US/China Trade Sentiment Fluctuates Ahead of Strong Nov Employment Report

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Weekly Market Update: US/China Trade Sentiment Fluctuates Ahead of Strong Nov Employment Report

Fri, 06 Dec 04:03 PM EST/09:03 PM GMT

Stock markets opened the week under pressure as positive sentiment surrounding US-China trade talks ebbed. The President was in the UK meeting with NATO leaders, where he acknowledged a trade deal with China might not be possible until after the 2020 election. As foreshadowed by a surprise South American tariff announcement Monday, he struck a more contentious tone while meeting with NATO officials, which included new tariffs on French products in retaliation for the expected digital tax. By midweek, though, the pendulum began to swing back into more favorable territory surrounding the trade talks following a host of China sourced reports and more constructive commentary from administration officials. Hong Kong remained a potential flash point, but both sides appeared to remain in regular contact, reportedly plugging away towards a hopeful 'Phase 1' agreement before Trump’s Dec 15th tariff decision.

Friday’s November employment numbers handily surpassed expectations on nearly all accounts, though it was potentially helped by the late Thanksgiving calendar and the GM operations resumption. Nevertheless, risk assets continued to run up, affording US stock markets to move back into positive territory for the week. Oil prices held near multi-month highs as producers were able to cobble together an agreement to remove an additional 500K bpd when they met in Vienna. Rates finished the week near a one-month high and the US Treasury curve steepened in the wake of the Nov jobs report. For the week, the S&P and Dow added ~0.1% and the NASDAQ lost 0.1%.

In corporate news this week, Salesforce shares saw choppy trading after beating on the bottom line and raising its FY20 outlook, but Q4 guidance came in a little below consensus. Slack quarterly results topped expectations as competition with Microsoft’s Teams product intensifies. Ulta Beauty shares surged after posting an EPS beat despite continuing challenges in the cosmetics sector. Expedia CEO Mark Okerstrom and CFO Alan Pickerill announced their resignations amidst a strategy dispute between the board and senior management. Cleveland-Cliffs agreed to acquire AK Steel for ~$3.36/shr in an all-stock transaction as falling prices have roiled the steel sector. Google co-founders Page and Brin stepped down from their top management roles at the tech giant, as Sundar Pichai takes the reins at both Google and parent company Alphabet. United Airlines CEO Oscar Munoz said he would resign and that President Scott Kirby would take the airline’s leadership position.

SUNDAY 12/1
*(CN) CHINA NOV MANUFACTURING PMI (govt official): 50.2 V 49.5E (1st expansion in 7 months)
*(CN) CHINA NOV CAIXIN PMI MANUFACTURING: 51.8 V 51.5E (4th consecutive month of expansion, fastest rate of expansion in almost 3-years)

MONDAY 12/2
OPEC+ said to be discussing deepening current oil production cuts by at least 400K bpd at least until June - financial press
*(US) NOV ISM MANUFACTURING: 48.1 V 49.2E; PRICES PAID: 46.7 V 47.0E
(US) Atlanta Fed cuts Q4 GDP growth from 1.7% to 1.3%
(US) US offiicals reportedly considering loosening some intellectual property (IP) rules for drugmakers under the USMCA in order to win Democratic support - press
(FR) US issues decision in response to France digital tax: USTR will take action against digital tax regimes that discriminate against US companies; proposes $2.4B tariffs on French goods including sparkling wines, handbags, makeup, household goods, and cheeses
JGB (JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.1% 10-year JGBs: avg yield: -0.042% v -0.099% prior, bid to cover 3.28x v 3.62x prior (lowest btc since Aug 2016)

TUESDAY 12/3
(US) Sen Kamala Harris reportedly to drop out of Democratic primary contest - The Atlantic
(US) House Democrats in impeachment inquiry report claim Pres Trump used powers of his office to solicit foreign interference in 2020 US election
Reportedly OPEC+committee did NOT discuss deeper output cuts ahead of meetings this week - press
CRM Reports Q3 $0.75 v $0.66e, Rev $4.5B v $4.44Be
GOOGL CEO Larry Page and President Sergey Brin to step down from Alphabet; Google CEO Sundar Pichai will be the CEO of both Google and Alphabet going forward

WEDNESDAY 12/4
*(US) NOV ADP EMPLOYMENT CHANGE: +67K V +135KE (lowest rise since May 2019)
EXPE Announces 20M share buyback (14% of shares outstanding); CEO Mark Okerstrom and CFO Alan Pickerill to resign, effective immediately
*(US) NOV ISM NON-MANUFACTURING INDEX: 53.9 V 54.5E
(US) Association of American Railroads weekly rail traffic report for week ending Nov 30th: 436.9K, -23% y/y
(JP) Japan Investors Net Buying of Foreign Bonds: -¥511.1B v -¥150.8B prior week; Foreign Net Buying of Japan Stocks: +¥394B v ¥131.1B prior week

THURSDAY 12/5
*(EU) EURO ZONE Q3 FINAL GDP Q/Q: 0.2% V 0.2%E; Y/Y: 1.2% V 1.2%E
*(US) House Speaker Pelosi: confirms the House will draft Articles of Impeachment against President Trump
*(US) OCT FINAL DURABLE GOODS ORDERS: 0.5% V 0.6%E; DURABLES EX-TRANSPORTATION: 0.5% V 0.6%E
(US) Atlanta Fed raises Q4 GDP growth from 1.3% to 1.5%

FRIDAY 12/6
OPEC+ said to have agreed to a deepening of production cuts by 500K bpd (in-line with speculation)
*(US) NOV AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 3.1% V 3.0%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E

Stocks Rally into Thanksgiving Break Before Fading on Black Friday

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Weekly Market Update: Stocks Rally into Thanksgiving Break Before Fading on Black Friday

Fri, 29 Nov 01:04 PM EST/06:04 PM GMT

The Santa Claus rally continued this week, with US indices notching new record highs heading into the Thanksgiving break. Sentiment around US/China trade talks continued to be largely optimistic and even the President’s signing of the Hong Kong bill into law did little to sway that, at least initially. A burst of M&A announcements underscored animal spirits while supporting overall equity positioning this week, as well. Friday’s session saw a modest pullback led by weak trade in energy futures. Oil prices dropped 3.5% and natural gas slumped more than 6% ahead of next week’s OPEC+ meeting. Fed Chairman Powell echoed what we continue to hear from a wide array of Fed officials, namely that rates will remain on hold unless there is a significant change to the outlook. The latest reading of the Fed’s Beige Book offered little to suggest the US economy’s trajectory has changed materially. Treasury yields held in a tight range for much of the week before backing up modestly on Friday alongside the selling in equity markets. For the week the S&P rose 1%, the Dow gained 0.7% and the NASAQ added 1.7%.

In corporate news for this holiday-shortened week, Charles Schwab struck a $26B all-stock deal to acquire discount broker TD Ameritrade amid shrinking trade commissions throughout the industry. Novartis announced it would acquire The Medicines Company for $85/shr in cash, ahead of MDCO’s NDA filings for promising cholesterol treatment inclisiran. Tiffany confirmed it will be bought by LVMH for $135/shr in a cash deal valued at $16.2B, one of the largest acquisitions in luxury retail sector history. eBay sold its StubHub ticket seller unit to London-based exchange viagogo for $4.05B in cash, reuniting current viagogo CEO Eric Baker with the US company he co-founded in 2000. Apollo outbid Warren Buffett by reaching a deal to acquire Tech Data for $6.0B. As some earnings continued to trickle in, HPE reported a beat on its bottom line though its top line missed expectations, Dell cut its Rev forecast, citing a PC chip shortage, and VMWare topped consensus on both profit and sales.

MONDAY 11/25
*(DE) GERMANY NOV IFO BUSINESS CLIMATE: 95.0 V 95.0E; CURRENT ASSESSMENT: 97.9 V 97.9E
EBAY Confirms sale of StubHub to viagogo for $4.05B in cash
*(US) NOV DALLAS FED MANUFACTURING ACTIVITY INDEX: -1.3 V -3.8E
(US) Fed Chair Powell: Policy appropriately provided; supporting decisive return to 2% inflation and Fed goals; Reiterates stance that if outlook changes materially, policy will change as well

TUESDAY 11/26
(CN) China Ministry of Finance (MOF) to sell $6B USD-denominated 3-year, 5-year, 10-year and 20-year bonds (as speculated)
BBY Reports Q3 $1.13 v $1.04e, Rev $9.76B v $9.73Be
VOW3.DE Audi unit said to cut up to 9500 jobs by 2025 as part of labor deal - financial press
(US) Nevada reports Oct casino gaming Rev $1.02B, -3.9% y/y; Las Vegas strip Rev $538.5M, -9.3% y/y
CNI Teamsters union: normal operations at CN will resume Weds at 06:00 local time across Canada - press
*(US) NOV RICHMOND FED MANUFACTURING INDEX: -1 V 5E
*(US) NOV CONSUMER CONFIDENCE: 125.5 V 127.0E
*(US) OCT NEW HOME SALES: 733K V 705KE
(US) Democratic primary Quinnipiac poll: Biden 24% (+3), Buttigieg 16% (+6), Warren 14% (-14), Sanders 13% (-2)

