Volatility rises as tech momentum gets blunted; economic data continues to improve

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Weekly Market Update: Volatility rises as tech momentum gets blunted; economic data continues to improve

2020-09-04T19:18:08.22

Equity markets continued to accelerate to the upside through mid-week, and then fell apart on Thursday as traders began to reassess the high flying valuations in the momentum names that have been the backbone of the rally since April. Highly anticipated stock splits in Apple and Tesla led the megacap stocks to new record highs as retail investors flooded into the ‘cheaper’ stocks post-split, but they were hit by a wave of steady selling on Thursday, and there was some rotation into long suffering sectors like banks and energy. By Friday, reports revealed that some of the froth in the tech sector over the last month has been driven by Softbank buying options in the tech sector tied to about $50B in equities. For the week, the S&P fell 2.3%, the DJIA lost 1.8%, and the Nasdaq plunged 3.3%.

Economic data continued to largely improve at a better than expected pace. China saw the sixth straight month of expansion in its Manufacturing PMI, while the Eurozone posted its seconds straight month of expansion in its manufacturing and services indices. A weak reading in the ADP employment change on Wednesday was quickly forgotten as the government’s employment data on Friday saw payrolls rises by nearly 1.4M jobs and unemployment fall to 8.4%, well below the 9.8% consensus estimate. The dollar index hit a fresh 2-year low on Monday and then rebounded slightly through the rest of the week, while gold saw a two-percent selloff. Treasury yields slipped throughout most of the week, but then reversed after the strong employment data on Friday.

In corporate news this week, Zoom blew away expectations in its quarterly report and guided well above what the market was looking for as the company expands its work-from-home client base. Sabre Corp saw its August air bookings drop 85% y/y, but the company in a mid-quarter statistics release noted net bookings moved positive in all regions for July, and that trend continued into August. The Department of Justice reportedly plans to file antitrust charges against Google in the coming weeks, despite pushback from DOJ lawyers who had sought more time to build a stronger case. Nestle announced it would purchase peanut allergy drug developer Aimmune Therapeutics in a $2.6B deal. Language learning tool maker Rosetta Stone said it would be acquired by Cambium Learnings for $30.00/share cash. AT&T is reportedly looking to divest its DirecTV satellite assets and was said to have been in talks with private equity names around a $20B valuation. Honda and General Motors signed an MOU toward establishing a strategic alliance to develop a range of cars in North America. The U.S. DOE selected Albemarle to take the lead on two new lithium research projects with the aim to enable nationwide lithium independence. Walmart announced it would finally launch its Walmart Plus subscription competitor to Amazon Prime on September 15th.

SUN 8/30
3328.HK Reports H1 Net -14.6% y/y
(JP) Berkshire Hathaway unit acquired 5% passive stakes in each of the 5 leading Japan trading companies (Itochu, Marubeni, Mitsubishi Corp, Mitsui & Co and Sumitomo Corp)
*(CN) CHINA AUG MANUFACTURING PMI (GOVT OFFICIAL): 51.0 V 51.2E (6 straight expansion)

MON 8/31
*(DE) GERMANY AUG PRELIMINARY CPI M/M: -0.1% V 0.0%E; Y/Y:0.0% V 0.1%E
*(IN) INDIA Q2 GDP Y/Y: -23.9% V -18.0%E (record contraction)
(US) Fed Vice Chair Clarida: Fed would consider yield caps if circumstances changed markedly; forward guidance and large scale asset purchases are effective stimulus tools
*(US) AUG DALLAS FED MANUFACTURING ACTIVITY: 8 V 0.0E
ZM Reports Q2 $0.92 v $0.45e, Rev $663.5M v $498Me; raises FY guidance

TUES 9/1
*(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 0.25%; AS EXPECTED; expands size and duration of term lending facility
(HK) Macau Aug Casino Rev (MOP): 1.3B; Y/Y: -94.5% v -93.0%e
*(IT) ITALY AUG MANUFACTURING PMI: 53.1 V 52.0E (2nd month of expansion and highest since Jun 2018)
*(FR) FRANCE AUG FINAL MANUFACTURING PMI: 49.8 V 49.0E (confirms 1st contraction in 3 months)
*(DE) GERMANY AUG FINAL MANUFACTURING PMI: 52.2 V 53.0E (confirms 2nd month of expansion)
*(DE) GERMANY AUG NET UNEMPLOYMENT CHANGE: -9.0K V -2.0KE (2nd straight decline); UNEMPLOYMENT CLAIMS RATE: 6.4% V 6.4%E
*(EU) EURO ZONE AUG FINAL MANUFACTURING PMI: 51.7 V 51.7E (confirms 2nd month of expansion)
*(UK) AUG FINAL MANUFACTURING PMI: 55.2 V 55.3E (confirms its 3rd straight expansion)
*(EU) EURO ZONE AUG ADVANCE CPI ESTIMATE Y/Y: -0.2% V +0.2%E; CPI CORE Y/Y: 0.4% V 0.8%E (record low reading for core)
*(EU) EURO ZONE JULY UNEMPLOYMENT RATE: 7.9% V 8.0%E
*(US) AUG ISM MANUFACTURING: 56.0 V 54.8E; PRICE PAID: 59.5 V 54.0E (highest ISM since Jan 2019, highest prices paid since Nov 2018)
(US) Dallas Fed Aug Texas Service Sector Outlook Survey: General Business Activity: 4.7 v -26.7 prior
(IE) ECB’s Lane (Ireland, chief economist): We have seen a repricing in the Euro in recent weeks
V Reports Aug total US payments +7% y/y

WED 9/2
M Reports Q2 -$0.81 v -$1.78e, Rev $3.56B v $3.51Be
*(US) AUG ADP EMPLOYMENT CHANGE: +428K V +1.00ME (3rd straight month of increase)
CCA.CA Altice USA presents unsolicited offer to acquire Cogeco for $7.8B in order to own Atlantic Broadband; to sell Canadian assets to Rogers Communications upon completion of transaction
*(US) DOE CRUDE: -9.4M V -2ME; GASOLINE: -4.3M V -3ME; DISTILLATE: -1.7M V -1.5ME
*(US) FED BEIGE BOOK: EMPLOYMENT INCREASED OVERALL AMONG DISTRICTS, GAINS IN MANUFACTURING CITED MOST OFTEN
(US) CDC calls on states to be ready for potential vaccine by early November - NY Times
ALB Selected by U.S. DOE for Lithium Research Projects, one with ANL to "Enable Lithium Independence"
SABR Reports July/Aug Gross air bookings down ~85% y/y; Jul Net air bookings down ~ 90% and Aug down ~85% - filing

THURS 9/3
(FR) FRANCE AUG FINAL SERVICES PMI: 51.5 V 51.9E (confirms 3rd straight expansion)
*(DE) GERMANY AUG FINAL SERVICES PMI: 52.5 V 50.8E (confirms 2nd month of expansion)
*(EU) EURO ZONE AUG FINAL SERVICES PMI: 50.5 V 50.1E (confirms 2nd month of expansion)
*(UK) AUG FINAL SERVICES PMI: 58.8 V 60.1E (confirms 2nd straight expansion and highest since Apr 2015)
*(US) Q2 FINAL NONFARM PRODUCTIVITY: 10.1% V 7.5%E; UNIT LABOR COSTS: 9.0% V 12.0%E
*(US) INITIAL JOBLESS CLAIMS: 881K V 950KE; CONTINUING CLAIMS: 13.25M V 14.00ME
CIEN Guides Q4 Rev $800-840M v $999Me, adj gross margin 46-48% - earnings call
*(US) AUG FINAL MARKIT SERVICES PMI: 55.0 V 54.7E
*(US) AUG ISM SERVICES INDEX: 56.9 V 57.0E
GOOGL Dept of Justice reportedly to file antitrust charges against Google in coming weeks; DOJ lawyers said to oppose move to expedite the case - New York Times
AVGO Reports Q3 $5.40 v $5.24e, Rev $5.82B v $5.78Be

FRI 9/4
*(US) AUG AVERAGE HOURLY EARNINGS M/M: 0.4% V 0.0%E; Y/Y: 4.7% V 4.4%E; AVERAGE WEEKLY HOURS: 34.6 V 34.5E
*(US) AUG UNEMPLOYMENT RATE: 8.4% V 9.8%E
*(US) AUG CHANGE IN NONFARM PAYROLLS: +1.37M V +1.35ME
Reportedly Softbank has been buying options in tech stocks over the last month - FT
MRNA To slow enrollment of COVID-19 vaccine trial to ensure diversity; trial could be delayed by a week due to the enrollment slowdown - CNBC

Stock run-up unabated; Fed formalizes view on inflation

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Weekly Market Update: Stock run-up unabated; Fed formalizes view on inflation

