIs
25: German Ifo Business Climate; ECB Policy Statement & Press Conference; US Durable Goods Orders; UN General Assembly in NYC
26: US Advance Q3 GDP
28: Brazil election (2nd round)
29: German Retail Sales; US Personal Income & Spending
30: German Preliminary CPI; EU Flash Q3 GDP; US Conference Board Consumer Confidence; BOJ Policy Statement & Outlook Report
31: EU Flash CPI; Chicago PMI; China Manufacturing & Non-Manufacturing PMIs
NOVEMBER
1: UK Manufacturing PMI; BOE Policy Decision & Inflation Report; US ISM Manufacturing PMI
2: UK Construction PMI; US Payrolls & Unemployment
6: US Midterm Election
Sunday, September 9, 2018
Tech slides amid concerns over tariffs and regulation, dampening another strong jobs report
TradeTheNews.com Weekly
Market Update: Tech slides amid concerns over tariffs and regulation, dampening
another strong jobs report
Fri, 07 Sep 2018 16:08 PM EST
Trading resumed with indices under modest pressure due to lingering uncertainty surrounding trade and continued volatility in emerging market FX. Tuesday saw US August ISM manufacturing data come in at the strongest level in more than a decade. NASDAQ volumes picked up notably mid-week, boosted by intensifying selling pressure in large cap tech. Sharp reversals in several high beta tech groups that surged so aggressively in recent weeks saw reversals coinciding with social media executives being grilled on Capitol Hill. Oil prices moved up ahead of Tropical Storm Gordons landfall in the Gulf and then edged lower.
Investors continued to await a decision by the Trump administration on potentially moving ahead with tariffs on an additional $200B in Chinese products along with some kind resolution to the Canada NAFTA negotiations. Simultaneously, the President was forced to deal with another barrage of press reports indicating his leadership style continues to create anxiety in the West Wing. Friday saw the August payrolls report top estimates while wages grew at 2.9% y/y. That wage figure matched the January 2018 reading which sparked a move higher in rates and a spike in volatility earlier this year. Rates moved up again with Treasury yields lifting to the highest level in about a month, but the overall stock market reaction appeared subdued. The Dollar also firmed except against the Pound. Cable gained on multiple reports of potential thawing around some key Brexit negotiating themes. For the week, the S&P fell 1%, the DJIA slipped 0.2%, and the Nasdaq tumbled 2.6%, suffering its biggest weekly decline since late March.
In corporate news, top tech executives were in the hot seat this week. Twitter’s CEO Dorsey and Facebook’s COO Sandberg were called before Congress to discuss privacy and censorship issues. Tesla shares dropped as much as 10% on Friday in response to video of CEO Musk smoking pot during a podcast interview, followed closely by the resignation of his Chief Accounting Officer. Costco kept the positive news for retailers going with a report of an 8% surge in August same store sales.
MON 9/3
TUES 9/4
*(ZA) SOUTH AFRICA Q2 GDP ANNUALIZED Q/Q: -0.7% V +0.6%E; Y/Y: 0.4% V 1.0%E (moves into recession for 1st time since 2009)
*(US) AUG FINAL MARKIT MANUFACTURING PMI: 54.7 V 54.5E (lowest since Nov 2017)
AMZN Tests $2,050.27, becomes second publicly listed US company valued at $1 trillion
WED 9/5
BAYN.DE Reports Q2 adj €1.54 v €1.64e, adj EBITDA €2.34B v €2.45Be, Rev €9.5B v €9.3Be; Completes Monsanto acquistion
*(UK) AUG SERVICES PMI: 54.3 V 53.9E (25th month of expansion)
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATE UNCHANGED AT 1.50%; AS EXPECTED; Recent data reinforced view that higher rates would be warranted
(US) Conference Board Aug Total online job ads 4.61M v 4.65M m/m v 4.52M y/y; New ads 1.74M v 1.89M m/m v 1.90M y/y
(US) Dept of Justice to convene meeting to discuss 'growing concern' that social media companies are stifling the exchange of ideas and may be hurting competition - press
(KR) South Korea Official: North and South Korea to hold summit on Sept 18-20 in North Korea; said North Korea leader Kim said he wanted to realize denuclearization during US President Trump's first term, noted he no longer intends to test long-range missile
THRS 9/6
*(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT -0.50; AS EXPECTED (pushes back 1st potential rate hike to Dec or Feb)
*(US) AUG ADP EMPLOYMENT CHANGE: +163K V +200KE
*(US) Q2 FINAL NONFARM PRODUCTIVITY: 2.9% V 3.0%E; UNIT LABOR COSTS: -1.0% V -0.9%E
*(US) AUG ISM NON-MANUFACTURING INDEX: 58.5 V 56.8E
*(US) DOE CRUDE: -4.3M V -2ME; GASOLINE: +1.8M V -1ME; DISTILLATE: +3.1M V +0.5ME
(JP) Pres Trump reportedly hinted in press interview that trade fight with Japan may be next on agenda - CNBC
COST Reports August SSS (ex gas) +8.0%, US SSS (ex gas) +8.9%
FRI 9/7
*(EU) EURO ZONE Q2 FINAL GDP Q/Q: 0.4% V 0.4%E; Y/Y: 2.1% V 2.2%E
(UK) EU's Barnier said to be open to other backstops for Irish border and simplify checks- Transcript release by UK govt of Sept 3rd meeting
*(CA) CANADA AUG NET CHANGE IN EMPLOYMENT: -51.6K V +5.0KE; UNEMPLOYMENT RATE: 6.0% V 5.9%E
TSLA Chief Accounting Officer Morton resigns, effective immediately (resigns after one month in the job)
Fri, 07 Sep 2018 16:08 PM EST
Trading resumed with indices under modest pressure due to lingering uncertainty surrounding trade and continued volatility in emerging market FX. Tuesday saw US August ISM manufacturing data come in at the strongest level in more than a decade. NASDAQ volumes picked up notably mid-week, boosted by intensifying selling pressure in large cap tech. Sharp reversals in several high beta tech groups that surged so aggressively in recent weeks saw reversals coinciding with social media executives being grilled on Capitol Hill. Oil prices moved up ahead of Tropical Storm Gordons landfall in the Gulf and then edged lower.
