More stimulus bazookas are fired off as conronavirus lockdowns expand

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Weekly Market Update: More stimulus bazookas are fired off as conronavirus lockdowns expand

Fri, 27 Mar 04:14 PM EST/09:14 PM GMT

The coronavirus pandemic continued to intensify this week as the hotspots spread to new locations, most notably NYC. By Friday, the number of infections in both Italy and the US had surpassed that of China with only marginal signs that the stringent mitigation measures being implemented in western economies were beginning to bend infection rate curves. The US Federal reserve unleashed one of the largest weapons in its arsenal on Monday when it stated categorically that the central bank could buy “unlimited” amounts of US treasuries and mortgage backed securities. Worries of growing global financial contagion were somewhat assuaged by the audacious move and similar subsequent announcements by the ECB and central banks. Fiscal stimulus plans were also advanced by various governments, most notably the $2.2T package passed by the US Congress on Friday.

Helped by the firehouse of both fiscal and monetary policy stimulus, stock markets mounted an historic bear market rally that started on Tuesday. US indices surged some 20% in a three day rally, the likes of which had not been seen since 1929. The S&P 500 first three day rally in more than a month resulted in a litany of market followers opining that the bottom may very well be in. Treasury yields moved lower amid signs of better functioning in some lending markets which had been viewed as hotspots of dysfunction. The US dollar rolled over too, providing further comfort that dollar funding pressures were subsiding. On the other hand, oil prices remained a flashing waring signal. Anecdotal reports suggesting global storage has been maxed out, supporting a narrative that the supply and demand imbalance is on the verge of pushing crude prices even lower. Amid the historic volatility, the S&P surged 10.2% in its biggest weekly gain since 2009, while the DJIA gained 12.8% and the Nasdaq added 9%.

In corporate news this week, a further flood of companies withdrew full-year outlooks and cut dividends or stock buybacks as the coronavirus obscures any visibility for businesses around the globe. Some companies did release earnings, however. Nike revenue came in higher than anticipated while its gross margins took a hit, though it said 80% of its stores in China have reopened post-coronavirus. Micron beat on its top and bottom line, noting strong demand in its cloud data and personal computing units. Target withdrew its guidance, though said its March month to date comp sales were up over 20% y/y (likely attributable to hoarding of home staples). Yum China said its restaurant traffic is recovering slowly but is still heavily impacted as people continue to implement social distancing measures. Facebook reported seeing some weakening in its ad business due to coronavirus, though it is also posting new usage records almost every day. Chevron cut its capex outlook by 20% along with some other actions to protect its dividend. GE announced it would cut 10% of the workforce in its aviation unit. US Steel cut production, drew down its credit lines, and reduced its FY20 capex by $125M. Caterpillar also withdrew its FY20 outlook, but noted its financial position remains strong, and it plans to continue to run the majority of its U.S. domestic operations. Boeing’s stock had perhaps the most dramatic move of the week, nearly doubling off a 7-year low as the US stimulus package was confirmed to include grants to rescue airlines, though Boeing said it won’t take any direct government aid.


SUN 3/22
*(NZ) RESERVE BANK OF NEW ZEALAND (RBNZ) ANNOUNCES NZ$30B ASSET PURCHASE PROGRAM TARGETED AT GOVT BONDS, across all range of maturities

MON 3/23
(DE) German Cabinet said to have adopted package of €750B in measures to to cushion the fallout from COVID-19 outbreak in an emergency meeting - press
*(US) FED TO BUY UNLIMITED AMOUNTS OF TREASURYS AND MORTGAGE SECURITIES - Statement
AA Asset-backed 30-Day Commercial Paper rates ticked LOWER to 1.84% v 1.98% yesterday; 90-day HIGHER 2.36 v n.a yesterday (1.67% prior) - NY Fed
BA To temporarily suspend Puget Sound production operations for 14-days in response to escalating COVID-19 pandemic

TUES 3/24
*(EU) EURO ZONE MAR PRELIMINARY PMI MANUFACTURING: 44.8 V 39.0E (14th straight month and lowest since Jul 2012)
*(UK) MAR PRELIMINARY PMI MANUFACTURING: 48.0 V 45.0E (1st contraction in 3 months)
F To collaborate with 3M, GE, UAW to speed production of respirators for healthcare workers, ventilators for Coronavirus patients
*(JP) JAPAN PM ABE CONFIRMS THAT TOKYO OLYMPIC GAMES TO BE POSTPONED FOR ONE YEAR
(US) CNBC's Javers: agreement said to be reached on oversight of Treasury Sec fund as part of potential stimulus pact - CNBC
*(US) MAR PRELIMINARY MARKIT PMI MANUFACTURING: 49.2 V 43.5E (lowest since 2009)
AA Asset-backed 30-Day Commercial Paper rates ticked higher to 2.37% v 1.84% prior; 90-day n/a v 2.36% prior - NY Fed
(US) MAR RICHMOND FED MANUFACTURING INDEX: +2 V -15E
*(US) FEB NEW HOME SALES: 765K V 750KE
NKE Reports Q3 $0.53 v $0.55e, Rev $10.1B v $9.87Be
FB Seeing some weakening in ad business due to coronavirus; seeing new usage records almost every day
WWE CEO McMahon entered into a variable prepaid forward contract with an unaffiliated bank covering approximately 3.5 million shares of the Company’s Class B common stock - filing
(US) Federal Reserve to temporarily reduce bank exam activities, with the greatest reduction in activities occurring at the smallest banks; large banks should still submit CCAR capital plans by April 6th
CME To Launch New Gold Futures Contract with Expanded, Flexible Delivery in 100-ounce, 400-ounce or 1-kilo Bars; notes growing demand for broader range of delivery needs for clients; the new contract will provide customers with maximum flexibility in managing physical delivery

WEDS 3/25
BLK To execute bond buying for Federal Reserve - US financial press
*(US) SENATE SAID TO HAVE REACHED A BIPARTISAN AGREEMENT ON VIRUS STIMULUS PLAN - financial press
*(US) FEB PRELIMINARY DURABLE GOODS ORDERS: +1.2% V -0.9%E; DURABLES (EX-TRANSPORTATION): -0.6% V -0.4%E
AA Asset-backed 30-Day Commercial Paper rates ticked lower to 1.71% v 2.37% prior; 90-day 2.50% v n/a prior - NY Fed
MU Reports Q2 $0.45 v $0.38e, Rev $4.80B v $4.66Be
F S&P cuts rating to junk status; cuts one notch to BB+ from BBB-; outlook to Watch Negative from Stable
*(US) SENATE UNANIMOUSLY VOTES TO PASS $2.0T CORONAVIRUS STIMULUS BILL; AS EXPECTED

THURS 3/26
(EU) ECB clarifies that self-imposed issuer 33% limit used in QE will not apply to pandemic emergency purchase program
*(DE) GERMANY APR GFK CONSUMER CONFIDENCE: 2.7 V 7.5E (lowest since May 2009)
*(UK) FEB RETAIL SALES (EX-AUTO/FUEL) M/M: -0.5% V -0.2%E; Y/Y: 0.6% V 1.1%E
*(EU) ECB ECONOMIC BULLETIN: Council decided on a comprehensive package of monetary policy measures
*(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATE UNCHANGED AT 0.10%; AS EXPECTED; vote was unanimous (9-0)
*(US) WEEKLY INITIAL JOBLESS CLAIMS: 3.28M (record level) V 1.64ME; CONTINUING CLAIMS: 1.803M V 1.791ME
*(US) Q4 FINAL GDP PRICE INDEX: 1.3% V 1.3%E; CORE PCE Q/Q: 1.3% V 1.2%E
(US) Nevada reports Feb casino gaming Rev $1.04B, +3.1% y/y; Las Vegas strip Rev $596.2M, +0.8% y/y
AA Asset-backed 30-Day Commercial Paper rates remained at 1.71% v 1.71% prior; 90-day 1.52% v 2.50% prior - NY Fed

FRI 3/27
*(IN) INDIA CENTRAL BANK (RBI) CUTS REPURCHASE RATE BY BY 75BPS TO 4.40%; widens rate corridor (intra-policy move)
3328.HK Reports FY19 (CNY) Net 77.28B v 73.6B y/y, NII 144.08B v 130.9B y/y
(UK) PM Johnson has tested positive for COVID-19; to isolate himself at 10 Downing Street - BBC
*(CA) BANK OF CANADA (BOC) CUTS INTEREST RATES BY 50BPS TO 0.25%; Third cut this month

Coronavirus spread swats stocks into bear market and drives G7 government officials into action

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Weekly Market Update: Coronavirus spread swats stocks into bear market and drives G7 government officials into action

Fri, 13 Mar 04:06 PM EST/09:06 PM GMT

It was a historic week for markets as volatility exploded in the midst of the global coronavirus pandemic. The epicenter of the crisis moved to Europe while cases in the US continued to rise rapidly along with expanded testing. Italy went into complete lock down to fight the spread of the virus while dramatic measures were taken in other EU nations and the US as well. Many European nations restricted their borders, and many schools and universities shut down along with nearly all professional sports leagues. The VIX jumped above 70 and Thursday saw double digit percentage declines for stock markets in Europe and the US for the first time since 1987’s Black Monday. The correlation between lower Treasury yields and stocks seemed to erode as US rates started to firm up despite multiple down 1,000 point days in the Dow. Treasury market functionality was bolstered when the NY Fed injected $1.5T into overnight lending markets on Thursday. Friday’s trade saw some modicum of stabilization after Germany and the European Commission announced significant fiscal measures and promised even further support if necessary. US Treasury Sec Mnuchin and House Speaker Pelosi remained in close contact in an effort to hash out an agreement for a major stimulus package announcement before the weekend. Friday also saw President Trump invoke the Stafford Act to declare a national emergency and loosen up tens of billions in funds to fight the coronavirus outbreak. Gold prices slumped and the US dollar firmed broadly. Emerging markets were hit particularly hard as Central Banks were forced step in on multiple occasions to proper up their currencies. For the week, the S&P fell 8.9%, the DJIA dropped 10.4%, and the Nasdaq lost 8.2%.