2020-08-28T16:15:05.917

- US stock markets continued track higher this week despite a renewed round of US civil unrest and landfall of category 4 hurricane Laura in the Gulf of Mexico. By Friday the Dow managed to recoup all of it 2020 losses ahead of the implementation of historic composition changes set to take place Monday. The S&P rode a 5-day win streak of all-time highs testing 3500 for the first time, and the NASDAQ continued to ride the ongoing wave of nearly unprecedented momentum into technology shares. Covid-19 developments remained mostly positive following FDA approval for rapid coronavirus tests by Abbvie, as well as continued constructive reports surrounding various vaccine development. Case trends remained on downtrend in US and most of Asia, though EU showed some upward curve.
- The economic data turned a bit more constructive, once again led by strength in the housing market. The US Federal Reserved reiterated it is serious about keeping support flowing into this economy. By clarifying their long run goals after completing the long awaited policy review, Chairman Powell and others formally acknowledged that inflation will likely have to run above its 2% target for some time before they can be sure they achieved their mandated goal. The Dollar lost some ground following the announcement and gold prices lifted. The US yield curve also steepened after long dated debt underperformed. For the week the S&P rose 3.3%, the Dow added 2.6% and NASDAQ gained 3.4%.
- In corporate news this week, Salesforce reported a monster beat and raised its outlook by a wide margin, while also announcing it would lay off some of its workforce as part of a rebalancing. On the retail front, Best Buy saw a boost from the stay-at-home state of affairs, as online sales rose by over 200%, while it continues to weigh availability of inventory to match consumer demand. Dicks Sporting Goods saw record sales amid its own nearly 200% rise in e-commerce revenue. Nordstrom’s disappointed, notching a drop in digital sales on a year-on-year basis. Ulta Beauty smashed EPS estimates and noted sales trends have continued to improve. Amazon unveiled a new service dubbed ‘Amazon Halo,' along with the Amazon Halo Band, a health and wellness device which can purportedly also track a user’s moods. Google said it would invest $100M into telehealth provider Amwell as part of its multi-year plan to improve patient and clinician telehealth experiences. Walmart announced it is teaming up with Microsoft on a bid for TikTok’s US operations, while Oracle and its consortium was said to still be interested in the social media asset. Moderna confirmed it would supply Europe with 80M doses of its mRNA vaccine against COVID-19, while Sanofi’s CEO said recent data has increased confidence in the success of its two coronavirus vaccine candidates.

MON 8/24
2317.TW Reportedly Foxconn and Pegatron likely to relocate some facilities to Mexico due to continued US China trade war - press
GOOGL Reportedly plans $100M investment in telehealth provider Amwell - CNBC
CRM Amgen, Salesforce, Honeywell to join Dow Jones Industrial Average Index; to replace Exxon, Pfizer, and Raytheon; effective prior to the open on Aug 31st; prompted by Apple's 4:1 stock split reducing technology sector weighting

TUES 8/25
*(DE) GERMANY AUG IFO BUSINESS CLIMATE SURVEY: 92.6 V 92.1E (4th straight month of improvement)
BBY Reports Q2 $1.75 v $1.05e, Rev $9.91B v $9.69Be; continues to weigh availability of inventory to match consumer demand
*(US) AUG CONSUMER CONFIDENCE: 84.8 V 93.0E
*(US) JULY NEW HOME SALES: 901K V 790KE
*(US) AUG RICHMOND FED MANUFACTURING INDEX: 18 V 10E

WEDS 8/26
*(US) JULY PRELIMINARY DURABLE GOODS ORDERS: 11.2% V 4.7%E; DURABLES (EX-TRANSPORTATION): 2.4% V 2.0%E
(US) Nevada reports July casino gaming Rev $756.8M, -26.2% y/y; Las Vegas strip Rev $330.1M, -39.2% y/y
*(US) DOE CRUDE: -4.7M V -3ME; GASOLINE: -4.6M V -1.5ME; DISTILLATE: +1.4M V 0ME
MRNA Reports Covid-19 vaccine induces immune responses in small trial of older adults; produces similar antibody levels in seniors as in younger people
(US) National Hurricane Center (NHC): Hurricane Laura has become 'extremely dangerous Category 4 hurricane'

THURS 8/27
*(US) INITIAL JOBLESS CLAIMS: 1.01M V 1.00ME; CONTINUING CLAIMS: 14.54M V 14.40ME
*(US) Q2 PRELIMINARY GDP ANNUALIZED Q/Q: -31.7% V -32.5%E; PERSONAL CONSUMPTION: -34.1% V -34.6%E
*(US) Q2 PRELIMINARY GDP PRICE INDEX: -2.0% V -1.8%E; CORE PCE Q/Q: -1.0% V -1.1%E
AMZN Introducing Amazon Halo and Amazon Halo Band, new service that helps customers improve their health and wellness
(US) Fed's Powell formally clarifies long run goals following policy review: Fed will now target 2% inflation on average; long run goal remains to achieve 2% inflation; would not be appropriate to specify a fixed goal for employment
(US) Fed's Powell: important to communicate to the public that any inflation overshoots will be moderate and not go on for long periods of time - Jackson Hole Q&A

FRI 8/28
*(JP) PM ABE SAID PLANNING TO RESIGN CITING HEALTH CONCERNS - NHK
3328.HK Reports H1 (CNY) Net 36.5B v 42.7B y/y, NII 73.8B v 70.1B y/y
*(EU) EURO ZONE AUG ECONOMIC CONFIDENCE: 87.7 V 85.0E
*(US) JULY PERSONAL INCOME: +0.4% V -0.3%E; PERSONAL SPENDING: 1.9% V 1.6%E
*(US) AUG CHICAGO PURCHASE MANAGERS INDEX: 51.2 V 52.6E
(US) Weekly Baker Hughes Rig Count: 254 v 254 w/w (flat w/w)

Markets continue to climb the wall of worry, betting on large cap tech and big box retail

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Weekly Market Update: Markets continue to climb the wall of worry, betting on large cap tech and big box retail

2020-08-21T16:09:09.323

The markets opened the week still under the influence of many of the same underlying cross currents that have been driving the action in recent weeks. The White House added another 38 Huawei affiliates to the economic blacklist while President Trump announced that he had postponed the six-month review of the Sino-US phase one trade deal, citing his unhappiness with China’s handling of the coronavirus outbreak. Trump also continued to raise concerns about the integrity of the upcoming US election, while Democrats raised a stink about the activities of the Postmaster General and hammered Trump for his pandemic record as they officially nominated Joe Biden at a virtual convention. Covid-19 infections picked up in Europe and parts of Asia but positive incremental news on vaccines and therapeutics continued to trickle out. Earnings season focus shifted to retailers, amongst whom the big box and home improvement names blew away analyst expectations. The often incredible growth came clearly at the expense of department stores and smaller players illustrating the tailwinds generated by forced closures related to the pandemic. The US data was mixed with housing holding up strong, but weekly initial jobless claims jumped back above the one million mark.

For much of the week stock indices climbed, powered by big gains in select mega-cap tech names masking broader softness. On Friday, decliners led advancers by nearly 3:1 margin across all major US stock markets but the indices still gained, illustrating the continued divergence exacerbated by the skewed index weighting towards select big cap tech. The Greenback bounced along 2-year lows before bouncing late in the week and rates moved lower amid a flattening yield curve. For the week, the S&P gained 0.7% and hit new all-time highs, while the DJIA was flat and the Nasdaq powered up 2.7%.

Corporate news this week was largely dominated by earnings reports from retailers. Home Depot blew away estimates, notching strong operating margins and a 25% jump in comp sales. Lowe’s fared even better, with revenue well above expectations and comp sales up 34%. Walmart posted beats along with 9% US SSS growth, and also noted its Sam’s Club new member count increased more than 60%. Target saw 24% comp sales growth and said it has continued to see strength across its portfolio into August. Kohl’s Q2 was not as weak as feared, but the department store chain said it was planning for the crisis to continue to impact its business in the near term. TJX disappointed with a surprise earnings miss to the downside. Nvidia posted an earnings beat amid strong data center business growth, and the company said it expects a strong second half for gaming. Oracle was said to have entered the bidding war for TikTok US, though Microsoft reportedly still remains in the pole position to acquire the social media assets. Apple's market cap reached the $2 trillion level, while Tesla shares pushed through $2,000 a share, both assisted by impending stock splits.


MON 8/17
(US) US Commerce Department to add another 38 Huawei affiliates in 21 countries to economic blacklist - press
*(US) AUG EMPIRE MANUFACTURING: 3.7 V 15.0E

TUES 8/18
HD Reports Q2 $4.02 v $3.71e, Rev $38.1B v $34.9Be; Maintains dividend
WMT Reports Q2 $1.56 v $1.20e, Rev $137.7B v $134.2Be
*(US) JULY HOUSING STARTS: 1.50M V 1.25ME; BUILDING PERMITS: 1.50M V 1.33ME
(US) State Dept asks college endowment funds to divest from Chinese companies
(US) Pres Trump: I have postponed trade talks with China; I don't want to talk to China right now

WEDS 8/19
*(UK) JULY CPI M/M: +0.4% V -0.1%E; Y/Y: 1.0% V 0.6%E
*(EU) EURO ZONE JULY FINAL CPI Y/Y: 0.4% V 0.4%E; CPI CORE Y/Y: 1.2% V 1.2%E
LOW Reports Q2 $3.75 v $2.94e, Rev $27.3B v $24.7Be; Sales momentum continues in Aug
TGT Reports Q2 $3.38 v $1.64e, Rev $23.0B v $20.2Be
*(US) DOE CRUDE: -1.6M V -2.5ME; GASOLINE: -3.3M V -1ME; DISTILLATE: +0.2M V -0.5ME
MNTA To be acquired by JNJ for $52.50/shr valued at $6.5B in cash; Affirms FY20 $7.75-7.95 and expects incremental investment in R&D to have EPS impact worth ~$0.10-0.15 in 2021, Expects nipocalimab to contribute to goal of achieving above-market growth over the mid and long term
AAPL Reaches $2T market cap
OPEC+ JMMC technical meeting draft communique: plans next JMMC meeting for Sept 17th
(US) US and China officials reportedly plan to hold video conference in coming days to discuss progress fulfilling terms of 'Phase 1' trade agreement - press
NVDA Reports Q2 $2.18 v $1.95e, Rev $3.87B v $3.65Be

