Second half kicks off to strong start despite coronavirus outbreaks

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

2020-07-02T16:11:20.167

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

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

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

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

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

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

2020-06-26T16:06:49.48

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

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


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

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

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

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

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

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

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

2020-06-05T16:04:26.803

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

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


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

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

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

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

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

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

War of words over Hong Kong doesn’t dampen optimism about reopening economies

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Weekly Market Update: War of words over Hong Kong doesn’t dampen optimism about reopening economies

2020-05-29T16:06:14.75

Coming out of the holiday break, equity markets roared. US indices reached levels not seen since early March and late February while the S&P pushed up through its 200-day moving average. Positive developments on the coronavirus treatment front combined with incremental headlines surrounding the pullback of various lockdown measures aided risk appetite broadly. Japan raised expected bond issuance to fund a second budget to provide stimulus, while EU officials unveiled details of an ambitious €750B recovery fund that favors grants over loans and would be funded by joint debt. US stock markets experienced a notable rotation away from the perceived pandemic winners into banks and other beaten-down groups including small caps in general, which affirmed a welcomed sense of widening breadth in the stock market’s rebound.

Late in Thursday’s session concerns about the rising tensions over China’s move to crimp Hong Kong’s autonomy seemed to finally put a cap on risk exuberance. After a week of increasingly harsh rhetoric from the White House, on Friday President Trump announced some visa restrictions and a ‘working group’ to examine the differing financial practices of Chinese firms listed in the US. Separately, Trump also signed an executive order aimed at social media companies after one of his tweets criticizing mail-in ballots was ‘fact checked’ by Twitter. The dollar continued to lose ground this week with the very notable exception against the Yuan; The Chinese currency fell to its weakest level against the dollar since early 2008. Meanwhile, crude futures continued to rebound, ending the month of May with a record 80% gain. For the week, the S&P gained 3%, the DJIA rose 3.9%, and the Nasdaq added 1.8% to come within just a few percent of all time highs.

In corporate news this week, Boeing shares rose after it said it would resume 737 MAX production at its Renton, WA facility, and forecast output to gradually ramp up this year. Disney announced plans to start a phased reopening for its Magic Kingdom and Animal Kingdom parks on July 11th, while Six Flags is set to reopen its first park in Oklahoma on June 5th. UPS said it would add a peak surcharge and an oversize package surcharge for ground shipments beginning May 31st amid an influx of e-commerce orders. Tesla reduced prices on certain vehicles by as much as $5,000 in North American markets as well as imported Model S and X vehicles in China. Costco saw a sales bounce early in Q3 on a burst of coronavirus-related spending, but the numbers did not sustain as shopping frequency decreased over the quarter. Toll Brothers Q2 earnings beat street estimates, and while the CEO said net signed contracts in the first four weeks of May were down 37% year-over-year, they remain ‘very encouraged’ by recent deposit activity.


MON 5/25
*(DE) GERMANY Q1 FINAL GDP Q/Q: -2.2% V -2.2%E; Y/Y: -2.3% V -2.3%E (confirms technical recession)
*(DE) GERMANY MAY IFO BUSINESS CLIMATE SURVEY: 79.5 V 78.5E; CURRENT ASSESSMENT SURVEY: 78.9 V 80.0E
REGN Sanofi to sell majority of its 20.6% stake; Regeneron announces $5B stock repurchase (8% of market cap); drug collaborations will not be impacted
NVAX Initiates Phase 1/2 clinical trial of COVID-19 vaccine NVX-CoV2373; result is expected in early July

TUES 5/26
*(DE) GERMANY JUN GFK CONSUMER CONFIDENCE: -18.9 V -18.0E
(DE) German govt said to be prepared to lift travel warnings on almost three dozen countries and replaced by more detailed travel advice - financial press
(UK) EU said to be prepared to drop maximalist approach to fisheries in next round of Brexit negotiations - financial press
(EU) ECB said to be working on a contingency plan if Bundesbank is forced to quit PSPP bond buying scheme - financial press
*(US) APR NEW HOME SALES: 623K V 480KE
*(US) MAY CONSUMER CONFIDENCE: 86.6 V 87.0E
*(US) MAY DALLAS FED MANUFACTURING ACTIVITY INDEX: -49.2 V -62.0E
MRK Merck CEO Frazier casts doubt over 12 to 18 month timeframe for development of a Covid-19 vaccine - FT
TWTR Twitter now includes a 'fact check' of Pres Trump tweets about mail-in ballots on his Twitter page
(US) White House econ adviser Kudlow: Trump is so 'miffed' with China on coronavirus and other matters that the trade deal is not as important to him as it once was; China trade deal is on for now - Fox interview

WED 5/27
(CN) China Foreign Ministry spokesperson Zhao Lijan: Will take countermeasures if others harm China
(EU) ECB chief Lagarde: Will not have a new Euro area debt crisis following the pandemic; not overly concerned about the high level of debt- online event
(EU) EU Commissions recovery fund proposal said to be comprised of €500B in grants and €250B in loans - German press
(EU) EU Commission President Von der Leyen: Dealing with pandemic is Europe's moment; total EU recovery effort stands at €2.4T
*(US) MAY RICHMOND FED MANUFACTURING INDEX: -27 V -40E
(US) Dallas Fed May Texas Service Sector Outlook Survey: General Business Activity: -41.7 v -83.9 prior
(US) Sec of State Pompeo: announces that US can no longer certify Hong Kong autonomy from China; says no reasonable person can assert today that Hong Kong maintains high degree of autonomy from China given facts on the ground
BA Resumes 737 MAX production at its Renton, WA facility; production to gradually ramp up this year - press
MU Raises Q3 $0.75-0.80 v $0.56e (prior $0.40-0.70), Rev $5.2-5.4B v $4.91Be (prior $4.6-5.2B), Gross margin 33-34% (prior 31.5% +/-1.5%) - filing