Investors continued to await a decision by the Trump administration on potentially moving ahead with tariffs on an additional $200B in Chinese products along with some kind resolution to the Canada NAFTA negotiations. Simultaneously, the President was forced to deal with another barrage of press reports indicating his leadership style continues to create anxiety in the West Wing. Friday saw the August payrolls report top estimates while wages grew at 2.9% y/y. That wage figure matched the January 2018 reading which sparked a move higher in rates and a spike in volatility earlier this year. Rates moved up again with Treasury yields lifting to the highest level in about a month, but the overall stock market reaction appeared subdued. The Dollar also firmed except against the Pound. Cable gained on multiple reports of potential thawing around some key Brexit negotiating themes. For the week, the S&P fell 1%, the DJIA slipped 0.2%, and the Nasdaq tumbled 2.6%, suffering its biggest weekly decline since late March.
In corporate news, top tech executives were in the hot seat this week. Twitter’s CEO Dorsey and Facebook’s COO Sandberg were called before Congress to discuss privacy and censorship issues. Tesla shares dropped as much as 10% on Friday in response to video of CEO Musk smoking pot during a podcast interview, followed closely by the resignation of his Chief Accounting Officer. Costco kept the positive news for retailers going with a report of an 8% surge in August same store sales.
MON 9/3
TUES 9/4
*(ZA) SOUTH AFRICA Q2 GDP ANNUALIZED Q/Q: -0.7% V +0.6%E; Y/Y: 0.4% V 1.0%E (moves into recession for 1st time since 2009)
*(US) AUG FINAL MARKIT MANUFACTURING PMI: 54.7 V 54.5E (lowest since Nov 2017)
AMZN Tests $2,050.27, becomes second publicly listed US company valued at $1 trillion
WED 9/5
BAYN.DE Reports Q2 adj €1.54 v €1.64e, adj EBITDA €2.34B v €2.45Be, Rev €9.5B v €9.3Be; Completes Monsanto acquistion
*(UK) AUG SERVICES PMI: 54.3 V 53.9E (25th month of expansion)
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATE UNCHANGED AT 1.50%; AS EXPECTED; Recent data reinforced view that higher rates would be warranted
(US) Conference Board Aug Total online job ads 4.61M v 4.65M m/m v 4.52M y/y; New ads 1.74M v 1.89M m/m v 1.90M y/y
(US) Dept of Justice to convene meeting to discuss 'growing concern' that social media companies are stifling the exchange of ideas and may be hurting competition - press
(KR) South Korea Official: North and South Korea to hold summit on Sept 18-20 in North Korea; said North Korea leader Kim said he wanted to realize denuclearization during US President Trump's first term, noted he no longer intends to test long-range missile
THRS 9/6
*(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT -0.50; AS EXPECTED (pushes back 1st potential rate hike to Dec or Feb)
*(US) AUG ADP EMPLOYMENT CHANGE: +163K V +200KE
*(US) Q2 FINAL NONFARM PRODUCTIVITY: 2.9% V 3.0%E; UNIT LABOR COSTS: -1.0% V -0.9%E
*(US) AUG ISM NON-MANUFACTURING INDEX: 58.5 V 56.8E
*(US) DOE CRUDE: -4.3M V -2ME; GASOLINE: +1.8M V -1ME; DISTILLATE: +3.1M V +0.5ME
(JP) Pres Trump reportedly hinted in press interview that trade fight with Japan may be next on agenda - CNBC
COST Reports August SSS (ex gas) +8.0%, US SSS (ex gas) +8.9%
FRI 9/7
*(EU) EURO ZONE Q2 FINAL GDP Q/Q: 0.4% V 0.4%E; Y/Y: 2.1% V 2.2%E
(UK) EU's Barnier said to be open to other backstops for Irish border and simplify checks- Transcript release by UK govt of Sept 3rd meeting
*(CA) CANADA AUG NET CHANGE IN EMPLOYMENT: -51.6K V +5.0KE; UNEMPLOYMENT RATE: 6.0% V 5.9%E
TSLA Chief Accounting Officer Morton resigns, effective immediately (resigns after one month in the job)
Saturday, September 1, 2018
Barrons weekend summary
Barrons weekend summary: positive feature on KSU
Cover story: A move by the S&P and MSCI to reconstitute their indexes by moving AMZN to consumer discretionary and FB and GOOGL to communications services and out of the tech sector will have a ripple effect throughout the professional money-management industry, and could mean big changes for investors’ portfolios.
Features: 1) With changes being made to how stocks are classified by industry, the tech sector is about to get smaller, which could help investors, partly by cutting out short-term noise; 2) Positive on KSU: Railway will benefit from the fact that the U.S. trade relationship with Mexico isn’t set to substantially change, allowing it to continue transporting goods in both directions across the border; 3) Two years after starting as a new kind of real estate company, Compass has reversed course and embraced a traditional model using agent commissions, but says its technology boosts effectiveness.
Tech Trader: Though most co-CEO efforts during the past few decades have failed, CRM’s move to have chief operating officer Keith Block share the CEO role with Marc Benioff has so far been a success by nearly every measure.