THURS 8/20
Several central banks to reduce frequency of 7-day USD liquidity operations from 3x to 1x per week; effective Sept 1st
*(US) AUG PHILADELPHIA FED BUSINESS OUTLOOK: 17.2 V 20.8E
*(US) INITIAL JOBLESS CLAIMS: 1.11M V 920KE; CONTINUING CLAIMS: 14.84M V 15.00ME
*(US) JULY LEADING INDEX: 1.4% V 1.1%E

FRI 8/21
*(UK) JULY RETAIL SALES (EX-AUTO/FUEL) M/M: 2.0% V 0.2%E; Y/Y: 3.1% V 1.5%E
*(FR) FRANCE AUG PRELIMINARY MANUFACTURING PMI: 49.0 V 53.0E (1st contraction in 3 months)
*(TR) Turkey President Erdogan: Found 320B CM in Black Sea gas discovery; will not stop until we become a next exporter of energy
*(US) JULY EXISTING HOME SALES: 5.86M V 5.41ME (2nd straight highest monthly gain on record)

Markets pause awaiting better signals on the direction of the recovery and stimulus plans

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Weekly Market Update: Markets pause awaiting better signals on the direction of the recovery and stimulus plans

2020-08-14T16:05:53.3

US stock markets pushed higher this week and the move included a welcomed expansion of leadership. The gains came despite rising concerns about the resurgence of Covid-19 infections globally and a hardening of the Washington stalemate over new financial stimulus. The Senate went on recess after President Trump passed executive orders that are expected to result in a deferral of payroll tax withholdings, and both sides spent the week outlining a significant gulf in demands that has only widened. The S&P neared its mid-February all-time highs while the Transports and small caps rode extended winning streets. The NASDSAQ took a step back, especially early in the week, as money appeared to rotate away from large cap tech/growth into areas more traditionally deemed as value like banks and other more deep cyclical sectors. Treasury yields backed up and the curve steepened alongside that rotation spurred by hotter than expected US July inflation readings and a deluge of UST supply which culminated in a very poorly received 30-year bond auction on Thursday. The US dollar was unable to garner any momentum as the discord in DC likely served as a headwind. Hopes that a Sino-US teleconference this weekend might ease tensions over sharping White House rhetoric on the virus origins and Chinese social media firms’ position in the US market were dashed after the meeting was postponed indefinitely on Friday. For the week, the S&P gained 0.6%, the DJIA added 1.8%, and the Nasdaq edged up 0.1%.

In corporate news this week, 3M shares rose after posting solid July numbers, noting ‘broad-based improvements’ in sales trends. Cisco stock slid after reporting a drop in revenue and offering downbeat guidance for next quarter amid caution from enterprise customers. Tesla followed Apple’s lead and announced a 5-for-1 stock split, effective at the end of August. Epic Games filed antitrust suits against Apple and Google after both banned the ‘Fortnite’ game from their app stores because of unsanctioned in-game payments. After its recent IPO, Rocket Companies’ shares surged after reporting jaw-dropping growth in preliminary earnings as the company said it was positioned to capture further market share. Simon Property was said to be in talks with Amazon over turning certain department store spaces into Amazon fulfillment centers. Twitter reportedly held preliminary talks about taking over TikTok, after Microsoft confirmed last week it had held discussions about acquiring the controversial social media company. Barry Diller’s IAC announced it invested $1B to take a 12% stake in gaming giant MGM, adding it is particularly interested in online gaming. The White House announced it had reached a $1.5B supply agreement with Moderna for an initial 100M doses of their COVID-19 vaccine, while Novavax announced a more modest vaccine collaboration with the UK government.


MON 8/10
*(US) JUN JOLTS JOB OPENINGS: 5.889M V 5.300ME
(US) FCC plans auction for 100 megahertz of spectrum that had been previously reserved for military radar; sale could begin in Dec 2021 - press

TUES 8/11
*(DE) GERMANY AUG ZEW CURRENT SITUATION SURVEY: -81.3 V -69.5E; EXPECTATIONS SURVEY: 71.5 V 55.8E
MSTR Adopts 21.5K Bitcoin (~$250M) as primary treasury reserve asset
*(US) JULY PPI FINAL DEMAND M/M: 0.6% V 0.3%E; Y/Y: -0.4% V -0.7%E
TSLA Announces a 5-for-1 stock split, effective Aug 31st
(US) Fed to modify pricing for Municipal Liquidity Facility (MLF); cuts interest rate spread on tax-exempt notes by 50bps
*(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 0.25%; (AS EXPECTED) EXPANDS QE BOND BUYING PROGRAM

WEDS 8/12
*(UK) Q2 PRELIMINARY GDP Q/Q: -20.4% V -20.7%E; Y/Y: % V -22.3%E
700.HK Reports Q2 (CNY) Net 30.2B v 29.2Be, Rev 114.9B v 88.8B y/y; does not provide interim dividend
*(US) JULY CPI M/M: 0.6% V 0.3%E; CPI (EX-FOOD/ENERGY) M/M: 0.6% V 0.2%E; CPI NSA: 259.101 V 258.543E
*(US) DOE CRUDE: -4.5M V -2ME; GASOLINE: -0.7M V -1ME; DISTILLATE: -2.3M V +0.5ME
(US) House Speaker Pelosi: we are still 'miles apart' from any deal on coronavirus aid; there's no use in continuing talks if Republicans don't come to the table - MSNBC interview
(US) NJ Gov Murphy: signing Executive Order officially clearing both our public and nonpublic pre-K through 12 schools and our colleges and universities to reopen for upcoming academic year in New Jersey
*(US) JULY MONTHLY BUDGET STATEMENT: -$63B V -$137.5BE

THURS 8/13
MMM Reports July Rev $2.8B +6% y/y
*(US) INITIAL JOBLESS CLAIMS: 963K V 1.10ME (lowest level since mid-Mar); CONTINUING CLAIMS: 15.49M V 15.80ME
*(US) TREASURY $26B 30-YEAR BOND AUCTION DRAWS 1.406%; BID TO COVER 2.14 V 2.30 PRIOR AND 2.30 OVER LAST 4 AUCTIONS
AAPL Epic Games files civil antitrust suit against Apple after Fortnite removal from the App Store - press
BIDU Reports Q2 $1.46 v $1.39e, Rev $3.69B v $3.66Be

FRI 8/14
*(EU) EURO ZONE Q2 PRELIMINARY GDP Q/Q: -12.1% V -12.1%E V -12.1% ADVANCE; Y/Y: -15.0% V -15.0%E
RKT Reports Prelim Q2 adj Net $2.8B +995% y/y; Rev $5.0B, +437% y/y
*(US) Q2 PRELIMINARY NONFARM PRODUCTIVITY: 7.3% V 1.5%E; UNIT LABOR COSTS: 12.2% V 6.9%E
*(US) JULY ADVANCE RETAIL SALES M/M: 1.2% V 2.1%E; RETAIL SALES (EX-AUTO) M/M: 1.9% V 1.3%E
(CN) US-China six-month review of trade agreement reportedly postponed due to a scheduling issue; had been planned for tomorrow; parties have not set new date yet - press

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 Strong tech earnings stoke optimism despite slow-moving US stimulus talks and COVID flare ups

2020-07-31T16:06:57.227

Investors had a litany of potential catalysts to navigate this week. Earnings season surged, while four high-profile US tech executives testified in front of a Senate panel the day before their firms reported astonishing quarterly numbers. The FOMC meeting concluded without and changes to policy, as expected. Chairman Powell explicitly expressed yet again that officials had no intention of even entertaining a discussion on raising rates anytime soon. There were some signs that US hotspots were seeing coronavirus infection rates start to slow, while other parts of the country, and various pockets outside the US were forced to confront resurgent Covid-19 numbers. Interest rates moved lower globally exacerbated by benign inflation readings in Europe and continued worries about the trajectory of the US economy. Adding to the unease was continued bickering in Washington D.C. Republican and Democratic leaders showed little inclination to find middle ground in the ongoing coronavirus stimulus talks. The US dollar continued to break lower while metals and bitcoin made new cycle highs. For the week, the S&P gained 1.7%, the DJIA lost 0.2%, and the Nasdaq surged 3.7%.

