Markets unfazed by US election drama

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Weekly Market Update: Markets unfazed by US election drama

2020-11-06T16:03:37.783

As advertised it was a wild week of trade around the US election as stock markets looked to bounce back from last week’s drubbing. Equity futures swung violently into the early morning hours on Wednesday before global risk-on flows gathered momentum ahead of the US open. Votes were still being tallied across key battleground states, but relatively quickly markets appeared to embrace a narrative that the Senate would likely stay in the hands of the Republicans by a narrow margin, and VP Biden was getting enough late support to overtake President Trump’s leads in key swing states to eventually win the Electoral College. US stock markets surged Wednesday and Thursday and the VIX index plunged after running up to 40 last week. After spiking on election eve, Treasury yields dropped aggressively, perhaps on the notion that a large, sweeping fiscal stimulus package will be more difficult to attain given the expected congressional composition. Vote counting continued into Friday and with two run-off Georgia Senate elections not slated until January, and Trump’s apparent desire to mount various legal challenges contesting the election results, it may be some time before the US political landscape is confirmed.

Outside of election headlines, the pandemic continued with Covid case counts rising to new daily records in the US and EU, with many European nations taking additional lockdown measures to fight the virus spread. Third quarter earnings reports continued to come in generally much stronger than analysts had expected. US economic data was also encouraging with the October ISM data hitting its highest level in more than two years, while the October jobs report revealed sharp declines in both the unemployment and underemployment rates. The BOE met and delivered more stimulus as promised ahead an FOMC press conference where Chairman Powell looked to reassure markets by noting Fed officials discussed various ways they could offer additional stimulus going forward should things deteriorate. Gold prices slipped, bitcoin surged to two year highs above $15K, and the US dollar fell to a two month low. For the week, the S&P rebounded 7.3%, the DJIA gained 6.9%, and the Nasdaq surged 9%.

In corporate news this week, GM reported Q3 EPS that blew away estimates amid a 15% EBIT margin and robust truck sales. Qualcomm shares lifted after it beat on the top and bottom line, guiding FY21 handsets significantly higher year-over-year. PayPal earnings came in above consensus while its account and total payment volume growth hit multi-year highs. Costco notched 14% same store sales growth in October as the pandemic continued to boost in-person and online shopping. China halted Ant Group’s planned $34B stock debut in Shanghai and Hong Kong, citing the need to maintain regulation in the fintech industry, and the IPO could face a six-month delay. Inspire Brands confirmed it would enter merger agreement to acquire Dunkin’ Brands for $11.3B in cash, adding the coffee chain to its roster of other casual eateries. In the California election, the Uber- and Lyft-backed Proposition 22 passed easily, allowing drivers to remain as independent contractors and boosting the shares of the ride-share leaders. Other US states granted various degrees of legalization to cannabis sales, leading to a rally in the pot-related stocks.


SUN 11/1
(HK) Macau Oct Casino Rev (MOP): 7.3B v 2.2B prior; Y/Y: -72.5% v -90.0% prior

MON 11/2
*(IT) ITALY OCT MANUFACTURING PMI: 53.8 V 53.7E (4th month of expansion and highest since Mar 2018)
(DE) German Chancellor Merkel: Facing a difficult winter with an aggressive virus; will likely have to limit contacts between people in private for ALL winter months; Light at the end of the tunnel is very far away
*(US) OCT ISM MANUFACTURING: 59.3 V 56.0E (highest since Aug 2018); PRICES PAID: 65.5 V 61.5E
(US) Treasury quarterly financing estimates: to borrow $617B in Oct-Dec quarter v $550-600Be (prior estimate to borrow $1.216B)
(AU) RESERVE BANK OF AUSTRALIA (RBA) CUTS CASH RATE TARGET BY 15BPS TO 0.10%; LOWERS 3-YEAR YIELD TARGET BY 15BPS TO 0.10%; BOTH AS EXPECTED; Announces new A$100B bond buying program of 5 and 10 year maturities
992.HK Reports Q2 Net $310M v $202.2M y/y, Op $565M v $441.7M y/y Rev $14.5B v $13.5B y/y

TUES 11/3
6688.HK Shanghai Stock Exchange reportedly suspends Ant Group's IPO - press (update)
(IN) India RBI said to explore increasing Gold and dollar buying in order to further diversify FX reserve investments - press
6688.HK Hong Kong IPO of Ant Group has also been suspended
(SA) Saudi Arabia and others in OPEC reportedly considering deeper cuts amid oil turmoil; further cuts among several possibilities being considered - press
LPX Overall, expect Q4 to look a lot like Q3 - earnings call comments

WEDS 11/4
*(FR) FRANCE OCT FINAL PMI SERVICES: 46.5 V 46.5E (confirms 2nd straight contraction)
*(DE) GERMANY OCT FINAL PMI SERVICES: 49.5 V 48.9E (confirms 1st contraction in 4 months)
*(EU) EURO ZONE OCT FINAL PMI SERVICES: 46.9 V 46.2E (confirms 2nd straight contraction)
*(UK) OCT FINAL PMI SERVICES: 51.4 V 52.3E (confirms 4th month of expansion)
*(US) OCT ADP EMPLOYMENT CHANGE: +365K V +650KE; Significant slowdown in Manufacturing gains
*(US) OCT FINAL MARKIT PMI SERVICES: 56.9 V 56.0E
*(US) OCT ISM SERVICES INDEX: 56.6 V 57.5E
*(US) DOE CRUDE: -8.0M V +1ME; GASOLINE: +1.5M V -1ME; DISTILLATE: -1.6M V -2.5ME
(US) Trump campaign manager Stepien: plan to immediately request a recount in Wisconsin; irregularities have been reported in several counties in that state
(US) Trump campaign files suit in Michigan to halt counting of ballots - press
(US) Trump campaign to file two legal challenges in PA around poll observers and voter ID rules
COST Reports Oct SSS +14.4% v +11.6%e