THRS 5/28
*(EU) EURO ZONE MAY ECONOMIC CONFIDENCE: 67.5 V 70.6E
*(DE) GERMANY MAY PRELIMINARY CPI M/M: -0.1% V -0.1%E; Y/Y: 0.6% V 0.6%E
*(US) APR PRELIMINARY DURABLE GOODS ORDERS: -17.2% V -19.0%E; DURABLES (EX-TRANSPORTATION): -7.4% V -15.0%E
*(US) INITIAL JOBLESS CLAIMS: 2.123M V 2.10ME; CONTINUING CLAIMS: 21.05M V 25.68ME
*(US) Q1 PRELIMINARY GDP ANNUALIZED Q/Q: -5.0% V -4.8%E; PERSONAL CONSUMPTION: -6.8% V -7.5%E
*(US) Q1 PRELIMINARY GDP PRICE INDEX: 1.4% V 1.3%E; CORE PCE Q/Q: 1.6% V 1.8%E
*(US) DOE CRUDE: +7.9M V -1.5ME; GASOLINE: -0.7M V -0.5ME; DISTILLATE: +5.5M V +2ME
(US) Atlanta Fed raises Q2 GDP growth to -40.4% from -41.9%
UPS To add peak surcharge for ground packages, to add oversize package surcharge beginning May 31st amid jump in e-commerce shipments - press
(US) Pres Trump: will sign executive order to 'uphold free speech'; social media companies will lose their liability shield; they are tantamount to a monopoly
COST Reports Q3 $1.89 v $1.91e, Rev $36.5B v $37.7Be

FRI 5/29
*(EU) EURO ZONE MAY ADVANCE CPI ESTIMATE Y/Y: 0.1% V 0.1%E; CPI CORE Y/Y: 0.9% V 0.8%E
(US) Nevada reports April casino gaming Rev $3.7M, -99.6% y/y; Las Vegas strip Rev $3.4M, -99.3% y/y
(US) Fed Chairman Powell: want to reiterate Fed is strongly committed to using all our tools to get to a robust recovery; acknowledging a lot of pain being felt out there - Princeton webcast
(US) New York Fed Nowcast: cuts Q2 forecast to -35.5% from -30.5%
(US) Atlanta Fed cuts Q2 GDP growth to -51.2% from -40.4%
(US) President Trump reportedly will NOT leave the phase one US/China trade deal over recent tensions - press
(US) Pres Trump: to launch working group to study differing practices of Chinese companies listed on US stock markets; will revoke Hong Kong's preferential treatment; Will take steps to sanction Hong Kong officials involved in eroding Hong Kong's autonomy - remarks at Rose Garden

Hopes surrounding vaccine progress outweigh renewed US/China tensions

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Weekly Market Update: Hopes surrounding vaccine progress outweigh renewed US/China tensions

2020-05-22T16:09:41.773

Stock markets rose further this week climbing a wall of worry surrounding rising US/China tensions. May economic data remained extremely soft, but the sequential improvement from last month’s nadirs supported the advancing narrative that April will likely be seen as the trough. Commentary from a host of major retailers pointed to signs of pent-up demand from US consumers as they emerge from stay-at-home directives. Larger swaths of the US economy continued to reopen without much handwringing while Covid-19 vaccine hopes received a boost from early positive Interim Phase 1 Data out of Moderna.

Heading into the long Memorial Day weekend deteriorating ties between Beijing and Washington began to exert a greater effect on sentiment. Wednesday, the Senate passed legislation that could have the effect of banning Chinese companies from listing on US exchanges resulting in speculation that major US listed Chinese companies were already preparing to move their listings to Hong Kong. Separately, US lawmakers also approved a bill aimed at censuring China's move to impose new national-security laws on Hong Kong. By Friday, President Trump warned that Washington would react "very strongly" if China follows through on its HK plans. Treasury yields moved up early in the week alongside stocks. Wednesday saw the first US 20-year bond auction since the mid 1980’s go off with solid demand. The upward momentum in oil largely continued until global growth concerns induced by the decision of Chinese officials to omit an annual GDP target resulted in some profit taking on Friday. The Russell 2000 and Dow Jones transports easily outpaced the overall market’s gains signaling to some increased bets on American reopening. For the week, the S&P gained 3.2%, the DJIA added 3.3%, and the Nasdaq rose 3.4%.

In corporate news this week, Target earnings and revenue were lifted by a 141% increase in its e-commerce sales, and the company saw ‘rapid increase in traffic and sales in stores, resulting in some of strongest comp sales growth in company history in mid-April. Walmart earnings jumped, also driven by both a boost in traffic and e-commerce. Lowe’s handily beat earnings forecasts as its same store sales surged, with May SSS running above +20%, as home improvement spending saw a pickup amid coronavirus shut-downs. Best Buy shares moved lower despite beats on both top and bottom line, though the tech retailer said it retained 81% of last year’s sales during the last six weeks of the quarter despite switching to curbside pickup. Home Depot missed its earnings target as coronavirus costs weighed on the retailer. Nvidia topped earnings estimates and shares hit all-time highs as the supply challenges it experienced were counterbalanced by a surge in e-commerce revenue amid work-from-home spending and gaming demand. Reports said GrubHub remains in discussions with Uber about a potential buyout, with CNBC’s Faber noting the two are fairly close to a deal.