WEDNESDAY 11/27
(EU) ECB President Lagarde: ECB must nurture, sustain trust in euro
DTE.DE Reportedly explores merger with Orange - German press
*(US) OCT PRELIMINARY DURABLE GOODS ORDERS: +0.6% V -0.9%E; DURABLES (EX-TRANSPORTATION): 0.6% V 0.1%E
(US) Atlanta Fed raises Q4 GDP growth to 1.7% from 0.4%
(US) Association of American Railroads weekly rail traffic report for week ending Nov 23rd: 521.9K, +10.6% y/y (first rise in 40 weeks)
(UK) YouGov MRP Poll reportedly shows significant Tory majority - UK's Guardian
*(US) FEDERAL RESERVE BEIGE BOOK: ECONOMY EXPANDED MODESTLY FROM OCT TO MID-NOVEMBER (PRIOR: "SLIGHT TO MODEST")
(JP) Japan Investors Net Buying of Foreign Bonds: -¥155.2B v +¥123.4B prior week; Foreign Net Buying of Japan Stocks: ¥131.7B v ¥111.0B prior week

THURSDAY 11/28
*(EU) EURO ZONE NOV BUSINESS CLIMATE INDICATOR: -0.23 V -0.14E
*(DE) GERMANY NOV PRELIMINARY CPI M/M: -0.8% V -0.6%E; Y/Y: 1.1% V 1.2%E
*(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.25%; AS EXPECTED

FRIDAY 11/29
*(DE) GERMANY NOV UNEMPLOYMENT CHANGE: -16.0K V +6.0KE; UNEMPLOYMENT CLAIMS RATE: 5.0% V 5.0%E

Stocks retreat from highs, still awaiting word on pending trade deals

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Weekly Market Update: Stocks retreat from highs, still awaiting word on pending trade deals

Fri, 22 Nov 04:06 PM EST/09:06 PM GMT

The week’s trading opened amid news of a surprise meeting between President Trump, Treasury Secretary Mnuchin and Fed Chairman Powell at the White House on Monday. Details were minimal but many speculated China was high on the list of issues discussed especially in light the recent reports that continued disagreements surrounding agricultural purchases and IP remain the key impediments to finalizing ‘Phase 1’ of the trade deal. Developments outside the scope of the trade deal added to the complexity after the US Congress overwhelmingly passed the Hong Kong Human Rights and Democracy Act. Both sides tried to downplay concerns, suggesting deal talks continued, and that Hong Kong won’t derail them. Nevertheless, intrigue grew over whether or not President Trump will sign the bill while reports out of China warned Hong Kong could very well become another obstacle to any Phase 1 trade deal. Dramatic testimony in the House impeachment inquiry overshadowed reports of progress being made Trump’s other pending trade deal, the USMCA.

The October FOMC minutes echoed what we have heard from a litany of Fed officials since that meeting; rates are on hold unless there is a material change in the outlook. US manufacturing data rebounded and topped expectations but continued to fare significantly better than overseas readings. Treasury yields drifted lower through the week, extending a recent trend, which included a flattening along the US curve. WTI crude prices rose and for much of the week held above the 50-day moving average at levels not seen since September. According to multiple reports OPEC+ produces are unlikely to deepen output cuts when they meet in early December, but the coordinated production levels are expected to be extended for another 6-months. US indices topped out at new high water marks on Tuesday before backing off on US/China-related hand wringing. The S&P fell for the first time in six week, slipping 0.3%, while the DJIA lost 0.5% and the Nasdaq dropped 0.3%.

In corporate news this week, a slew of retail companies reported to cap off the third quarter earnings season. Home Depot shares dropped despite an earnings beat as the company’s sales grew short of analyst estimates and the company cut its outlook citing the potential impact on consumers from recently announced tariffs. Lowe's posted a beat and raised its yearly forecast, as well as announced plans to restructure its Canadian operations. Kohl’s slashed its EPS guidance and predicted the current highly promotional environment will continue through the end of the year. Target shares surged after crushing earnings expectations and raising its outlook amid broad-based strength across multiple metrics. Macy’s cut its forecast, pointing to a warmer fall and weaker spending by international tourist customers. Gap outperformed already diminished expectations, despite cutting its FY19 same store sales outlook, while reaffirming its plans to spin off Old Navy. On the M&A front, Novartis is said to be among various suitors that are in talks to acquire The Medicines Co. LVMH reportedly raised its takeover offer to get Tiffany to open its books. HPQ’s board unanimously rejected the previously announced unsolicited bid from Xerox. PayPal announced it would buy rewards platform Honey Science for $4B, its largest ever acquisition.


MON 11/18
(US) Fed Chair Powell: Did not discuss expectations for monetary policy when meeting with President Trump and Treasury Sec Mnuchin at White House today - press
FCC Chair Pai: Calls for public auction of C-band airwaves - Tweet

TUES 11/19
MDCO Novartis said to among various suitors which are in talks on purchase of company - press
HD Reports Q3 $2.53 v $2.52e, Rev $27.2B v $27.5Be
KSS Reports Q3 $0.74 adj v $0.85e, Rev $4.63B v $4.67Be
*(US) OCT HOUSING STARTS: 1.314M V 1.320ME; BUILDING PERMITS: 1.461M V 1.385ME
(CA) Bank of Canada (BOC) Wilkins: while the policy rate may be low at 1.75%, there's still room to maneuver; economy and financial system are in a good position to weather potential global economic storm

WEDS 11/20
LOW Reports Q3 $1.41 v $1.35e, Rev $17.4B v $17.7Be
TGT Reports Q3 $1.36 v $1.18e, Rev $18.7B v $18.5Be
(US) House impeachment inquiry testimony: US Ambassador to EU Sondland says explicitly there was a "quid quo pro"
(CN) Phase 1 of US-China trade deal reportedly may not be completed this year; talks may be getting more complicated - press
*(US) FOMC OCT MINUTES FROM OCT 30TH MEETING: MOST SAW RATES AS APPROPRIATE UNLESS THERE IS A MATERIAL CHANGE; MOST SAW RATES AS WELL CALIBRATED
(JP) Japan Investors Net Buying of Foreign Bonds: ¥119.4B v ¥530.0B prior week; Foreign Net Buying of Japan Stocks: ¥110.3B v ¥569.8B prior week

THURS 11/21
TKA.DE Reports FY18/19 Net -€304M v -€62M y/y, adj EBIT €802M v €805Me, Rev €42.0B v €41.6Be; proposes suspending FY19 dividend
M Reports Q3 $0.07 v $0.01e, Rev $5.17B v $5.31Be
*(EU) ECB ACCOUNT OF OCTOBER POLICY MEETING (OCT MINUTES): Officials expressed concern over SPF inflation revision; strong call was made for unity of Governing Council
*(US) NOV PHILADELPHIA FED BUSINESS OUTLOOK: 10.4 V 6.0E
GPS Reports Q3 $0.53 v $0.51e, Rev $4.00B v $3.95Be

FRI 11/22
*(DE) GERMANY Q3 FINAL GDP Q/Q: 0.1% V 0.1%E; Y/Y: 0.5% V 0.5%E
*(FR) FRANCE NOV PRELIMINARY MANUFACTURING PMI: 51.6 V 50.9E (4th consecutive month of expansion)
(EU) ECB President Lagarde: Face a global environment that is marked by uncertainty; Europe needs a new policy mix - inaugural comments from Frankfurt
*(US) NOV PRELIMINARY MARKIT MANUFACTURING PMI: 52.2 V 51.4E (7-month high)
(US) NOV FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 96.8 V 95.7E

Mixed signals, but no roadblocks, allow equity markets to mark fresh record highs

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Weekly Market Update: Mixed signals, but no roadblocks, allow equity markets to mark fresh record highs

Fri, 15 Nov 04:16 PM EST/09:16 PM GMT

US stock indices continued to make new highs this week despite a modest pull back in Treasury yields. For a majority of the trading sessions, cautious optimism surrounding US/China trade negotiations underpinned a bid in equities. US administration officials, in particular, on multiple occasions expressed their belief we were still well on our way to a ‘Phase 1’ agreement. The assurances came in the wake of President’s Trumps Tuesday speech where he re-emphasized that new tariffs are still on the table if no deal can be reached, as well as various sourced press reports indicating talks had hit a snag over agriculture purchases and intellectual property protections. House speaker Pelosi suggested that a USMCA deal breakthrough may be imminent despite the palpably partisan environment in Washington as the House’s public impeachment hearings got underway.

Global economic data provided some mixed signals. US October headline CPI ran a bit hotter than expected but Friday’s retails sales and industrial production data disappointed. Germany avoided a technical recession with a slightly positive GDP print. That and a strong improvement in the November Euro Zone ZEW expectations index provided some green shoots. In Asia, Chinese industrial production and retails sales came in significantly short once again. Overall the incoming data did little to change the narrative around Fed policy. In his Capitol Hill testimony Chairman Powell repeated the Fed litany that in all likelihood monetary policy is now on hold unless there is a material change in the outlook. Interest rates retreated modestly on a global basis, but risk assets in general continued to perform well. Crude finished near the highs of the week and the VIX dropped back towards 12 through options expiration on Friday. US equity markets hit fresh all-time highs: the S&P moved up 0.9%, rising above 3,100, while the DJIA topped 28,000 with a 1.2% gain, and the Nasdaq rose 0.8%.