THURS 11/5
MT.NL Reports Q3 Net -$0.3B v -$0.5B y/y, EBITDA $901M v $1.06B y/y, Rev $13.3B v $16.6B y/y
*(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.10%; AS EXPECTED
*(UK) BOE RAISES TOTAL ASSET PURCHASE PROGRAM (APT) BY £150B TO £895B; NOT EXPECTED; indicates ready to increase QE again if functioning worsens
AZN.UK Reports Q3 Core EPS $0.94 v $1.00e, Rev $6.58B v $6.65Be
(UK) BOE Gov Bailey: Believed there is value in acting quickly and strongly to support the economy with asset purchases -post rate decision press conference
GILD Remdesivir shows superior to placebo in shortening time to recovery in adults hospitalized with COVID-19 - New England Journal of Medicine
FAST Reports Oct net sales $488.2M -3.9% y/y
GM Reports Q3 $2.83 v $1.47e, Rev $35.5B v $38.0Be
*(US) Q3 PRELIMINARY NONFARM PRODUCTIVITY: 4.9% V 5.6%E; UNIT LABOR COSTS: -8.9% V -11.0%E
(US) Pres Trump tweets: "STOP THE COUNT!...ANY VOTE THAT CAME IN AFTER ELECTION DAY WILL NOT BE COUNTED!"
(US) Pres Trump tweets: will challenge election results in 'Biden claimed states', alleging voter fraud and election fraud
(US) Second Georgia Senate race now likely to go to runoff as Sen Perdue falls below 50% threshold
*(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25%; AS EXPECTED; REMAINS COMMITTED TO USING FULL RANGE OF TOOLS TO SUPPORT ECONOMY; TO CONTINUE BOND BUYING AT LEAST AT CURRENT PACE
7203.JP Reports H1 Net ¥629.4B v ¥1.3T y/y; Op ¥520B v ¥1.4T y/y; Rev ¥11.4T v ¥15.3T y/y; Raises Dividend to ¥105/shr v ¥100/shr prior

FRI
(US) Presidential candidate Joe Biden said to now have the lead in Georgia vote count by almost 1,000 - financial press
*(US) OCT UNEMPLOYMENT RATE: 6.9% V 7.6%E
*(US) OCT AVERAGE HOURLY EARNINGS M/M: 0.1% V 0.2%E; Y/Y: 4.5% V 4.5%E; AVERAGE WEEKLY HOURS: 34.8 V 34.7E
(US) Joe Biden takes lead in Pennsylvania by 5,587 votes; NBC declares Joe Biden 'President Elect'
(US) SEPT FINAL WHOLESALE INVENTORIES M/M: 0.4% V -0.1%E
(US) SEPT CONSUMER CREDIT: $16.2B V $7.8BE
(US) Trump campaign spokesperson: This election is not over; We've said all legal ballots must be counted and all illegal ballots must not be counted; We'll pursue this process through every aspect of the law

Markets brace for a bumpy ride in the next few weeks

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Weekly Market Update: Markets brace for a bumpy ride in the next few weeks

Fri, 23 Oct 04:10 PM EST/09:10 PM GMT

The week began with some renewed optimism related to US fiscal stimulus talks causing stocks to be bid up. The Russell 2000 exhibited relative strength as the week progressed while the Nasdaq lagged. Earnings season continued on with nearly a quarter of the S&P500 reporting. Revenue and earnings beats remained largely the norm, but investors focused more on exogenous factors like the disjointed US fiscal stimulus talks, the growing 2nd and 3rd waves of the coronavirus pandemic and the upcoming US election. Thursday night saw the final presidential debate, but 50M voters have already cast their ballots early, diminishing any impact of the debate. Ultimately the chances of a fiscal stimulus deal being enacted before the November election appeared nonexistent, despite the rhetoric from both sides about inching closer. Amid those diminished prospects and new daily highs for Covid-19 infection rates across Europe and in various states here, US stocks moved modestly lower.

September housing starts saw good growth in the single family segment, while the NAHB housing market index hit a new record high and September US existing homes sales reached the highest level since 2006. US rates backed up with Treasury yields traded up to levels not seen since early June. The curve stepped as well with the 2-10 year spread approaching 80 bps. The Euro rose following record investor demand for the EU’s first issuance of social bonds and on news Brexit negotiations will resume with the aim of reaching a deal next month. Bitcoin jumped to fresh one-year highs alongside strength in precious metals after PayPal announced a new service enabling users to buy, hold, and sell cryptocurrency. For the week, the S&P slipped 0.5%, the DJIA lost 0.9%, and the Nasdaq was down 1.1%.

In corporate news this week, tech earnings season kicked off on a sour note, as Intel and Netflix both were routed after reporting their quarterly results. Intel posted a surprise drop in its data center group and saw margins contract amid the move to cheaper chips. Netflix missed expectations broadly as its subscriber growth slowed again. IBM cloud growth disappointed as the tech giant notched its lowest quarterly revenue in over 20 years. Enthusiasm for Tesla was reinvigorated following strong Q3 results and a plethora of analyst upgrades. Snap reported a surprise profit, with its revenue easily topping forecasts, helped by a surprise jump in ad dollars. The Justice Department filed an antitrust lawsuit against Google in federal court, joined by 11 Republican state attorneys general, accusing the search provider of locking up deals with mega-cap partners like Apple and limiting overall competition. In a flurry of M&A in the Permian Basin, ConocoPhillips announced it would buy Concho Resources and Parsley Energy agreed to be acquired by Pioneer Natural Resources, both in all-stock deals.


SUN 10/18
*(CN) CHINA Q3 GDP Q/Q: 2.7% V 3.3%E; Y/Y: 4.9% V 5.5%E

MON 10/19
CXO ConocoPhillips confirms acquisition of Concho Resources in all-stock transaction for a fixed ratio of 1.46shrs of CP common stock (enterprise valued at ~$60B)
*(US) OCT NAHB HOUSING MARKET INDEX: 85 V 83E (highest on record)
INTC Reportedly close to deal to divest NAND memory chip unit to SK Hynix in potential $10B sale; could be finalized by Monday - press
IBM Reports Q3 $2.58 adj v $2.55e, Rev $17.6B v $17.6Be
BHP.AU Reports Q1 Waio Iron Ore Production: 74Mt v 69Mt y/y, Copper Production 413 Kt v 394Kte
INTC Hynix confirms to purchase Intel's NAND flash-memory manufacturing business for KRW10.3T (~$9.0B) in all cash transaction (the transaction was speculated to be $10.0B)

TUES 10/20
(US) NY Fed Head of Markets Group Singh: In scenario of significant market stress, Fed could buy both bonds and ETFs
AZN Reportedly Covid-19 trial in the US to resume this week following review by the FDA of a serious illness - press
GOOGL DOJ confirms filing antitrust suit against Google in federal court today on search market dominance, joined by 11 state AGs
CP Reports Q3 C$4.12 v C$4.22e, Rev C$1.86B v C$1.87Be
*(US) SEPT HOUSING STARTS: 1.42M V 1.47ME; BUILDING PERMITS: 1.55M V 1.520ME
PG Reports Q1 $1.37 v $1.43e, Rev $19.3B v $18.3Be; Raises FY21 buyback view by $1B (0.2% of market cap)
UBSG.CH Reports Q3 Net $2.1B v $1.56Be y/y; Rev $8.94B v $7.73Be, To propose cash dividend in Apr 2021