SUN 5/17
005930.KR Reports Q1 semiconductor production 277.4B units, +57.4% y/y - Yonhap citing report

MON 5/18
(EU) EU said to borrow considerably more €320B for its recovery fund - FT
MRNA Announces early positive Interim Phase 1 Data for mRNA Vaccine (mRNA-1273) against Novel Coronavirus in first four of eight study participants; expects Phase 3 trial to start in July
BIDU Reports Q1 $1.25 v $0.64e, Rev $3.18B v $3.13Be
FNMA To Issue Request for Proposals to Hire Financial Advisor
(US) NASDAQ said to be tightening/restricting IPO and listing rules for companies from China - US financial press

TUES 5/19
*(DE) GERMANY MAY ZEW CURRENT SITUATION SURVEY: -93.5 V -86.6E; EXPECTATIONS SURVEY: 51.0 V 30.0E
HD Reports Q1 $2.08** v $2.27e, Rev $28.3B v $27.5Be; Suspends FY20 outlook
WMT Reports Q1 $1.18 v $1.12e, Rev $134.6B v $130.9Be; Withdrawing FY21 outlook; To discontinue Jet.com
(US) Atlanta Fed raises Q2 GDP growth to -41.9% from -42.8%
MRNA Vaccine experts say Moderna didn’t produce data critical to assessing Covid-19 vaccine - StatNews
992.HK Reports Q4 Net $43M v $118M y/y, Rev $10.6B v $11.7B y/y
(TW) Taiwan President Tsai: Reiterates will not accept China one country, two systems model; Coronavirus has changed world political and economic order, new opportunity for Taiwan - Inauguration speech

WEDS 5/20
(TW) China Taiwan Affair Office: Current situation with Taiwan, is complex and severe; China will never tolerate any act of separating the country - Xinhua
*(UK) APR CPI M/M: -0.2% v -0.1%e; Y/Y: 0.8% v 0.9%e (slowest annual pace since 2016)
*(EU) EURO ZONE APR FINAL CPI Y/Y: 0.3% V 0.4%E; CPI CORE Y/Y: 0.9% V 0.9%E
LOW Reports Q1 $1.77 v $1.29e, Rev $19.7B v $18.2Be; Withdraws FY20 outlook
INO COVID-19 DNA Vaccine INO-4800 Demonstrates Robust Neutralizing Antibody and T Cell Immune Responses in Preclinical Models
SHOP Announces strategic partnership with the World's Leading Crypto Payments Processor CoinPayments
*(US) DOE CRUDE: -5.0M V +1.5ME; GASOLINE: +2.8M V -2.5ME; DISTILLATE: +3.8M V +2.5ME
(US) Senate passes by unanimous consent Holding Foreign Companies Accountable Act that could delist Chinese companies from US stock exchanges - press
EKSO Announces CFIUS Determination Regarding China Joint Venture; prior national security concerns regarding the JV could not be mitigated, termination of the JV not have material impact on our operations during the remainder of 2020
(CN) China Customs administration revises iron ore import inspection rules, will examine iron ore imports only based on applications (prior selected quality checks for all imports); effective June 1st

THURS 5/21
(CN) China releases a new bill on Hong Kong National Security; Will strengthen Hong Kong enforcement capacity - Xinhua
(CN) China 13th National People's Congress (NPC): Affirms Monetary Policy stance [prudent monetary policy stance to be more flexible and appropriate]; Guiding money supply significantly higher y/y; Expanding 5G applications in 2020
*(CN) CHINA 13TH NATIONAL PEOPLE'S CONGRESS (NPC) OMITS 2020 GROWTH TARGETS - US FINANCIAL PRESS (as speculated)
NVDA Reports Q1 $1.80 v $1.69e, Rev $3.08B v $3.00Be
*(US) MAY MARKIT PRELIMINARY PMI MANUFACTURING: 39.8 V 39.5E
*(US) MAY PHILADELPHIA FED BUSINESS OUTLOOK: -43.1 V -40.0E
*(US) INITIAL JOBLESS CLAIMS: 2.44M V 2.40ME; CONTINUING CLAIMS: 25.07M V 24.25ME
BBY Reports Q1 $0.67 v $0.41e, Rev $8.56B v $8.15Be; Retained ~81% of y/y sales with curbside pickup model from mid-Q1 onward
(CN) Diplomatic backchannels between the US and China have dried up, some say the behind-the-scenes meetings and messages between gov't officials have 'ground to a halt' - SCMP
*(FR) FRANCE MAY PRELIMINARY PMI MANUFACTURING: 40.3 V 36.0E (4th straight contraction)
*(DE) GERMANY MAY PRELIMINARY PMI MANUFACTURING: 36.8 V 39.4E (17th month of contraction)
*(EU) EURO ZONE MAY PRELIMINARY PMI MANUFACTURING: 39.5 V 38.0E (16th straight contraction)
*(UK) MAY PRELIMINARY PMI MANUFACTURING: 40.6 V 37.2E (3rd straight contraction)

FRI 5/22
*(UK) APR RETAIL SALES (EX-AUTO/FUEL) M/M: -15.2% V -15.0%E; Y/Y: -18.4% V -18.6%E (record declines)
(HK) Hong Kong Chief Exec Lam: Will fully cooperate with China to enact National Security Law ASAP; Safeguarding national security is constitutional responsibility
(US) New York Fed Nowcast: raises Q2 forecast to -30.5% from -31.1%