In corporate news this week, as the coronavirus spread ravaged the travel industry, major US airlines such as American, Southwest, Spirit, JetBlue, and Delta withdrew guidance and took capacity reductions, grounding hundreds of planes. Lufthansa said it will speak with the German government about potential state aid. Boeing instituted a hiring freeze for most of its divisions and reportedly plans a full drawdown of its $13.8B loan to bolster cash on hand amid declining jet demand. Carnival decided to issue a temporary pause of its global ship operations for 60 days on its Princess Cruises line, and Norwegian Cruise Lines and Royal Caribbean each announced a one month suspension of voyages. Royal Caribbean also withdrew its guidance and cut its expected FY21 capex spend. On the earnings front, Oracle shares rose after beating expectations on its top and bottom line. Broadcom stock slumped to a 52-week low after withdrawing its guidance, noting intensifying demand uncertainty. Slack investors fled after the company posted slower growth and weaker guidance than anticipated, though the messaging platform saw a significant spike in new free users due to the coronavirus outbreak. Stitch Fix missed on revenue estimates and guided below consensus, pointing to lower order values due to new clients that spend less per quarter on average. Pepsi reportedly neared a deal to acquire Rockstar Energy Beverages for $3.85B, as the beverage giant further broadens its portfolio. Twitter announced a cooperation agreement with Elliott Management and said Silver Lake would invest $1B into the company, staving off activist efforts to oust CEO Jack Dorsey.


SUNDAY 3/8
(IT) Italy government confirmed imposing 17M person quarantine in the North to fight spread of coronavirus - press
BA FAA may request Boeing make electrical wiring fixes before 737 Max flies again - financial press

MONDAY 3/9
US equity markets halted for 15 minutes on S&P hitting 7% circuit breaker
(IT) Italy PM Conte: Confirms movement will be restricted throughout the country in effort to combat the spread of the coronavirus
(US) President Trump: Will discuss possible payroll tax cut with Congress and support for hourly wage earners so they dont miss paychecks; New conference tomorrow on "major" economic measures

TUESDAY 3/10
DPW.DE Reports Q4 Net €858M v €813M y/y, EBIT €1.26B v €1.29Be, Rev €17.0B v €16.9B y/y
*(EU) EURO ZONE Q4 FINAL GDP Q/Q: 0.1% V 0.1% PRELIM; Y/Y: 1.0% V 0.9% PRELIM
(DE) Germany reportedly weighing Bank capital relief to counter COVID-19 effect

WEDNESDAY 3/11
PEP Reportedly nears deal to acquire Rockstar Energy Beverages; said to pay $3.85B - US financial press
*(US) FEB CPI M/M: 0.1% V 0.0%E; CPI (EX-FOOD/ENERGY) M/M: 0.2% V 0.2%E; CPI NSA: 258.678 V 258.455E
(UK) Chancellor of the Exchequer (Fin Min) Sunak: Total fiscal stimulus of £30B; doing everything to keep the country healthy; will get through the virus outbreak together - Budget Speech
*(UK) OFFICE OF BUDGET RESPONSIBILITY (OBR) UPDATES FORECASTS
DD Affirms FY20 $3.70-3.90 v $3.75e, cuts FY20 Rev $21.3-21.8B v $21.4Be (prior Rev $21.5-22.0B) updated to reflect $0.04 Q1 headwind from COVID-19
BA Reportedly planning full drawdown of $13.8B loan as a precaution, plan to bolster cash-on-hand on declining jet demand due to COVID-19 - press
(US) Institute for Supply Management coronavirus study: 75% of companies report supply chain disruptions
(US) Association of American Railroads weekly rail traffic report for week ending March 7th: 462.3K, -9.1% y/y
(RU) Russia Dep Energy Min Sorokin: OPEC had asked Russia to cut by 300K bpd but doubling exisiting cuts is technically difficult, OPEC+ could not cut oil output indefinitely
(US) Fed increases size of overnight repo operations through Apr 13
(IT) Italy PM Conte: orders closure of "all" shops except for groceries and pharmacies for the entire country, bars and restaurants must close unless they can keep 1 meter distance between customers; factories can continue to work with precautions
(AU) Australia Treasurer Frydenberg: Stimulus package could add 1.5% to GDP in Q2; too early to judge full impact of coronavirus on economy
*(US) PRESIDENT TRUMP ANNOUNCES TRAVEL BAN FROM EUROPE TO US FOR THE NEXT 30 DAYS; effective at midnight Friday, Mar 13th - NATIONWIDE SPEECH

THURSDAY 3/12
(DE) GERMANY REPORTEDLY READY TO ABANDONED ITS BALANCED BUDGET TO COMBAT COVID-19 - financial press
*(US) FEB PPI FINAL DEMAND M/M: -0.6% V -0.1%E; Y/Y: 1.3% V 1.8%E
CCL Princess Cruises announces a voluntary and temporary pause of its global ship operations for 60 days; Affects 18 ships
*(EU) ECB LEAVES 7-DAY MAIN REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
*(EU) ECB LEAVES 7-DAY MAIN REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
(NO) Norway Central Bank (Norges): to offer extraordinary loans to banks
(EU) ECB chief Lagarde COVID-19 is a major shock to growth prospects - Prepared Remarks
(CA) Toronto Stock Exchange halted after 9.2% decline
(EU) ECB chief Lagarde: General Council was unanimous on the package announced today - Q&A
*(US) FED REPORTS Q4 FINANCIAL ACCOUNTS: HOUSEHOLD CHANGE IN NET WORTH: $3.15T V $0.8T PRIOR
*(US) New York Fed announces new $1.5T in Treasury reserve management purchases and repurchase operations to address "highly unusual disruptions" in Treasury financing markets associated with the coronavirus outbreak; to offer $500B in 3-mo repo today, and two $500B repos tomorrow; will continue $1T in repos each week for the rest of the monthly schedule; expands repo purchases beyond bills to a 'range of maturities'
(US) NY Gov Cuomo: orders Broadway closed immediately in NYC; bans gatherings of more than 500 people, effective Friday
ORCL Reports Q3 $0.97 v $0.96e, Rev $9.80B v $9.77Be
GPS Reports Q4 $0.58 v $0.41e, Rev $4.67B v $4.52Be; Katrina O’Connell named CFO; intends to suspend share repurchases in FY20
AVGO Reports Q1 $5.25 v $5.22e, Rev $5.86B v $5.93Be; withdraws FY20 oultook due to coronavirus

FRIDAY 3/13
*(CN) CHINA PBOC CUTS RESERVES RATIO REQUIREMENT (RRR) BETWEEN 50-100BPS IN A TARGETED RESPONSE; effective Monday, Mar 16th
(DE) German Fin Min Scholz: To use all means possible to address coronavirus effects including NO LIMIT on credit program to help companies; plan to set up safety net form companies impacted by outbreak
(EU) EU Commission President Von der Leyen: Virus is a major shock to region and look to address strategies to avoid any permanent damage
(US) Fed updates current monthly schedule of Treasury purchase operations to address temporary disruptions in the market for Treasury securities; conducting $33B of purchases today
(US) Pres Trump confirms he will invoke Stafford Act and declare national emergency over coronavirus

Markets strain under Coronavirus fears, plunge in Treasury yields, and OPEC+ collapse

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Weekly Market Update: Markets strain under Coronavirus fears, plunge in Treasury yields, and OPEC+ collapse

Fri, 06 Mar 04:04 PM EST/09:04 PM GMT

Global markets were unable to escape the grasp of the spreading coronavirus which appeared headed towards pandemic proportions. Covid-19 cases reached ~100K globally with big daily jumps continuing to be seen in hotspots outside of Asia, though the news coming out of China appeared to improve. The US saw its first significant cluster outbreaks in New York and Seattle further unsettling investors. On Tuesday, G7 finance ministers and central bankers met and pledged a coordinated response, and shortly thereafter the Federal Reserve announced an emergency 50 basis point rate cut. The rate cut failed to have its intended effect as panicky markets tumbled, and futures markets continued to price in another 50 bps cut at the FOMC’s regularly scheduled meeting just two weeks from now. On Wednesday, stocks surged after former VP Biden had big wins in many of the Super Tuesday Democratic primaries which prodded Mike Bloomberg and Elizabeth Warren to drop out of the race.