WEDS 10/21
*(UK) SEPT CPI M/M: 0.4% V 0.5%E; Y/Y: 0.5% V 0.6%E
(UK) EU Brexit Negotiator Barnier: Reiterates that EU stance on Brexit will not change; to continue to look for a deal but it must reflect a balance compromised
VZ Reports Q3 $1.25 v $1.22e, Rev $31.5B v $31.6Be
PYPL Launches new service enabling users to Buy, Hold and Sell Cryptocurrency
VZ CFO: expect to see cost cuts beyond $10B - earnings call comments
*(US) DOE CRUDE: -1.0M V -1ME; GASOLINE: +1.9M V -1.5ME; DISTILLATE: -3.8M V -1.5ME; Utilization: 72.9% v 75.8%e
(US) Association of American Railroads weekly rail traffic report for week ending Oct 17th: 518.8K, +2.2% y/y
*(US) FEDERAL RESERVE BEIGE BOOK: ECONOMIC ACTIVITY CONTINUED TO INCREASE ACROSS ALL DISTRICTS, WITH THE PACE OF GROWTH CHARACTERIZED AS SLIGHT TO MODEST IN MOST DISTRICTS

THURS 10/22
KO Reports Q3 $0.55 v $0.45e, Rev $8.7B v $8.35Be
*(US) INITIAL JOBLESS CLAIMS: 787K V 870KE; CONTINUING CLAIMS: 8.37M V 9.63ME
*(US) SEPT EXISTING HOME SALES: 6.54M V 6.30ME (highest level since 2006)
*(US) SEPT LEADING INDEX: 0.7% V 0.6%E
CNX Reportedly EQT Corp is seeking to acquire CNX - press
INTC Reports Q3 $1.11 v $1.10e, Rev $18.3B v $18.2Be; To complete $2.4B share buyback when market stabilizes

FRI 10/23
DAI.DE Reports final Q3 Net €2.18B v €1.81B y/y; adj EBIT €3.48B v €3.48B prelim; Rev €40.3B v €43.3B y/y
*(UK) SEPT RETAIL SALES (EX-AUTO/FUEL) M/M: 1.6% V 0.5%E; Y/Y: % V 5.0%E
*(FR) FRANCE OCT PRELIMINARY MANUFACTURING PMI: 51.0 V 51.0E (2nd month of expansion)
*(DE) GERMANY OCT PRELIMINARY MANUFACTURING PMI: 58.0 V 55.0E (4th straight expansion and highest reading since Apr 2018)
*(EU) EURO ZONE OCT PRELIMINARY MANUFACTURING PMI: 54.4 V 53.0E (4th month of expansion and highest reading since Aug 2018)
*(UK) OCT PRELIMINARY MANUFACTURING PMI: 53.3 V 53.1E (5th straight expansion)
- (LY) Libya National Oil Company says force majeure lifted on Ras Lanuf and Es Sider ports
AZN FDA reportedly allowing resumption of US Phase 3 trial for AstraZeneca COVID-19 vaccine – press
JNJ Covid-19 vaccine trial said to resume shortly - press
BA FAA determines a 2019 software fix for several Boeing 747 passenger and cargo planes was inadequate; Boeing to develop a new fix; faulty software did not result in any accidents - press

Hopes for vaccines and government deals fend off concerns about new global pandemic wave

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Weekly Market Update: Hopes for vaccines and government deals fend off concerns about new global pandemic wave

Fri, 16 Oct 04:17 PM EST/09:17 PM GMT

Stocks rose out of the gate this week looking past rising coronavirus infection rates globally. Stay-at-home stocks continued to outperform the broader market, helped in part by fresh lockdown measures in several European nations intended to mitigate the spread of COVID-19 hotspots. Earnings season kicked off, with most of the mega banks topping earnings estimates, albeit largely on lower provisions for loan losses rather than an improving lending landscape. The US dollar moved up against the Chinese Yuan after officials in China took note of the recent strength when the PBOC cut the its FX risk reserve ratio, effectively making it easier to short the Yuan.

By midweek investors risk appetite receded. Worries surrounding forced closures in Europe alongside continued stalemates on both the Brexit and US fiscal stimulus fronts weighed on sentiment. The German 10-year government yield fell to its lowest level since March amid a chorus of ECB officials highlighting their growing concerns about too-low inflation. US inflation data largely met expectations, but CPI last month was clearly buoyed by rising used car prices and not much else. Stocks rebounded into the tail end of the week helped in part by hopes that a US coronavirus vaccine approval was getting closer. US economic data was also positive, headlined by a strong September retail sales report. For the week, the S&P gained 0.2%, the DJIA edged up 0.1%, and the Nasdaq rose 0.8%.

In corporate news this week, as earnings season kicked off, United Airlines reported a wider than anticipated Q3 profit loss, though it was able to reduce its cash burn to $25M/day from $40M/day in Q2. Delta reiterated it expects to reach breakeven by spring 2021, and noted it’s seeing ‘good bookings’ for Thanksgiving and Christmas. Fastly cut its outlook, citing regulatory pressure on its biggest customer, TikTok, as a headwind. Hewlett Packard Enterprises shares jumped after providing upbeat guidance at its analyst day. Both J&J and Lilly halted key coronavirus studies this week due to trial safety concerns. Traton reached an agreement in principle to acquire the remaining shares of Navistar at $44.50/share, though the deal is still subject to finalization of due diligence. Disney announced a major strategic reorganization of its media and entertainment businesses with the aim of bolstering its streaming platforms, Disney+, ESPN+, and Hulu. The FCC said it will 'move forward' on Section 230 rulemaking changes and Republicans in Congress called for big tech CEOs to testify after Twitter blocked recirculation of a New York Post article regarding Hunter Biden's Ukraine connections.

SUN 10/11
(CN) China PBOC to cut the FX risk reserve ratio to 0% [from 20%], effective from Monday (Oct 12th); The move relates to certain FX forwards trading by financial firms - financial press
(CN) China President Xi to visit Shenzhen this week [on Oct 14th]; Shenzhen to ease foreign investment entry limit related to high technology; China to support digital yuan trial in Shenzhen - SCMP

MON 10/12
(UK) Strict national lockdown may be the next step taken by UK Government - press
(US) Reportedly White House seeks Congressional approval for three separate arms packages to Taiwan
DIS Announces strategic reorganization of media and entertainment businesses
JNJ Coronavirus vaccine study has been halted due to unexplained illness in one of its participants - press

TUES 10/13
MAERSKB.DK Issues Q3 trading update: prelim Adj EBITDA $2.4B v $1.66B y/y, Rev $9.9B v $10.1B y/y; Raises FY20 outlook
*(DE) GERMANY OCT ZEW CURRENT SITUATION SURVEY: -59.5 V -60.0E; EXPECTATIONS SURVEY: 56.1 V 72.0E
JPM Reports Q3 $2.92 v $2.35e, Managed Rev $29.9B v $28.6Be; Extends buyback suspension at least through Q4
FAST Reports Sep net sales $478.6M +7.3% y/y
*IMF UPDATES ITS WORLD ECONOMIC OUTLOOK (WEO)
*(US) SEPT CPI M/M: 0.2% V 0.2%E; CPI (EX-FOOD/ENERGY) M/M: 0.2% V 0.2%E; CPI NSA: 260.280 V 260.285E
DAL Reports Q3 -$3.30 v -$3.10e, Rev $2.65B v $3.09Be
LLY Lilly monoclonal antibody trial has been paused due to safety concerns - press
VZ CEO appears at the Apple 5G event; Verizon to double its fastest 5G wideband network launch across 1,800 US cities effective today