In corporate news this week, Google announced plans to partner with banks to begin offering a smart checking account to consumers next year. Disney launched its Netflix streaming video competitor Disney+ and surprised investors by announcing 10M signups within its first 24 hours. In the semis space, Applied Materials reported a beat on its top and bottom lines and guided above consensus, while Nvidia edged lower after forecasting a return to revenue growth in Q4 that the street viewed as conservative. Walgreens reportedly received a formal approach from KKR on a potential buyout. Canada’s OpenText acquired data security firm Carbonite for over $1.4 billion. American Outdoor Brands announced plans to separate into two independent publicly traded companies, splitting off its gun business Smith & Wesson amid ‘changes in the political climate.’


MON 11/11
WBA Reportedly KKR has made a formal approach to Walgreens about a possible buyout - press
TUES 11/12
VOD.UK Reports H1 adj €0.01 v €0.04 y/y, adj EBITDA €7.11B v €6.92B y/y, Rev €21.9B v €21.9B y/y
*(UK) OCT JOBLESS CLAIMS CHANGE: +33.0K V +13.5K PRIOR; CLAIMANT COUNT RATE: 3.4% V 3.3% PRIOR
*(DE) GERMANY NOV ZEW CURRENT SITUATION SURVEY: -24.7 V -22.3E; EXPECTATIONS SURVEY: -2.1 V -13.0E
(US) US is reportedly considering blocking the passage of the WTO's budget - press
WEDS 11/13
700.HK Reports Q3 (CNY) Net 20.4B v 23.5Be, Rev 97.2B v 99.0Be
GOOGL Reportedly to partner with banks to offer checking accounts to consumers - US financial press
*(US) OCT CPI M/M: 0.4% V 0.3%E; CPI EX FOOD AND ENERGY M/M: 0.2% V 0.2%E; CPI NSA: 257.346 V 257.200E
(US) Fed Chair Powell: rates remain on hold barring material change in outlook - Congressional testimony text release
(US) House Intelligence and Judiciary Committees begins pubic hearings on Impeachment Inquiry
(US) Fed Chair Powell: US economy can operate at lower rate of unemployment than thought - Testimony before joint economic committee
DIS Reports 10M signups for Disney+ since launch - press
(CN) US-China trade talks said to hit snag over specific US agriculture purchases; China also resisting commitments on tech transfers and enforcement mechanisms - press
(JP) Japan Investors Net Buying of Foreign Bonds: ¥528.8B v ¥668.1B prior week; Foreign Net Buying of Japan Stocks: ¥569.5B v ¥420.9B prior week
* (AU) AUSTRALIA OCT EMPLOYMENT CHANGE: -19.0K V +15.0KE (1st decline in 14 months and largest in 3 years); UNEMPLOYMENT RATE: 5.3% V 5.2%E
*(CN) CHINA OCT INDUSTRIAL PRODUCTION Y/Y: 4.7% V 5.4%E
*(CN) CHINA OCT RETAIL SALES Y/Y: 7.2% V 7.8%E
THURS 11/14
*(DE) GERMANY Q3 PRELIMINARY GDP Q/Q: +0.1% V -0.1%E; Y/Y: 0.5% V 0.5%E (avoids technical recession)
*(UK) OCT RETAIL SALES (EX-AUTO/FUEL) M/M: -0.3% V +0.2%E; Y/Y: 2.7% V 3.4%E
*(EU) EURO ZONE Q3 PRELIMINARY GDP Q/Q: 0.2% V 0.2%E; Y/Y: 1.2% V 1.1%E
WMT Reports Q3 $1.16 v $1.09e, Rev $128.0B v $129.0Be
*(US) OCT PPI FINAL DEMAND M/M: 0.4% V 0.3%E; Y/Y: 1.1% V 0.9%E
(US) Fed Chair Powell: labor force participation is a pressing US issue - House Budget Committee
(US) House Speaker Pelosi (D-CA): USMCA deal breakthrough may be imminent
(CN) US and China struggling to complete Phase 1 trade deal; Trump administration officials said to be frustrated that China hasn't offered enough to justify a reduction in US tariffs on Chinese goods - FT
AMAT Reports Q4 $0.80 v $0.76e, Rev $3.75B v $3.68Be
NVDA Reports Q3 $1.78 v $1.57e, Rev $3.01B v $2.90Be
FRI 11/15
*(US) OCT ADVANCE RETAIL SALES M/M: 0.3% V 0.2%E; RETAIL SALES (EX-AUTO) M/M: 0.2% V 0.4%E
*(US) OCT INDUSTRIAL PRODUCTION M/M: -0.8% V -0.4%E; CAPACITY UTILIZATION: 76.7% V 77.0%E

Santa Claus rally starts early amid talk of rolling back China tariffs

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Weekly Market Update: Santa Claus rally starts early amid talk of rolling back China tariffs

Fri, 08 Nov 04:02 PM EST/09:02 PM GMT

The breakout in US stock indices resumed this week as investors’ willingness to add to risk positions increased. Technicians and Dow theorists were heartened by widening participation into new high territory which now includes a confirmatory new high in the Transports for Dow theorists. Sentiment continued to be underpinned by reports that the US and China were discussing rolling back tariffs on the way to signing the first phase of a trade deal. Risk-on trade flows powered Treasury bond yields to jump to levels not seen since the summer. Heavy sovereign supply in both Europe and the US exacerbated the aggressive move up in rates. Rising rates and steepening yield curves helped financials assume a leadership role.

By Friday, the strength in equity markets petered out after President Trump and others within his administration emphasized that, despite what had been reported in the press, nothing had been agreed upon with regards tariff roll backs. Crude and copper prices drifted lower along with the Yuan as some of the risk-on flows perpetuated by trade hopes earlier in the week reversed, and gold ended off of lows after breaking back below $1,500. The Dollar index crept higher, approaching potential resistance at the 50-day moving average. For the week, the S&P gained 0.8%, the DJIA added 1.2%, and the Nasdaq rose 1.1%.

In corporate news this week, McDonald's CEO Steve Easterbook was forced to step down after the board determined he violated company policy in regards to a recent consensual relationship with an employee. Under Armour confirmed it was the subject of a federal accounting probe related to revenue recognition. Xerox offered to acquire HP Inc (HPQ) for $22/share, and HP confirmed that talks have been occurring intermittently. Bidu posted top and bottom line beats, citing strength in its video streaming division. Roku shares plunged after the company cut its EBITDA outlook despite notching better than expected earnings for the quarter. Dish Network rallied after reporting a Q3 that saw its pay TV net subs surprisingly increase. Disney shares also rallied on Friday after reporting strong earnings results ahead of next week’s official launch of the Disney+ streaming platform.


SUN 11/3
MCD Appoints President, McDonald's USA Chris Kempczinski new CEO; effective immediately; succeeds Steve Easterbrook, who has separated from the Company following violation of company policy and demonstrated poor judgment involving a recent consensual relationship with an employee
UA Confirms under investigation: Cooperating with US SEC and DoJ investigations, believe accounting practices and disclosures were appropriate - CNBC

MON 11/4
*(ES) SPAIN OCT MANUFACTURING PMI: 46.8 V 47.5E (5th straight contraction and lowest reading since Apr 2013)
*(US) SEPT FINAL DURABLE GOODS ORDERS: -1.2% V -1.1%E; DURABLES (EX-TRANSPORTATION): -0.4% V -0.3%E
(CN) US said to be considering removing some tariffs from China goods in order to secure partial trade deal - FT
SHAK Reports Q3 $0.31 v $0.20e, Rev $158M v $157Me

TUES 11/5
ARNC Reports Q3 $0.58 v $0.53e, Rev $3.56B v $3.60Be
*(US) OCT ISM NON-MANUFACTURING INDEX: 54.7 V 53.5E
*(US) SEPT JOLTS JOB OPENINGS: 7.024M V 7.063ME
WBA Reportedly considering deal with buyout firms to go private - press
(EU) Pres Trump reportedly to miss auto import tariff deadline next week in order to maintain leverage in broader US-EU trade talks, according to former officials - press
(CN) China PBOC sets Yuan Reference Rate: 7.0080 v 7.0385 prior (strongest fix since early Aug)
JGB (JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.1% 10-year JGBs: avg yield: -0.099% v -0.158% prior, bid to cover 3.62x v 3.42x prior
HPQ Xerox considers cash and stock takeover offer - US Financial Press

WEDS 11/6
*(US) Q3 NONFARM PRODUCTIVITY: -0.3% V +0.9%E; UNIT LABOR COSTS: 3.6% V 2.3%E
(US) Senior Trump administration official: Trump-Xi meeting could be delayed until Dec as talks continue over terms and venue; still possible that a US-China trade agreement will not be reached, but deal is more likely than not - press
BIDU Reports Q3 $1.76 v $1.25e, Rev $3.93B v $3.97Be (2 est)
(CN) China PBOC sets Yuan Reference Rate: 7.0008 v 7.0080 prior (strongest since Aug 7)
992.HK Reports Q2 Net $202.2M v $201Me, Op $441.7M v $784M y/y Rev $13.5B v $13.4B y/y
7203.JP Reports H1 Net ¥1.3T v ¥1.2T y/y; Op ¥1.4T v ¥1.3T y/y; Rev ¥15.3T v ¥14.7T y/y, announces stock buyback of ¥200B (~1.2% of market cap)