The volatility seen in both bond and stock markets was breathtaking. The Dow had multiple 1,000 points days for the second straight week. The S&P posted a streak of the largest percentage swings on daily basis seen since the days before 1987’s Black Monday. As the week progressed cascading US Treasury yields held the markets by the throat as investors confronted the ever increasing possibility of recession and expected central back action. On Friday, the US 10-year yield plunged below 70 basis points, while the VIX hit 50 and gold traded at $1,690 despite an outstanding Fed employment report for February. Adding to the overall consternation, crude prices plunged 10% after Russia refused to join an OPEC proposal to further cut production to address global demand destruction caused by the coronavirus outbreak. Markets were shaken by the potential for crumbling commodity prices to cause dislocations in the high-yield bond market that could hit debt-laden energy companies.

In corporate news this week, several major firms warned of trouble ahead amid the spread of coronavirus, with the pain particularly acute in the travel sector. Southwest Airlines cut its Q1 guidance, seeing a ‘significant decline’ in recent days in demand and an increase in cancellations. Lufthansa announced it would reduce capacity by up to 50% in coming weeks, more than previously planned, due to a slump in demand. United said its cuts to domestic and international flights would likely extend into May. Semiconductor names such as Skyworks, Qorvo, and Microchip Technologies all trimmed their outlooks on reduced demand and greater supply chain obstacles. Visa lowered its Q2 revenue growth guidance, citing a slowdown in travel and cross-border spending. Starbucks announced an adverse impact on China results, though noted it was seeing robust performance outside of the countries affected most by coronavirus. Hyatt withdrew its full year guidance as booking decreases extended beyond greater China and group cancellations picked up. Costco reported exceptionally strong February same store sales as customers stocked up on supplies, while Target’s quarter came in largely in line. AMD shares jumped after it affirmed Q1 and provided bullish long-term financial targets. Elliott Management reportedly took an activist stake in Twitter and is pushing to oust long-time CEO Jack Dorsey. Through an extremely volatile week, the S&P ended higher by 0.6%, the DJIA gained 1.7%, and the Nasdaq edged up 0.1%.


MON 3/2
*(AU) RESERVE BANK OF AUSTRALIA (RBA) CUTS CASH TARGET RATE BY 25BPS TO 0.50% (record low), AS EXPECTED**; in response to coronavirus outbreak
H Withdraws FY20 outlook due to evolving coronavirus impact; seeing decrease beyond greater China in near-term transient bookings and an increase in near-term group cancellations over past week
PFE Exec: we have identified compounds that have a high probability to be effective against coronavirus - comments at White House
(IL) Israel news organizations release election exit polls: Likud Party 36 seats, Blue and White Party 33; Netanyahu one seat short of governing majority - KAN Exit Poll
(US) NBC's Engel: Just finished interview with Dr. Fauci, US director of infectious diseases. He said: We're dealing with clearly an emerging infectious disease that has “now reached outbreak proportions and likely pandemic proportions"
(US) Treasury yields continue to fall on speculation the Fed will ease policy to prop up financial markets pummeled by the spread of the coronavirus.

TUES 3/3
*(EU) EURO ZONE FEB ADVANCE CPI ESTIMATE Y/Y: 1.2% V 1.2%E; CPI CORE Y/Y: 1.2% V 1.2%E
TGT Reports Q4 $1.69 v $1.66e, Rev $23.4B v $23.5Be
(US) G7 Statement of G7 Finance Ministers and Central Bank Governors; Reaffirm our commitment to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks
*(US) FED CUTS TARGET RANGE BY 50BPS; SAYS VIRUS POSES EVOLVING RISKS TO ECONOMIC ACTIVITY; DECISION IS UNANIMOUS; FOMC CLOSELY MONITORING DEVELOPMENTS AND WILL USE TOOLS AND ACT AS APPROPRIATE TO SUPPORT THE ECONOMY (largest cut and 1st intra-meeting move since 2008)
(US) US Treasury 10-year yield moves below 1.00% for the first time
(US) Pres Trump: would approve a payroll tax cut for middle income earners this year if Democrats support it; the market is in good shape - press

WEDS 3/4
*(US) FEB ADP EMPLOYMENT CHANGE: +183K V +170KE
*(CA) BANK OF CANADA (BOC) CUTS INTEREST RATES BY 50BPS TO 1.25%; MORE-THAN-EXPECTED; Sees Covid-19 virus as 'material negative shock' to Canadian and Global outlooks
(US) Michael Bloomberg to suspend Democratic presidential campaign; announces support for VP Biden
(US) Association of American Railroads weekly rail traffic report for week ending Feb 29th: 477.6K, -9.6% y/y
(IT) Italy Education Min: confirms schools and universities to close from Thurs until March 15th due to coronavirus
*(US) FEDERAL RESERVE BEIGE BOOK: SIGNS OF CORONAVIRUS ARE NEGATIVELY IMPACTING TRAVEL AND TOURISM STARTING TO EMERGE
CDC Dep Director Redd: CDC estimates coronavirus fatality rate is 0.5-1.0% - press

THURS 3/5
HPQ Rejects Unsolicited Exchange Offer from Xerox
LUV Cuts Q1 RASM -2% to +1% (prior +3.5-5.5%); CASM +5-7% (prior +6-8%); sees "significant decline" in recent days in demand over coronavirus and increase in cancellations
(US) Q4 Final Nonfarm Productivity: 1.2% v 1.3%e; Unit Labor Costs: 0.9% v 1.4%e
(US) Elizabeth Warren said to suspend her Presidential campaign - NYT
(UK) BoE Carney: BoE will take all necessary steps to support UK economy and financial system through coronavirus outbreak
(US) California trade association: Coronavirus is causing a backlog of exports to Asia at US ports; some China-bound meat shipments are being temporarily diverted to other countries - press
COST Reports Q2 $2.10 v $2.07e, Rev $38.3B v $38.4Be; Feb SSS benefited by 3% from coronavirus concerns
AMD Provides long-term financial targets; Rev ~20% CAGR, gross margin >50%, operating margin mid-20%s, FCF margin >15% - investor day

FRI 3/6
(RU) Russia said to only agree to an extension of current OPEC+ production cuts and NOT to proposed deepening of 1.5M bpd; position on issue will not change - press
*(US) FEB AVERAGE HOURLY EARNINGS M/M: 0.3% V 0.3%E; Y/Y: 3.0% V 3.0%E; AVERAGE WEEKLY HOURS: 34.4 V 34.3E
*(US) FEB CHANGE IN NONFARM PAYROLLS: +273K V +175KE (highest since May 2018)
OPEC delegate: OPEC+ talks have ended without a deal - press
LHA.DE To cut capacity by up to 50% in coming weeks (more than previously planned) due to slump in demand
US govt reportedly considering ways to discourage some travelers from going on cruises in order to limit spread of coronavirus - press
(US) Fed’s Rosengren (hawk, nonvoter in 2020): Fed should be allowed to broaden what assets it can buy (which would require a change in the Federal Reserve Act); runs real risk of limits on QE power with Treasuries; negative rates won't do much for the economy in a downturn