WEDS 10/14
BAC Reports Q3 $0.51 adj v $0.53e, Rev $20.3B v $20.6Be
(AT) ECB's Holzmann: More extensive containment measures likely to require more monetary and fiscal accommodation in the short run - financial press
*(US) SEPT PPI FINAL DEMAND M/M: 0.4% V 0.2%E; Y/Y: 0.4% V 0.2%E
(US) Association of American Railroads weekly rail traffic report for week ending Oct 10th: 520.5K, +1.9% y/y
(FR) France govt declares public health state of emergency beginning Saturday - Sky News
FSLY Cuts Q3 Rev $70.0-71M v $75Me (prior $73.5-75.5M), cites lower usage by TikTok
AA Reports Q3 -$1.17 v -$1.51e, Rev $2.37B v $2.22Be
UAL Reports Q3 -$8.16 v -$7.63e, Rev $2.49B v $2.57Be
Twitter and Facebook have limited user access to posts that linked to NY Post report that alleged Biden met with Ukrainian energy execs

THURS 10/15
ROG.CH Reports Q3 (CHF) Rev 14.7B v 15.4Be; Expects further dividend increase in 2020
2330.TW Reports Q3 (NT$) Net 137.3B v 124.9Be; Op 150B v 107.9B y/y; Rev 356.4B v 293.0B y/y
Guides Q4 Rev $12.4-12.7B; Gross Margin 51.5-53.5%; Forecasts based on NT$28.75/USD
(DE) Germany 10-year govt yield at -0.61% (lowest level since March)
*(US) OCT EMPIRE MANUFACTURING: 10.5 V 14.0E
*(US) INITIAL JOBLESS CLAIMS: 898K V 825KE; CONTINUING CLAIMS: 10.02M V 10.55ME; highest level of initial claims since Aug; California jobless claims remain frozen at prior level
*(US) OCT PHILADELPHIA FED BUSINESS OUTLOOK INDEX: 32.3 V 14.8E
*(US) DOE CRUDE: -3.8M V -2ME; GASOLINE: -1.6M V -1.5ME; DISTILLATE: -7.2M V -2ME
(US) FCC Chair Pai: FCC will 'move forward' on Section 230 with rulemaking to clarify its meaning; FCC general counsel has said agency has legal authority to interpret Section 230
DAI.DE Reports prelim Q3 adj EBIT €3.48B v €2.50Be; Expects a positive impact for the remainder of the year
HPE Guides initial FY21 $1.56-1.76 v $1.49e, FCF to grow at a 3-year CAGR of over 50% between FY20 and FY23
RIO.AU Reports Q3 Pilbara iron ore production 86.4Mt v 87.3Mt y/y; iron ore shipments 82.1Mt v 86.1Mt y/y
TWTR Twitter Lawyer Vijaya Gadde Tweets: Twitter will no longer remove hacked content unless directly shared by hackers or those acting in concert with hackers
(US) Pres Trump confirms he owes debts to 'normal banks' related to mortgages - debate comments

FRI 10/16
*(US) SEPT ADVANCE RETAIL SALES M/M: 1.9% V 0.8%E; RETAIL SALES (EX-AUTO) M/M: 1.5% V 0.4%E
(UK) PM Johnson: Prepared for no-deal exit and move to an Australia style deal; Still willing to discuss practicalities with EU - financial press
*(EU) EURO ZONE SEPT FINAL CPI Y/Y: -0.3% V -0.3%E; CPI CORE Y/Y: 0.2% V 0.2%E
BA EU regulator EASA: Boeing 737 Max is safe, may return in 2020
PFE CEO: Could apply for emergency use of COVID-19 vaccine in late Nov (prior early Oct) - open letter
(US) Weekly Baker Hughes Rig Count: 282 v 269 w/w (+5% w/w)

Hope still alive for stimulus and Brexit deals

TradeTheNews.com 

Weekly Market Update: Hope still alive for stimulus and Brexit deals

2020-10-09T16:03:38.88

Stock markets forged higher this week despite a rising second wave of coronavirus infections globally. President Trump’s condition appeared to improve dramatically thanks to, in his opinion, a promising new antibody treatment which he described as a “cure.” Trump is set to resume attending campaign events next week. The drama in DC was not just confined to intrigue surrounding Trump’s Covid diagnosis but also the fate of a second fiscal stimulus package. Sentiment seesawed following a series of tweets from the President who called off the talks on Tuesday, only to do a complete reversal by Friday calling on negotiators to go big and find a much larger aid package than either side of Congress is currently offering. Regardless of the mixed signals coming out of Washington, markets and investors alike appear to holding out hope some sort of aid deal can be reached in the neighborhood of a $2T package.

Brexit talks continued but progress remained extremely limited ahead of next week’s UK-imposed EU summit deadline. Both sides agreed to intensify talks yet again, but the fisheries issue remains a key stumbling block. EU and French PMI services data fell back into contraction territory for the first time in several months while US weekly jobless claims remained elevated above 800K. The squishy data was reflected in a deluge of dovish remarks from central bank speakers. For example, Fed Chairman Powell reiterated that the FOMC was nowhere near worrying about overdoing it on the stimulus side given the current outlook. Treasury yields still managed to drift higher, helped in large part by another historic dose of coupon supply. The Greenback lost ground late in the week and WTI crude futures recouped a good portion of the recent weakness seen coming into the week. For the week, the S&P gained 3.8%, the DJIA rose 3.3%, and the Nasdaq added 4.6%.

In corporate news this week, Domino’s saw sales jump but pandemic-related costs crimp profits, sending shares lower. Levi’s blew away estimates and guided above consensus as its online sales surged. Morgan Stanley announced it would acquire investment manager Eaton Vance for $56.50/share in a $7B deal as the banking giant moves to buy up another fee-based business, following its E-Trade acquisition earlier this year. Bristol Myers Squibb agreed to pay $225.00/share in cash for Myokardia, in a deal valued at $13.1B, in order to acquire its pipeline of cardiovascular drugs. AMD reportedly is in late-stage talks to acquire Xilinx for over $30B, a deal that would be only the latest M&A in a rapidly consolidating sector. On the energy front, Fuelcell disclosed an $8M award from the Department of Energy to advance the commercialization of its solid oxide electrolysis high efficiency hydrogen generation technology.