In corporate news this week, earnings season ramped into overdrive as reports from the big tech firms and over a third of the S&P 500 came in. Amazon blew away estimates again, guiding well above top-line consensus with improving margins, as spending flooded in from pandemic online shopping. Apple soared higher after posting its own monster third quarter and announcing a 4-for-1 stock split. Google shares fell after posting a decline in ad business and operating margin. Facebook advertising revenue topped expectations, as the social media giant continued to grow amid the pandemic and despite a boycott by many large advertisers. EBay beat on the top and bottom line and guided ahead of consensus as volumes spiked amid the pandemic spending influx. AMD posted an earnings beat and raised its revenue forecast as it gained semiconductor market share at the expense of Intel. Starbucks posted further coronavirus-induced losses but the coffee chain noted positive US SSS in July. McDonalds reported a weak quarter, posting a miss on EPS, though it, too, saw positive US comps in July. UPS notched a big beat on both its top and bottom line though it said it expects US Q3 demand growth to be lower sequentially. Exxon and Chevron results were disappointing, highlighting current difficulties in the oil patch environment. Enova announced it would acquire online lender OnDeck in a $90M deal, about 94% below its peak market valuation in 2015. Reports late in the week indicated Nvidia is in advanced talks to acquire Softbank’s semiconductor design company Arm for over $32B. On the regulatory front, a bipartisan duo of congressmen, Senators Blumenthal (D-CT) and Hawley (R-MO), called on the Department of Justice to probe Zoom and TikTok. And on Friday, the Trump administration was said to be preparing to order China’s ByteDance to sell its US TikTok operations.


SUN 7/26
TSM Receives order from Intel for 180K units with 7nm optimized version of the 6nm process; AMD also increased its 7nm order with TSMC to 200K units - Taiwanese press

MON 7/27
SAP.DE Reports final Q2 Non-IFRS Op €1.96B v €1.96B prelim, Rev €6.74B v €6.74B prelim; Affirms FY20 Rev outlook and Raises FCF
Morgan Stanley Cuts U.S. Software Industry View to In-Line from Attractive
(CN) China Foreign Ministry: reiterates US allegations of Houston spying are groundless
*(DE) GERMANY JULY IFO BUSINESS CLIMATE SURVEY: 90.5 V 89.3E
*(US) JUN PRELIMINARY DURABLE GOODS ORDERS: 7.3% V 7.0%E; DURABLES (EX-TRANSPORTATION): 3.3% V 3.6%E
GOOGL Reportedly Google extends its work from home order to Summer 2021 - press
LECO Reports Jul MTD order rates trending down high-teens to low 20% - earnings slides
TUES 7/28
MMM Reports Q2 $1.78 v $1.77e, Rev $7.18B v $7.27Be; On track for ~2B global respirators production
(US) Fed extends emergency lending programs by 3 months through Dec 31st to provide certainty to borrowers
*(US) JUL RICHMOND FED MANUFACTURING INDEX: 10 V 5E
*(US) JULY CONSUMER CONFIDENCE: 92.6 V 95.0E
(US) Dallas Fed July Texas Service Sector Outlook Survey: General Business Activity: -26.7 v +2.1 prior
EBAY Reports Q2 $1.08 v $1.06e, Rev $2.87B v $2.80Be
ONDK Enova to acquire OnDeck in $90M deal for $1.38/shr ($8M to be paid in cash)
SHOP Files $7.5B mixed securities shelf (7% of market cap)
LB Confirms to cut home office headcount by 15%; updates on progress in executing go-forward strategy; most Bath & Body Works and Victoria’s Secret stores in North America have reopened

WEDS 7/29
DBK.DE Reports Q2 Net -€77M v -€3.2B y/y, Pretax +€158M v -€946M y/y, Net Rev €6.29B v €6.20B y/y; Transformation is fully on track, raises FY20 Rev guidance
SAN.FR Reports Q2 Business EPS €1.28 v €1.31 y/y, Business Net €1.60B v €1.64B y/y, Rev €8.21B v €8.4Be; Raises Business EPS guidance
RIO.AU Reports H1 Underlying Net $4.75B v $4.3Be; underlying EBITDA $9.64B v $9.14Be; Rev $19.4B (consolidated sales) v $20.7B y/y; Affirms FY20 output guidance
RIO.AU CFO: China's recovery is amazing, elsewhere is very weak - post earnings comments
GE Reports Q2 -$0.15 v -$0.14e, Rev $17.8B v $17.0Be; Sees positive Industrial FCF in FY21
SMG Reports Q3 $3.80 v $3.35e, Rev $1.49B v $1.32Be; Consumer purchases entering August are up 23% at our largest four retail partners and we’ve seen increases in every product category
BA Reports Q2 -$4.79 v -$2.93e, Rev $11.8B v $12.6Be; has close to $10B untapped credit
GM Reports Q2 -$0.50 v -$1.72e, Rev $16.8B v $20.5Be
R Reports Q2 -$0.95 v -$1.44e, Rev $1.90B v $2.00Be; now expects the recovery in the used vehicle market will be delayed beyond the company's prior expectation of mid-2021
INTU Introduces QuickBooks Cash & Payments, a New Business Bank Account With a 1% Rate (Using GDOT Banking Lic)
(US) Nevada reports June casino gaming Rev $567M, -45.6% y/y; Las Vegas strip Rev $238.3M, -31.4% y/y
*(US) DOE CRUDE: -10.6M V -0.5ME; GASOLINE: +0.7M V -1.5ME; DISTILLATE: +0.5M V +0.5ME
DB1.DE Reports Q2 Net €288M v €288M y/y, adj EBITDA €483.1M v €482Me, Rev €778M v €724.8M y/y
005930.KR Reports Q2 Final (KRW) Net 5.5T v 5.18T y/y; Op 8.15T v 6.6T y/y (vs 8.10T prelim); Rev 52.97T v 56.13T y/y (vs 52.0T prelim)
*(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25%; AS EXPECTED; economy has picked up in recent months but still below pre-pandemic levels

THURS 7/30
AIR.FR Reports H1 Net -€1.9B v +€1.2B y/y, Adj EBIT -€945M* v +€2.5B y/y; Rev €18.9B v €20.27Be
RDSA.NL Reports Q2 -$2.33* v -$0.31e, Rev $32.5B v $91.8B y/y; Affirms dividend cut to $0.16/share [in line with announcement from April 30th]
BA.UK Reports H1 adj EPS 16.7p v 25.0p y/y, adj EBITA £895M v £999M y/y, Rev £9.87B v £9.42B y/y
066570.KR Reports final Q2 (KRW) Net 65.6B v 106B y/y; Op 495.4B v 652B y/y (493B prelim), Rev 12.8T v 15.6T y/y (12.8T prelim)
AZN.UK Reports Q2 Core EPS $0.96 v $0.93e, Rev $6.28B v $6.3Be
*(DE) GERMANY JULY NET UNEMPLOYMENT CHANGE: -18.0K V +41.0KE (1st decline in 4 months); UNEMPLOYMENT CLAIMS RATE: 6.4% V 6.5%E
*(DE) GERMANY Q2 PRELIMINARY GDP Q/Q: -10.1% V -9.0%E; Y/Y: -11.7% V -11.5%E (largest contraction since 1970)
*(EU) EURO ZONE JULY ECONOMIC CONFIDENCE: 82.3 V 81.4E
*(EU) EURO ZONE JUN UNEMPLOYMENT RATE: 7.8% V 7.7%E
JNJ Single dose of Johnson & Johnson COVID-19 vaccine candidate demonstrates robust protection in pre-clinical studies on non-human primates (NHPs) as demonstrated by 'neutralizing antibodies'; Ad26.COV2.S Phase 3 trial to start in Sept to evaluate both one- and two-dose regimens of Ad26.COV2.S in parallel studies
UPS Reports Q2 $2.13 v $1.06e, Rev $20.5B v $17.3Be
PG Reports Q4 $1.16 v $1.01e, Rev $17.7B v $17.0Be
*(DE) GERMANY JULY PRELIMINARY CPI M/M: -0.5% V -0.3%E; Y/Y: -0.1% V +0.1%E
Z Launches nationwide strategic existing home selling partnership with D.R. Horton
*(US) Q2 ADVANCE GDP ANNUALIZED Q/Q: -32.9% (record decline) V -34.5%E; PERSONAL CONSUMPTION: -34.6% V -34.5%E
*(US) INITIAL JOBLESS CLAIMS: 1.43M V 1.45ME; CONTINUING CLAIMS: 17.02M V 16.20ME
*(US) Q2 ADVANCE GDP PRICE INDEX: -1.8% V 0.0%E; CORE PCE Q/Q: -1.1% V -0.9%E
(US) Pres Trump questions whether the election should be delayed until it can be done 'properly, securely and safely'
ZM Sen Blumenthal (D-CT) and Sen Hawley (R-MO) call on Dept of Justice to probe Zoom and Tiktok - press
AMZN Reports Q2 $10.30 v $1.74e, Rev $88.9B v $81.6Be
GOOGL Reports Q2 $10.13 v $8.43e, Rev $31.6B (ex $6.7B of TAC) v $30.6Be
*(CN) CHINA JULY MANUFACTURING PMI (GOVT OFFICIAL): 51.1 V 50.8E (5th straight expansion)

FRI
NOKIA.FI Reports Q2 non- IFRS Net €316M v €258M y/y, Rev €5.1B v €5.24Be
*(FR) FRANCE Q2 PRELIMINARY GDP Q/Q: -13.8% V -15.2%E; Y/Y: -19.0% V -20.0%E
*(EU) EURO ZONE Q2 ADVANCE GDP Q/Q: -12.1% V -12.1%E; Y/Y: -15.0% V -14.5%E
*(EU) EURO ZONE JULY ADVANCE CPI ESTIMATE Y/Y: 0.4% V 0.2%E; CPI CORE Y/Y: 1.2% V 0.8%E
NVDA Reportedly in advanced talks to acquire Softbank chip company arm - press
CAT Reports Q2 $1.03 v $0.66e, Rev $10.0B v $9.20Be; Not providing FY20 outlook
*(US) JUN PERSONAL INCOME: -1.1% V -0.6%E; PERSONAL SPENDING: 5.6% V 5.2%E
*(US) JULY FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 72.5 V 72.9E
(US) Atlanta Fed GDPNow forecasts initial Q3 GDP growth at +11.9%
(US) NJ Gov Murphy: New Jersey transmission rate rises to 1.35; these numbers are 'setting off alarms'
KSU PE firms reportedly discussing bid for KSU, could fetch $21B with debt - press