TradeTheNews.com 

Coronavirus panic selling grips markets

Fri, 28 Feb 04:14 PM EST/09:14 PM GMT

- Global stock markets fell into full-blown crisis this week amid panic selling related to the global spread of coronavirus. The S&P plunged through the 200-day moving average and into correction territory at the fastest rate in history. Investors saw three sessions in a row with the Dow down 1000+ points and the VIX surged towards 50 on Friday. New Covid-19 transmissions outside of China overtook the number within China for the first time, spreading to more than 50 countries. Hotspots in Italy and South Korea continued to provide worrying signals surrounding the rate of spread, while the first US community-spread transmission was confirmed in California. By Friday, global cumulative cases topped 83K and cumulative deaths approached 2,900. US officials even acknowledged that school closures here are a real possibility and testing capacity needs to be dramatically ratcheted up. US Treasury yields careened lower alongside stock indices in just as eye-popping a manner. Futures markets are now pricing in 75 bps of cuts by the FOMC this year beginning at the March meeting. Fed officials remained much more circumspect, saying they want to see more data and how the virus situation unfolds before deciding to take action. A debate raged on whether central banks even can or should play a role in the response, but late on Friday Chairman Powell released a statement emphasizing the Fed will “act as appropriate to support the economy,” suggesting to some the door was opened for Fed action as soon as next month.
- At President Trump’s directive, VP Pence was tapped to lead a new US coronavirus task force. The President, clearly frustrated with the vaporizing stock market gains, suggested the declines were likely being exacerbated by embellished media coverage, as well as potential positioning by investors after Bernie Sanders seemed to solidify his lead to head the Democratic ticket following his Nevada primary win. Separately, speculation grew surrounding potential fiscal stimulus packages that could offset what appears to be a throwaway Q1 in terms of economic growth. Germany signaled they were exploring a plan to temporarily suspend the constitutional balanced-budget rule to reduce the debt burden of some local municipalities while the US Congress is set to vote next week on a supplemental funding bill that could unlock up to $8B to fight the outbreak. The US 10-year yield dropped more than 30 bps on the week, below 1.15% for the first time ever. Gold rallied early on and sold off late in the week amid what appeared to be indiscriminate portfolio deleveraging. Oil prices dropped significantly back to levels not seen since the lows of 2017. With Brent testing $50 and the dramatic move in yields, potential distress in the high-yield markets re-surfaced on many investors’ radars. OPEC meets next week and Russia indicated they remain reluctant to support further coordinated production cuts being pushed by the Saudis. For the week the S&P plunged 11.5%, the Dow lost 12.4% and the NASDAQ dropped 10.5%.
- In corporate news this week, United Airlines withdrew its FY20 guidance on coronavirus disruption, though it said it still expects Q1 Adj EPS to remain within its prior outlook range and targets earnings growth in 2021. Mastercard announced a CEO transition and cut its outlook amid coronavirus concerns but noted there still are many unknowns about the duration and severity of the situation. Home Depot reported better-than-expected Q4 earnings and same-store sales, citing broad-based growth across all geographies and merchandising departments. Microsoft acknowledged Q3 personal computing segment revenue will not meet their prior guidance but affirmed the outlook for the rest of the company. Macy's earnings topped estimates, sending shares higher, boosted by a solid amount of last-minute holiday buying. Best Buy profit for the quarter beat consensus as the electronic retailer saw its own strong holiday sales. Longtime Disney CEO Bob Iger announced he would step down as CEO, though he plans to stay on as executive chairman through 2021 while Bob Chapek takes the reins of the entertainment giant.

MONDAY 2/24
*(DE) GERMANY FEB IFO BUSINESS CLIMATE: 96.1 V 95.3E; CURRENT ASSESSMENT: 98.9 V 98.6E
UAL Withdraws FY20 guidance on coronavirus disruption; expects Q1 Adj EPS to remain within prior guidance range of $0.75-1.25 v $$0.95e - filing
MA Cuts Q1 net rev growth to +9-10% if coronavirus trends continue (prior 'low double-digits'); cuts FY20 net rev growth to 'low end of the low-teens range' if virus effects are limited to Q1 only (prior 'growth low double-digits')

TUESDAY 2/25
HD Reports Q4 $2.28 v $2.10e, Rev $25.8B v $25.7Be; Raises Quarterly dividend 10.3% to $1.50 from $1.36 (indicated yield 2.5%)
M Reports Q4 $2.12 v $1.95e, Rev $8.34B v $8.32Be
*(US) FEB RICHMOND FED MANUFACTURING INDEX: -2 V +10E
(US) CDC spokesperson: coronavirus epidemic is 'rapidly evolving and expanding' - call comments
DIS Bob Chapek named CEO, effective immediately; Bob Iger assumes role of Executive Chairman through 2021

WEDNESDAY 2/26
LOW Reports Q4 $0.94 v $0.91e, Rev $16.0B v $16.1Be
(DE) German Fin Min Scholz said to plan a temporary Debt Brake suspension to aid the local govt - German press
NVAX Advances development of Novel COVID-19 Vaccine; Phase 1 clinical trial planned for May or June
*(US) JAN NEW HOME SALES: 764K V 718KE
*(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.25%; NOT EXPECTED
- Decision to keep policy steady was NOT unanimous (2 dissenters again called for 25bps cut (Cho Dong-Chul and Shin In-Seok)
-MSFT Cuts Q3 'more personal computing' segment Rev to not meet prior guidance of $10.75-11.15B due to coronavirus; other guidance unchanged

THURSDAY 2/27
(JP) Japan PM Abe reportedly asks schools to shut from Monday, Mar 2nd until spring break citing virus concerns - press
*(EU) EURO ZONE FEB ECONOMIC CONFIDENCE: 103.5 V 102.8E
*(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL €6.5B VS. €5.5-6.5B INDICATED RANGE IN 5-YEAR AND 10-YEAR BTP BONDS
BBY Reports Q4 $2.90 v $2.76e, Rev $15.2B v $15.1Be; Raises quarterly dividend 10% to $0.55/shr
*(US) Q4 PRELIMINARY GDP PRICE INDEX: 1.3% V 1.4%E; CORE PCE Q/Q: 1.2% V 1.3%E
*(US) JAN PRELIMINARY DURABLE GOODS ORDERS: -0.2% V -1.5%E; DURABLES (EX-TRANSPORTATION): -0.1% V +0.2%E
(DE) Germany Econ Min Altmaier: Germany considering bringing some measures forward in response to coronavirus, but reaction won't be a classic stimulus program
BIDU Reports Q4 $3.81 v $3.71e, Rev $4.15B v $4.06Be
*(US) JAN PENDING HOME SALE M/M: 5.2% V 3.0%E; Y/Y: 6.7% V 2.1%E

FRIDAY 2/28
UBSG.CH Reports final FY19 Net $4.30B v $4.52B y/y, Rev $28.9B v $30.2B y/y
Brent oil trades below $50/barrel (1st time since Dec 2018) - traders
(CN) Former China govt official: China will 'definitely' honor its agricultural purchase commitments as part of its 'Phase 1' trade deal but may invoke a force majeure - SCMP
*(DE) GERMANY FEB PRELIMINARY CPI M/M: 0.4% V 0.3%E; Y/Y: 1.7% V 1.7%E
(US) Nevada reports Jan casino gaming Rev $1.04B, +5.5% y/y; Las Vegas strip Rev $572M, +7.5% y/y
*(US) FED CHAIR POWELL: CORONAVIRUS POSES 'EVOLVING RISKS TO ECONOMIC ACTIVITY'; FED WILL ACT AS APPROPRIATE TO SUSTAIN THE ECONOMY

Coronavirus concerns persist but investors climb wall of worry

TradeTheNews.com 

Weekly Market Update: Coronavirus concerns persist but investors climb wall of worry

Fri, 14 Feb 04:03 PM EST/09:03 PM GMT

- US stock markets managed to notch new all-time highs this week despite continued hand-wringing around the coronavirus. Data coming out of China remained sketchy at best. Wednesday saw Hubei disclose a spike in new cases of more than 14K after the Province changed the methodology by which they clinically diagnosed cases. The very next day, Chinese officials attempted to walk those numbers back, but with outside officials still not being let into the country to do their own investigations, uneasiness persisted. Investors for the most part continued to look past the headlines as well as cautious corporate commentary related to the virus. Aiding sentiment was continued speculation that the Chinese government, as well as the PBOC, continue to stand ready to provide ample stimulus.
- US treasury yields moved lower and the curve flattened as the week progressed. US supply was well received as the lower yields had little effect on investor demand in all three coupon auctions. Undercurrents of risk-off flows related to the coronavirus likely buoyed demand along with softer economic data. European growth readings remained very subdued. Tuesday’s US JOLTS report was the weakest since early 2017 and Friday saw the US retail sales input to GDP miss expectations by a fairly wide margin. WTI crude attempted what appeared as a modest technical bounce after holding the $50 level for the largest weekly rally since early December. Gold prices drifted up, particularly late in the week, as rates came down and traders looked to hedge risk positions heading into the long holiday weekend. For the week, the S&P gained 1.6%, the Dow added 1% and the NASDAQ closed at another all-time high up 2.2%.
- In corporate news this week, Nvidia rallied after posting a strong quarter and guiding well above consensus amid strength in the gaming sector. Akamai stock lifted after topping estimates on revenue and profit and guiding ahead of consensus, noting rapid growth in its cloud security business and robust seasonal traffic on its network. Under Armour guided FY20 sales down mid-single-digits as it sees coronavirus headwinds and said it would take further restructuring charges. QSR beat on its top and bottom line, helped by a surge in Popeye’s sales, though it noted Burger King has closed about half of its 1,300 China stores due to the coronavirus outbreak. Sprint shares surged after a judge rejected state AGs' arguments and signed off on its T-Mobile deal. Simon Property Group announced it would buy Taubman Centers for $52.50/shr in a $3.6B cash deal designed to boost Simon’s funds from operations as mall operators remain under pressure. A judge granted Amazon’s request to temporarily halt Microsoft's $10B JEDI cloud contract with DOD. Tesla surprised the market by announcing it would raise $2.6B in a discounted stock offering to bolster its balance sheet.