THURS 11/7
DTE.DE Reports Q3 adj Net €1.4B v €1.3B y/y, adj EBITDA (adj for leases) €6.48B v €6.44Be, Rev €20.2B v €19.1B y/y
SIE.DE Reports Q4 Net €1.32B v €1.01Be, Industrial Business EBITA €2.64B v €2.21B y/y, Rev €24.5B v €22.6B y/y
MT.NL Reports Q3 Net -$0.5B v -$0.5B y/y, EBITDA $1.06B v $943.2Me, Rev $16.6B v $16.8Be
(CN) China Commerce Ministry (MOFCOM): If China and US reach Phase 1 deal, both sides must cancel existing tariffs at the same time, with the same proportion based on agreement - weekly press conference
*(UK) BOE NOV MINUTES: VOTED 7-2 TO KEEP INTEREST RATES UNCHANGED AT 0.75%; First dovish dissent since July 2016
(CN) US govt spokesperson: US has agreed that first China trade deal would include tariff rollbacks - press
*(US) TREASURY $19B 30-YEAR BOND REOPENING DRAWS 2.430%; BID TO COVER 2.23 V 2.25 PRIOR
*(US) SEPT CONSUMER CREDIT: $9.5B V $15.0BE
(JP) Japan Investors Net Buying of Foreign Bonds: ¥668.1B v -¥1.02T prior week; Foreign Net Buying of Japan Stocks: ¥420.9B v +¥649.5B prior week
DISH Reports Q3 $0.66 v $0.59e, Rev $3.17B v $3.17Be; Pay-TV net additions 148K v -341K y/y

FRI 11/8
ACA.FR Reports Q3 Net €1.23B v €1.13Be, Rev €5.03B v €4.99Be

Fed ‘put’, easing uncertainty, and upside non-farm payrolls buoy markets

TradeTheNews.com   Weekly Market Update: Fed ‘put’, easing uncertainty, and upside non-farm payrolls buoy markets

US stock markets charged out of the gates this week buoyed by continued optimism on US/China trade talks and what appears to be some clarity surrounding Brexit. The S&P punched through this summer’s all time high amid general strength in global markets. Earnings season got into high gear, providing lots of information for traders to digest heading into Wednesday’s FOMC announcement. As expected on Wednesday, the Fed cut rates by 25bps and also signaled policy is now firmly on hold. Rates fell and the dollar weakened after Chair Powell said it would take a “material” reassessment of the Fed’s outlook to cause the central bank to alter policy at this point.

Thursday saw investors retreat to more of a risk-off posture after overnight reports suggested the Chinese continued to harbor significant doubts that any long-term trade deal is possible with the current administration. The report offered little in terms of new, incremental information and was quickly met with more upbeat tones out of Washington DC. On Friday, the equity breakout gathered steam with NASDAQ making is first new all-time high since July after a surprisingly strong October employment report. On top of better than expected payrolls growth, an upward revision to hourly earnings brought the year-over-year growth rate back up to 3.0%. The consumer looks to be in very solid shape heading into the all-important holiday season. Rates drifted marginally higher, recouping some of the post-Fed decision pull back, helped by a chorus of accompanying Fed commentary that solidified expectations that rate cuts are over for the time being. The S&P500 hit fresh all-time highs, rising 1.5% this week, while the DJIA gained 1.4%, and the Nasdaq added 1.7%.

In corporate news this week, Alphabet kicked off a heavy week of earnings reports with a big profit miss as the company continues to invest in cloud and machine learning infrastructure. Facebook posted beats on its top and bottom line amid solid daily active user growth in North America. Apple surpassed street estimates and issued solid guidance for the holiday quarter, while also noting continued growth in its wearables and services units. Kraft’s quarter surprised to the upside, pointing to a potential turnaround for the beleaguered food company. Fiat Chrysler and Peugeot confirmed renewed plans to merge into what would become the world’s fourth-largest automaker. Alphabet announced it would acquire Fitbit for $2.1B in cash, as the tech giant looks to jumpstart its wearables product line. Tiffany’s confirmed it had received an unsolicited non-binding proposal from LVMH, though mid-week reports indicated deal talks could be currently at a standstill. Twitter’s CEO announced that his social media platform would ban political ads, in sharp contrast to Facebook’s laissez faire policies to political promotions. Microsoft was announced as the winner of DoD’s $10B JEDI cloud computing contract, beating out Amazon.


MON 10/28
HSBA.UK Reports Q3 Net $3.0B v $3.9B y/y, adj Pretax $5.35B v $5.7Be, Rev $13.3B v $13.8B y/y
WBA Reports Q4 $1.43 v $1.41e, Rev $34.0B v $33.9Be; Raises cost savings target to >$1.8B by 2022
*(US) OCT DALLAS FED MANUFACTURING ACTIVITY INDEX: -5.1 V 1.0E
FIT Alphabet reportedly in talks to acquire Fitbit - press
DB1.DE Reports Q3 Adj EBITDA €461.7M v €470Me, Rev €734M v €730Me
GOOGL Reports Q3 $10.12 v $13.06 y/y, Rev $33B (ex $7.5B of TAC) v $32.8Be

TUES 10/29
BP.UK Reports Q3 Adj Net $2.25B v $1.8Be, Rev $68.29B v $72.67B y/y
GM Reports Q3 $1.72 v $1.18e, Rev $35.5B v $34.2Be; Cuts outlook as a result of the UAW strike
*(US) OCT CONSUMER CONFIDENCE: 125.9 V 128.0E
(UK) Parliament approves general election to be held on Thursday, Dec 12th - press

WED 10/30
AIR.FR Reports Q3 Net €989M v €957M y/y, Adj EBIT €1.60B v €1.4Be, Rev €15.3B v €15.9Be
CSGN.CH Reports Q3 (CHF) Net 881M v 813.5Me, adj Pretax 1.14B v 1.30B y/y, Rev 5.33B v 5.2Be
DBK.DE Reports Q3 adj Net -€832M v €229M y/y, adj Pretax -€687M v €506M y/y, Net Rev €5.26B v €5.6Be
066570.KR Reports final Q3 (KRW) Net 345.7B v 748.8B y/y; Op B v 781.1B prelim, Rev 15.7T v 15.7T prelim
BAYN.DE Reports Q3 Adj Net €1.04B v €2.87B y/y, adj EBITDA €2.29B v €2.24B y/y, Rev €9.83B v €9.75Be; Adjusts outlook to exclude discontinued operations
*(DE) GERMANY OCT UNEMPLOYMENT CHANGE: +6.0K V +3.0KE; UNEMPLOYMENT CLAIMS RATE: 5.0% V 5.0%E
*(EU) EURO ZONE OCT BUSINESS CLIMATE INDICATOR: -0.19 V -0.24E
GE Reports Q3 $0.15 v $0.12e, Rev $23.4B v $23.1Be
*(US) OCT ADP EMPLOYMENT CHANGE: +125K V +110KE
*(US) Q3 ADVANCE GDP PRICE INDEX: 1.7% V 1.9%E; CORE PCE Q/Q: 2.2% V 2.2%E
*(US) Q3 ADVANCE GDP ANNUALIZED Q/Q: 1.9% V 1.6%E; PERSONAL CONSUMPTION: 2.9% V 2.6%E
*(DE) GERMANY OCT PRELIMINARY CPI M/M: 0.1% V 0.0%E; Y/Y: 1.1% V 1.0%E
(US) Nevada reports Sept casino gaming Rev $1.06B, +6.8% y/y; Las Vegas strip Rev $584.2M, +7% y/y
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 1.75%; AS EXPECTED
(CL) Chile President Pinera: Chile to cancel the planned APEC Summit in Santiago next month amid ongoing protests - press
*(US) FOMC CUTS TARGET RANGE BY 25BPS TO 1.50-1.75%; AS EXPECTED
(US) Fed Chair Powell: Current stance of monetary policy is 'likely to remain appropriate' as long as model of economy continues to remain accurate; would respond accordingly if events materially affect outlook - FOMC press conf
TWTR CEO: Twitter will ban all political ads globally; final policy to be published on 11/15
(JP) Japan Investors Net Buying of Foreign Bonds: -¥1.02T v +¥536.1B prior week; Foreign Net Buying of Japan Stocks: ¥649.5B v +¥522.3B prior week
*(CN) CHINA OCT MANUFACTURING PMI (OFFICIAL): 49.3 V 49.8E (6th straight contraction)
*(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; (as expected); STRENGTHENS FORWARD GUIDANCE

THURS 10/31
SAN.FR Reports Q3 Business EPS €1.92 v €1.72e, Business Net €2.40B v €2.30B y/y, Rev €9.50B v €9.5Be
RDSA.NL Reports Q3 CCS EPS $0.59 v $0.68 y/y, Adj CCS Net $5.88B v $5.84B y/y, Rev $89.5B v $101.5B y/y
(CN) China said to doubt that any long term trade deal is possible with President Trump - financial press
*(IT) ITALY Q3 PRELIMINARY GDP Q/Q: 0.1% V 0.0%E; Y/Y: 0.3% V 0.2%E
KHC Reports Q3 $0.69 v $0.53e, Rev $6.08B v $6.10Be
(US) Pres Trump: "China and the USA are working on selecting a new site for signing of Phase One of Trade Agreement, about 60% of total deal, after APEC in Chile was canceled do to unrelated circumstances. The new location will be announced soon. President Xi and President Trump will do signing!'
*(US) OCT CHICAGO PURCHASE MANAGER INDEX (PMI): 43.2 V 48.0E (lowest since Dec 2015)
(US) House of Representatives has sufficient votes to pass impeachment inquiry measure (as expected)
*(CN) CHINA OCT CAIXIN PMI MANUFACTURING: 51.7 V 51.0E (3rd month of expansion and highest since Feb 2017)