MON 10/5
AIR.FR COO: Outlook for the aviation industry deteriorated again; expects at least 15,000 job cuts - press
CINE.UK Confirms to suspend operations at 536 theaters in US and 127 theaters in UK from Thursday, Oct 8th
*(FR) FRANCE SEPT FINAL SERVICES PMI: 47.5 V 47.5E (confirms 1st contraction in 4 months and lowest reading since May 2020)
*(DE) GERMANY SEPT FINAL SERVICES PMI: 50.6 V 49.1E (3rd month of expansion but lowest since June 2020)
*(EU) EURO ZONE SEPT FINAL SERVICES PMI: 48.0 V 47.6E (confirms 1st contraction in 3 months)
*(UK) SEPT FINAL SERVICES PMI: 56.1 V 55.1E (confirms 3rd month of expansion)
MYOK Confirms to be acquired by Bristol Myers Squibb for $225.00/shr in cash valued at $13.1B
*(US) SEPT FINAL MARKIT SERVICES PMI: 54.6 V 54.6E
(US) Said that the US House Panel will propose a break up of the US tech giants - press
*(US) SEP ISM SERVICES INDEX: 57.8 V 56.2E

TUES 10/6
(EU) EU Commission to allow budget rules to remain suspended in 2021 - financial press
(NO) Norway Central Bank (Norges) Gov Olsen: Reiterates stance that willing to contemplate negative interest rates if financial markets are hit by a renewed wave of turmoil
(EU) ECB chief Lagarde: Reiterates stance that recovery is bumpy and uneven; prepared to add more monetary support, including cutting a key rate further below zero - CEO Summit comments
(US) Fed's Bullard (non-voter): Does not expect Fed to change policy stance through 2021; US Q3 GDP growth of 30% likely
*(US) PRESIDENT TRUMP: I HAVE DIRECTED REPUBLICANS TO STOP NEGOTIATING ON FISCAL STIMULUS UNTIL AFTER THE ELECTION
(US) House Antitrust Subcommittee Democratic report seeks break-up of giant internet platforms; calls for sweeping antitrust reforms for big tech
(US) Fed's Mester (FOMC voter): disappointed that fiscal talks have been halted; timing of fiscal stimulus is less important than approving a package; recovery will continue but it will be slower - CNBC interview

WEDS 10/7
(UK) UK intends to leave Brexit trade talks if there's no deal seen by Oct 15th, according to source familiar with UK Brexit position - press
*(US) DOE CRUDE: +0.5M V -1ME; GASOLINE: -1.4M V -1ME; DISTILLATE: -1.0M V -1ME
(US) Association of American Railroads weekly rail traffic report for week ending Oct 3rd: 518.8K, +0.8% y/y
*(US) AUG CONSUMER CREDIT: -$7.2B v +$14.0Be
C Fed announces enforcement action against Citigroup that requires the firm to correct several longstanding deficiencies; cease and desist order requires Citigroup to enhance its firm-wide risk management and internal controls
(US) Pres Trump tweets recorded video message: says Regeneron antibody drug was 'the key' to feeling good again; mentions similar Lilly treatment being developed; wants Regeneron and Lilly drugs to be available free to Americans
005930.KR Reports Q3 prelim (KRW) Op 12.3T v 10.5Te, Rev 66.0T v 64.1Te (62.0T y/y)

THURS 10/8
066570.KR Reports Q3 prelim (KRW) Op 959.0B v 781.1B y/y, Rev 16.9T v 15.7T y/y
IBM To spin-off Managed Infrastructure Services Unit; Guides Q3 adj $2.58 v $2.55e, Rev $17.6B v $17.6B v $17.6Be
(DE) German Bundesrat (upper house) approves tax raise on greenhouse emission - press
(US) President Trump: feeling perfect; he will not participate in virtual debate against Biden following earlier Commission recommendation - Fox News interview
*(US) INITIAL JOBLESS CLAIMS: 840K V 820KE; CONTINUING CLAIMS: 10.98M V 11.40ME
(CN) Pres Trump: I plan to use tariffs on China in a second term - Fox Business interview
(US) Treasury Sec Mnuchin reportedly floated the idea of restarting stimulus talks with Speaker Pelosi - Politico
(CN) SEC Chair Clayton: Directed staff to actively consider Trump's working group recommendations to strengthen protections for investors from EM risks, including investments in US-listed Chinese firms
(US) House Speaker Pelosi: there is no standalone airline bill without a bigger aid plan
*(US) TREASURY $23B 30-YEAR BOND REOPENING DRAWS 1.578%; BID TO COVER 2.29 V 2.31 PRIOR
(US) Pres Trump reportedly indicated he was worried by stock market reaction to his tweet calling off coronavirus relief talks; told House Min Leader McCarthy that he wanted a "big deal" with Speaker Nancy Pelosi - Axios
XLNX Speculated that co. is in advanced talks to be acquired by AMD, the deal could be worth over $30.0B [vs Xilinix's closing market cap of ~$25.9B] - US financial press

FRI 10/9
*(UK) AUG MONTHLY GDP M/M: 2.1% V 4.6%E
FCEL Discloses $8M DoE award to advance the demonstration and commercialization of FuelCell Energy’s solid oxide electrolysis high efficiency hydrogen generation technology
(US) Aug Final Wholesale Inventories M/M: 0.4% v 0.5%e

Markets stay calm despite US stimulus deadlock and Trump testing Covid positive

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Weekly Market Update: Markets stay calm despite US stimulus deadlock and Trump testing Covid positive

2020-10-02T16:15:24.463

Trade commenced this week amid renewed hopefulness regarding US fiscal stimulus talks which came alongside several M&A announcement. A pronounced rebound in European banks also gained traction following a report Ping An acquired more shares of HSBC. Tuesday saw all eyes turn to the election in what could best be described as a wild, chaotic and decidedly unpresidential first debate. What was viewed by many as a poor showing for each candidate, appeared to result in little change in trajectory heading into next month’s vote. Focus quickly shifted back to DC, where, as the week progressed, hope waned that Treasury Secretary Mnuchin and House Speaker Pelosi would be able to bridge a roughly $700B gap and find a way to a fiscal stimulus package compromise. Thursday evening the Democrats went ahead and pushed their $2.2T stimulus package through the House. Airlines did get a little boost on Friday as Pelosi said she was open to a separate deal to resume support for industry payrolls.

Ultimately Tuesday’s Presidential debate might just be the only one to occur after Friday’s bombshell announcement that the President and First Lady had tested positive for Covid-19, along with several other White House personnel. Initial reports indicated President Trump’s symptoms were mild but the news sent shockwaves through Washington and the nation. It also somewhat overshadowed a mixed September jobs report. Payroll figures missed expectations but the unemployment rate fell more than expected and the previous month’s job gains were revised higher. Particularly worrying though was the number of long-term unemployed (those jobless for 27 weeks or more), which increased by 781K to 2.4M, the single largest monthly increase since they started keeping records in 1948. For the week the S&P gained 1.5%, the DJIA added 1.9%, and the Nasdaq was up 1.5%.