MONDAY 2/10
TCO To be acquired by Simon Property Group for $52.50/shr in cash valued at ~$3.6B
(US) Reportedly the White House is considering drug price indexing as a way to reduce drug prices - press

TUESDAY 2/11
S Judge concludes T-Mobile/Sprint merger is not reasonably likely to substantially lessen competition; rejects state AGs' arguments
*(US) DEC JOLTS JOB OPENINGS: 6.423M V 6.925ME (lowest since Dec 2017)

WEDNESDAY 2/12
HEIA.NL Reports FY19 Net €2.56B v €2.05B y/y Op €3.63B v €3.12B y/y, Rev €28.4B v €22.5B y/y
*(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT 0.00%; AS EXPECTED; maintains forward guidance
(US) Association of American Railroads weekly rail traffic report for week ending Feb 8th: 485.3K, -6.6% y/y
AMAT Reports Q1 $0.98 v $0.92e, Rev $4.16B v $4.12Be
(CN) China Hubei Coronavirus update Feb 12th: 14,840 additional cases (under revised standards) v 1,638 prior; Daily death toll 242 v 94 prior; notes it has adopted a revised methodology under which additional confirmed cases now include cases that are 'clinically diagnosed'

THURSDAY 2/13
AIR.FR Reports Q4 Net -€3.5B v +€1.6B y/y, Adj EBIT €2.81B v €2.7Be, Rev €24.3B v €23.3Be
TKA.DE Reports Q1 Net -€372M v -€85Me, Adj EBIT €48.8M v €59Me, Rev €9.67B v €9.67Be
CSGN.CH Reports Q4 (CHF) Net 852M v 934Me, Pretax 1.21B v 1.38Be, Rev 6.19B v 5.56Be
(DE) Germany Jan Final CPI M/M: -0.6% v -0.6%e; Y/Y: 1.7% v 1.7%e
(EU) EU Commission Winter Forecasts: Economy is well placed to navigate external risks but economic malaise is set to continue this year
*(UK) CHANCELLOR OF THE EXCHEQUER JAVID (Fin Min) RESIGNS in protest of PM demand to fire all 5 of his aides - financial press
HSBA.UK Said to be considering creation of a bad bank as part of its strategic review - financial press
KHC Reports Q4 $0.72 v $0.68e, Rev $6.54B v $6.58Be; Turnaround will take time; Expect significant progress in 2020
*(US) JAN CPI M/M: 0.1% V 0.2%E; CPI (EX-FOOD/ENERGY) M/M: 0.2% V 0.2%E; CPI NSA: 257.971 V 257.863E
*(US) TREASURY $19B 30-YEAR BOND AUCTION DRAWS 2.061%; BID TO COVER 2.43 V 2.23 PRIOR AND 2.24 OVER LAST 4 AUCTIONS (RECORD LOW AUCTION YIELD)
(US) Fed reduces size of overnight repo operations and plans smaller term operations
(US) Senators reportedly expect Fed nominee Shelton to withdraw from consideration - The Hill
NVDA Reports Q4 $1.89 v $1.66e, Rev $3.11B v $2.96Be

FRIDAY 2/14
AZN.UK Reports Q4 Core EPS $0.89 v $0.98e, Rev $6.66B v $6.73Be
*(DE) GERMANY Q4 PRELIMINARY GDP Q/Q: 0.0% V 0.1%E; Y/Y: 0.4% V 0.3%E
*(US) JAN RETAIL SALES ADVANCE M/M: 0.3% V 0.3%E; RETAIL SALES (EX-AUTO) M/M: 0.3% V 0.3%E
*(US) JAN INDUSTRIAL PRODUCTION M/M: -0.3% V -0.2%E; CAPACITY UTILIZATION: 76.8% V 76.8%E
*(EU) EURO ZONE Q4 PRELIMINARY GDP Q/Q: 0.1% V 0.1%E; Y/Y: 0.9% V 1.0%E
(US) U.S. states reportedly reject opioid settlement agreement from wholesalers - WSJ

Coronavirus fears infect markets

TradeTheNews.com 

Weekly Market Update: Coronavirus fears infect markets

Fri, 31 Jan 04:06 PM EST/09:06 PM GMT

Global markets landed in turmoil this week as the rapidly spreading coronavirus stoked fears over global growth and overshadowed a heavy slate of corporate earnings reports. Government officials in China and elsewhere emphasized they were tracking the virus and taking extra precautions to slow its spread, trying to calm nerves and prevent a full blown hysteria. By Friday though, global confirmed cases approached 10,000, surpassing the 2003 SARS outbreak, and the first confirmation of an asymptomatic transmission of the virus sent investors scurrying to the exit. Weak US manufacturing data only added to the concerns that global growth could be entering a precarious stage, as the effects of what the WHO declared a ‘public health emergency of international concern’, are yet to be felt. Several major airlines announced the cancelation of all flights servicing the Chinese mainland through early April. And late Friday afternoon, the Trump Administration announced more aggressive measures including limiting entry to foreign nationals who have recently traveled to China.

Stock markets came under significant pressure and risk aversion flows were prevalent across a variety of asset classes for much of the week. US Treasury yields slumped back towards the lows of last September and curve flattening resulted in portions of the curve re-inverting. Oil prices slid, sending WTI crude into the low $50’s and high yield corporate spreads continued to widen. Copper and other base metals slumped and the USD/CNY exchange rate moved back above the key psychological 7.00 level. Gold prices lifted along with the VIX which popped back above 19 for the first time since October. For the week, the S&P lost 2.1%, the DJIA dropped 2.5%, and the Nasdaq fell 1.8%.

In corporate news this week, Apple revenue and earnings handily beat estimates, with strength seen particularly in services and wearables. Microsoft crushed profit expectations and offered robust guidance as its cloud business gained traction. Boeing missed on its top and bottom line and noted $4B in abnormal production costs to be expensed as incurred, primarily in 2020, amid its ongoing 737 MAX woes. McDonald's reported a profit and revenue beat but saw US Q4 customer traffic decline. Tesla shares surged after a second straight blowout quarter, and the carmaker set a goal to sell over half a million vehicles this year. On Friday, Amazon gained $75B in market cap, joining the trillion-dollar valuation club, after smashing earnings expectations and announcing it has surpassed 150M Prime members. Facebook posted a modest beat, but investors saw warning signs on the horizon as costs and expenses continue to rise. Altria missed revenue estimates and took a charge on its disappointing investment in e-cigarette maker Juul. Auto parts supplier BorgWarner announced it would acquire Delphi Technologies for $3.3B to help shore up its power electronics product offerings. L Brands reportedly is exploring strategic options for its Victoria’s Secret division as founder Lex Wexner was said to be in talks to step down as CEO.


SUNDAY 1/26
*(CN) China National Health Commissioner Ma says appears that the coronavirus' ability to spread is getting stronger, virus is mutating and can be transmitted through human contact; total confirmed cases of infection in China is over 2,000 as of Sunday afternoon, with 56 deaths
(CN) China has confirmed 2,744 cases of the coronavirus as of the end of Jan 26th (Sunday) and 80 deaths [vs 830 cases and 25 deaths as of Jan 23rd], China officials have extended the Lunar Year holiday to Feb 2nd from Jan 30th due to the impact of the virus

MONDAY 1/27
*(DE) GERMANY JAN IFO BUSINESS CLIMATE SURVEY: 95.9 V 97.0E; CURRENT ASSESSMENT SURVEY: 99.1 V 99.1E
ARNC Reports Q4 $0.53 v $0.33 y/y, Rev $3.40B v $3.47B y/y
LHA.DE Exec: seeing 'slightly subdued' situation regarding bookings to and from China due to coronavirus
*(US) DEC NEW HOME SALES: 694K V 730KE
(US) CDC Director Messonnier: still only 5 confirmed US cases of coronavirus, and 110 people under investigation; CDC is working on a plan for distribution of more test kits - conronavirus briefing
WHR Reports Q4 $4.75 v $4.30e, Rev $5.38B v $5.53Be; Guides initial FY20 $16.00-17.00 v $16.19e
(CN) China Updates on Coronavirus: Total cases in China at 4,515 v 2,744 at the end of Jan 26th; Death toll 106 v 80 yesterday - China press