Trader: Investors have approached uncertainty around Nafta by buying tech giants such as AAPL and MSFT, while other tech shares—including ADSK, ANET, and SPLK—have been rallying on good news; Cautious on BBY: Investors’ reaction to the retailer’s earnings says more about market expectations than the results themselves; Cautious on DLTR: The recent share drop can’t solely be attributed to the discount retailer’s one cent miss on net income per share—it reflects other concerns.
Profile: Michael Lippert, manager of the Baron Opportunity fund, invests in innovation through companies instigating change or benefiting from it (top 10 holdings: AMZN, MSFT, GOOG, GWRE, IT, AAPL, CSGP, TSLA, ACXM, EA).
Interview: Mariana Mazzucato, a professor of economics at University College London, talks about the limitations of conventional views of value and other conclusions from her recent book, “The Value of Everything: Making and Taking in the Global Economy.”
Follow-Up: The political heat on FB and TWTR “has reached white-hot intensity over their susceptibility to foreign interests digitally manipulating their vast platforms,” and for now Washington may have the upper hand.
European Trader: Fears about the Brexit may start to grow as investors in the U.S. and U.K. return from their summer holidays, says Helen Thomas of Blonde Money.
Emerging Markets: The new trade deal with Mexico led its markets and currency to dip, because a Nafta agreement was already priced in.
Commodities: A serious threat to hog supplies in China, the world’s largest pork consumer, could lead to a bounce-back in hog prices, which are down 28% year to date.
Streetwise: Columnist Mary Childs discusses the debate about whether a hedge fund such as Aurelius Capital Management can ever be justified in forcing a perfectly functional company into bankruptcy—in this case, Windstream Holdings.
Friday, August 31, 2018
Risk-On Sentiment Rules Amid Tentative Progress on Trade Issues
TradeTheNews.com Weekly
Market Update: Risk-On Sentiment Rules Amid Tentative Progress on Trade Issues
Fri, 31 Aug 2018 16:09 PM EST
The S&P opened the week at record levels while the Nasdaq topped 8,000 and the Dow rose above 26,000 for the first time since February, as positive sentiment over strong corporate earnings was augmented by some apparent progress on trade. News of a trade agreement between the US and Mexico buoyed optimism about a trilateral deal being reached, but Canada was not convinced by Friday afternoon, leaving the US to press ahead with a Mexico deal with more US/Canada talks next week. Amazon pushed closer to a $1 trillion market cap and Apple surged again to new all-time highs as large cap tech led the way higher yet again. Sentiment waned into the back half of week as emerging market volatility and potential contagion fears resurfaced around fresh plunges in the Argentine peso and Turkish Lira along with notable weakness in other EM exchange rates forced central banks to respond. That consternation remained prevalent in bond trading too as Treasury yields moved lower after rising earlier in the week. The composition of the curve continued to flash warning signals to many observers including to some within the Federal Reserve. The 2-10 yield spread tested below 20 basis points several times after last week’s Jackson Hole commentary. The S&P500 ended the week up 0.9%, while the DJIA gained 0.7%, and the Nasdaq surged 2.1%.
In corporate news this week, Salesforce shares slipped on conservative Q3 guidance and a miss on billings revenue. Under Armour dropped after Dick’s Sporting Goods noted it saw “continued significant declines in Under Armour sales” due to their decision to expand distribution. Best Buy lost some ground after its Q3 outlook disappointed. Lululemon surged after another beat and guidance raise. Electronic Arts shares fell after it cut its bookings outlook and announced a delayed launch for ‘Battlefield V’. Coca Cola acquired UK coffeehouse chain Costa Ltd for £3.9B in a move to compete with Starbucks and other coffee brands in Europe.
MONDAY 8/27
(DE) GERMANY AUG IFO BUSINESS CLIMATE: 103.8 V 101.8E; CURRENT ASSESSMENT: 106.4 V 105.3E
(US) AUG DALLAS FED MANUFACTURING ACTIVITY: 30.9 V 30.0E
(US) US and Mexico reach trade deal to replace NAFTA - press
(US) President Trump: There will be US-Mexico trade agreement; will call this US-Mexico trade agreement, dropping NAFTA name
TUESDAY 8/28
3988.HK Reports H1 (CNY) Net 109.1B v 103.7B y/y, Op Income 251.5B v 248.4B y/y
TIF Reports Q2 $1.17 v $1.00e, Rev $1.08B v $1.04Be
BBY Reports Q2 $0.91 v $0.83e, Enterprise Rev $9.38B v $9.25Be
WEDNESDAY 8/29
(IT) Italy govt reportedly seen reaching out to ECB for a new round of QE - press
(FR) FRANCE Q2 PRELIMINARY GDP Q/Q: 0.2% V 0.2%E; Y/Y: 1.7% V 1.7%E