Realities of earnings reports and dollar weakness drive divergences in markets this week

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Weekly Market Update: Realities of earnings reports and dollar weakness drive divergences in markets this week

2020-07-24T16:04:12.353

It was another busy week with earnings season shifting into a higher gear and rising US China tensions exhibited in a series of tit for tat announcements by each side. Several high profile, high-flying technology names moved lower despite delivering strong quarterly results. Weekly US Initial jobless claims climbed for the first time since March, with another staggering 1.4M people filing for the first time. A theme of a softening US dollar and firming commodity prices gained momentum as the week progressed with chartists highlighting significant breakouts in the Euro, gold and silver. European data surpassed expectations, potentially highlighting diverging prospects to that of the US economy as it deals with continued rising infection rates in the South and West. Those varying potential pathways were further illustrated by EU leaders ability to reach an agreement on the €750B recovery fund while Republicans in Washington were unable to produce a formal relief package for debate, delaying their opening proposal to next week with just days left until the prior stimulus package expires. Interest rates continued to drift lower amid the murky US economic landscape and the prospect of this ‘fiscal cliff’ at the end of the month. For the week the S&P slipped 0.3%, the DJIA dropped 0.8%, and the Nasdaq was down 1.3%.

In corporate news this week, amid tensions between China and the European Union, Beijing said it may consider export controls on Nokia and Ericsson products if the EU takes action against Chinese suppliers. The much-ballyhooed release of coronavirus vaccine data from AstraZeneca in The Lancet disappointed the street despite showing ‘robust immune responses in all participants’ in its Phase I/II trial. IBM posted an earnings beat in Q2 as cloud revenues rose though analysts pointed to underperformance in some high-margin areas. Microsoft profits came ahead of consensus but a perceived slowdown in Azure growth worried some on the Street. Intel shares plummeted despite reporting Q2 above consensus after disclosing production issues would delay its next-generation 7-nanometer product launch. The FAA released an emergency directive about Boeing 737s in storage after inspectors found compromised air check valves, a discovery which could affect over 2,000 aircraft. Chevron announced the takeover of Houston-based independent driller Noble Energy for $13B, a move that could portend a wave of consolidations amid a volatile oil market.

7/19 SUN
(CN) China Banking and Insurance Regulatory Commission (CBIRC) raised the equity investment cap for insurance cos to 45% of total assets from 30% currently; Regulator also pledged to offer more support to areas impacted by floods - financial press

7/20 MON
NBL Confirms to be acquired by Chevron for $10.38/shr in all stock transaction valued at ~$5B
ERICB.SE Reportedly China could consider export controls on Nokia, Ericsson products; China to only follow through if EU members take action against Chinese suppliers - press
AZN.UK AstraZeneca-Oxford coronavirus vaccine study of AZD1222 shows good antibody, T-cell response; not anticipated to impact the Company's FY20 financial guidance
IBM Reports Q2 $2.18 v $2.14e, Rev $18.1B v $17.7Be
BHP.AU Reports Q4 Waio Iron Ore Production: 75.6Mt v 71.0Mt y/y, Attributable Iron Ore Production: 66.7Mt v 62.6Mt y/y
*(EU) EU LEADER SUMMIT REACHES AGREEMENT ON €750B RECOVERY FUND

7/21 TUES
UBSG.CH Reports Q2 Net $1.2B v $1.3B y/y, Adj Pretax $1.6B v $1.8B y/y; Rev $7.4B v $7.53B y/y; Premature to issue FY20 guidance; may resume share repurchases in Q4
KO Reports Q2 $0.42 v $0.40e, Rev $7.26B v $7.15Be
FE Ohio Speaker of the House arrested on bribery charges; probe said to focus on bailout of FirstEnergy nuclear plants - press
EUR/USD Pair trades through March 9th high to levels not seen since Jan 2019 (approaching 1.15)
Gold probes higher to levels not seen since Dec 2012; silver posting multiyear highs
TXN Reports Q2 $1.48 v $0.88e, Rev $3.24B v $2.96Be
UAL Reports Q2 -$9.31 v -$9.13e, Rev $1.48B v $1.22Be; Will materially reduce cash burn in Q3
FE Received subpoenas in connection with Ohio House Bill 6 investigation: reviewing details of probe and intend to fully cooperate
(US) EPA to propose carbon dioxide limits on airplanes for first time - press
(US) President Trump: virus will probably get worse before it gets better; outbreak seems to be largely in the Sun Belt, but it could spread - coronavirus briefing
(US) China extends anti dumping probe into certain US chemicals for an additional 6 months, probe relates to n-Propanol; cites the 'complexity' of the case - Press

7/22 WEDS
CP Reports Q2 C$4.07 v C$3.64e, Rev C$1.79B v C$1.73Be
*(US) DOE CRUDE: +4.9M V -1ME; GASOLINE: -1.8M V -2ME; DISTILLATE: +1.1M V 0ME
MSFT Reports Q4 $1.46 v $1.38e, Rev $38.0B v $36.6Be

7/23 THURS
ROG.CH Reports H1 (CHF) Core EPS 10.44 v 10.72e y/y, Core Op 11.8B v 12.4B y/y, Rev 29.3B v 30.5B y/y
UNA.NL Reports H1 Net €3.5B v €3.2B y/y; Rev €25.7B v €26.1B y/y; Confirms plan to unify Group's legal structure under a single parent company
(UK) EU Brexit Negotiator Barnier: Remain far apart from any agreement with UK over the future relationship with the bloc; time is running out
*(US) INITIAL JOBLESS CLAIMS: 1.416M V 1.30ME (1st rise in 16 weeks, since March); CONTINUING CLAIMS: 16.20M V 17.10ME
INTC Reports Q2 $1.23 v $1.11e, Rev $19.7B v $18.5Be; 7nm product launch delayed approx 12 months
(US) Pres Trump: to cancel GOP convention in Jacksonville, FL; timing of a big GOP convention in Florida is not right; I have to protect the American people
(CN) China Foreign Ministry confirms it will ask the US to close Chengdu (China) consulate in 72 hours - US financial press [as speculated]

7/24 FRIDAY
*(UK) JUN RETAIL SALES (ex-auto/fuel) M/M: 13.5% V 7.9%E; Y/Y: +1.7% V -3.7%E
VOD.UK Reports Q1 Rev €10.5B v €10.7B y/y; Service Organic Rev -1.3% v -2.1%e; Tower unit on track for IPO early 2021 in Germany
*(FR) FRANCE JULY PRELIMINARY PMI MANUFACTURING: 52.0 V 53.0E (2nd straight expansion)
*(DE) GERMANY JULY PRELIMINARY PMI MANUFACTURING: 50.0 V 48.0E (1st non-contraction in 19 months and highest reading since Dec 2018)
*(EU) EURO ZONE JULY PRELIMINARY PMI MANUFACTURING: 51.1 V 50.1E (1st expansion in 18 months)
*(UK) JULY PRELIMINARY PMI MANUFACTURING: 53.6 V 52.0E (2nd straight expansion)
VZ Reports Q2 $1.18 v $1.16e, Rev $30.4B v $29.9Be
XOM Collaborates with UCal on discovery of new material to enhance carbon capture technology
BA FAA releases emergency directive related to 737s in storage; inspectors found compromised air check valves; could affect 2K aircraft - press
(US) JULY MARKIT PRELIMINARY PMI MANUFACTURING: 51.3 V 52.0E
(US) JUN NEW HOME SALES: 776K V 700KE

Markets vacillate between fears of COVID spread and hopes for a vaccine

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Weekly Market Update: markets vacillate between fears of COVID spread and hopes for a vaccine

2020-07-17T16:04:19.71

Equity markets started the week off on continued solid footing, helped by rising hopes for a coronavirus vaccine before year end. A push and pull between concerning headlines surrounding Covid-19 hotspots and incremental developments from vaccine trials was evident in modest intraday markets swings. Earnings season kicked off led by the banks as usual. Generally encouraging reports for several of the large US financial institutions did little to alter the share price trajectory of most. Economic data continued to show improvement from the April pandemic shutdown lows while stock markets forged higher. But the impending expiry of current US government pandemic measures has created a looming fiscal cliff that has many investors concerned that trend can hold. To that end, by Friday much of the focus pivoted to Washington as well as Brussels as leaders there tried to find common ground on what the next round coronavirus fiscal stimulus should look like. Rates stayed very subdued, illustrated by a new record low in 30-year mortgage rates. The US dollar remained on softer footing as evident against the Euro which touched it highest level since March. For the week, the S&P gained 1.2% and the DJIA added 2.3%, while profit taking in the tech megacaps took the Nasdaq down 1.1%.