Markets face a reality check

TradeTheNews.com 

Weekly Market Update: Markets face a reality check

2020-05-15T16:05:50.357

Stock indices rolled over this week as investor sentiment underwent somewhat of reality check. The economic data saw historic declines both in Europe and the US. The brutal numbers, though not unexpected, came alongside circumspect comments from Fed Chairman Powell as well as several legendary investors. The notion of any v-shaped economic recovery seemed to dissipate further after Powell warned of potential lasting economic damage from this crisis could very well mean additional measures will be needed. Treasury yields moved lower and the curve flattened despite a barrage of Fed commentary meant to push back on the notion that US rates could eventually find their way into negative territory. The week came to a close amid renewed concerns surrounding rising China tensions. President Trump and his administration repeatedly emphasized their dissatisfaction and distrust of China’s handling of the coronavirus crisis, going as far as to suggest he could consider cutting ties altogether. Friday the US Commerce Department announced rules aimed at cutting off Huawei's efforts to undermine US export controls, prompting swift reaction by Chinese state media. The VIX moved up and gold prices moved back to the highest levels in weeks. Oil prices continued to rebound to levels not seen since before the wild volatility of mid-April. For the week, the S&P slipped 2.3%, the DJIA fell 2.7%, and the Nasdaq lost 1.2%.

As the major thrust of earnings season winds down, some names still remained to report this week. Applied Materials reported a miss on its top and bottom line, but noted it sees evidence that the supply chain is recovering. Cisco shares rose on an earnings beat despite “manufacturing challenges and component constraints” amid the pandemic. United Natural Foods released preliminary Q3 numbers that smashed expectations, as demand surged for both its natural and conventional products and sales remain elevated. Word that Uber is in talks to acquire GrubHub in an all-stock deal surprised the Street this week, though follow-up reports indicate the companies remain at odds on price. Disney added its name to the list of corporations moving in to capital markets to shore up balance sheets, filing to offer $11B in notes.


MON 5/11
DIS Launches $11B six-tranche note offering
BA CEO: Likely that a US airline will shutdown by Sept, sees US air traffic levels at less than 25% by Sept

TUES 5/12
7203.JP Reports FY19/20 Net ¥2.08T v ¥1.88T y/y; Op ¥2.44T v ¥2.47T y/y; Rev ¥29.93T v ¥30.23T y/y
VOD.UK Reports FY20 adj 5.60p v 6.27p y/y, adj EBITDA €14.9B v €13.9B y/y, Rev €45.0B v €43.7B y/y; affirms FY19 dividend at 9c/shr v 9c/shr y/y
*(US) APR CPI M/M: -0.8% V -0.8%E; CPI (EX-FOOD/ENERGY) M/M: -0.4% V -0.2%E; CPI NSA: 256.389 V 256.489E (CORE INDEX FALLS BY MOST ON RECORD)
(IN) India PM Modi: announces economic package worth INR20T (10% of GDP)
GRUB Uber reportedly approached Grubhub with takeover offer - press
KSU Reports QTD volume -25% y/y, Rev -22% y/y - investor slides
*(US) APR MONTHLY BUDGET STATEMENT: -$737.9B V -$737.2BE
*(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 0.25%; AS EXPECTED; RAISES LARGE SCALE ASSET PURCHASE (LSAP) PROGRAM FROM NZ$33B TO NZ$60B

WEDS 5/13
*(UK) Q1 PRELIMINARY GDP Q/Q: -2.0% V -2.6%E; Y/Y: -1.6% V -2.2%E ((worst quarterly contraction since Q4 2008)
700.HK Reports Q1 (CNY) Net 28.9B v 27.2B y/y, Op 37.3B v 30.6Be, Rev 108.1B v 101.0Be
TMO Raises Q2 Organic Rev -10% to flat (prior -15% to flat) - filing
*(US) APR PPI FINAL DEMAND M/M: -1.3% V -0.5%E; Y/Y: -1.2% V -0.4%E
(US) Fed Chairman Powell: growing sense that recovery may be slower than we like; expect unemployment to peak in next month or so, but will likely to remain well above levels we saw in 2018 and 2019 - Q&A
(US) Fed Chairman Powell: Negative rates is NOT something we are looking at; our view has NOT changed
*(US) DOE CRUDE: -0.7M V +4.5ME; GASOLINE: -3.5M V -2.5ME; DISTILLATE: +3.5M V +3.5ME
ABT New York University data shows Abbott coronavirus test missed one-third of COVID cases in preliminary test; the 15-min test may yield false negatives - press
*(US) TREASURY $22B 30-YEAR BOND AUCTION DRAWS 1.342%; BID TO COVER 2.30 V 2.43 PRIOR AND 2.28 OVER LAST 4 AUCTIONS

THURS 5/14
*(EU) ECB ECONOMIC BULLETIN: To continue to support the euro area economy in the face of the current economic disruption and heightened uncertainty
LH Confirms launch of "return to work services" for employers with IgG test
MMM CFO: Expects to be producing Respirators at run rate of 2B/yr by end-2020 - investor conf comments
*(US) INITIAL JOBLESS CLAIMS: 2.98M V 2.50ME; CONTINUING CLAIMS: 22.83M V 25.12ME
AMAT Reports Q2 $0.89 v $0.91e, Rev $3.96B v $4.20Be; Supply chain is recovering