(US) Q2 PRELIMINARY GDP ANNUALIZED (2ND READING) Q/Q: 4.2% V 4.0%E (highest since 2014); PERSONAL CONSUMPTION: 3.8% V 3.9%E
(UK) EU Chief Brexit Negotiator Barnier: We're prepared to offer Britain a partnership unlike with any other country
(US) JULY PENDING HOME SALES M/M: -0.7% V 0.3%E; Y/Y: -0.5% V -2.5%E
(US) DOE CRUDE: -2.6M V -1ME; GASOLINE: -1.6M V 0ME; DISTILLATE: -0.8M V +2ME
(RU) Sec of State Pompeo reportedly asks for meeting with Russia Foreign Min Lavrov to ease tensions ahead of new planned sanctions - Wash Post
(DE) Germany Foreign Ministry: there will be no special rules for a post-Brexit UK
CRM Reports Q2 $0.71 v $0.47e, Rev $3.28B v $3.23Be; raises FY19 outlook
THURSDAY 8/30
(DE) GERMANY AUG UNEMPLOYMENT CHANGE: -8K V -8KE; UNEMPLOYMENT CLAIMS RATE: 5.2% V 5.2%E
(HK) Macau July Hotel Occupancy Rate: 89.9%, -0.9ppts y/y
*(EU) EURO ZONE AUG BUSINESS CLIMATE INDICATOR: 1.22 V 1.26E; CONSUMER CONFIDENCE (FINAL): -1.9 V -1.9E
(EU) EU said would agree with zero tariffs on industrial goods (including cars) if US agree - financial press
(CN) China Cabinet reportedly adopting new measures to support the real economy; to improve national medicines system - press
(AR) Argentina Central Bank said to be meeting before local market open on Thursday - financial press
*(DE) GERMANY JULY PRELIMINARY CPI M/M: 0.1% V 0.1%E; Y/Y: 2.0% V 2.0%E
*(CA) CANADA JUN GDP M/M: 0.0% V 0.1%E; Y/Y: 2.4% V 2.3%E
(AR) Argentina Central Bank (BCRA) raises LELIQ Rate by 1500bps to 60.00% (from 45.00%) (intra-policy decision)
(US) Atlanta Fed cuts Q3 GDP forecast to 4.1% from 4.6% prior
(CN) President Trump reportedly tells aides he is ready to implement the proposed $200B in new China tariffs as soon as next week, though final decision is still pending - press
(US) President Trump: will withdraw from WTO if it doesn't 'shape up'; don't regret naming Powell as Fed Chair - press interview
(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.50%; AS EXPECTED
*(CN) CHINA AUG OFFICIAL GOVT MANUFACTURING PMI: 51.3 V 51.0E
USD/IDR Rupiah (IDR) currency extends decline, trades at lowest level since 1998; Indonesia 10-year bond yield trades above 8.02% (highest since Dec 2016)
FRIDAY 8/31
WTB.UK To divest Costa Ltd to Coca-Cola for £3.9B
(DE) GERMANY JULY RETAIL SALES M/M: -0.4% V -0.2%E; Y/Y: 0.8% V 1.3%E
(DE) GERMANY JULY RETAIL SALES M/M: -0.4% V -0.2%E; Y/Y: 0.8% V 1.3%E
(CA) Canada govt officials said to doubt having a NAFTA deal by today (Friday, Aug 31st) – press
*(US) CANADA-US NAFTA TALKS END WITH NO AGREEMENT; TRUMP TO NOTIFY CONGRESS OF PLANS TO PROCEED WITH MEXICO-ONLY DEAL TO REPLACE NAFTA
(CA) USTR Lighthizer confirms US/Canada talks will resume on Wed (Sept 5); plan to sign a trade deal with Mexico, and with Canada if they are willing
Fri, 31 Aug 2018 16:09 PM EST
The S&P opened the week at record levels while the Nasdaq topped 8,000 and the Dow rose above 26,000 for the first time since February, as positive sentiment over strong corporate earnings was augmented by some apparent progress on trade. News of a trade agreement between the US and Mexico buoyed optimism about a trilateral deal being reached, but Canada was not convinced by Friday afternoon, leaving the US to press ahead with a Mexico deal with more US/Canada talks next week. Amazon pushed closer to a $1 trillion market cap and Apple surged again to new all-time highs as large cap tech led the way higher yet again. Sentiment waned into the back half of week as emerging market volatility and potential contagion fears resurfaced around fresh plunges in the Argentine peso and Turkish Lira along with notable weakness in other EM exchange rates forced central banks to respond. That consternation remained prevalent in bond trading too as Treasury yields moved lower after rising earlier in the week. The composition of the curve continued to flash warning signals to many observers including to some within the Federal Reserve. The 2-10 yield spread tested below 20 basis points several times after last week’s Jackson Hole commentary. The S&P500 ended the week up 0.9%, while the DJIA gained 0.7%, and the Nasdaq surged 2.1%.
In corporate news this week, Salesforce shares slipped on conservative Q3 guidance and a miss on billings revenue. Under Armour dropped after Dick’s Sporting Goods noted it saw “continued significant declines in Under Armour sales” due to their decision to expand distribution. Best Buy lost some ground after its Q3 outlook disappointed. Lululemon surged after another beat and guidance raise. Electronic Arts shares fell after it cut its bookings outlook and announced a delayed launch for ‘Battlefield V’. Coca Cola acquired UK coffeehouse chain Costa Ltd for £3.9B in a move to compete with Starbucks and other coffee brands in Europe.