As earnings season kicked off this week, Netflix reported a historic Q2 subscriber gain, but posted an earnings miss and its guidance disappointed the street. Kansas City Southern missed expectations, noting weakness in its auto and intermodal sectors. Major banks began releasing quarterly results, as well: JPMorgan beat on its top and bottom line, while Wells Fargo disappointed investors and slashed its dividend. Bank of America shares were hit after notching a nearly 50% drop in earnings year on year. Goldman’s Q2 earnings came in higher than anticipated on strong FICC results, and Morgan Stanley posted a profit beat, as well, amid strong trading results. On the M&A front, Analog Devices bought rival Maxim Integrated Products to create a $68B chipmaker. Dell shares lifted after it confirmed it is exploring a spinoff of its 81% stake in VMWare.

MON 7/13
MXIM Confirms to be acquired by Analog Devices in all stock transaction; Combined EV >$68B
(US) Jun Monthly Budget Statement: -$864.1B v -$398.9B prior
(US) California Gov Newsom: closes indoor activities in bars and restaurants

TUES 7/14
*(UK) MAY MONTHLY GDP M/M: 1.8% V 5.5%E
*(DE) GERMANY JULY ZEW CURRENT SITUATION SURVEY: -80.9 V -65.0BE; EXPECTATIONS SURVEY: 59.3 V 60.0E
JPM Reports Q2 $1.38 v $1.34e, Managed Rev $33.8B v $30.7Be
FAST Reports Q2 $0.42 v $0.35e, Rev $1.51B v $1.44Be
JPM CFO Piepszak: expects economic "damage" visibility in "coming months"; Investment banking rev declining q/q and y/y in Q3 - media call comments
*(US) JUN CPI M/M: 0.6% V 0.5%E; CPI (EX-FOOD/ENERGY) M/M: 0.2% V 0.1%E; CPI NSA: 257.797 V 257.706E
MRNA NEJM reports trial data shows mRNA-1273 COVID-19 vaccine has produced antibodies in all patients tested during initial Phase 1 study - press
(US) Pres Trump: China sanctions legislation will hold China accountable for its actions in Hong Kong; also signs executive order ending preferential treatment for Hong Kong - comments at 'Hong Kong Autonomy Act' signing ceremony
*(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%, AS EXPECTED

WEDS 7/15
*(UK) JUN CPI M/M: 0.1% V 0.0%E; Y/Y: 0.6% V 0.4%
*(US) JULY EMPIRE MANUFACTURING: 17.2 V 10.0E (first positive reading since Feb 2020)
*(US) JUN INDUSTRIAL PRODUCTION M/M: 5.4% V 4.3%E; CAPACITY UTILIZATION: 68.6% V 67.8%E
*(US) DOE CRUDE: -7.5M V -1.5ME; GASOLINE: -3.1M V -1ME; DISTILLATE: -0.5M V +1.5ME
AA Reports Q2 -$0.02 v -$0.01 y/y, Rev $2.15B v $2.71B y/y
TWTR Several high profile Twitter accounts, including those of Barack Obama, Elon Musk, and Bill Gates, have been hacked
AZN.UK UK's Telegraph: Oxford scientists may have a 'breakthrough' on COVID-19 vaccine; drug triggers response that may offer 'double defense' against the virus
VMW Dell confirms explores VMware spin-off; intends to negotiate terms consistent with an investment grade rating for both companies
*(CN) CHINA Q2 GDP Q/Q: 11.5% V 9.6%E; Y/Y: 3.2% V 2.4%E

THURS 7/16
TSM Reports Q2 (NT$) Net 120.8B v 66.8B y/y, Op 131.1B v 73.3B y/y; US Chip plant production to begin in 2024
BAC Reports Q2 $0.37 v $0.28e, Rev $22.3B v $21.8Be
*(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED; maintains forward guidance and path of bond-buying program
*(US) JUN ADVANCE RETAIL SALES M/M: 7.5% V 5.0%E; RETAIL SALES (EX-AUTO) M/M: 7.3% V 5.0%E
*(US) INITIAL JOBLESS CLAIMS: 1.30M V 1.25ME; CONTINUING CLAIMS: 17.3M V 17.5ME
*(US) JULY PHILADELPHIA FED BUSINESS OUTLOOK: 24.1 V 20.0E
JBLU JetBlue and American Airlines announce strategic 7-yr partnership to create more competitive options and choice for customers in the Northeast
(EU) ECB chief Lagarde: Outlook remains highly uncertain, reiterates stance that will do everything within its mandate - Prepared Remarks
(EU) ECB chief Lagarde: Have made full use of Pandemic bond fund flexibility - Q&A
DAI.DE Reports prelim Q2 adj EBIT -€708M v -€1.72Be, industrial FCF €685M v -€2.11Be; better than expected market recovery and a strong June performance
(US) Pres Trump tells associates he will not sign next COVID relief bill without a payroll tax cut - Politico
MSFT Reportedly cut <1K jobs this week; the cuts were said to target areas including MSN.com and Azure cloud unit - Financial Press

FRI 7/17
*(EU) EURO ZONE JUN FINAL CPI Y/Y: 0.3% V 0.3%E; CPI CORE Y/Y: 0.8% V 0.8%E
KSU Daily volumes are recovering across key strategic growth areas - earnings slides
STT Reports Q2 $1.86 v $1.63e, Rev $2.94B v $2.87Be
(US) JULY PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 73.2 V 79.0E

Stock markets show no let-up despite rising US virus cases

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Weekly Market Update: Stock markets show no let-up despite rising US virus cases

Fri, 10 Jul 04:06 PM EST/09:06 PM GMT

US stock markets continued to push higher this week, once again largely led by technology stocks and the NASDAQ. Though valuations are hard, if not impossible to justify for some of the mega-cap darlings, money continued to pour into that select group of names, driving the overall indices higher. The week opened with animal spirits percolating after a couple of significant M&A announcements. The economic data generally surpassed expectations, led by a 4-month high in the June ISM services data. A significant jump in JOLTS jobs openings offset another stubbornly high print (1.3M) in weekly initial jobless claims. Treasury yields moved to the lowest levels since the pandemic lockdown measures were eased, amid robust foreign demand seen in the weekly coupon sales. Covid-19 infections continued to jump in the US, led by the hotspots in the Sunbelt, which may have also buoyed demand for the relative safety of government securities. For the week, the S&P rose 1.8%, the Dow gained 1%, and the NASDAQ jumped another 4%.

In corporate news, some major M&A stories led off the week. Berkshire Hathaway’s Energy Company acquired Dominion Energy’s natural gas pipeline and storage assets for $9.7 billion. Uber confirmed plans to buy Postmates for $2.7B in an all-stock transaction as the ride-sharing giant moves further into the food delivery space. Alcoa released preliminary Q2 numbers, reporting a stronger than expected top and bottom line amid rising productivity and cost cuts, despite coronavirus headwinds. Walgreens shares fell after posting an earnings miss in Q2 as COVID-19 costs and a sales shift to low-margin items weighed on profits. Bed, Bath and Beyond plummeted after announcing a plan to close 200 stores over the next 2 years amid wider-than-expected losses and a sharp drop in Q1 revenue. In the social media world, reports circulated that Twitter is working on a subscription service, code named ‘Gryphon,’ but Twitter sources said any effort on that front remains in its early stages. TikTok was said to be considering changing its corporate structure in order to distance the app from China amid reports that the White House was considering banning the video sharing app.

SUN 7/5
D Berkshire Hathaway Inc.’s Energy Company to acquire Gas Transmission and Storage Business for $9.7B (includes the assumption of $5.7B of existing debt); agreement does not include acquisition of the Atlantic Coast Pipeline; Cuts FY20 Op EPS guidance to $3.37-3.63 v $4.33e, cites transaction (guided $4.25-4.60 prior); to use proceeds of transaction to buy back stock

MON 7/6
UBER Confirms to acquire Postmates for $2.65B in all-stock deal
(US) Boston Fed: Main Street Lending Facility is now fully operational; can now purchase participations in eligible loans from registered lenders
*(US) JUN FINAL MARKIT SERVICES PMI: 47.9 V 47.0E
*(US) JUN ISM NON-MANUFACTURING INDEX: 57.1 V 50.0E (four-month high)
005935.KR Reports Prelim Q2 (KRW) Op 8.10T v 6.21Te (6.6T y/y); Rev 52.0T v 50.7Te (56.1T y/y)

TUES 7/7
*(US) MAY JOLTS JOB OPENINGS: 5.397M V 4.500ME
(BR) Brazil Pres Bolsonaro: confirms personal coronavirus test has come back positive; I'm taking chloroquine and feeling perfectly well
WMT Reportedly plans to launch $98/yr competitor to Amazon Prime this month - Recode

WEDS 7/8
*(US) DOE CRUDE: +5.7M V -3ME; GASOLINE: -4.8M V -0.5ME; DISTILLATE: +3.1M V 0ME
*(US) MAY CONSUMER CREDIT: -$18.3B V -$15.0BE
COST Reports June SSS (ex gasoline) +14.4%