TUESDAY 1/28
SAP.DE Reports Q4 EPS €1.82 v €1.51 y/y; Op €2.84B v €2.85Be; Rev €8.05B v €8.1Be
MMM Reports Q4 $1.95 v $2.10e, Rev $8.11B v $8.13Be; Implements new global operating model and streamlined structure; To cut 1,500 jobs
DLPH To be acquired in all-stock deal by Borgwarner; deal valued at $3.3B; Borgwarner announces $1B share repurchase program
HUAWEI.CN To have limited role in 5G rollout in the UK as speculated; to have 35% cap in periphery of 5G network
*(US) DEC PRELIMINARY DURABLE GOODS ORDERS: 2.4% V 0.3%E; DURABLES (EX-TRANSPORTATION): -0.1% V +0.3%E
*(US) JAN RICHMOND FED MANUFACTURING INDEX: +20 V -3E (16-month high)
UAL To suspend some flights to China beginning Feb 1st through Feb 8th; to cut some service to Beijing, Hong Kong, and Shanghai; suspensions to last for about a week
(US) Congressional Budget Office (CBO) issues 10-year budget and economic outlook: sees US budget deficit at $1.015T in FY20; sees federal deficits at $1T per year for at least 11 years
(US) Sen Maj Leader McConnell reportedly told GOP in closed door meeting that he does not have the votes to block impeachment witnesses - press

WEDNESDAY 1/29
066570.KR Reports FY19 (KRW) Net 180.0B v 1.47T y/y, Op 2.44T v 2.70T y/y, Rev 62.3T v 61.3T y/y
GE Reports Q4 $0.21 v $0.18e, Rev $26.2B v $26.2Be; says on positive trajectory heading into 2020, despite areas of uncertainty
BA Reports Q4 -$2.33 v +$1.73e, Rev $17.9B v $21.7Be; Confirms to cut 787 production to 12 jets/month
CP Reports Q4 C$4.82 v C$4.69e, Rev C$2.07B v C$2.04Be
*(US) DEC PENDING HOME SALES M/M: -4.9% V 0.5%E; Y/Y: 6.8% V 10.3%E
(US) Association of American Railroads weekly rail traffic report for week ending Jan 25th: 485.3K, -7.1% y/y
*(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 1.50-1.75%; AS EXPECTED; EXTENDS REPO OPERATIONS AT LEAST THROUGH APRIL
MSFT Reports Q2 $1.51 v $1.32e, Rev $36.9B v $35.7Be
TSLA Reports Q4 $2.14 v $1.62e, Rev $7.38B v $7.05Be
(EU) EU aims to create a single European data market in order to counteract US tech giants' dominance; large online platforms may see new rules implemented to ensure open and fair competition - EU document

THURSDAY 1/30
ROG.CH Reports FY19 (CHF) Core EPS 20.16 v 19.96e, Core Op 22.48B v 22.65Be, Rev 61.5B v 61.95Be; Proposes to increase dividend to CHF9.00/share from CHF8.70
DBK.DE Reports Q4 Net -€1.48B v -€409M y/y, Pretax -€1.29B v -€319M y/y, Net Rev €5.35B v €5.30Be
RDSA.NL Reports Q4 CCS EPS $0.37 v $0.40e, Adj CCS Net $2.93B v $3.2Be, Rev $85.07B v $80.99Be; intends to complete $25B share buyback program
DGE.UK Reports H1 Net £1.87B v £1.98B y/y, Adj Op £2.5B v £2.43B y/y, Rev £7.2B v £6.91B y/y
UNA.NL Reports FY19 Net €5.63B v €5.84Be, adj Op €9.95B v €9.94Be, Rev €52.0B v €51.0B y/y; initiates strategic review of global tea business
*(DE) GERMANY JAN NET UNEMPLOYMENT CHANGE: -2.0K V +5.0KE; UNEMPLOYMENT CLAIMS RATE: 5.0% V 5.0%E
RDSA.NL CFO: 2020 looks to be challenging - post earnings comments
*(EU) EURO ZONE JAN BUSINESS CLIMATE INDICATOR: -0.23 V -0.20E
KO Reports Q4 $0.44 v $0.43e, Rev $9.10B v $8.91Be
*(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATE UNCHANGED AT 0.75%; AS EXPECTED
*(UK) BOE JAN MINUTES: VOTED 7-2 TO KEEP POLICY STEADY (Saunders and Haskel remain as doves)
VZ Reports Q4 $1.13 v $1.15e, Rev $34.8B v $34.5Be
UPS Reports Q4 $2.11 v $2.10e, Rev $20.6B v $20.6Be
*(DE) GERMANY JAN PRELIMINARY CPI M/M: -0.6% V -0.6%E; Y/Y: 1.7% V 1.7%E
*(US) Q4 ADVANCE GDP ANNUALIZED Q/Q: 2.1% V 2.0%E; PERSONAL CONSUMPTION: 1.8% V 2.0%E
*(US) Q4 ADVANCE GDP PRICE INDEX: 1.4% V 1.8%E; CORE PCE Q/Q: 1.3% V 1.6%E
(US) Nevada reports Dec casino gaming Rev $1.06B, +5.8% y/y; Las Vegas strip Rev $591.8M, +4.5% y/y
AMZN Reports Q4 $6.47 v $3.98e, Rev $87.4B v $86.0Be; Prime membership is over 150M worldwide (*Note: crossed 100M about 21 months ago)
V Reports Q1 $1.46 v $1.46e, Rev $6.05B v $6.06Be; Authorized $9.5B share buyback program (2% market cap)
*(CN) CHINA JAN MANUFACTURING PMI (OFFICIAL GOVT): 50.0 V 50.0E (6th month without a contraction)

FRIDAY 1/31
*Study documents first case of coronavirus spread by a person showing no symptoms - STAT News
*(IT) ITALY Q4 PRELIMINARY GDP Q/Q: -0.3% V +0.1%E; Y/Y: 0.0% V 0.3%E
CAT Reports Q4 $2.63 v $2.37e, Rev $13.1B v $13.6Be
(BR) Brazil Dec Primary Budget Balance (BRL): -13.5B v -21.0Be; Nominal Budget Balance: -38.4B v -48.5Be
(US) Atlanta Fed forecasts initial Q1 GDP growth at 2.7%
(RU) Russia Energy Min Novak: Russia is prepared to meet with OPEC+ members in Feb (pushing meeting up from March); date is currently being discussed; Russia is ready to act if needed to rebalance oil market
(US) HHS Sec Azar: Declares coronavirus presents a "public health emergency" in the US; under temporary measuers, travelers from China may be subject to screening, potential quarantine, or denied entry - White House press conf

Markets see ‘red’ Chinese New Year amid coronavirus fears

TradeTheNews.com 

Weekly Market Update: Markets see ‘red’ Chinese New Year amid coronavirus fears

Fri, 24 Jan 04:22 PM EST/09:22 PM GMT

The cloud of the spreading coronavirus cast a pall over trading this week. Investors became somewhat unnerved upon confirmation of the virus spreading across every province of China and beyond its borders. By Friday three cases were confirmed in the United States and Chinese officials had quarantined over a dozen cities and begun instituting travel restrictions heading in the key Lunar New Year holiday, normally China’s busiest travel season. Separately, President Trump traveled Davos touting his administrations’ economic accomplishments even as the impeachment trial commenced in the Senate. Trump also reached a deal with French President Macron to postpone any digital tax at least for the remainder of 2020 as they discuss a trade deal. The ECB, Bank of Japan, and the Bank of Canada all left rates unchanged as expected, and the ECB also provided details of its ongoing strategic review under the stewardship of President Lagarde. European manufacturing readings showed real improvement topping expectations buoying hope that growth in that region has turned the corner. Interest rates slipped lower and the US Treasury curve flattened, helped by demand for safe haven assets. Oil prices and other commodities saw selling pressure amidst the never-ending barrage of coronavirus reports. WTI crude slipped to levels not since October and some investors noted it was accompanied by widening spreads in portions of the high yield bond market. Thanks to Friday’s selloff, the S&P ended down 1% for the week, while the DJIA slipped 1.2% and the Nasdaq lost 0.8%.

Earnings reports this week were highlighted by a number of major technology names. Intel shares popped to a nearly two-decade high after posting big top and bottom line beats, citing good data center demand, and issuing strong guidance. Netflix subscription numbers beat along with earnings, but investors took profits as competition multiplies. IBM topped estimates and reported strong EPS and revenue numbers as some investors saw signs of a turnaround for the tech giant. Citrix reported beats and raised guidance as its transition to a subscription-based model seems to be progressing smoothly. Boeing announced that it doesn’t expect regulators to sign off on the return of the 737 MAX until June or July, which would be months later than the manufacturer previously estimated.