FRI 5/15
*(DE) GERMANY Q1 PRELIMINARY GDP Q/Q: -2.2% V -2.2%E ; Y/Y: -2.3% V -2.0%E (confirms technical recession and worst quarterly performance since financial crisis)
(EU) EURO ZONE Q1 PRELIMINARY GDP Q/Q: -3.8% V -3.8%E; Y/Y: -3.2% V -3.3%E
*(US) MAY EMPIRE MANUFACTURING: -48.5 V -60.0E
*(US) APR ADVANCE RETAIL SALES M/M: -16.4% V -12.0%E; RETAIL SALES (EX-AUTO) M/M: -17.2% V -8.5%E
(US) APR INDUSTRIAL PRODUCTION M/M: -11.2% V -12.0%E; CAPACITY UTILIZATION: 64.9% V 63.8%E
(US) MAR JOLTS JOB OPENINGS: 6.191M V 5.800ME
(US) Atlanta Fed cuts Q2 GDP growth to -42.8% from -34.9%

Markets continue to look past terrible near-term data

TradeTheNews.com Weekly Market Update: Markets continue to look past terrible near-term data

US stock markets continued to rally this week in the face of another series of all time low economic readings. Investors remained willing to look past the pandemic induced seizure and focus on the gradual reopening that is taking hold across portions of Europe and some parts of the US. Q1 earnings reports surged in number, but the underlying story remained largely the same. Significant gains were seen for as basket of well-known tech/consumer companies that revealed numbers that solidified investors’ belief that they are the best positioned to benefit from the changing business landscape amid the coronavirus pandemic. Paced by large cap tech, the Nasdaq composite found its way back into positive territory for the year. The VIX dropped below 30 for the first time in more than 2 months, albeit amid dwindling volumes.

Larger than expected rate cuts by several central banks outside the US served as a reminder that officials remain at the ready to provide stimulus as the crisis plays out. On Thursday Fed fund futures contracts for 2021 began trading above par, suggesting some traders are betting the Fed will allow the policy rate to move into negative territory. Short rates remained subdued into the April employment report on Friday. The jobs numbers were ugly as expected, but perhaps not as dismal as some had thought. The decline in payrolls topped 20M and the unemployment rate jumped to nearly 15%, but that number probably still doesn’t fully reflect the damage inflicted by the pandemic. WTI crude prices rallied alongside stock prices and a host of other commodities further signaling investors’ willingness to look past the current period of uncertainty and position for some level of economic resurgence. For the week, the S&P gained 3%, the DJIA added 2.6%, and the Nasdaq rose 6%.

A deluge of corporate earnings gave a broad sampling of how companies are handling the coronavirus crisis. Disney’s EPS missed expectations as earnings dropped -90% y/y, and the media juggernaut cut capex and said it will not pay a dividend this summer. General Motors earnings beat by a wide margin despite recent halts in production, though the company said it plans to restart US operations on May 18th. CVS came in ahead of consensus on its top and bottom line as the retailer experienced an influx of demand due to the coronavirus, but the company said it saw some signs of moderation in April. Tyson Foods’ Q2 earnings and revenue missed estimates as the meat producer struggles with production slowdowns, though it said it expects to remain profitable in the second half. Uber shares hit the gas despite widening losses as the CEO seemed optimistic that ride volume was rising again after a trough in mid-April and said adjusted EBITDA margins would continue to improve in Q3. Wayfair soared on an EPS beat and cheery Q2 commentary, Pinterest dropped after seeing a sharp deceleration in its ad business, and Shopify shares hit record highs as its subscription revenue rose substantially. Pfizer began its coronavirus vaccine trials in humans this week and estimates that, if the tests are successful, a vaccine could be ready for emergency use as soon as September. Amid a significant hiatus in M&A activity in the pharma space, Alexion announced it would acquire Portola for $18/share in cash in a deal valued at $1.6B.


MON 5/4
(US) April ISM New York: 4.3 v 12.9 prior (all time low)
(US) Treasury quarterly financing estimates: to borrow $3.0T in Apr-June quarter v $2.4Be (prior estimate to pay down $56B) (most since Q4'08)

TUES 5/5
PFE Exec: Expect millions of doses of Covid-19 vaccine by October - CNBC
(US) Atlanta Fed cuts Q2 GDP growth to -17.6% from -16.6%
(US) Fed Vice Chair Clarida (moderate, voter): recovery could begin in H2 of this year; it's important to make sure the rebound is as robust as possible - CNBC interview
DIS Reports Q2 $0.60 v $0.83e, Rev $18.0B v $18.0Be

WEDS 5/6
(EU) EU Commission Spring Forecasts: Cuts 2020 GDP to contraction territory; Raises 2021
GM Reports Q1 $0.62 v $0.18e, Rev $32.7B v $32.6Be
(US) Treasury to sell $20B 20-year bond - quarterly refunding announcement
*(US) DOE CRUDE: +4.6M V +8ME; GASOLINE: -3.2M V +0.5ME; DISTILLATE: +9.5M V +3ME
*(CN) CHINA APR TRADE BALANCE:$45.3B V $8.7BE

THURS 5/7
*(UK) BANK OF ENGLAND BANK (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.10%; AS EXPECTED
(US) China and US trade chiefs could hold a phone call as soon as next week regarding progress on implementation of the phase-1 trade deal - press
ARAMCO.SA Raises ARAB light official selling price to Asia by $1.40 to -$6.50
*(US) Q1 PRELIMINARY NONFARM PRODUCTIVITY: -2.5% V -5.5%E; UNIT LABOR COSTS: 4.8% V 4.5%E
*(US) INITIAL JOBLESS CLAIMS: 3.17M V 3.00ME; CONTINUING CLAIMS: 22.6M V 19.80ME
(US) Jan 2021 Fed funds futures trade above par, predicting negative policy rate
Nevada Gaming Commission votes to approve casino virus safety policies ahead of reopening casinos - press
*(US) MAR CONSUMER CREDIT: -$12.1B V +$15.0BE
(US) US Treasury confirms conference call between USTR Lighthizer, Treasury Sec Mnuchin, and China Vice Premier Liu He