FRI 11/1
*(UK) OCT PMI MANUFACTURING: 49.6 V 48.2E (6th straight month of contraction, but highest since Apr 2019)
*(US) OCT AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 3.0% V 3.0%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
*(US) OCT CHANGE IN NONFARM PAYROLLS: +128K V +85KE
*(US) OCT ISM MANUFACTURING: 48.3 V 48.9E; PRICES PAID: 45.5 V 50.0E
(US) White House advisor Kudlow: we are working on 'tax cuts 2.0', want tax cuts for the middle class

Risk appetite not dampened by mixed bag of earnings and plodding progress on trade and Brexit deals

TradeTheNews.com Weekly Market Update: Risk appetite not dampened by mixed bag of earnings and plodding progress on trade and Brexit deals

Fri, 25 Oct 04:09 PM EST/09:09 PM GMT

Trading commenced this week amid continued uncertainty around Brexit and anxiety surrounding the onslaught of corporate earnings reports. Ultimately though, it was reports of steady progress on the US China trade front that pushed indices back towards all-time highs. Last Saturday the UK parliament backed a move that was intended to delay any Brexit deal approval. The supporters of the bill got their wish when on Tuesday MPs rejected PM Johnson’s accelerated timetable, forcing the government to call for a general election. Cable drifted lower throughout the week as the possibility of a ‘no deal’ Brexit at the end of the month continues to loom. A third of the S&P 500 reported Q3 results and many firms offered up cautious outlooks, citing well known macro factors, but investors in many cases seemed willing to look past the current environment, at least for the time being. Many of those same participants were rewarded on Friday when the White House reported continued headway during a scheduled call between the trade principles Lighthizer, Mnuchin and Vice Premier Liu. Notably, the reports of a constructive tone came in the wake of another hawkish speech from VP Pence on Thursday. For the week, the S&P gained 1.2%, coming within a point of all-time highs, while the DJIA added 0.7% and the Nasdaq rose 1.9%.

A raft of earnings took center stage on the corporate news front this week. Amazon’s earnings fell for the first time in over two years as one-day shipping costs exceeded expectations. Intel shares lifted after posting a beat on its top and bottom line and raising guidance. Boeing remained under pressure amid downgrades and an even uglier quarter than expected. Caterpillar missed analyst expectations and cut its outlook, citing flat demand and rising inventories. Biogen surged after it resubmitted a long-thought-dead Alzheimer’s drug, claiming that new analysis showed that aducanumab reduced decline in patients with early onset of the disease. In the sportswear space, both Under Armor and Nike announced CEO transitions. Texas Instruments’ revenue miss and underwhelming guidance hit its stock and the overall chip sector. Chipotle beat but tweaked its new restaurant openings lower as it launches drive-thru offerings at some locations. Tesla shorts got burned by a surprise quarterly profit and quicker than anticipated progression at its Shanghai factory. New California wildfires weighed on PG&E and EIX as the spotlight of blame remains on electric transmission equipment.


MON 10/21
SAP.DE Reports Q3 EPS €1.30 v €1.14 y/y; Op €2.09B v €1.74B y/y; Rev €6.81B v €6.03B y/y
941.HK Reports 9M (CNY) Net 81.8B v 92.1B y/y; EBITDA 225.5B v 214.1B y/y; Rev 566.7B v 567.7B y/y
TEVA Confirms settlement of Track 1 opioid cases in Ohio, and confirms agreement on global framework to settle remaining litigation under which it would pay up to $250M in cash over 10 years and donate up to $23B of treatments for opioid addiction

TUES 10/22
UBSG.CH Reports Q3 Net $1.05B v $1.0Be, Rev $7.13B v $7.37B y/y
BIIB New data show aducanumab reduced clinical decline in patients with early Alzheimer’s disease; Plans to submit BLA with Eisai in early 2020
PG Reports Q1 $1.36 v $1.24e, Rev $17.8B v $17.5Be
UPS Reports Q3 $2.07 v $2.06e, Rev $18.3B v $18.3Be
*(US) OCT RICHMOND FED MANUFACTURING INDEX: +8 V -7E
*(UK) PARLIAMENT REJECTS 'PROGRAMME MOTION' FOR ACCELERATED BREXIT BILL VOTING BY 308-322 MARGIN
TXN Reports Q3 $1.49 v $1.41e, Rev $3.77B v $3.81Be
SNAP Reports Q3 -$0.04 v -$0.05e, Rev $446.2M v $438Me
WHR Reports Q3 $3.97 v $3.96e, Rev $5.10B v $5.15Be
(CN) Chinese govt reportedly considering plans to replace Hong Kong Leader Lam with interim Chief Executive - FT
(HK) Hong Kong Leaders office declines to comment on report that Chief Exec Carrie Lam would be replaced

WEDS 10/23
HEIA.NL Reports prelim 9M Net €1.67B v €1.60B y/y; Q3 Organic Beer volume +2.3% v +2.3%e
CAT Reports Q3 $2.66 v $2.83e, Rev $12.8B v $13.4Be
BA Reports Q3 $1.45 v $2.04e, Rev $20.0B v $19.3Be; cuts monthly 787 production rate to 12 for ~2 yrs beginning in late 2020 (prior 14/month)
(US) Pres Trump: Turkey has said it is stopping combat and will make Syria ceasefire permanent; US will remove sanctions on Turkey
(US) New York Fed: overnight repo operations will increase to at least $120B (prior $75B) starting Thursday, October 24, 2019; term repo operations to increase to at least $45B (prior $35B)
MSFT Reports Q1 $1.38 v $1.25e, Rev $33.1B v $32.2Be
CP Reports Q3 C$4.61 v C$4.46e, Rev C$1.98B v C$1.96Be
TSLA Reports Q3 +$1.86 v -$0.15e, Rev $6.30B v $6.52Be
*(KR) SOUTH KOREA Q3 PRELIMINARY GDP Q/Q: 0.4% V 0.5%E; Y/Y: 2.0% V 2.0%E

THURS 10/24
NOKIA.FI Reports Q3 non-IFRS Net €0.05 v €0.05e, Rev €5.69B v €5.67Be; Cuts FY19 and FY20 guidance on margin pressure and additional 5G investments and additional digitalization investments
AZN.UK Reports Q3 Core EPS $0.99 v $0.71, Rev $6.41B v $6.20Be
*(FR) FRANCE OCT PRELIMINARY MANUFACTURING PMI: 50.5 V 50.2E (3rd consecutive month of expansion)
*(EU) EURO ZONE OCT PRELIMINARY MANUFACTURING PMI: 45.7 V 46.0E (9th straight contraction)
MMM Reports Q3 $2.58 v $2.47e, Rev $7.99B v $8.10Be
(EU) White House Adviser Navarro: Phase 1 of US-China trade agreement adopts "virtually entire chapter" from May agreement on intellectual property - financial press
*(US) SEPT PRELIMINARY DURABLE GOODS ORDERS: -1.1% V -0.7%E; DURABLES (EX-TRANSPORTATION): -0.3% V -0.2%E
*(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED; maintains forward guidance outlook
(EU) ECB's Draghi: Incoming data indicates more protracted weakness and prominent downside risk; inflation pressures remain muted - Prepared Remarks
(EU) ECB's Draghi: Assessment of negative rate environment has been positive but monitoring potential side effects- Q&A
*(US) OCT PRELIMINARY MARKIT MANUFACTURING PMI: 51.5 V 50.9E (6-month high)
*(UK) UK GOVT TO TABLE MOTION FOR GENERAL ELECTION ON DEC 12TH - SKY NEWS
*(US) SEPT NEW HOME SALES: 701K V 702KE
(US) VP Pence: if China ends unfair trade, US is ready for a new future; US is not seeking to contain China's development
AMZN Reports Q3 $4.23 v $4.46e, Rev $70.0B v $68.4Be
V Reports Q4 $1.47 v $1.43e, Rev $6.10B v $6.08Be; raises dividend by 20% to $0.30 from $0.25 (indicated yield 0.68%)
(JP) Japan Investors Net Buying of Foreign Bonds: +¥536.1B v +¥1.06T prior week; Foreign Net Buying of Japan Stocks: +¥522.3B v +¥508.1B prior week

FRI 10/25
ABI.BE Reports Q3 adj $0.94 v $1.06e, adj EBITDA $5.29B v $5.52Be, Rev $13.2B v $12.92B y/y
*(DE) GERMANY OCT IFO BUSINESS CLIMATE: 94.6 V 94.5E; CURRENT ASSESSMENT: 97.8 V 98.0E
3328.HK Reports Q3 (CNY) Net 17.4B v 16.5B y/y, NII 36.3B v 34.5B y/y
*(US) OCT FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 95.5 V 96.0E
(US) Weekly Baker Hughes Rig Count 830 v 851 w/w (-2.5% w/w)
GM Automotive News projects tentative UAW-GM agreement will be ratified

Uncertainties ease as tentative deals are reached on Brexit and GM strike

TradeTheNews.com Weekly Market Update

This week’s trade opened amid lingering doubt surrounding the US/China trade truce. China reportedly wanted more talks before signing “phase 1” of any trade agreement. Those concerns receded after officials on both sides indicated they remain hopeful as they work towards formally documenting the deal ahead of next month’s expected Xi/Trump meeting in South America. As the week progressed, focus moved onto intensified Brexit negotiations and Q3 earnings season. By early Thursday UK PM Johnson and EU officials confirmed an agreement that could potentially allow for the UK to leave the EU with a deal by the end of this month. But sentiment was far from exuberant as it remained unclear if this version of a deal can get the nod from the UK Parliament at its “super Saturday” sitting. As the Brexit deal came together the pound sterling strengthened against the dollar throughout the week, reaching 5-month highs by Friday as one press report suggested PM Johnson will get the proposal passed by a razor thin margin.