MONDAY 8/27
(DE) GERMANY AUG IFO BUSINESS CLIMATE: 103.8 V 101.8E; CURRENT ASSESSMENT: 106.4 V 105.3E
(US) AUG DALLAS FED MANUFACTURING ACTIVITY: 30.9 V 30.0E
(US) US and Mexico reach trade deal to replace NAFTA - press
(US) President Trump: There will be US-Mexico trade agreement; will call this US-Mexico trade agreement, dropping NAFTA name
TUESDAY 8/28
3988.HK Reports H1 (CNY) Net 109.1B v 103.7B y/y, Op Income 251.5B v 248.4B y/y
TIF Reports Q2 $1.17 v $1.00e, Rev $1.08B v $1.04Be
BBY Reports Q2 $0.91 v $0.83e, Enterprise Rev $9.38B v $9.25Be
WEDNESDAY 8/29
(IT) Italy govt reportedly seen reaching out to ECB for a new round of QE - press
(FR) FRANCE Q2 PRELIMINARY GDP Q/Q: 0.2% V 0.2%E; Y/Y: 1.7% V 1.7%E
(US) Q2 PRELIMINARY GDP ANNUALIZED (2ND READING) Q/Q: 4.2% V 4.0%E (highest since 2014); PERSONAL CONSUMPTION: 3.8% V 3.9%E
(UK) EU Chief Brexit Negotiator Barnier: We're prepared to offer Britain a partnership unlike with any other country
(US) JULY PENDING HOME SALES M/M: -0.7% V 0.3%E; Y/Y: -0.5% V -2.5%E
(US) DOE CRUDE: -2.6M V -1ME; GASOLINE: -1.6M V 0ME; DISTILLATE: -0.8M V +2ME
(RU) Sec of State Pompeo reportedly asks for meeting with Russia Foreign Min Lavrov to ease tensions ahead of new planned sanctions - Wash Post
(DE) Germany Foreign Ministry: there will be no special rules for a post-Brexit UK
CRM Reports Q2 $0.71 v $0.47e, Rev $3.28B v $3.23Be; raises FY19 outlook
THURSDAY 8/30
(DE) GERMANY AUG UNEMPLOYMENT CHANGE: -8K V -8KE; UNEMPLOYMENT CLAIMS RATE: 5.2% V 5.2%E
(HK) Macau July Hotel Occupancy Rate: 89.9%, -0.9ppts y/y
*(EU) EURO ZONE AUG BUSINESS CLIMATE INDICATOR: 1.22 V 1.26E; CONSUMER CONFIDENCE (FINAL): -1.9 V -1.9E
(EU) EU said would agree with zero tariffs on industrial goods (including cars) if US agree - financial press
(CN) China Cabinet reportedly adopting new measures to support the real economy; to improve national medicines system - press
(AR) Argentina Central Bank said to be meeting before local market open on Thursday - financial press
*(DE) GERMANY JULY PRELIMINARY CPI M/M: 0.1% V 0.1%E; Y/Y: 2.0% V 2.0%E
*(CA) CANADA JUN GDP M/M: 0.0% V 0.1%E; Y/Y: 2.4% V 2.3%E
(AR) Argentina Central Bank (BCRA) raises LELIQ Rate by 1500bps to 60.00% (from 45.00%) (intra-policy decision)
(US) Atlanta Fed cuts Q3 GDP forecast to 4.1% from 4.6% prior
(CN) President Trump reportedly tells aides he is ready to implement the proposed $200B in new China tariffs as soon as next week, though final decision is still pending - press
(US) President Trump: will withdraw from WTO if it doesn't 'shape up'; don't regret naming Powell as Fed Chair - press interview
(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.50%; AS EXPECTED
*(CN) CHINA AUG OFFICIAL GOVT MANUFACTURING PMI: 51.3 V 51.0E
USD/IDR Rupiah (IDR) currency extends decline, trades at lowest level since 1998; Indonesia 10-year bond yield trades above 8.02% (highest since Dec 2016)
FRIDAY 8/31
WTB.UK To divest Costa Ltd to Coca-Cola for £3.9B
(DE) GERMANY JULY RETAIL SALES M/M: -0.4% V -0.2%E; Y/Y: 0.8% V 1.3%E
(DE) GERMANY JULY RETAIL SALES M/M: -0.4% V -0.2%E; Y/Y: 0.8% V 1.3%E
(CA) Canada govt officials said to doubt having a NAFTA deal by today (Friday, Aug 31st) – press
*(US) CANADA-US NAFTA TALKS END WITH NO AGREEMENT; TRUMP TO NOTIFY CONGRESS OF PLANS TO PROCEED WITH MEXICO-ONLY DEAL TO REPLACE NAFTA
(CA) USTR Lighthizer confirms US/Canada talks will resume on Wed (Sept 5); plan to sign a trade deal with Mexico, and with Canada if they are willing
Saturday, August 25, 2018
Barron’s weekend summary
Barron’s weekend summary: Cover story on the cloud in video gaming, positive for EA and ATVI
Cover story: “The cloud is the future of videogaming, and it could arrive sooner than many players expect, with important implications for investors”; Companies such as EA and ATVI will benefit, while NVDA, MSFT, and SNE may face challenges because of the trend.
Features: 1) Steve Perlman—whose OnLive streaming game service offering a flat-fee subscription model came online more than a decade ago—explains why the cloud gaming revolution has taken so long; 2) The Value Investors Club “is the rare medium where partners at hedge funds will anonymously discuss stocks with investors they know nothing about,” and where members with good ideas can make a name for themselves.
Tech Trader: Cautious on NFLX: Investors should pay close attention to the stock as rivals DIS and T rush to emulate its Internet video business, especially because Netflix earnings are largely a creation of accounting practices.
Trader: Doug Ramsey of Leuthold Group “points to the number of stocks making new lows in recent weeks as one worrisome trend,” though it shouldn’t make investors grow too bearish; The healthcare sector has faced problems, but is regaining its strength, and the rally may just be getting started—though there are still risks.
Interview: Dan Chung, chief executive and chief investment officer at Fred Alger Management, argues that the forces that have lifted the market are far from spent (picks: MSFT, ROP, TNDM, Puma).
Profile: Martin Schulz of the PNC International Equity fund and his team cover specific regions and let macroeconomic outlooks guide their initial investment decisions (top 10 holdings: Wirecard, Tencent Holdings, SNE, BABA, ASML, Ping An Insurance Group, HDB, Nidec, AIA Group, AEM).