FRI 5/8
SIE.DE Reports Q2 Net €652M v €1.81B y/y, Industrial Business EBITA €1.59B v €1.94B y/y, Rev €14.2B v €14.3B y/y; sees stronger COVID-19 impact in Q3; withdraws FY20 EPS guidance
*(US) APR UNEMPLOYMENT RATE: 14.7% V 16.0%E
*(CA) CANADA APR NET CHANGE IN EMPLOYMENT: -1.99M V -4.00ME; UNEMPLOYMENT RATE: 13.0% V 18.1%E
*(US) APR AVERAGE HOURLY EARNINGS M/M: 4.7% V 0.5%E; Y/Y: 7.9% V 3.3%E; AVERAGE WEEKLY HOURS: 34.2 V 33.6E
(US) New York Fed Nowcast: cuts Q2 forecast to -31.2% from -9.3%
(US) Atlanta Fed cuts Q2 GDP growth to -34.9% from -17.6%

Markets consolidate as poor data is balanced by hopes that coronavirus effects will ease soon

TradeTheNews.com 

Weekly Market Update: Markets consolidate as poor data is balanced by hopes that coronavirus effects will ease soon

2020-05-01T16:14:57.307

Coming into the week risk appetite was already on the upswing as investors eagerly awaited key signals from areas in Europe and the US that have begun lifting coronavirus lockdown restriction. The release of promising study results for Gilead’s investigational antiviral Remdesivir in treatment of COVID-19 provided further hope to investors that the economy can safely reopen soon. The positive development on the coronavirus front initially overshadowed a series of disappointing economic data releases as well as most of the uncertain commentary coming out of earnings season, allowing the S&P to run back above 2,950, only about 13% off of all-time highs set in March.

US and most European sovereign bonds rallied and yields noticeably slipped in the second half of the week while stock markets rolled over. The Fed and ECB met and made it clear that emergency measures were not going anywhere anytime soon, as well as acknowledging that they continue to look at expanding programs and will likely take additional measures to support the recovery. The dose of reality from the two key central banks as well as a shift back towards focusing on the corporate commentary appeared to reverse sentiment. Late in the week, President Trump ratcheted up his China rhetoric with new tariff threats, and a report (later denied by the White House) suggested that the administration was considering plans to demand financial compensation from China over its handling of coronavirus. Front month WTI crude futures settled up more than 15% this week after weekly DOE inventory data showed continued declines in US production and OPEC+ members commenced the already agreed upon production cuts. The S&P and DJIA each fell 0.2%, and the Nasdaq dropped 0.3%.

In corporate news this week, Boeing tapped the bond market with a $25B 7-part offering, and as a result of high demand for the bond sale, the aerospace giant said it will not need to seek federal aid. Diamond Offshore confirmed it was beginning voluntary Chapter 11 proceedings for restructuring, as had been speculated. This week also saw earnings season kick off in earnest with a large swath of major tech companies reporting. Google EPS missed expectations due to a predictable but ‘significant’ slowdown in ad revenue. Apple posted flat sales and did not provide its usual outlook, but did note a pickup for business in the second half of April. Amazon sales grew faster than expected but the online shopping giant reported an EPS miss and said it would spend $4B in Q2 profits on Covid-19-related costs. Investors liked what they heard from Facebook, as the social media giant said the ad revenue drop it experienced in March was followed by signs of stabilization in April. Tesla shares jumped on a surprise Q1 profit and revenue beat despite the coronavirus-affected demand in the auto sector, though shares slump on Friday as CEO Musk took to Twitter to express his opinion that the “stock price is too high.” Microsoft topped estimates on both EPS and sales, driven by a strong showing in its cloud business, notably the +61% jump y/y in Azure revenue.


SUN 4/26
DBK.DE Reports prelim Q1 Net €66M v €201M y/y; Pretax €206M v €292M y/y; Rev €6.4B v €6.35B y/y; Provisions for credit losses €500M (44bp of loans) v €140M y/y
*(JP) BANK OF JAPAN (BOJ) AMENDS POLICY; strengthens stimulus with unlimited JGB buying and increasing corporate bond and commercial paper purchases
MON 4/27
DO Confirms beginning voluntary Chapter 11 proceedings for restructuring, as speculated
*(US) APR DALLAS FED MANUFACTURING ACTIVITY INDEX: -73.7 V -75.0E
(US) California Gov Newsom: state is 'just weeks, not months' away from changing lockdown orders
BA Seattle Times corrects report, Company has not provided job cut estimates to union (had reported to cut workforce by 15-35%)

TUES 4/28
005930.KR Reports final Q1 (KRW) Net 4.9T v 5.1T y/y; Op 6.5T v 6.4T prelim; Rev 55.3T v 55.0T prelim
*(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT 0.00%; AS EXPECTED; does not rule out of rate cut later this year
3328.HK Reports Q1 (CNY) Net 21.45B v 21.07B y/y, NII 36.74B v 34.9B y/y
CAT Reports Q1 $1.60 v $1.77e, Rev $10.6B v $11.1Be
UPS Reports Q1 $1.15 v $1.23e, Rev $18.0B v $17.6Be; Suspends buybacks for 2020 and withdraws FY20 outlook
*(US) APR RICHMOND FED MANUFACTURING INDEX: -53 V -42E
*(US) APR CONSUMER CONFIDENCE: 86.9 V 87.0E (lowest since 2014)
(US) Dallas Fed April Texas Service Sector Outlook Survey: General Business Activity: -81.7 v -78.8 prior
BA Reportedly could face criminal or civil inquiries out of the 737 MAX production issue investigation; FAA considering fines or other enforcement actions - press
(US) Pres Trump confirms will sign order to keep US meat plants open during coronavirus pandemic - press