SUNDAY 1/19
(CN) China Ministry of Industry and Information Technology (MIIT) Official Miao Wei: Studying postponing the reduction of subsidies for new energy vehicles (NEVs)*; China faces big pressure in stabilizing industrial production this year

MONDAY 1/20
(US) President Trump and France President Macron agree to continue discussions regarding digital tax through the remainder of 2020 - press
(CN) China city of Wuhan reports 4th death from pulmonary coronavirus; Beijing confirms human-to-human transmission; China Pres Xi: Party committees, governments and relevant departments at all levels should put people’s lives and health first.
*(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED

TUESDAY 1/21
UBSG.CH Reports Q4 Net $722M v $682Me, Adj Pretax $1.2B v $478M y/y; Rev $7.05B v $6.97B y/y; To buyback $450M in shares in H1
*(DE) GERMANY JAN ZEW CURRENT SITUATION SURVEY: -9.5 V -13.5E; EXPECTATIONS SURVEY: 26.7 V 15.0E (highest since 2015)
(US) US President Trump: US in the midst of a economic boom; recent trade deals represent new model - Davos speech
(US) CNN producer: CDC expected to report this afternoon that the first case of Wuhan coronavirus in the US has been discovered in Washington state
BA CNBC: Boeing doesn’t expect regulators to sign off on 737 Max until June or July, months later than the manufacturer previously expected
IBM Reports Q4 $4.71 v $4.69e, Rev $21.8B v $21.7Be
*(KR) SOUTH KOREA Q4 PRELIMINARY GDP Q/Q: 1.2% V 0.7%E (fastest pace since Q3 2017); Y/Y: 2.2% V 1.9%E

WEDNESDAY 1/22
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED 1.75%; AS EXPECTED
AER CEO: there is No alternative to the 737MAX, and airlines want more of these aircraft - press
(US) Association of American Railroads weekly rail traffic report for week ending Jan 18th: 499.7K, -8% y/y
BA CEO: Expects 737 MAX production will resume months before return to service in midyear; no discussions about cutting dividend
(CN) Wuhan bus, metro, ferry and passenger service have suspended operations from Jan 23rd to address China coronavirus outbreak; recovery time will be announced separately - China state media
TXN Reports Q4 $1.12 v $1.02e, Rev $3.35B v $3.22Be
(CN) China confirms 571 cases of new Coronavirus v 473 reported ~13 hours ago - China Press
*(AU) AUSTRALIA DEC EMPLOYMENT CHANGE: +28.9K V +10.0KE; UNEMPLOYMENT RATE: 5.1% V 5.2%E (9-month low for jobless rate)

THURSDAY 1/23
PG Reports Q2 $1.42 v $1.37e, Rev $18.2B v $18.3Be
*(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED; formally announces Strategic Review (as expected)
(EU) ECB's Lagarde: Strategic Review to look at a host of issues and how to deliver price stability - Q&A
(CN) China Xinhua: Total coronavirus cases at 830 vs 639 prior*; death toll now at 25 as of Jan 23; At least 2 deaths have been confirmed outside of the Hubei province

FRIDAY 1/24
(EU) ECB's Lagarde: ECB policy is not on autopilot during Strategic Review
*(DE) GERMANY JAN PRELIMINARY MANUFACTURING PMI: 45.2 V 44.5E, (13th straight contraction and highest since Feb 2019)
*(UK) JAN PRELIMINARY PMI MANUFACTURING: 49.8 V 48.8E, (9th straight month of contraction but highest since April)
*(EU) EURO ZONE JAN PRELIMINARY MANUFACTURING PMI: 47.8 V 46.8E (12th straight month of contraction but highest since Apr 2019)
BA Considering another 787 Dreamliner production cut amid decline in wide-body demand - press

Positive sentiment continues to reign as trade deals come together

TradeTheNews.com 

Weekly Market Update: Positive sentiment continues to reign as trade deals come together

Fri, 17 Jan 04:38 PM EST/09:38 PM GMT

Investors saw the fantastic start to the new year continue this week, led by an ever rising equity market. As promised, the US and China signed the phase one trade agreement in DC and both sides remained optimistic that implementation will go smoothly. The deal was afforded increased goodwill after the US removed China’s currency manipulation designation ahead of the signing, though it remains unclear if and when US officials will be willing to cut Chinese tariffs further. Also on the trade front, the Senate passed the USMCA agreement sending the bill that updates trade arrangements with Canada and Mexico to the President’s desk. President Trump and his administration touted the positive trade developments throughout the week ahead of his Senate impeachment trial that is set to begin next Tuesday.

The US economic data stayed largely constructive with benign inflation readings coming alongside signals of improvement in the manufacturing sector. Friday’s single family housing starts saw the strongest reading since before the 2008 financial crisis, suggesting the industry is preparing for a jump in household formation resulting from the strong consumer environment. China Q4 data releases also calmed some investors’ nerves when GDP, retail sales, industrial production, and new loans data topped expectations. UK data largely underwhelmed, bolstering the belief the BOE could ease as early as this month. The pound and GILT yields moved lower for much of the week. US Treasury yields moved lower only to rebound late in the week spurred by news the US Treasury will be offering a new 20-year bond later this year. Gold and WTI crude futures found some support around $1550 and just below $60/barrel, respectively, following last week’s key reversal around the escalating Iran tensions. For the week, the S&P added 2%, the DJIA rose 1.8%, and the Nasdaq was up 2.3%.

In corporate news this week, major financial institutions kicked off earnings season. JPMorgan posted record profit, beating on its top and bottom line, as sentiment improves amid easing trade tensions. Wells Fargo, however, missed targets as legal challenges and low interest rates weighed on the company. Citigroup reported a beat on its top and bottom line, notching impressive revenue in its fixed-income unit. Goldman Sachs missed on profit after being hit with a $1.1B legal bill. Bank of America earnings and revenue came in above expectations, but a forecast for higher expenses concerned investors. Morgan Stanley posted outstanding Q4 results with strength seen across all its businesses. In the retail space, Target’s holiday same store sales disappointed, with notable weakness seen in its toys and electronics divisions. Five Below also posted weaker than expected holiday revenue, leading the company to cut its Q4 outlook. The Gap announced it no longer intends to spin off its Old Navy unit into a separate, publicly-traded company, backtracking on a plan it had announced early last year.


SUNDAY 1/12
(CN) China said there will be no significant reduction in new energy vehicle subsidies in 2020, 2020 NEV subsidy policy to remain relatively stable - financial press

MONDAY 1/13
FMCC Multifamily 2020 Outlook projects Originations will grow to $390B
(US) Democratic candidate Sen Booker (D-NJ) drops out of presidential race - press
V Confirms to acquire Plaid for $5.3B
(US) TREASURY SEMI-ANNUAL CURRENCY REPORT: confirms removal of China from designation as a currency manipulator; country must take necessary steps to avoid a persistently weak currency

TUESDAY 1/14
JPM Reports Q4 $2.57 v $2.32e, Managed Rev $29.2B v $27.3Be
C Reports Q4 $1.90 v $1.82e, Rev $18.4B v $17.7Be
(US) DEC CPI M/M: 0.2% V 0.3%E; CPI (EX-FOOD/ENERGY) M/M: 0.1% V 0.2%E; CPI NSA: 256.974 V 257.170E
(CN) Reportedly US officials have no plans to cut China duties further now; will verify China deal adherence of 'Phase 1' before considering further reduction of existing tariffs - press

WEDNESDAY 1/15
(UK) DEC CPI M/M: 0.0% V 0.2%E; Y/Y: 1.3% V 1.5%E (3-year low)
TGT Reports holiday SSS +1.4%, results came in below Co expectations
BAC Reports Q4 $0.74 v $0.68e, Rev $22.3B v $22.0Be
(RU) Russia PM Medvedev says govt (cabinet) to resign; President Putin will announce the makeup of the new govt
(US) JAN EMPIRE MANUFACTURING INDEX: 4.8 V 3.6E
(US) DEC PPI FINAL DEMAND MM: 0.1% V 0.2%E V 0.0% PRIOR; Y/Y: 1.3% V 1.3%E
(US) Association of American Railroads weekly rail traffic report for week ending Jan 11th: 501.6K, -9.6% y/y
(US) US and China officials sign 'Phase 1' trade deal at the White House
(US) FEDERAL RESERVE BEIGE BOOK: ECONOMY CONTINUED TO EXPAND MODESTLY IN LAST WEEKS OF 2019 (prior 'expanded modestly')

THURSDAY 1/16
2330.TW Reports Q4 (NT$) Net 116.0B v 111.3Be; Op 124.2B v 121Be; Rev 317.2B v 289.8B y/y
(TR) TURKEY CENTRAL BANK (CBRT) CUTS ONE-WEEK REPO RATE BY 75BPS TO 11.25%; AS EXPECTED
(US) DEC ADVANCE RETAIL SALES M/M: 0.3% V 0.3%E; RETAIL SALES (EX-AUTO) M/M: 0.7% V 0.5%E
(US) Senate passes USMCA trade deal; bill now goes to Pres Trump's desk for signing (as expected)
RIO.AU Reports Q4 Pilbara Iron Ore production 83.6Mt v 86.6 Mt y/y; Shipments 86.8Mt v 87.4Mt y/y
(CN) CHINA Q4 GDP Q/Q: 1.5% V 1.4%E; Y/Y: 6.0% V 6.0%E