Follow-Up: 1) Positive on GSK: Shares of the pharma company are rebounding after years of poor performance, and investors believe it can replace one blockbuster asthma drug with another, while other drug studies show potential; 2) Cautious on LB: Barron’s suggests that the company can’t be fixed despite some positive steps—Victoria’s Secret discounts are failing to entice shoppers while Pink’s sales could drop by half.
European Trader: Positive on Carlsberg: The Danish brewing giant “could fit the bill for long-term investors thirsting for an undervalued, but promising, consumer stock,” and it appears to be on track for better profitability.
Emerging Markets: Positive on Tencent Holdings: Chinese online colossus has become the largest stock in emerging markets, and its recent drop presents a buying opportunity—the company should resume its winning ways.
Commodities: “Sugar prices have fallen to their lowest levels in a decade and are likely to drop further as record worldwide production collides with healthier eating.”
Streetwise: Senator Elizabeth Warren’s introduction of legislation that would require large U.S. companies to create a “material positive impact on society” is misguided, and would fail to solve the problem of growing inequality.
Political and Trade Troubles in Washington Discounted by Bullish Markets
TradeTheNews.com Weekly
Market Update: Political and Trade Troubles in Washington Discounted by Bullish
Markets
Fri, 24 Aug 2018 16:06 PM EST
US stock indices made a run at historic highs this week. Hopes for movement in the NAFTA and China trade negotiations, abatement of the recent US dollar strength, a continued benign interest rate environment as well as a thin summer trading were most often cited for the melt up. The view on the US consumer remained vibrant, getting support from historically strong earnings reports from several high profile US retailers. Target’s CEO declared the consumer environment was the best of his career. The momentum waned somewhat mid-week after President Trump’s former campaign Manager was found guilty on various counts, and his former personal lawyer Michael Cohen took a plea while his lawyer insinuated he has further information related to the Russia election hacking investigation.
The US went ahead and slapped tariffs on another $16B in Chinese goods amid low expectations for progress as trade negotiations resumed in Washington. Meanwhile US/Mexico trade talks fell short of an agreement, but will continue next week. Both the Fed and ECB released minutes from their most recent meetings and the commentary did little to lift Treasury yields from the lows of the month. The US curve flattened further with the 2-10 yield spread narrowing toward 20 basis points for the first time this cycle. On Friday Fed Chairman Powell reiterated the case for gradual rate hikes, and hinted that tightening may slow when the ‘neutral’ rate is reached even if the economy is still strong because there is no sign of inflation accelerating. Stocks pushed aside the political and trade troubles and ended higher: the S&P500 gained 0.9% on the week to set a new record high, while the DJIA added 0.5% and the Nasdaq surged 1.7%.
In corporate news this week, a swath of retailers released earnings, with mixed results. Target posted its best quarterly comps figure in 13 years. Lowe's cut its outlook after announcing plans to close every one of its 99 Orchard Supply stores. Gap investors took profits after the clothier affirmed its FY outlook. Williams Sonoma jumped on an earnings beat, but L Brands slipped to its lowest level in seven years on disappointing guidance. Footlocker slid on a comp sales miss, and Hibbett Sports reported a surprise loss and cut guidance. Online brokers took a hit after JPMorgan announced an investing app with free or discounted trades and no-fee access to stock research. There were reports that Saudi Arabia had abandoned its Saudi Aramco IPO, but the Saudis responded that the government remains committed to the plan but will do so at a time of its own choosing. PepsiCo announced it would acquire carbonated beverage machine maker Sodastream for $144/share in cash in a deal valued at $3.2B. And mobile game developer Zynga got a boost from an agreement with Disney to produce free-to-play Star Wars videogames.
MONDAY 8/20
SODA To be acquired by PepsiCo for $144/shr in cash valued at $3.2B
(US) President Trump: not thrilled with what Fed Chief Powell is doing so far, should be more accommodating - press interview
(US) President Trump: does not anticipate much coming out of meeting with Chinese delegation regarding trade talks this week - press interview
(TR) President Trump: will give no concessions to Turkey over detained US pastor; not concerned about any economic fallout for Europe over Turkey sanctions - press interview
BHP.AU Reports FY18 Underlying Net $9.6B (continuing ops) v $9.2Be, Underlying EBITDA $24.1B (includes Onshore US business) v $24.3Be, Rev $45.8B v $45.5Be
TUESDAY 8/21
JPM To unveil new investing app with free or discounted trades, portfolio building tool, and no-fee access to stock research - CNBC
(US) Former Trump lawyer Cohen enters guilty plea at court hearing; says he violated campaign law at direction of the 'candidate', sought to influence the election
(US) Former Trump campaign chair Paul Manafort found guilty on eight counts including tax fraud, bank fraud charges - press
(VE) 7.3 magnitude earthquake reported off northern coast of Venezuela
(MX) US said to announce 'handshake' NAFTA deal related to Mexico on Thursday (Aug 23rd), says Politico; Mexico said to deny the existence of a deal related to NAFTA, according to a separate report