WEDS 4/29
AIR.FR Reports Q1 Net -€481M v +€40M y/y, Adj EBIT €281M v €549M y/y, Rev €10.6B v €12.5B y/y
DBK.DE Reports Q1 Net -€43M v €66M prelim, Pretax €206M v €206M prelim, Net Rev €6.35B v €6.4B prelim
AZN.UK Reports Q1 Core EPS $1.05 v $0.93e, Rev $6.35B v $5.95Be
*(EU) EURO ZONE APR ECONOMIC CONFIDENCE: 67.0 V 73.1E
GE Reports Q1 $0.05 v $0.06e, Rev $20.5B v $20.7Be; Q2 will be first full Q with COVID-19 pressure
3988.HK Reports Q1 (CNY) Net 52.58B v 51.0B y/y, Op Income 148.5B v 141.0B y/y
*(US) Q1 ADVANCE GDP ANNUALIZED Q/Q: -4.8% V -4.0%E; PERSONAL CONSUMPTION: -7.6% V -3.6%E
*(DE) GERMANY APR PRELIMINARY CPI M/M: 0.3% V 0.1%E; Y/Y: 0.8% V 0.7%E
*(US) Q1 ADVANCE GDP PRICE INDEX: 1.3% V 1.0%E; CORE PCE Q/Q: 1.8% V 1.7%E
CAPR New data reports 100% survival in critical COVID-19 patients treated with CAP-1002; U.S. FDA approves company’s expanded access protocol to treat additional patients
(US) Nevada reports March casino gaming Rev $618.1M, -39.6% y/y; Las Vegas strip Rev $299.9M, -45.7% y/y
*(US) DOE CRUDE: +9.0M V +11ME; GASOLINE: -3.7M V +3ME; DISTILLATE: +5.1M V +4ME
DB1.DE Reports Q1 adj €2.11 v €2.08e, adj EBITDA €619.8M v €596.0Me, Rev €914.8M v €800Me
*(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25%; TARGET INTEREST RATE WILL REMAIN UNCHANGED UNTIL ECONOMY HAS WEATHERED RECENT EVENTS AND IS ON TRACK TO ACHIEVE ECONOMIC AND INFLATION GOALS; COMMITTED TO USING FULL RANGE OF TOOLS TO SUPPORT ECONOMY
MSFT Reports Q3 $1.40 v $1.27e, Rev $35.0B v $33.9Be; COVID-19 had minimal net impact on Rev
TSLA Reports Q1 +$1.24 v -$0.22e, Rev $5.99B v $5.37Be
BA S&P cuts rating one notch to BBB- from BBB; outlook Stable
*(CN) CHINA APR MANUFACTURING PMI (GOVT OFFICIAL): 50.8 V 51.0E

THURS 4/30
NOK Reports Q1 non-IFRS Net +€33M v -€116M y/y, Rev €4.91B v €5.1Be
(FR) FRANCE Q1 PRELIMINARY GDP Q/Q: -5.8% V -4.0%E; Y/Y: -5.4% V -3.6%E
RDSA.NL Reports Q1 CCS EPS $0.37 v $0.65, Adj CCS Net $2.96B v $5.4B y/y, Rev $60.0B v $83.7B y/y; Cuts interim dividend 66% to $0.16/shr v $0.47/shr y/y, suspends buyback
*(EU) EURO ZONE Q1 ADVANCE GDP Q/Q: -3.8% V -3.8%E; Y/Y: -3.3% V -3.4%E
*(EU) EURO ZONE APR ADVANCE CPI ESTIMATE Y/Y: 0.3% V 0.1%E; CPI CORE Y/Y: 0.9% V 0.7%E
*(EU) EURO ZONE MAR UNEMPLOYMENT RATE: 7.4% V 7.8%E
*(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED; Affirms size of pandemic program at €750B and prepared to increase size of PEPP
BA To sell USD-denominated 3-year, 5-year, 7-year, 10-year, 20-year, 30-year and 40-year bonds (7 tranches)
*(US) INITIAL JOBLESS CLAIMS: 3.84M V 3.50ME; CONTINUING CLAIMS: 17.99M V 19.48ME
(EU) ECB chief Lagarde: Measures to stop virus outbreak has halted economic activity - prepared remarks
(EU) ECB chief Lagarde: Prepared to adjust all instruments as needed
*(US) FED EXPANDS SCOPE AND ELIGIBILITY FOR MAIN STREET LENDING PROGRAM
(US) Atlanta Fed GDPNow forecasts initial Q2 GDP growth at -12.1%
(US) House Speaker Pelosi (D-CA): discussing a $1T coronavirus relief package for state and local govts
(US) White House officials said to be considering plans to punish or demand financial compensation from China over handling of coronavirus - Wash Post
(RU) Russia PM Mishustin tests positive for coronavirus; First Dep PM Belousov named acting PM - press
AMZN Reports Q1 $5.01 v $6.36e, Rev $75.5B v $74.4Be
V Reports Q2 $1.39 v $1.35e, Rev $5.85B v $5.75Be
(US) Pres Trump: I have seen evidence that the coronavirus originated in the Wuhan Institute of Virology in China; could use tariffs to respond to China