THURS 7/9
(CN) Reportedly China state lenders revamping contingency plans in anticipation of US legislation which may penalize banks for serving officials who implement new HK security laws - press
*SUPREME COURT BLOCKS HOUSE ACCESS TO TRUMP RECORDS, RULES LOWER COURTS MUST RECONSIDER HOUSE EFFORT TO SUBPOENA TRUMP TAX RECORDS
*(US) TREASURY $19B 30-YEAR BOND REOPENING DRAWS 1.330%; BID TO COVER 2.50 V 2.30 PRIOR AND 2.33 OF THE LAST 8 REOPENINGS
*(CN) China PBOC Macroprudential Policy Bureau Vice Head Zhou: YUAN TO BE TRADED DIRECTLY WITH MORE CURRENCIES (Currencies not disclosed immediately after PBoC comments)

FRI 7/10
(EU) EU Council President Michel on compromise proposal on recovery plan Proposes 2021-27 budget at €1.074T; maintains recovery fund proposal of €750B
Various govt bond yield hitting record lows in session on safe-haven flows
GILD Presents additional data on investigational antiviral remdesivir for the treatment of COVID-19; remdesivir was associated with an improvement in clinical recovery and a 62% reduction in the risk of mortality
*(US) JUN PPI FINAL DEMAND M/M: -0.2% V +0.4%E; Y/Y: -0.8% V -0.2%E

Second half kicks off to strong start despite coronavirus outbreaks

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Weekly Market Update: Second half kicks off to strong start despite coronavirus outbreaks

2020-07-02T16:11:20.167

US stock markets finished out the first half and commenced Q3 on a decidedly positive note this week. Encouraging data from Pfizer in an early-stage Covid-19 vaccine candidate helped to offset a drumbeat of discouraging data from the US Sunbelt and rising coronavirus infections. June ISM data topped expectations, registering its best reading in about a year, and Friday’s June employment report easily surpassed expectations across the board. The NASDAQ led by megacap FANGM names continued driving the gains for the major indices overall. Gold moved up, briefly pushing back above $1,800 before backing off post the June jobs report, and WTI crude moved back above $40. For the week, the Dow gained 3.3%, S&P rose 4%, and the NASDAQ added 4.6%.
In corporate news this week, better-than-expected earnings and guidance from Micron sparked a bid in the semis. Xilinx raised its Q1 guidance, noting stronger than expected revenues in its wired and wireless group and data center divisions which offset consumer-oriented end market weakness. Facebook saw an exodus of advertisers who are calling for the social media giant to limit hateful content shared on its platform. Tesla beat Q2 vehicle delivery projections despite coronavirus-related plant shutdowns and also overtook Toyota as the world’s most valuable automaker earlier this week. FedEx shares soared after posting solid Q4 earnings, sending UPS up in sympathy along with the transports. Google said it will raise YouTubeTV membership prices by 30% to $64.99/mo effective immediately, making cord-cutting a less financially attractive endeavor for some.
MON 6/29
*(EU) EURO ZONE JUN ECONOMIC CONFIDENCE: 75.7 V 80.0E
*(DE) GERMANY JUN PRELIMINARY CPI M/M: 0.6% V 0.3%E; Y/Y: 0.9% V 0.6%E
(US) Supreme Court rules in favor of Trump Admin, backing the President's power to fire the CFPB director
MU Reports Q3 $0.82 v $0.78e, Rev $5.44B v $5.32Be
*(CN) CHINA JUN MANUFACTURING PMI (GOVT OFFICIAL): 50.9 V 50.5E (4th straight month of expansion, 3-month high)

TUES 6/30
*(FR) FRANCE JUN PRELIMINARY CPI M/M: -0.1% V +0.3%E; Y/Y: 0.1% V 0.4%E
*(EU) EURO ZONE JUN ADVANCE CPI ESTIMATE Y/Y: 0.3% V 0.2%E; CPI CORE Y/Y: 0.8% V 0.8%E
(US) Nevada reports May casino gaming Rev $5.8M, -99.4% y/y; Las Vegas strip Rev $3.8M, -99.3% y/y
EU confirms lifting travel restrictions on 15 countries, includes China on the condition of reciprocity; travel ban for US residents remains in place (as expected)
*(US) JUN CONSUMER CONFIDENCE: 98.1 V 91.4E
(US) Dallas Fed June Texas Service Sector Outlook Survey: General Business Activity: +2.1 v -41.7 prior
(HK) China announces details of new Hong Kong security law: Crime of secession punishable by up to life in prison; Crime of subversion punishable by up to life in prison
GOOGL To raise YouTubeTV membership price to $64.99/mo, effective today (prior $50/month)
FDX Reports Q4 $2.53 v $1.42e, Rev $17.4B v $16.1Be

WEDS 7/1
(CN) China announces retaliation for US curbs on state media (in line with earlier speculation)
*(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT 0.00%; AS EXPECTED; expands QE bond buying from SEK300B to SEK500B
*(IT) ITALY JUN MANUFACTURING PMI: 47.5 V 47.8E (20th month of contraction)
*(FR) FRANCE JUN FINAL MANUFACTURING PMI: 52.3 V 52.1E (confirms 1st expansion in 5 months and highest reading since Sept 2018)
*(DE) GERMANY JUN FINAL MANUFACTURING PMI: 45.2 V 44.6E (confirms 18th straight contraction)
*(DE) GERMANY JUN UNEMPLOYMENT CHANGE: +69.0K V +120.0KE (3rd straight monthly rise); UNEMPLOYMENT CLAIMS RATE: 6.4% V 6.5%E
*(EU) EURO ZONE JUN FINAL MANUFACTURING PMI: 47.4 V 46.9E (confirms 17th straight contraction but highest reading since Feb 2020)
M Reports Q1 -$2.03 v -$2.03 prelim, Rev $3.02B v $3.02B prelim; not currently providing outlook; nearly all stores have reopened
(DE) German Chancellor Merkel: EU members remain far apart on issues of Recovery Fund and 7-year budget - Bundestag comments
*(US) JUN ADP EMPLOYMENT CHANGE: +2.37M V +2.90ME
*(US) JUN FINAL MARKIT MANUFACTURING PMI: 49.8 V 49.6E
*(US) DOE CRUDE: -7.2M V -0.5ME; GASOLINE: +1.2M V -1.5ME; DISTILLATE: -0.6M V 0ME
GM Reports Q2 deliveries 492.5K v 618.3K q/q; -34% y/y v -35%e

THRS 7/2
AZN.UK Oxford potential vaccine's scientist: the team has seen the right sort of immune response in AZD1222 trials; entered the Phase III clinical stage
*(EU) EURO ZONE MAY UNEMPLOYMENT RATE: 7.4% V 7.7%E
TSLA Reports Q2 vehicle production 82.3K v 102.7K q/q; deliveries 90.7K v 88.4K q/q
(US) JUN CHANGE IN NONFARM PAYROLLS: +4.767M V +3.058ME
(US) JUN UNEMPLOYMENT RATE: 11.1% V 12.5%E
(US) JUN AVERAGE HOURLY EARNINGS M/M: -1.2% V -0.7%E; Y/Y: 5.0% V 5.3%E; AVERAGE WEEKLY HOURS: 34.5 V 34.5E
(US) June ISM New York: 39.5 v 19.5 prior

Resurgence in virus cases and trade rhetoric dampen market mood, even as some data improves

TradeTheNews.com 

Weekly Market Update: Resurgence in virus cases and trade rhetoric dampen market mood, even as some data improves

2020-06-26T16:06:49.48

Investors were unable to look past surging Covid-19 infections in portions of the US Sunbelt this week. Early on, weakness in overall equity markets was masked by continued buying in select mega-cap technology stocks. June PMI readings provided some fodder for the bulls, especially in Europe where key markets registered readings not seen since before the pandemic induced shutdowns. Those numbers were tempered though by reports of rising tensions on the trade front between the US and Europe and China. As the week progressed US coronavirus cases mounted and investors’ willingness to offload risk rose. Some analysts also noted that Joe Biden’s lead in the polls has extended as virus cases have risen. The IMF further reduced its outlook for world growth this year, cutting the 2020 global GDP forecast to -4.9% due to extended uncertainty around the epidemic. By Friday, the S&P 500 was testing the 200-day moving average after Texas and Florida were forced to roll back some reopening measures, including closing bars and pulling back restaurant capacity. US Treasury yields moved lower and the US dollar firmed. For the week, the S&P fell 2.9%, the DJIA lost 3.3%, and the Nasdaq declined 1.9%.

In corporate news this week, Nike reported a surprise miss on earnings for just the second time in eight years as sales tumbled, but management was more upbeat on its conference call, pointing to positive e-commerce sales trends and improving digital engagement. La-Z-Boy posted an earnings beat but missed on revenues, though the furniture maker noted it has been seeing strong early demand as its galleries have begun to reopen. MasterCard acquired data aggregator Finicity for $825M in order to advance its open banking strategy. Dell reportedly hired advisers to explore options for its 81% VMware stake, which is valued at around $50B. Gap shares looked stronger on Friday morning after it announced a new fashion line partnership with Kanye West to be launched next year.