WEDNESDAY 8/22
LOW Reports Q2 $2.07 v $2.02e, Rev $20.9B v $20.8Be; adjusts outlook, strategic reassessment is ongoing to exit Orchard Supply Hardware
TGT Reports Q2 $1.47 v $1.40e, Rev $17.8B v $17.3Be
(US) USTR: no deal yet on NAFTA, there are still major outstanding issues
*(US) JULY EXISTING HOME SALES: 5.34M V 5.40ME (slowest pace in over two years)
*(US) DOE CRUDE: -5.8M V -2ME; GASOLINE: +1.2M V -1ME; DISTILLATE: +1.8M V +1.5ME
ARAMCO.IPO Saudi Arabia reportedly abandons Aramco IPO and has dismissed advisers - press
*(US) FOMC MINUTES FROM AUG 1ST MEETING: MANY OFFICIALS SAID ANOTHER RATE INCREASE WOULD LIKELY SOON BE APPROPRIATE; OFFICIALS NOTE RATES MOVING CLOSER TO ESTIMATES OF NEUTRAL
THURSDAY 8/23
*(FR) FRANCE AUG BUSINESS CONFIDENCE: 105 V 107E; MANUFACTURING CONFIDENCE: 110 V 108E
(FR) FRANCE AUG PRELIMINARY MANUFACTURING PMI: 53.7 V 53.5E (23rd month of expansion)
*(DE) GERMANY PRELIMINARY MANUFACTURING PMI: 56.1 V 56.5E (44th month of expansion)
*(EU) EURO AUG PRELIMINARY MANUFACTURING PMI: 54.6 V 55.2E (61st month of expansion)
(US) National Hurricane Center (NHC): Hurricane Lane (Category 4) is the biggest weather threat to Hawaii in decades (1959 and 1992 last time hurricanes made landfall)
BABA Reports Q2 $1.22* v $1.29e, Rev $12.2B v $12.3Be
*(US) AUG PRELIMINARY MARKIT MANUFACTURING PMI: 54.5 V 55.0E (9-month low)
*(US) JULY NEW HOME SALES: 627K V 645KE
GPS Reports Q2 $0.76 v $0.72e, Rev $4.09B v $3.98Be
*(CN) CHINA PBOC CONDUCTS CNY149B 1-YEAR MEDIUM-TERM LENDING FACILITY (MLF) V CNY383B PRIOR AT 3.30% V 3.30% PRIOR (2nd MLF operation this month)
(AU) Australia PM Turnbull reiterates stance that said will not stand for PM and resigns as the leader of the Liberal party; Ruling Liberal Party voted 45 to 40 to hold leadership ballot for the party
(AU): Australia Treasurer Morrison to replace Turnbull as PM after winning party leadership vote - Australia Media
FRIDAY 8/24
(DE) GERMANY Q2 FINAL GDP Q/Q: 0.5% V 0.5%E; Y/Y: 2.0% V 2.0%E
(CN) China PBoC said to resume counter-cyclical factor in Yuan mid-point fixing mechanism - financial press
*(US) JULY PRELIMINARY DURABLE GOODS ORDERS: -1.7% V -1.0%E; DURABLES EX-TRANSPORTATION: 0.2% V 0.5%E
*(US) Fed Chair Powell: Gradual hikes are likely appropriate if growth stays strong; US economy is strong; does not seem to be elevated risk of overheating - Jackson Hole symposium speech
(MX) Mexico Pres-elect Lopez Obrador reportedly holds position on oil policy that is hindering new NAFTA agreement - press
(KR) Pres Trump asks Sec of State Pompeo to cancel North Korea trip at this time due to lack of denuclearization progress; says China is not helping with denuclearization process 'as they once were'
Fri, 24 Aug 2018 16:06 PM EST
US stock indices made a run at historic highs this week. Hopes for movement in the NAFTA and China trade negotiations, abatement of the recent US dollar strength, a continued benign interest rate environment as well as a thin summer trading were most often cited for the melt up. The view on the US consumer remained vibrant, getting support from historically strong earnings reports from several high profile US retailers. Target’s CEO declared the consumer environment was the best of his career. The momentum waned somewhat mid-week after President Trump’s former campaign Manager was found guilty on various counts, and his former personal lawyer Michael Cohen took a plea while his lawyer insinuated he has further information related to the Russia election hacking investigation.
The US went ahead and slapped tariffs on another $16B in Chinese goods amid low expectations for progress as trade negotiations resumed in Washington. Meanwhile US/Mexico trade talks fell short of an agreement, but will continue next week. Both the Fed and ECB released minutes from their most recent meetings and the commentary did little to lift Treasury yields from the lows of the month. The US curve flattened further with the 2-10 yield spread narrowing toward 20 basis points for the first time this cycle. On Friday Fed Chairman Powell reiterated the case for gradual rate hikes, and hinted that tightening may slow when the ‘neutral’ rate is reached even if the economy is still strong because there is no sign of inflation accelerating. Stocks pushed aside the political and trade troubles and ended higher: the S&P500 gained 0.9% on the week to set a new record high, while the DJIA added 0.5% and the Nasdaq surged 1.7%.
In corporate news this week, a swath of retailers released earnings, with mixed results. Target posted its best quarterly comps figure in 13 years. Lowe's cut its outlook after announcing plans to close every one of its 99 Orchard Supply stores. Gap investors took profits after the clothier affirmed its FY outlook. Williams Sonoma jumped on an earnings beat, but L Brands slipped to its lowest level in seven years on disappointing guidance. Footlocker slid on a comp sales miss, and Hibbett Sports reported a surprise loss and cut guidance. Online brokers took a hit after JPMorgan announced an investing app with free or discounted trades and no-fee access to stock research. There were reports that Saudi Arabia had abandoned its Saudi Aramco IPO, but the Saudis responded that the government remains committed to the plan but will do so at a time of its own choosing. PepsiCo announced it would acquire carbonated beverage machine maker Sodastream for $144/share in cash in a deal valued at $3.2B. And mobile game developer Zynga got a boost from an agreement with Disney to produce free-to-play Star Wars videogames.