In corporate news this week, airlines gained back some of their losses for the week after Speaker Pelosi said the House will pass standalone legislation to keep airline workers on payroll even if there is no broader agreement with the White House on COVID-19 relief, though any action by the House has been pushed to next week. Micron Q1 guidance disappointed, pushing shares lower, and the company couldn’t put a date on when it could sell to Huawei again. Bed Bath and Beyond posted a surprise blowout earnings number and notched its first comp sales gain since 2016 as it saw an upswing in e-commerce sales. Tesla reported a company record number of deliveries in Q3, setting the pace to reach its planned 500K total for the full year. Disney announced plans to cut 28K US theme park positions, 67% of which are part-time employees, as its California theme parks experience prolonged closures. Duke Energy reportedly rejected a takeover approach from NextEra Energy, though Next Era was said to still be interested in making a deal and Duke could be open to more discussions. Apollo's Covis reached an agreement to acquire AMAG Pharmaceuticals, which focuses on ‘underrecognized health conditions,’ at $13.75/share in cash, valuing it at $647M. Ford named John Lawler as CFO, effective immediately, as the auto industry enters the high-demand autumn selling season. Molson Coors signed an exclusive agreement with Coca-Cola to launch Mexico’s Topo Chico brand as a new hard seltzer product in the US.


SUN 9/27
981.HK US has imposed restrictions on exports to SMIC, the move by the US government said to be not as severe as blacklisting the co. - financial press
5.HK Ping An Insurance (largest shareholder) raised stake to 8% from 7.95%, purchased an additional 10.8M H-shares - update
MON 9/28
(US) White House plans to announce shipments of millions of rapid Covid tests to the states in an effort to get them to reopen schools - press
(UK) EU negotiators said to have indicated it was prepared to start writing a joint legal text of a post Brexit trade agreement with the UK - UK press
TUES 9/29
*(EU) EURO ZONE SEPT ECONOMIC CONFIDENCE: 91.1 V 89.0E
*(DE) GERMANY SEPT PRELIMINARY CPI M/M: -0.2% V -0.1%E; Y/Y: -0.2% V 0.0%E
*(US) SEPT CONSUMER CONFIDENCE: 101.8 V 90.0E
(UK) Reportedly the UK has sent 5 new trade deal drafts to the EU in an effort to reach a breakthough in talks
(US) Dallas Fed Aug Texas Service Sector Outlook Survey: General Business Activity: 11.5 v 4.7 prior
(US) NYC test positivity rate registers at 3% today (tripling over last few days); if it remains at 3% for 7 days, all public schools close - press
(US) DOJ Antitrust Chief Delrahim: we are looking at controversy around data feeds from exchanges and data pricing - press interview
REGN REGN-COV2 Antibody Cocktail reduced Viral Levels and improved symptoms in Non-Hospitalized COVID-19 Patients in seamless Phase 1/2/3 trial
MU Reports Q4 $1.08 v $1.00e, Rev $6.06B v $5.91Be
*(CN) CHINA SEPT MANUFACTURING PMI (GOVT OFFICIAL): 51.5 V 51.3E (7th straight expansion)
WEDS 9/30
RDSA.NL Issues Q3 Update: Guides Q3 Integrated gas Production 820-860Kboe/d, LNG liquefaction volumes 7.9-8.3Mt, Adj Earnings $100-200M; Confirms to cut 9K jobs
*(DE) GERMANY SEPT NET UNEMPLOYMENT CHANGE: -8.0K V -7.0KE; UNEMPLOYMENT CLAIMS RATE: 6.3% V 6.4%E
*(US) SEPT ADP EMPLOYMENT CHANGE: +749K V +649KE; Strong gains in Manufacturing (4th month of improvement)
*(US) Q2 FINAL GDP PRICE INDEX: -1.8% V -2.0%E; CORE PCE Q/Q: -0.8% V -1.0%E
*(US) Q2 FINAL GDP ANNUALIZED Q/Q: -31.4% V -31.7%E; PERSONAL CONSUMPTION: -33.2% V -34.1%E
(US) Nevada reports Aug casino gaming Rev $743.0M, -22.1% y/y; Las Vegas strip Rev $317.3M, -39.2% y/y
*(US) DOE CRUDE: -2.0M V +1ME; GASOLINE: +0.7M V -1ME; DISTILLATE: -3.2M V -1ME
(US) Association of American Railroads weekly rail traffic report for week ending Sep 26th: 518.3K, -2.1% y/y
(US) Fed extends restrictions on large banks' dividends and buybacks into Q4 (for firms with over $100B in assets)
(JP) Tokyo Stock Exchange (TSE): probing reports of network issues; JPX is halting trade of all shares due to network issues; Unsure when system will be restored.
(JP) Follow Up: JPX: Nikkei trading is halted for full day [Thursday] due to network issue [first time trading has been halted for an entire day]; To announce trading schedule tomorrow, will attempt to resume TSE trading on Friday (Oct 2nd)
THURS 10/1
(HK) Macau Sept Casino Rev (MOP): 2.2B v 1.3B prior; Y/Y: -90.0% v -94.5% prior
*(IT) ITALY SEPT MANUFACTURING PM: 53.2 V 53.5E (3rd month of expansion and highest since Jun 2018 )
*(EU) EURO ZONE AUG UNEMPLOYMENT RATE: 8.1% V 8.1%E
F Names John Lawler (54) as CFO, effective immediately
*(US) INITIAL JOBLESS CLAIMS: 837K V 850KE; CONTINUING CLAIMS: 11.8M V 12.20ME; California to not report claims for next 2 weeks
*(US) AUG PERSONAL INCOME: -2.7% V -2.5%E; PERSONAL SPENDING: 1.0% V 0.8%E
*(US) SEPT ISM MANUFACTURING: 55.4 V 56.4E; PRICES PAID: 62.8 V 58.8E
(UK) Bank of England (BOE): have reached target in corporate bond purchase program, no corporate bond operations will be conducted until further notice
(US) Fed extends temporary actions aimed at increasing the availability of intraday credit extended by Federal Reserve Banks to March 31st
(US) US President Trump: Will begin quarantine after aide Hicks tested positive for COVID-19, First Lady to also start the quarantine process
FRI 10/2
*(US) PRESIDENT TRUMP TWEETS: TESTED POSITIVE FOR CORONAVIRUS
*(EU) EURO ZONE SEPT ADVANCE CPI ESTIMATE Y/Y: -0.3% V -0.2%E; CPI CORE Y/Y: 0.2% (record low) V 0.4%E
TSLA Reports Q3 total production 145.0K v 82.3K q/q; deliveries 139.3K v 90.7K q/q v 140Ke; Says Q3 vehicle inventory declined further
*(US) SEPT UNEMPLOYMENT RATE: 7.9% V 8.2%E
*(US) SEPT CHANGE IN NONFARM PAYROLLS: +661K V +875KE
*(US) SEPT AVERAGE HOURLY EARNINGS M/M: 0.1% V 0.2%E; Y/Y: 4.7% V 4.8%E; AVERAGE WEEKLY HOURS: 34.7 V 34.6E
*(US) SEPT FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 80.4 V 79.0E
(US) House Speaker Pelosi: relief for airline workers is being advanced; calls on airlines to postpone job cuts; House will pass standalone legislation to keep airline workers on payroll if no broader agreement on COVID-19 relief is possible
(US) Pres Trump reportedly plans to empower Pence to take over some duties in the event his coronavirus symptoms worsen; national security is said to be a top priority - Fox News