MON 6/22
(US) Trump administration confirms new employment visa restrictions; will extend halt on new green cards through end of 2020; action will affect H-1B, H4, some H-2B, J, and L visa types - press

TUES 6/23
*(FR) FRANCE JUN PRELIMINARY MANUFACTURING PMI: 52.1 V 46.0E (1st expansion in 5 months and highest reading since Sept 2018)
*(DE) GERMANY JUN PRELIMINARY MANUFACTURING PMI: 44.6 V 42.5E (18th straight contraction)
*(EU) EURO ZONE JUN PRELIMINARY MANUFACTURING PMI: 46.9 V 45.0E (17th straight contraction but highest reading since Feb 2020)
*(UK) PMI JUN PRELIMINARY MANUFACTURING: 50.1 V 45.0E (1st expansion in 4 months)
MA To acquire Finicity to advance open banking strategy for $825M
*(US) JUN PRELIMINARY MARKIT MANUFACTURING PMI: 49.6 V 50.0E
*(US) JUN RICHMOND FED MANUFACTURING: 0 V -2E
*(US) MAY NEW HOME SALES: 676K V 640KE
(MX) Reports of strong earthquake in Mexico City; preliminary magnitude 7.1 - press
VMW *DELL EXPLORING OPTIONS FOR 81% VMWARE STAKE, VALUED AT $50B - PRESS

WEDS 6/24
(IE) ECB’s Lane (Ireland, chief economist): Sees some signs of initial recovery but the process likely to be gradual
*(DE) GERMANY JUN IFO BUSINESS CLIMATE SURVEY: 86.2 V 85.0E; CURRENT ASSESSMENT: 81.3 V 84.0E
(US) USTR said to target $3.2B in new tariff targets on exports from France, Germany, Spain and the UK
IMF TO UPDATE ITS WORLD ECONOMIC OUTLOOK (WEO): CUTS 2020 GLOBAL GDP FORECAST FROM -3.0% TO -4.9%
*(US) DOE CRUDE: +1.4M V +0.5ME; GASOLINE: -1.7M V -1.5ME; DISTILLATE: +0.2M V -0.5ME
*(CA) FITCH DOWNGRADES CANADA SOVEREIGN RATING ONE NOTCH TO AA+ FROM AAA; OUTLOOK STABLE

THURS 6/25
*(DE) GERMANY JULY GFK CONSUMER CONFIDENCE: -9.6 V -12.0E
BA.UK Issues H1 Trading statement:Guides H1 Rev to be 'broadly stable' and Profit 'lower y/y; productivity levels in June have improved within our defence businesses (which account for around 90% of the Group's revenues)
*(US) INITIAL JOBLESS CLAIMS: 1.48M V 1.32ME; CONTINUING CLAIMS: 19.5M V 20.00ME
*(US) MAY PRELIMINARY DURABLE GOODS ORDERS: 15.8% V 10.5%E; DURABLES (EX-TRANSPORTATION): 4.0% V 2.1%E
*(US) Q1 FINAL GDP ANNUALIZED Q/Q: -5.0% V -5.0%E; PERSONAL CONSUMPTION: -6.8% V -6.8%E
*(US) Q1 FINAL GDP PRICE INDEX: 1.4% V 1.4%E; CORE PCE Q/Q: 1.7% V 1.6%E
(US) Texas Gov Abbott issues order to suspend elective surgeries at hospitals in Bexar, Dallas, Harris, and Travis counties as COVID-19 infections rise
NKE Reports Q4 -$0.51 v +$0.02e, Rev $6.31B v $7.26Be
*FED BANK STRESS TEST RESULTS: FED TO LIMIT BIG BANK DIVIDEND PAYOUTS AND BUYBACKS TO PRESERVE CAPITAL DURING DOWNTURN; BANKS WILL HAVE TO RESUBMIT CAPITAL PLANS LATER THIS YEAR

FRI 6/26
*(US) MAY PERSONAL INCOME: -4.2% V -6.0%E; PERSONAL SPENDING: 8.2% V 9.2%E
*(US) JUN FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 78.1 V 79.2E
(CN) Chinese diplomatic and trade officials have warned the US that meddling in Chinese domestic affairs could jeopardize purchases of US exports under Phase I trade deal – press
(US) New York Fed Nowcast: raises Q2 forecast to -16.3% from -19.0%; raises Q3 forecast to 1.5% from -1.9%

Animal spirits unleashed by optimism, cemented by surprisingly strong US jobs report

TradeTheNews.com  

Weekly Market Update: Animal spirits unleashed by optimism, cemented by surprisingly strong US jobs report

2020-06-05T16:04:26.803

Markets began the week under the specter mass protests and sporadic urban looting following the murder George Floyd while in Minneapolis police custody. But neither the outbreak of civil unrest, nor the continued festering of US/China tensions could derail stock markets. Chinese officials appeared intentionally measured in their response to Friday’s press conference from President Trump, while the White House’s rhetoric largely covered the same ground as the week progressed. Positive commentary from a host US corporations along with both Germany and ECB’s willingness to press further on the stimulus pedal emboldened investors to search our risk assets. Those investors were rewarded on Friday when May non-farm payrolls expanded by more than 2.5M jobs, shocking nearly everyone. The surprise positive print reinforced the growing investor momentum around reopening the economy and a potential V-shaped recovery. Interest rates surged as money was allocated away from Treasury markets, pushing the spread between US 2- and 10-year notes to its widest level since early 2018. For the week, the S&P rose 4.9%, the DJIA surged 6.8%, and the Nasdaq climbed 3.4% to new all-time highs, surpassing the high water mark for the tech-heavy index set in February.

In corporate news this week, US airlines soared following constructive comments from American Airlines, with the company pointing to a ‘steady demand increase’ in May. Starbucks said it sees lower sales at US stores until at least autumn and plans to cut worker hours. eBay’s stock jumped after the online marketplace raised its Q2 outlook as it has seen orders surge amid the pandemic. Zoom reported blowout numbers and doubled its revenue outlook for the fiscal year as virtual meetings more broadly become the norm. Western Union reportedly made an offer for MoneyGram to unite two of the largest remittance firms in the world. FedEx said it would add new fees beginning June 8th for frequent shippers as well as oversized packages amid a recent flood of online shipments. The US Justice Department indicted current and former execs at Pilgrim's Pride and Claxton, including Pilgrim's CEO, in the first charges stemming from a DOJ probe into broiler chicken pricing.


SUN 5/31
05/31 (US) Unrest continues all over the US (incl fires, looting, riots, and peaceful protests) over the police killing of George Floyd, many cities are under curfew; President Trump has put military on alert for possible deployment to back up local police forces - press

MON 6/1
V Reports May total U.S. payments volume -5% y/y, global processed transactions -12% y/y
(US) Atlanta Fed cuts Q2 GDP growth to -52.8% from -51.2%
*(US) MAY FINAL MARKIT PMI MANUFACTURING 39.8 V 40.0E
(CN) China said to have halted some US agricultural imports due to rising tensions between the countries - financial press

TUES 6/2
(US) May ISM New York: 19.5 v 4.3 prior
(HK) US State Dept posts new travel advisory for travel to Hong Kong due to China Security Law; Increases advisory level to 2; comments on HK national security legislation

WED 6/3
*(DE) GERMANY MAY NET UNEMPLOYMENT CHANGE: +238K V +190.0KE; UNEMPLOYMENT RATE: 6.3% V 6.2%
*(EU) EURO ZONE APR UNEMPLOYMENT RATE: 7.3% V 8.2%E
(RU) Saudi, Russia said to be reluctant to extend production cuts without more compliance; planned meeting could be in doubt due to cheating - financial press
*(US) MAY ADP UNEMPLOYMENT CHANGE: -2.76M V -9.00ME
*(US) DOE CRUDE: -2.1M V +3ME; GASOLINE: +2.8M V -0.5ME; DISTILLATE: +9.9M V +3ME
PPC Justice Dept indicts current and former execs at Pilgrim's Pride and Claxton over price fixing, including Pilgrim's CEO - press
(US) Pres Trump chooses five virus vaccine candidates as 'finalists'; to announce decision in next few weeks; five companies mentioned are Moderna, AstraZeneca, J&J, Merck, and Pfizer; no mention in article of Inovio, Dynavax, or Novavax - NY Times
(DE) German Chancellor Merkel coalition reaches deal on Germany stimulus package - press

THURS 6/4
*(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
*(EU) ECB INCREASES SIZE OF ITS PANDEMIC BOND BUYING FUND (PEPP) FROM €750B TO €1.35T
*(US) Q1 FINAL NONFARM PRODUCTIVITY: -0.9% V -2.7%E; UNIT LABOR COSTS: 5.1% V 5.0%E
*(US) INITIAL JOBLESS CLAIMS: 1.88M V 1.84ME; CONTINUING CLAIMS: 21.5M V 20.00ME
(EU) ECB chief Lagarde: Economy showing signs that economy is bottoming out; improvement to be tepid - prepared remarks
(US) Atlanta Fed cuts Q2 GDP growth to -53.8% from -52.8%
AVGO Reports Q2 $5.14 v $5.13e, Rev $5.74B v $5.70Be
NVAX Receives US Department of Defense contract for coronavirus vaccine; DOD to provide $60M for funding for research, production of vaccine, first deliveries in 2020

FRI 6/5
*(US) MAY UNEMPLOYMENT RATE: 13.3% V 19.1%E
*(US) APR CHANGE IN NONFARM PAYROLLS: +2.51M V -7.50ME
*(US) MAY AVERAGE HOURLY EARNINGS M/M: -1.0% V 1.0%E; Y/Y: 6.7% V 8.5%E
(US) New York Fed Nowcast: raises Q2 forecast to -25.5% from -35.5%; raises Q3 forecast to -12.0% from 36.5%
(US) APR CONSUMER CREDIT: -$68.8B V -$20.0BE