MONDAY 8/20
SODA To be acquired by PepsiCo for $144/shr in cash valued at $3.2B
(US) President Trump: not thrilled with what Fed Chief Powell is doing so far, should be more accommodating - press interview
(US) President Trump: does not anticipate much coming out of meeting with Chinese delegation regarding trade talks this week - press interview
(TR) President Trump: will give no concessions to Turkey over detained US pastor; not concerned about any economic fallout for Europe over Turkey sanctions - press interview
BHP.AU Reports FY18 Underlying Net $9.6B (continuing ops) v $9.2Be, Underlying EBITDA $24.1B (includes Onshore US business) v $24.3Be, Rev $45.8B v $45.5Be
TUESDAY 8/21
JPM To unveil new investing app with free or discounted trades, portfolio building tool, and no-fee access to stock research - CNBC
(US) Former Trump lawyer Cohen enters guilty plea at court hearing; says he violated campaign law at direction of the 'candidate', sought to influence the election
(US) Former Trump campaign chair Paul Manafort found guilty on eight counts including tax fraud, bank fraud charges - press
(VE) 7.3 magnitude earthquake reported off northern coast of Venezuela
(MX) US said to announce 'handshake' NAFTA deal related to Mexico on Thursday (Aug 23rd), says Politico; Mexico said to deny the existence of a deal related to NAFTA, according to a separate report
WEDNESDAY 8/22
LOW Reports Q2 $2.07 v $2.02e, Rev $20.9B v $20.8Be; adjusts outlook, strategic reassessment is ongoing to exit Orchard Supply Hardware
TGT Reports Q2 $1.47 v $1.40e, Rev $17.8B v $17.3Be
(US) USTR: no deal yet on NAFTA, there are still major outstanding issues
*(US) JULY EXISTING HOME SALES: 5.34M V 5.40ME (slowest pace in over two years)
*(US) DOE CRUDE: -5.8M V -2ME; GASOLINE: +1.2M V -1ME; DISTILLATE: +1.8M V +1.5ME
ARAMCO.IPO Saudi Arabia reportedly abandons Aramco IPO and has dismissed advisers - press
*(US) FOMC MINUTES FROM AUG 1ST MEETING: MANY OFFICIALS SAID ANOTHER RATE INCREASE WOULD LIKELY SOON BE APPROPRIATE; OFFICIALS NOTE RATES MOVING CLOSER TO ESTIMATES OF NEUTRAL
THURSDAY 8/23
*(FR) FRANCE AUG BUSINESS CONFIDENCE: 105 V 107E; MANUFACTURING CONFIDENCE: 110 V 108E
(FR) FRANCE AUG PRELIMINARY MANUFACTURING PMI: 53.7 V 53.5E (23rd month of expansion)
*(DE) GERMANY PRELIMINARY MANUFACTURING PMI: 56.1 V 56.5E (44th month of expansion)
*(EU) EURO AUG PRELIMINARY MANUFACTURING PMI: 54.6 V 55.2E (61st month of expansion)
(US) National Hurricane Center (NHC): Hurricane Lane (Category 4) is the biggest weather threat to Hawaii in decades (1959 and 1992 last time hurricanes made landfall)
BABA Reports Q2 $1.22* v $1.29e, Rev $12.2B v $12.3Be
*(US) AUG PRELIMINARY MARKIT MANUFACTURING PMI: 54.5 V 55.0E (9-month low)
*(US) JULY NEW HOME SALES: 627K V 645KE
GPS Reports Q2 $0.76 v $0.72e, Rev $4.09B v $3.98Be
*(CN) CHINA PBOC CONDUCTS CNY149B 1-YEAR MEDIUM-TERM LENDING FACILITY (MLF) V CNY383B PRIOR AT 3.30% V 3.30% PRIOR (2nd MLF operation this month)
(AU) Australia PM Turnbull reiterates stance that said will not stand for PM and resigns as the leader of the Liberal party; Ruling Liberal Party voted 45 to 40 to hold leadership ballot for the party
(AU): Australia Treasurer Morrison to replace Turnbull as PM after winning party leadership vote - Australia Media
FRIDAY 8/24
(DE) GERMANY Q2 FINAL GDP Q/Q: 0.5% V 0.5%E; Y/Y: 2.0% V 2.0%E
(CN) China PBoC said to resume counter-cyclical factor in Yuan mid-point fixing mechanism - financial press
*(US) JULY PRELIMINARY DURABLE GOODS ORDERS: -1.7% V -1.0%E; DURABLES EX-TRANSPORTATION: 0.2% V 0.5%E
*(US) Fed Chair Powell: Gradual hikes are likely appropriate if growth stays strong; US economy is strong; does not seem to be elevated risk of overheating - Jackson Hole symposium speech
(MX) Mexico Pres-elect Lopez Obrador reportedly holds position on oil policy that is hindering new NAFTA agreement - press
(KR) Pres Trump asks Sec of State Pompeo to cancel North Korea trip at this time due to lack of denuclearization progress; says China is not helping with denuclearization process 'as they once were'
Saturday, August 18, 2018
Barrons weekend summary
Barrons weekend summary: positive feature on STT and on fertilizer makers (CF MOS NTR.CA)
- Cover story explores investing in blockchain's future winner as estimates for blockchain related revenue ramps from about $5B this year to over $3.1T by 2030 (Gartner estimate). IBM and MSFT are investing in the tech but don't break out their related revenue. Logistics related firms like A.P. Moller-Maersk and Walmart are also working on putting the food supply chain on to blockchain tech.
Positive feature on State Street (STT) says the bank stock has underperformed this year mainly on concerns about its acquisition o analytics firm Charles River Development. STT paid a hefty price for ht acquisition but investors should come back to STT as it digests Charles River and resume share buybacks in 2019.
Positive feature on fertilizer names (CF MOS NTR.CA) says there could be 25% upside in the companies as a supply glut has not materialized and demand is steadily increasing.
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