Pandemic, Brexit and election uncertainties continue to chip away at market confidence

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Weekly Market Update: Pandemic, Brexit and election uncertainties continue to chip away at market confidence

2020-09-25T16:10:20.163

US stock markets trended lower for the fourth straight week. Coronavirus worries in Europe were exported across the northern hemisphere as the flu season looms large, keeping a lid on investors’ willingness to add risk. Officials in Europe and Washington also showed little, if any, sense of urgency to reach a breakthrough in both Brexit and US fiscal stimulus talks. Adding to the uncertainty, President Trump continued to cast doubt on the potential authenticity of the upcoming election, forcing colleagues within the Republican party to avow that they will abide by the results and expect a peaceful transition of power in January. Banks in particular were soft globally amid a continued drift lower in rates and a report that accused several major banks of laundering over $2T in funds over the last 20 years. The US dollar benefited from several waves of safe haven trading while emerging market currencies lagged. The Euro tested fresh 7-week lows alongside gold prices. For the week, the S&P fell 0.6%, the DJIA dropped 1.7%, and the Nasdaq gained 1.1%.

In corporate news this week, Nike shares surged after blowing away Q1 expectations with large gains in online sales and a return to revenue growth in China. Embattled Nikola founder Trevor Milton voluntarily stepped down as Chairman as federal officials opened a probe into fraud claims against the electric vehicle company. Costco posted beats on its top and bottom line and reported comp sales +11%, but expectations got ahead of themselves and shares in the warehouse retailer moved lowed. Tesla held its Battery Day event, though investors were not so enthused by the focus on long-term vision and less on specifics and near-term deliverables. On the M&A front, Microsoft announced the acquisition of ZeniMax Media, the parent company of ‘Fallout’ and ‘Doom’ games publisher Bethesda Softworks, for $7.5B in cash. UK betting operator William Hill reportedly has been approached by Apollo and Caesars about a potential cash takeover. Illumina affirmed it would reacquire its former cancer detection spinoff Grail for $8B in a cash and stock deal. Scripps announced plans to acquire ION Media for $2.65B, and Warren Buffett’s Berkshire Hathaway will help finance the purchase with a $600M investment in preferred stock.


SUN 9/20
Several major global banks including Standard Chartered, JP Morgan, Deutsche Bank, Bank of New York Mellon and HSBC accused of laundering over $2.0T in funds over 20+ years in document filed by FinCEN

MON 9/21
NKLA Founder Trevor Milton proposes to voluntarily step down as Chairman and from the Board; Appoints former GM exec Stephen Girsky as successor; effective immediately
(US) Fed's Kaplan (FOMC dissenter): Sees rates near zero as appropriate for the coming 2.5-3.0 years
MSFT To acquire ZeniMax Media and its Game Publisher Bethesda Softworks for $7.5B in cash
*(US) FED Q2 FINANCIAL ACCOUNTS HOUSEHOLD CHANGE IN NET WORTH: +$7.61T V -$6.548T PRIOR

TUES 9/22
(UK) PM Johnson: Announces new restrictions to combat the spread of coronavirus; new restrictions likely to remain for six months (until Mar 2021) - comments in Parliament
(US) Senator Romney (R-UT) says will support vote this year on Trump's Supreme Court nominee - Politico
*(US) SEPT RICHMOND FED MANUFACTURING INDEX: 21 V 12E (highest since Sep 2018)
*(US) AUG EXISTING HOME SALES: 6.00M V 6.01ME (sales pace at 14-year high)
(US) FDA reportedly expected to release a new standard for Emergency Use Authorization (EUA) for coronavirus vaccine that may make it difficult to see approval before Election Day (Nov 3rd) - Wash Post
NKE Reports Q1 $0.95 v $0.46e, Rev $10.6B v $9.17Be
*(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 0.25%; (AS EXPECTED)

WEDS 9/23
*(FR) FRANCE SEPT PRELIMINARY MANUFACTURING PMI: 50.9 V 50.6E (moves back into expansion)
*(DE) GERMANY SEPT PRELIMINARY MANUFACTURING PMI: 56.6 V 52.5E (3rd straight expansion and highest reading since Jun 2018)
*(EU) EURO ZONE SEPT PRELIMINARY MANUFACTURING PMI: 53.7 V 51.9E (3rd month of expansion and highest reading since Aug 2018)
*(UK) SEPT PRELIMINARY PMI MANUFACTURING: 54.3 V 54.0E (4th straight expansion)
*(US) SEPT PRELIMINARY MARKIT MANUFACTURING PMI: 53.5 V 53.5E
*(US) DOE CRUDE: -1.6M V -1.5ME; GASOLINE: -4.0M V -0.5ME; DISTILLATE: -3.4M V +1ME
(US) Association of American Railroads weekly rail traffic report for week ending Sep 19th: 522K, -1.3% y/y
(US) Calif Gov Newsom signs exec order to ban sales of new automobiles with internal combustion engines in California beginning 2035 - press
(US) Pres Trump: believes the election will end up in the Supreme Court; that's why it's important to have nine justices seated
(US) President Trump: Going to have to see what happens on transfer of power

THURS 9/25
*(DE) GERMANY SEPT IFO BUSINESS CLIMATE SURVEY: 93.4 V 93.8E (5th straight month of improvement)
SSP Confirms to acquire ION Media for $2.65B cash-debt; Berkshire Hathaway to invest $600M PFD equity; To get warrant to buy up to 23.1M shares of Scripps
*(US) INITIAL JOBLESS CLAIMS: 870K V 840KE; CONTINUING CLAIMS: 12.58M V 12.28ME
*(US) AUG NEW HOME SALES: 1.01M V 890KE (highest in 14 years)
(US) House Ways and Means Chair Neal (D-MA): confirms Democrats are drafting a new COVID response bill; could be voted on next week; likely to be at $2.2T
COST Reports Q4 $3.13 v $2.85e, Rev $52.3B v $52.5Be

FRI 9/26
WMH.UK Reportedly approached by Apollo for potential deal - press
*(US) AUG PRELIMINARY DURABLE GOODS ORDERS: 0.4% V 1.4%E; DURABLES (EX-TRANSPORTATION): 0.4% V 1.0%E
(US) PRES TRUMP REPORTEDLY PLANS TO NOMINATE AMY CONEY BARRETT TO THE SUPREME COURT - CNN

Central banks reinforce commitments to prolonged easy policy in the face of uncertainty over new Covid spikes

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Weekly Market Update: Central banks reinforce commitments to prolonged easy policy in the face of uncertainty over new Covid spikes

2020-09-18T16:06:20.493

US stock markets came under modest pressure this week. The NASDAQ led the way lower punching below its 50-day moving average and the S&P followed suit. The Transports and Russel 2000 experienced significantly better performance suggesting further rotation out of the big cap technology names that powered indices to fresh all-time highs this summer. Snowflake’s white hot IPO went down as the biggest software IPO in history by a wide margin, and may ultimately prove as the high water mark for investors’ frenzy into the cloud. Late in week sentiment was further damped by ongoing uncertainty related to President Trump’s TikTok saga and a growing belief that governments in Europe were mulling revisiting lockdown measures to stem resurgent Covid-19 infection rates.