FRIDAY 1/17
(UK) DEC RETAIL SALES (EX-AUTO/FUEL) M/M: -0.8% V +0.8%E; Y/Y: 0.7% V 3.0%E
FAST Reports Q4 $0.31 v $0.32e, Rev $1.28B v $1.29Be
STT Reports Q4 $1.98 adj v $1.70e, Rev $3.05B v $2.92Be
(US) DEC HOUSING STARTS: 1.608M V 1.380ME; BUILDING PERMITS: 1.416M V 1.460ME
(US) DEC INDUSTRIAL PRODUCTION M/M: -0.3% V -0.2%E; CAPACITY UTILIZATION: 77.0% V 77.0%E
(US) NOV JOLTS JOB OPENINGS: 6.800M V 7.250ME
BA During testing audit last weekend, 737 flight computers were reportedly not talking to each other at startup; unclear how long fix will take
(US) CDC to begin deploying staff to screen travelers arriving from Wuhan, China for novel coronavirus

Iran tensions deescalate and risk-on rally takes DJIA above 29,000

TradeTheNews.com 

Weekly Market Update: Iran tensions deescalate and risk-on rally takes DJIA above 29,000

Fri, 10 Jan 04:04 PM EST/09:04 PM GMT

Markets opened the week amid a cloud of headlines related to rising Iranian tensions. Stock indices briefly moved lower while gold and oil prices shot higher after Iran sent a salvo of missiles into two bases housing US troops in Iraq, retaliation for last week’s assassination of Quds commander Soleimani. Just hours after that attack, news broke that a Ukrainian Air Boeing 737-800 crashed shortly after takeoff in Tehran. The timing and circumstances invited a wave of speculation surrounding the cause of the downing and only added to the overall unease. By midweek though, tensions began to subside as it became clear that the US would not respond militarily after no casualties resulted from Iran’s missile attack. Gold futures reversed some $35 off of 7-year highs above $1600 and WTI crude briefly pushed above $65 before failing and quickly falling back below $60. Ultimately the significant technical reversal in those widely followed risk barometers came alongside renewed vigor for stocks as investors become comfortable that the Iran situation was deescalating. By Friday, the early 2020 momentum carried the Dow past 29K for the first time. Another solid US employment report, albeit short of consensus expectations for job gains, reinforced the belief the Fed will likely remain on hold in 2020. Treasury yields declined and the Greenback softened in the wake of the jobs data as well as news that House Speaker Pelosi would be sending the articles of impeachment over to the Senate next week, allowing the trial to move forward. For the week, the S&P was up 0.9%, the DJIA added 0.7%, and the Nasdaq rose for the fifth week in a row, gaining 1.8%.

In corporate news this week, Boeing's woes continued as new internal memos showed employees raised safety concerns during the development of the troubled 737MAX, and Boeing supplier Spirit Aerosystems announced it will lay off thousands of employees in response to the production halt for the aircraft. Macy’s posted a small decline in holiday same store sales, though less than anticipated, but announced the closure of 29 stores over the coming months. Kohl’s shares slid after reporting poor holiday sales and cutting its outlook, citing specific weakness in its women’s apparel business. Bed Bath and Beyond missed estimates again, withdrew its outlook, and issued a warning that sales and profit will remain pressured during next quarter, as well. Costco notched a healthy +7.8% Dec same store sales increase amid strong holiday demand. Homebuilder Lennar topped earnings estimates and saw its cash flow acceleration continuing into 2020, promising further debt repurchases and return of capital. Yum! Brands announced the $375M acquisition of Habit Burger Grill for $14/share in cash in a move to compete with Shake Shack.


MONDAY 1/6
JGB (JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.1% 10-year JGBs: avg yield: -0.0050% v -0.042% prior, bid to cover 3.70x v 3.28x prior

TUESDAY 1/7
(IR) Iran reportedly assessing 13 retaliation scenarios against US - Iranian press
(ES) Spain Parliament approves Sanchez bid to form a new govt (as expected)
Boeing 737-800 passenger plane operated by Ukraine company, crashes after takeoff in Iran

WEDNESDAY 1/8
066570.KR Reports prelim Q4 (KRW) Op 98.6B v 75.3B y/y, Rev 16.1T v 15.8T y/y (16.5Te)
*(EU) EURO ZONE NOV BUSINESS CLIMATE INDICATOR: -0.25 V -0.18E
LEN Reports Q4 $2.13 v $1.90e, Rev $6.97B v $6.70Be
WBA Reports Q1 $1.37 v $1.40e, Rev $34.3B v $34.6Be
*(US) DEC ADP EMPLOYMENT CHANGE: +202K V +160KE
(US) Pres Trump: Iran appears to be standing down; no Americans were harmed in last night's attack; to place new sanctions on Iran
(US) Association of American Railroads weekly rail traffic report for week ending Jan 4th: 414K, -5.1% y/y
*(US) NOV CONSUMER CREDIT: $12.5B V $16.0BE
BBBY Reports Q3 -$0.38 adj v $0.03e, Rev $2.76B v $2.86Be; withdraws FY19 guidance
COST Reports Dec SSS (ex-gasoline) +7.8%

THURSDAY 1/9
3382.JP Reports 9M Net ¥169.97B v ¥156.27B y/y; Op ¥319.1B v ¥304.3B y/y; Rev ¥4.98T v ¥5.07T y/y
(IR) CBS Transportation Correspondent: "US officials are confident Ukrainian Flt 752 was shot down by Iran. US intelligence picked up signals of the radar being turned on & satellite detected infrared blips of 2 missile launches, probably SA-15s, followed shortly by another infrared blip of an explosion."
*(US) TREASURY $16B 30-YEAR BOND REOPENING DRAWS 2.341%; BID TO COVER 2.54 V 2.46 PRIOR AND 2.26 OF THE LAST 8 REOPENINGS
BA Releases new internal communications on 737 MAX that shows employees raised safety concerns during the development process

FRIDAY 1/10
*(US) DEC AVERAGE HOURLY EARNINGS M/M: 0.1% V 0.3%E; Y/Y: 2.9% V 3.1%E; AVERAGE WEEKLY HOURS: 34.3 V 34.4E
Dow hits 29,000 mark for first time
SPR CEO: To lay off 2.8K employees at Kansas facility; not yet received notice from Boeing when MAX production will restart or what production rates will be when it does
(US) House Speaker Pelosi: House will send Trump impeachment articles to the Senate next week
(IE) Sinn Fein party accepts the Northern Ireland power sharing agreement; will re-enter devolved govt in Northern Ireland - press
(US) On day Iran Gen Soleimani was killed, a second secret US mission to kill a senior Iranian military official in Yemen was not successful - Washington Post

Stocks and commodities float higher in light holiday trading

TradeTheNews.com 

Weekly Market Update: Stocks and commodities float higher in light holiday trading

Fri, 27 Dec 04:10 PM EST/09:10 PM GMT

Stocks continued to push out to new highs in the holiday shortened trading week. A Santa Claus rally took full effect in predictably thin year-end trading. US and Chinese officials indicated they remain in close contact as they hammer out the text of a ‘phase one’ trade agreement for signing in January. The Dow was helped by news that Boeing’s CEO was finally being replaced as the 737 Max debacle drags into the New Year. Tesla shares also turned heads, rising past the notorious $420 level, to notch new highs as the electric car maker continues to impress with its rapid expansion in China. The US economic data was somewhat soft with both the Richmond Fed and new home sales figures coming up short of expectations. That along with strong demand for US Treasury coupon auctions enabled Treasury yields to drift lower. Gold popped back above $1,500 for the first time since October, coinciding with marginal weakness in the US dollar. For the week, the S&P added 0.6%, the DJIA rose 0.7%, and the Nasdaq gained 0.9%.


SUNDAY 12/22
(JP) Japan Chief Cabinet Sec Suga: Has not eased export controls on South Korea; changes to controls are just procedural

MONDAY 12/23
TSLA Reportedly agrees 5-yr loan facility of up to CNY10B (~$1.4B) with Chinese banks - press
(US) NOV PRELIMINARY DURABLE GOODS ORDERS: -2.0% V +1.5%E; DURABLES (EX-TRANSPORTATION): 0.0% V 0.2%E
BA Dennis A. Muilenburg resigns as CEO effective immediately; Names current Chairman David L Calhoun as CEO; effective Jan 13th 2020
(US) NOV NEW HOME SALES: 719K V 730KE
(CN) According to China Association of Automobile Manufacturers (CAAM) China 2019 auto sales are tracking to be -9% to -8%; see 2020 sales -2% and 2021 flat or slightly slower – press

TUESDAY 12/24
UBER Founder Travis Kalanick to resign from Board of Directors; effective Dec 31

WEDNESDAY 12/25

THURSDAY 12/26
UBER RBC's Mahaney sees Uber as top tech pick for 2020 - CNBC interview

FRIDAY 12/27
(EU) ECB ECONOMIC BULLETIN: Sees signs of stabilization in global economy beginning to emerge towards the end of the year
(US) Nevada reports Nov casino gaming Rev $937.5M, -3.1% y/y; Las Vegas strip Rev $517.9M, -3.1% y/y