As expected, the IMF and Germany formally lowered growth projections this week while the Fed’s Beige book described slightly lowered growth indicators across most regions. Weaker US economic readings -- namely retails sales and building starts -- affirmed market expectations of another rate cut at the October 30th FOMC meeting. Fed officials’ commentary seemed to leave the door wide open for an October cut as well. But a narrative also developed that a pause on any further easing was gaining traction, especially in light of the recent positive developments regarding Brexit and US/China trade. For the week, the US yield held at steeper levels as solidifying Fed rate cut expectations juxtaposed a continued backup on longer rates in Europe. The DJIA lost 0.2% as two key components took hits on Friday, while the S&P rose 0.5%, and the Nasdaq added 0.4%.

In corporate news this week, banks kicked off earnings season on a largely positive note. JPMorgan outperformed profit expectations, as did Bank of America, which cited robust consumer spending growth as a tailwind. Morgan Stanley reported a profit beat as all three of its businesses showed strength. Goldman’s profits, however, missed forecasts, while Citi’s net interest margin declined more than anticipated. IBM shares fell despite reporting a positive first quarter for its Red Hat unit as investors noted concerns within its legacy software business. Workday’s investor day disappointed analysts, as executives pointed to slower growth in its human capital management software division, and the news weighed overall on the SaaS sector. Boeing slipped lower on Friday after previously undisclosed intra-company instant messages showed certain employees back in 2016 had concerns about the 737 MAX MCAS software and may have subsequently misled regulators. GM negotiators struck a tentative deal with UAW leadership, though the month-long strike will continue until UAW members vote to ratify the agreement. Johnson & Johnson recalled a lot of talc baby powder in the US after a test indicated the presence of sub-trace levels of chrysotile asbestos contamination. Oracle co-CEO Hurd passed away at the age of 62 after taking a leave of medical absence five weeks ago.


SUN 10/13
*(SG) SINGAPORE CENTRAL BANK (MAS) SEMI-ANNUAL MONETARY POLICY STATEMENT: WILL REDUCE SLIGHTLY THE RATE OF APPRECIATION OF THE S$NEER POLICY BAND (moves into easing)
MON 10/14
(CN) China said to want more talks before signing US Pres Trump 'Phase I' deal - press

TUES 10/15
(KR) BANK OF KOREA (BOK) CUTS 7-DAY REPO RATE BY 25BPS TO 1.25%; AS EXPECTED
WDAY Targets long-term non-GAAP operating margin 25%+ - investor day slides
IMF chief economist Gopinath: If global growth were to deteriorate more, internationally coordinated fiscal response is needed
*IMF UPDATES ITS WORLD ECONOMIC OUTLOOK (WEO): Cuts both 2019 and 2020 growth outlook (as expected)
C Reports Q3 $1.97 v $1.96e, Rev $18.6B v $18.6Be
JPM Reports Q3 $2.68 v $2.44e, Managed Rev $30.1B v $28.4Be
*(DE) GERMANY OCT ZEW CURRENT SITUATION SURVEY: -25.3 V -23.6E (Lowest since May 2010); EXPECTATIONS SURVEY: -22.8 V -26.4E
*(UK) SEPT JOBLESS CLAIMS CHANGE: +21.1K V +16.3K PRIOR; CLAIMANT COUNT RATE: 3.3% V 3.3% PRIOR

WEDS 10/16
ROG.CH Reports Q3 (CHF) Rev 15.6B v 15.1Be
BAC Reports Q3 $0.75 adj (ex JV impairment) v $0.50e, Rev $22.8B v $22.2Be
*(US) SEPT ADVANCE RETAIL SALES M/M: -0.3% V +0.3%E; RETAIL SALES (EX-AUTO) M/M: -0.1% V +0.2%E
*(US) FEDERAL RESERVE BEIGE BOOK: ECONOMY EXPANDED AT SLIGHT TO MODEST PACE (prior: "modest pace")
IBM Reports Q3 $2.68 v $2.64e, Rev $18.0B v $18.2Be
AA Reports Q3 -$0.44 v -$0.35e, Rev $2.57B v $2.54Be
BHP.AU Reports Q1 Waio iron ore production 69Mt v 69Mt y/y; attributable iron ore production 61.0Mt v 60.5Mte v 61.0Mt y/y
*(AU) AUSTRALIA SEPT EMPLOYMENT CHANGE: +14.7K V +15.0KE; UNEMPLOYMENT RATE: 5.2% V 5.3%E

THURS 10/17
UNA.NL Issues Q3 Trading update: Rev €13.3B v €12.5B y/y
(UK) SEPT RETAIL SALES (EX-AUTO/FUEL) M/M: +0.2% V -0.1%E; Y/Y: 3.0% V 2.9%E
*(EU) EU'S JUNCKER: WE HAVE A 'FAIR AND BALANCED' BREXIT DEAL
*(UK) PM BORIS JOHNSON CONFIRMS A BREXIT DEAL; says now Parliament should get Brexit done on Saturday, Oct 19th
*(US) SEPT HOUSING STARTS: 1.256M V 1.320ME; BUILDING PERMITS: 1.387M V 1.350ME
*(US) OCT PHILADELPHIA FED BUSINESS OUTLOOK: 5.6 V 7.6E
*(US) SEPT INDUSTRIAL PRODUCTION M/M: -0.4% V -0.2%E; CAPACITY UTILIZATION: 77.5% V 77.7%E
*(TR) VP PENCE: WE REACHED A DEAL WITH TURKEY FOR A CEASEFIRE IN NORTHERN SYRIA
(JP) Japan Investors Net Buying of Foreign Bonds: +¥1.06T v -¥428.3B prior week; Foreign Net Buying of Japan Stocks: +¥508.1B v +¥1.07T prior week
*(CN) CHINA Q3 GDP Q/Q: 1.5% V 1.5%E; Y/Y: 6.0% V 6.1%E (lowest annual reading since 1992)
(CN) CHINA SEPT INDUSTRIAL PRODUCTION Y/Y: 5.8% V 4.9%E; YTD Y/Y: 5.6% V 5.5%E
*(CN) CHINA SEPT RETAIL SALES Y/Y: 7.8% V 7.8%E; YTD Y/Y: 8.2% V 8.1%E

FRI 10/18
KO Reports Q3 $0.56 v $0.56e, Rev $9.5B v $9.48Be
STT Reports Q3 $1.51 adj v $1.40e, Rev $2.90B v $2.86Be
ORCL Co-CEO Mark Hurd reportedly passes away – press
(UK) Financial Times reporter: "By our numbers, Boris Johnson has a majority of two for his deal tomorrow"
BA Discloses intra-company instant messages written in 2016 that reportedly suggest employees misled the FAA about an important safety system on the 737 MAX - press

Negotiations on China trade and Brexit reach crescendo

TradeTheNews.com  

Weekly Market Update: Negotiations on China trade and Brexit reach crescendo

Fri, 11 Oct 04:29 PM EST/09:29 PM GMT

Stock markets entered the week on a continued upswing. US China trade talks kicked off in Washington D.C. on Monday amid optimism that deputy level meetings could set the table for productive meetings at the principle level later in the week. Those hopes took a hit by mid-week after the Trump Administration surprised markets by announcing an expansion of the Chinese company black list and the introduction of visa bans tied to human rights violations by the Chinese government. By Thursday though, the pendulum began to swing back in favor expectations that some sort of positive development was still possible. A narrative begun to develop around a path towards a skinny deal in which the US will hold back on raising tariffs this month in exchange for some kind of currency agreement framework, guarantees on IP protections, and a continued step-up in Chinese agricultural purchases. Late Friday afternoon, President Trump met with China Vice Premier Liu and confirmed the tentative ‘phase one’ trade deal, which will be written up over the coming weeks and followed by phase two and perhaps phase three negotiations to cover other thornier issues.

September US PPI figures remained notably cool, but the reading was somewhat offset by CPI data that was closer to market expectations. The data did little to change the overall perception of the inflation landscape. Fed Chairman Powell underscored that the central bank will remain highly data dependent while also foreshadowing an eventual announcement on Friday that the Fed will resume organic balance sheet expansion, purchasing $60 billion in Treasuries per month. The FOMC minutes highlighted the wide array of views held by FOMC members suggesting that, though futures markets were once again pricing in a rate cut later this month, the debate at the upcoming FOMC meeting will likely be intense. Thursday saw the largest jump in the British pound in more than half a year as a meeting between the British and Irish PMs reportedly yielded new concessions from the UK that might lead to resolution of the backstop issue. Turkey launched an offensive against Kurdish fighters in Northeast Syria after President Trump decided to withdraw US forces from the region, a choice that drew the ire of many Republicans in Congress and prompted Trump to threaten new tariffs that could “destroy” Turkish economy. As the trade deal made progress, Treasury yields rose throughout the week, and equities rose modestly, with the S&P up 0.6%, the DJIA gaining 0.9%, and the Nasdaq adding 0.9%.