We also heard from a host of central banks highlighted by the Fed. Chairman Powell discussed a sobering update of the FOMC’s outlook along with a heavily revised policy statement that included what he deemed as “powerful” forward guidance that should enable the Fed to meet its newly instituted average 2% inflation target. Meanwhile, the BOE acknowledged members specifically discussed the effectiveness of negative rates when they met on Thursday amid Brexit talks mired in stagnation following the House of Commons passage of PM Johnson’s internal markets bill. Overnight lending rates in Europe slipped further with Euribor falling below the ECB’s deposit rate for the first time and sovereign treasury yields remained capped. Crude oil prices moved up after OPEC+ producers met and made no mention of changes to oil output targets. For the week the S&P fell 0.7%, the DJIA slipped less than 0.1%, and the Nasdaq shed 0.6%.

In corporate news this week, after back-and-forth offers from multiple parties, reports indicated Oracle had reached a deal to partner with TikTok and bring its US operations under majority American ownership, but the White House had yet to sign off on the arrangement and set a Sunday deadline for its removal from app stores. FedEx posted an eye-popping quarter as COVID boosted deliveries and express margins, but the company refrained from offering FY guidance. Nvidia announced a deal to acquire Softbank’s chipmaker ARM for $40B, which would be the largest semiconductor deal in history, though regulatory hurdles still remain. Walmart confirmed its long-awaited Amazon Prime rival ‘Walmart+’ membership plan is now available, priced at $98/year or $12.95/month. Gilead Sciences announced a $21B deal for antibody therapy specialist Immunomedics at $88.00/share in cash, seeking to acquire its prized breast cancer treatment Trodelvy. Verizon bought Miami-based disposable phone service TracFone for $6.3B from America Movil as the telecom giant fortifies its position in the prepaid wireless space.


SUN 9/13
9984.JP Confirms it will sell ARM to NVIDIA for up to $40B [cash and stock transaction], $2.0B will be paid to Arm in cash; Softbank Group and Vision fund to receive $10B in cash; to receive $21.5B worth of NVIDIA shares
NVDA ARM transaction to be immediately accretive to non-GAAP gross margin and EPS

MON 9/14
(US) US Ambassador to China Branstad said to resign - CNN
DAL Cuts Q3 system capacity -60% y/y (prior -25% to -20% y/y) - filing
LEN Reports Q3 $2.12 v $1.51e, Rev $5.87B v $5.33Be; expect home sales to remain strong for the foreseeable future

TUES 9/15
*(DE) GERMANY SEPT ZEW CURRENT SITUATION SURVEY: -66.2 V -72.0E; EXPECTATIONS SURVEY: 77.4 V 69.5E
MMM Reports Aug Rev $2.7B +2% y/y; Guides Q3 Rev $8.2-8.3B v $8.0Be
WMT Confirms Walmart+ membership is now available costing $98/yr or $12.95/month
*(US) SEPT EMPIRE MANUFACTURING: 17.0 V 6.8E
*(US) AUG INDUSTRIAL PRODUCTION M/M: 0.4% V 1.0%E; CAPACITY UTILIZATION: 71.4% V 71.4%E
FDX Reports Q1 $4.87 v $2.54e, Rev $19.3B v $17.5Be

WEDS 9/16
*(UK) AUG CPI M/M: -0.4% V -0.6%E; Y/Y: 0.2% V 0.0%E (annual pace the slowest since Jan 2016)
*(US) AUG ADVANCE RETAIL SALES M/M: 0.6% V 1.0%E; RETAIL SALES (EX-AUTO) M/M: 0.7% V 1.0%E
*(US) DOE CRUDE: -4.4M V +1ME; GASOLINE: -0.4M V -1ME; DISTILLATE: +3.5M V +0.5ME
(US) Association of American Railroads weekly rail traffic report for week ending Sep 12th: 509.6K, +8.6% y/y
SNOW IPO opens for trade at $245
(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25%; AS EXPECTED; FED WILL MAINTAIN LOW RATES UNTIL JOB AND INFLATION GOALS MET; 13 OF 17 MEMBERS PROJECT NO RATE RISE THROUGH AT LEAST 2023
(US) New York Fed: plans to continue to increase SOMA holdings of Treasury securities by approximately $80B/mo and to increase SOMA holdings of agency MBS by $40B/mo
*(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%, AS EXPECTED

THURS 9/17
*(EU) EURO ZONE AUG FINAL CPI Y/Y: -0.2% V -0.2%E; CPI CORE Y/Y: 0.4% V 0.4%E
*(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATE UNCHANGED AT 0.10%; AS EXPECTED; Discussed effectiveness of negative rates
*(UK) BOE SEPT MINUTES: VOTED 9-0 TO LEAVE INTEREST RATES UNCHANGED AT 0.10%
*(US) INITIAL JOBLESS CLAIMS: 860K V 850KE; CONTINUING CLAIMS: 12.63M v 13.00ME
*(US) AUG HOUSING STARTS: 1.416M V 1.483ME; BUILDING PERMITS: 1.470M V 1.512ME
*(US) SEPT PHILADELPHIA FED BUSINESS OUTLOOK:15.0 V 15.0E

FRI 9/18
*(UK) AUG RETAIL SALES (EX-AUTO/FUEL) M/M: 0.6% V 0.4%E; Y/Y: 4.3% V 4.2%E
(US) Commerce Dept officials: confirm Americans will not be able to download WeChat or TikTok apps by Monday; US to ensure WeChat Pay will not be available in the US; WeChat ban prohibits replicating code in a new app; TikTok app will be removed from US app stores on Sunday
(US) SEPT PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 78.9 V 75.0E
(US) AUG LEADING INDEX: 1.2% V 1.3%E
MRNA Currently anticipates production of coronavirus vaccine mRNA-1273 will be 20M doses by end of 2020, anticipates total production of mRNA-1273 will be 0.5-1.0B doses during 2021

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

TradeTheNews.com 

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

TradeTheNews.com 

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

TradeTheNews.com 

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)