In corporate news this week, GM and UAW labor talks remained stuck in the mud, despite efforts from CEO Barra to push for an end to the strike. Nike shares saw some volatility midweek amid a spat between the NBA and China over league policy regarding support for Hong Kong protestors. Domino’s earnings disappointed investors and weighed on the pizza sector, but a buyback program announcement and CEO comments pointing to a promising long-term outlook turned shares around. Wendy’s caught a bid after disclosing at an investor day its best Q3 North America comps since 2015. US Steel slumped after announcing cost cuts and a CFO change. Bed Bath and Beyond jumped after landing former Target Inc CMO Mark Tritton as its new CEO, ending a lengthy search.

MON 10/7
(CN) Reportedly US Commerce Dept to place 28 Chinese govt and commercial organizations onto 'entity list' today - press
*(US) AUG CONSUMER CREDIT: $17.9B V $15.0BE
(EU) ECB: Current aggregate level of NPLs remain elevated by international comparison - 2019 supervisory bank stress test results
(TR) Pres Trump warns Turkey against taking actions that are "off limits" or he will "totally destroy and obliterate the Economy of Turkey (I’ve done before!)"
066570.KR Reports prelim Q3 (KRW) Op 781.1B v 748.8B y/y, Rev 15.7T v 15.5T y/y

TUES 10/8
(CN) China Embassy: US visa restrictions seriously violates the basic norms governing international relations, interferes in China’s internal affairs and undermines China’s interest
(CN) US imposes visa bans on Chinese persons linked to abuses against the Uighurs in Xinjiang province - press
(US) Fed Chair Powell: Fed will act as appropriate to support continued growth, a strong job market, and a return to 2% inflation; will carefully monitor incoming data; Fed will soon announce steps to add reserves over time - comments at NABE conf
*(US) SEPT PPI FINAL DEMAND M/M: -0.3% V +0.1%E; Y/Y: 1.4% V 1.8%E

WEDS 10/9
*(US) AUG JOLTS JOB OPENINGS: 7.051M V 7.250ME
*(US) FOMC MINUTES FROM SEPT 18 MEETING: TRADE UNCERTAINTY HAS INCREASED, GLOBAL GROWTH PROSPECTS WEAKENED, AND GEOPOLITICAL RISKS INTENSIFIED SINCE JULY
(JP) Japan Investors Net Buying of Foreign Bonds: -¥428.3B v +¥869.2B prior week; Foreign Net Buying of Japan Stocks: +¥1.07T v -¥221.2B prior week
(CN) US is said to be considering previously agreed currency agreement with China as part of trade deal, which could see next tariff increase cancelled under first part of trade deal with China - US financial press

THURS 10/10
3382.JP Reports H1 Net ¥110.65B v ¥101.36B y/y, Op ¥205.13B v ¥199.61B y/y, Rev ¥3.31T v ¥3.34T y/y; to close 1,000 unprofitable stores and cut 3K jobs
*(EU) ECB ACCOUNT OF SEPTEMBER POLICY MEETING (SEPT MINUTES): Clear majority supported the resumption of QE; some policy makers argued for 20bps rate cut and no QE
*(US) SEPT CPI M/M: 0.0% V 0.1%E; CPI (EX-FOOD/ENERGY) M/M: 0.1% V 0.2%E ; CPI NSA: 256.759 V 256.955E
(US) TREASURY $16B 30-YEAR BOND REOPENING DRAWS 2.170%; BID TO COVER 2.25 V 2.22 PRIOR AND 2.26 AVERAGE OVER LAST 8 (Record low yield)

FRI 10/11
FAST Reports Q3 $0.37 v $0.36e, Rev $1.38B v $1.37Be
(US) Pres Trump: "Good things are happening at China Trade Talk Meeting. Warmer feelings than in recent past, more like the Old Days. I will be meeting with the Vice Premier today. All would like to see something significant happen!"
*(US) OCT PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 96.0 V 92.0E (best since July)
*(CN) US AND CHINA HAVE REPORTEDLY REACHED A PARTIAL DEAL WHICH COULD SET UP A 'TRADE TRUCE' - PRESS
*(US) PRES TRUMP: WE'VE REACHED A PHASE ONE DEAL WITH CHINA; WILL TAKE UP TO FIVE WEEKS TO GET DEAL WRITTEN

China as a Seller’s Market

Modern China’s past success was based on exports. Its future must be based on imports.

China owes much of its current economic success to former ruler Deng Xiaoping, who famously opened up the economy to the rest of the world. His reforms transformed China into a manufacturing powerhouse, and in doing so, they turned the country’s biggest liability – a massive and impoverished population that upsets socio-economic harmony at home and constrains Chinese power abroad – into its greatest asset. China became the world’s factory because its workers could make things cheaper than workers in other countries could. The ratio of China’s exports of goods and services to its gross domestic product increased from 4.6 percent during the first year of Deng’s rule to a high of 36 percent in 2006 – long after Deng had passed away. During the same period, its GDP increased by a factor of 18.

The transformation into an export powerhouse reshaped the global economy. China made so many goods so proficiently that it drove prices down and gutted the manufacturing sectors of formerly competitive countries. China’s workforce simply undercut most everyone else. The economic roots of the current U.S.-China trade war, as well as of China’s massive current structural economic challenges, are born from these developments...

Continue reading: https://geopoliticalfutures.com/china-as-a-sellers-market 

Weak data and political follies dent markets until solid Friday jobs report eases concerns

TradeTheNews.com 

Weekly Market Update: Weak data and political follies dent markets until solid Friday jobs report eases concerns

Fri, 04 Oct 04:04 PM EST/09:04 PM GMT

Volatility returned this week as soft PMI readings in the US caused interest rates and stocks to decline. Tuesday’s ISM manufacturing reading registered the lowest since 2009 and was the second consecutive print in contraction territory. The S&P fell through the 50-day moving average for the first time in about a month on more robust volumes. Yields slipped, led by aggressive buying at the short end of the curve. Expectations for an October rate cut increased and the US curve steeped to levels not seen in more than two months. Thursdays ISM services figure was soft as well, suggesting to some the weakness seen in manufacturing may be leaking into the consumer side of the US economy. Friday’s September US unemployment rate fell to a 50-year low, but wage gains moderated noticeably. Markets seemed to view the jobs figures in a positive light while also keeping the door open for more easing by the Fed. Stock markets reversed and moved higher while Treasury yields largely held at the lower levels forged earlier in the week. The Dollar index touched fresh 2-year highs early on but backed off after the string of disappointing US data. The pound made modest gains as Boris Johnson submitted a new Brexit proposal that was constructive enough to ease fears about the UK ‘accidentally’ crashing out of the EU. For the week, the S&P fell 0.3% and the DJIA dropped 0.9%, while the Nasdaq gained 0.5%.

The discord in Washington remained at extremely intense levels throughout the week. Speaker Pelosi and other top Democrats said they saw a quid pro quo in the Ukraine call transcript, while President Trump doubled down on his corruption allegations and publically called for China to launch an investigation into Joe Biden, while also broadening his ‘witch hunt’ allegations to suggest big drug companies are in cahoots with Democrats and the news media. Separately the WTO issued a ruling granting the US the right to target $7.5B in EU imports with trade sanctions as a result of Airbus subsidies which the White House quickly jumped on, issuing a list of tariffs to be implemented later this month. Commentary remained somewhat constructive in the lead up to the next round of China trade talks in Washington next week.

In corporate news this week, US auto sales slumped after seeing encouraging early summer numbers, though GM deliveries rose while truck sales weighed down Ford, and Tesla came up short against its plan for September deliveries. Schwab, AmeriTrade, E-Trade, and Ally Bank followed Interactive Brokers’ lead and reduced their stock, ETF, and options commissions to zero. Lennar reported strong Q3 results and pointed to lower interest rates and slow price depreciation positively impacting sales. GoPro shares sank after the sport camera-maker cut guidance due to production delays with its latest Hero8 models. Costco shares fell after its earnings and comps disappointed the street, and Bed Bath & Beyond also missed revenue and SSS estimates. Apple reportedly asked its suppliers to boost production of the iPhone 11, citing stronger than expected demand, which gave a lift on Friday to shares of its manufacturing partners and the Nasdaq.


SUN 9/29
*(CN) CHINA SEPT NBS MANUFACTURING PMI: 49.8 V 49.6E (5th consecutive contraction)

MON 9/30
*(DE) GERMANY SEPT UNEMPLOYMENT CHANGE: -10.0K V +5.0KE; UNEMPLOYMENT CLAIMS RATE: 5.0% V 5.0%E
*(DE) GERMANY SEPT PRELIMINARY CPI M/M: 0.0% V 0.0%E; Y/Y: 1.2% V 1.3%E
*(US) SEPT CHICAGO PURCHASING MANAGER INDEX (PMI): 47.1 V 50.0E
*(US) SEPT DALLAS FED MANUFACTURING ACTIVITY: 1.5 V 1.0E
(US) USDA Q3 Grain Stocks Report (bu): Corn 2.11B v 2.42Be; Soybean 913M v 982Me; Wheat 2.39B v 2.32Be
*(JP) JAPAN Q3 TANKAN LARGE MANUFACTURING INDEX: 5 V 1E (3rd consecutive decline, lowest since 2013); OUTLOOK SURVEY: 2 V 0E; LARGE ALL INDUSTRY CAPEX: 6.6% V 7.0%E
JGB (JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.1% 10-year JGBs: avg yield: -0.158% v -0.265% prior, bid to cover 3.42x (lowest since 2016) v 3.60x prior

TUES 10/1
*(ES) SPAIN SEPT MANUFACTURING PMI: 47.7 V 48.2E (lowest reading since Apr 2013)
*(UK) SEPT PMI MANUFACTURING: 48.3 V 47.0E (5th straight month of contraction)
*(US) SEP FINAL MARKIT MANUFACTURING PMI: 51.1 V 51.0E (highest since April 2019)
*(US) AUG CONSTRUCTION SPENDING M/M: 0.1% V 0.5%E
*(US) SEPT ISM MANUFACTURING: 47.8 V 50.0E; PRICES PAID: 49.7 V 50.5E (lowest since June 2009)
(EU) EU reportedly prepared to consider a time limit on Irish backstop; could give Northern Ireland assembly a say on leaving the Brexit backstop - press
(UK) EU Commission spokesperson denies earlier report on potential time limit for Irish backstop; "The EU is not considering this option at all. We are waiting for the UK to come forward with a legally operational solution that meets all the objectives of the backstop” - Buzzfeed

WEDS 10/2
*(DE) GERMANY SELLS €2.323B VS. €3.0B INDICATED IN 0.0% OCT 2024 BOBL; AVG YIELD: -0.77% V -0.88% PRIOR; BID-TO-COVER: 2.5X V 1.9X PRIOR
LEN Reports Q3 $1.59 v $1.32e, Rev $5.86B v $5.52Be
(UK) UK PM Johnson: Northern Ireland to initially follow EU rules on agriculture and manufacturing, under no circumstances have checks at or near the border in Northern Ireland - Conservative party conf
*(US) SEPT ADP EMPLOYMENT CHANGE: 135K V 140KE
GM Reports Q3 deliveries 738.6K, +6% y/y
(US) Sen Sanders was hospitalized on Tues after experiencing chest pains at an event; two stents were surgically inserted; cancels all events until further notice
(US) USTR official: US will impose retaliatory tariffs of 10% on EU aircraft and 25% on EU agricultural and industrial goods; to take effect Oct 18th
BBBY Reports Q2 $0.34 v $0.26e, Rev $2.72B v $2.76Be; made substantial progress toward identifying a permanent CEO
TSLA Reports Q3 total production 96.2K v 87.0K q/q; deliveries 97.0K v 95.2K q/q
(JP) Japan Investors Net Buying of Foreign Bonds: +¥869.2B v -¥164.8B prior week; Foreign Net Buying of Japan Stocks: -¥221.2B v -¥1.18T prior week

THURS 10/3
(FR) France’s European Affairs Minister Montchalin: US tariffs decision is major political mistake
*(DE) GERMANY SEPT FINAL SERVICES PMI: 51.4 V 52.5E (lowest reading since Sept 2016)
*(EU) EURO ZONE SEPT FINAL SERVICES PMI: 51.6 V 52.0E (lowest reading since Jan 2019)
*(UK) SEPT PMI SERVICES: 49.5 V 50.3E (lowest reading since Mar 2019)
*(US) Sept ISM Non-Manufacturing Index: 52.6 v 55.0e (lowest since Aug 2016)
*(US) AUG FINAL DURABLE GOODS ORDERS: 0.2% V 0.2% PRELIM; DURABLES EX-TRANSPORTATION: 0.5% V 0.5% PRELIM
COST Reports Q4 $2.47** v $2.54e, Rev $47.5B v $47.1Be

FRI 10/4
*(IN) INDIA CENTRAL BANK (RBI) CUTS REPURCHASE RATE BY 25BPS TO 5.15%; AS EXPECTED; decision was not unanimous
(HK) Hong Kong Chief Executive Lam: Govt has invoked emergency powers (ERO); confirms to ban face masks in protests at public gatherings from Saturday, Oct 5th
(UK) BBC's Larna Gordon tweets: So to repeat government documents submitted to court of session say PM will send a letter asking the EU for an extension if no deal is in place by October 19th. But O'Neill says this is in direct contraction to what pm said earlier this week to Parliament.
*(US) SEPT AVERAGE HOURLY EARNINGS M/M: 0.0% V 0.2%E; Y/Y: 2.9% V 3.2%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
*(US) SEPT CHANGE IN NONFARM PAYROLLS: +136K V +145KE
(EU) EU Parliament Pres reportedly has rejected UK Brexit proposal - German press
(US) New York Fed Nowcast: cuts Q3 forecast to 2.0% from 2.1%; cuts Q4 forecast to 1.3% from 1.8%

Drama at the UN and in Washington lead markets lower

TradeTheNews.com Weekly Market Update: Drama at the UN and in Washington lead markets lower

Stock markets moved modestly lower this week and trading remained choppy due to headline risk. As usual President Trump was at the epicenter of headlines that swung sentiment. In another brash speech at the UN Trump chastised China again, doubling down on many of his administration’s hawkish foreign policy stances. The speech and his appearances on the sidelines in New York came alongside a new whistleblower report raising new allegations against the President. By mid-week House speaker Pelosi formally called for an ‘impeachment inquiry’. The President spent much of the week defending his actions while dismissing the Democrats attempt at oversight as nothing more than another politically motivated witch hunt. Indices gyrated around the developing story despite a general market narrative that regardless of what is ultimately uncovered, Trump may be distracted but will not be removed from office by the Senate.

US/China trade talks stayed largely on a positive trajectory heading into next week’s communist party anniversary in China. President Trump had some tough talk for China during his UN speech on Tuesday and reports surfaced on Friday that the White House has begun preliminary consideration of a potential effort to limit portfolio flows into China, which might include delisting Chinese firms from US exchanges. Chinese rhetoric was less bellicose, and there were reports that China was stepping up purchases of US commodities.

Global interest rates went nowhere as weak global economic readings and Central banks continued willingness to cut rates kept a relatively tight lid on Treasury yields. The dollar firmed sending the Euro to a fresh two and half year low. Cable moved lower after the UK’s Supreme Court thwarted PM Johnson’s effort to suspend parliament. Oil prices dropped throughout the week giving back all the gains that followed the Saudi Aramco attack just two weeks ago. For the week, the S&P fell 1%, the DJIA lost 0.4%, and the Nasdaq declined 2.2%.

In corporate news this week, Nike reported a big quarterly earnings and revenue beat, boosted by strong digital sales and high demand for athletic products. Micron dinged the semiconductor stocks after reporting a disappointing forecast and weaker than anticipated margins. IBKR announced a new ‘Lite’ offering launching in October to provide commission-free, unlimited trades on US exchange-listed stocks and ETFs, which weighed on competitors E*trade and Ameritrade. A leaked memo from Tesla's CEO to employees said the company has a shot at a record 100K deliveries this quarter. Layoffs and furloughs at GM facilities continued as the two sides still remained at odds over a new contract agreement for a second week. Beyond Meat heated up again on the announcement of a new pilot program with McDonald’s. eBay CEO Devin Wenig departed his company abruptly, while the We Company’s CEO Adam Neumann stepped down amid the company’s ongoing IPO woes, though he will remain chairman.

US Military Options in Iran

By George Friedman - Sept 17, 2019

The United States has openly accused Iran of being behind the drone and cruise missile attacks on Saudi Arabia’s largest oil refinery. Now the question is what the United States will do in response.

The U.S. is in a difficult position. The attacks did not directly affect the U.S., save for the spike in oil prices, which actually helps the American oil industry. There is a temptation to let the attacks slip into history. But the United States has formed an anti-Iran alliance in which Saudi Arabia is a key (though weak) player. Saudi Arabia is under internal pressure from members of the royal family who oppose Crown Prince Mohammed bin Salman, and low oil prices have undermined the kingdom’s political cohesion. Doing nothing would call the U.S.-sponsored coalition into question. Saudi Arabia is an important player in the Sunni Arab world – and that world is the main threat to Iranian expansion. Failing to respond to an Iranian attack on a vital Saudi facility could help Iran increase its power throughout the region. During Donald Trump’s presidency, the United States’ inclination has been to avoid initiating direct military action in favor of applying economic pressure instead. He has maneuvered to minimize and halt active military engagement. Military action against Iran, therefore, would both endanger the alliance structure and cut against U.S. strategy.

An alternative option would be to introduce new sanctions, but there are two problems with this move. First, sanctions do not have the psychological impact military action does. The psychological impact would be on both Iran and the Sunni world, and the logic of the situation requires it. Second, the U.S. has already imposed painful sanctions on Iran’s economy. Any further sanctions would have limited effect and insufficient heft.

Please continue reading at https://geopoliticalfutures.com/us-military-options-in-iran/