FRI 5/1
(US) Trump Administration considering order to block Government investment funds from investing into China companies that are considered a national security risk - US financial press
(US ) APR FINAL MARKIT MANUFACTURING PMI: 36.1 V 36.7E
(US) Atlanta Fed cuts Q2 GDP growth to -16.6% from -12.1%
(US) Pres Trump: I have a plan to address the national debt
GILD Pres Trump: Gilead has emergency use authorization from the FDA for remdesivir; working with FEMA to make sure drug

‘Animal spirits’ unshaken despite oil trading debacle and terrible economic data

TradeTheNews.com 

Weekly Market Update: ‘Animal spirits’ unshaken despite oil trading debacle and terrible economic data

2020-04-24T16:05:41.507

Markets opened the week amid historic turmoil in the crude markets. Oil prices continued to plummet amid a glut of supply against a backdrop of historic demand destruction related to the pandemic measures. Nowhere was the stress more evident than in the WTI futures market which saw the front month, May, contract trade well into negative territory ahead of expiry. Speculators struggled to find buyers that were willing and available to take delivery forcing them to pay a premium for the first time since the 1970s to offload what was essentially a cash contract. On Tuesday, the declines spread further out across the curve, before the summer contracts experienced a modicum of stabilization following Tuesday’s May contract expiration. June WTI finished the week down over 30%.

Global economic data remained awful. European PMI readings registered data series lifetime lows in both headline and component readings while Germany’s IFO and ZEW readings continue to descend rapidly. US weekly initial jobless claims remained near 4.5M and March new home sales missed expectations. Nevertheless, animal spirits continued to get a tailwind from an active corporate bond market. Both investment-grade and high-yield bond offerings remained plentiful as corporations rushed to raise capital to shore up balance sheets and ensure they can manage through the pandemic environment. EU officials struggled to find or even define ‘solidarity’, but pledged to find a way to provide massive fiscal stimulus for Europe once economies there reopen. The ECB was left holding down the fort yet again, announcing a widening of collateral rules to mitigate impacts of potential sovereign downgrades to economies within the Eurozone. Stocks consolidated recent gains, with the S&P down 1.3% on the week, the DJIA falling 1.9%, and the Nasdaq slipping 0.2%.

In corporate news this week, IBM reported a beat on earnings but a revenue miss and noted it expects customers to postpone projects in the near term. Intel shares took a hit after guiding Q2 EPS below consensus while withdrawing its FY outlook, and the chipmaker pointed to weaker demand in the second half from corporate and government customers. Netflix surprised the street by adding nearly 16M subscribers in the quarter, though the streaming giant offered conservative forward guidance as it expects global lockdown orders to ease. Snap surged after posting a top and bottom line beat, saying that it saw high revenue growth rates in the first two months of the quarter which offset its lower growth in March. Target offered some preliminary numbers, reporting its comparable sales were up +7% quarter to date and that it was experiencing “Cyber Monday volumes” almost every day in April. Tyson temporarily closed three meat processing facilities in Washington, Iowa, and Indiana on COVID-19 concerns, and a food workers union warned that about 10% of US beef processing plants and 25% of pork plants are closed due to coronavirus. Zoom Video shares added to recent gains after the teleconferencing provider announced it would join the Nasdaq 100 index on Apr 30th. AT&T CEO Stephenson confirmed plans to step down, setting his departure date for July 1st when COO John Stankey will assume his role.


SUN 4/19
(US) US Treasury announces 90-day deferral of some tariff payments, does not apply to anti-dumping and countervailing duties

MON 4/20
941.HK Reports Q1 (CNY) Net 23.5B v 23.7B y/y, Rev 181.3B v 185B y/y
May WTI crude futures fall into negative territory
IBM Reports Q1 $1.84 v $1.70e, Rev $17.6B v $18.0Be; Withdraws FY20 outlook
(US) House Speaker Pelosi told Democrats she expects a deal with GOP tonight on billions to replenish a small businesses loan program and provide more hospital funds; Maj Leader Hoyer says vote as soon as Wednesday - NY Times
(US) Treasury: finalized agreement with major airlines, distributed $2.9B in initial payments
(US) US President Trump tweets: "In light of the attack from the Invisible Enemy, as well as the need to protect the jobs of our GREAT American Citizens, I will be signing an Executive Order to temporarily suspend immigration into the United States!"

TUES 4/21
(EU) EU leaders reportedly unlikely to agree post-coronavirus economic plan during teleconference scheduled on Thursday, Apr 23rd - financial press
*(DE) GERMANY APR ZEW CURRENT SITUATION SURVEY: -91.5 V -77.5E; EXPECTATIONS SURVEY: +28.2 v -42.0E
(SG) Singapore PM Lee: To spend additional S$3.8B for virus stimulus
LH COVID-19 At-Home RNA test kit receives FDA Emergency use authorization
(US) Attorney Gen Barr says Dept of Justice may join lawsuits against stay-at-home orders if states repeatedly extend them - radio interview
TXN Reports Q1 $1.24 v $1.01e, Rev $3.33B v $3.18Be
UAL Files to sell 39.3M shares (16% of shares outstanding)
(US) CDC Director Redfield: possibility that the assault of the coronavirus on the US next winter will actually be even more difficult than the one we just went through because it is likely to coincide with the start of flu season
DGX Begins performing coronavirus antibody testing, expects to scale up to 150K tests/day by early May

WEDS 4/22
ROG.CH Reports Q1 (CHF) Rev 15.1B v 14.8Be
*(TR) TURKEY CENTRAL BANK (CBRT) CUTS ONE-WEEK REPO RATE BY 100BPS TO 8.75%; MORE-THAN-EXPECTED
(US) President Trump tweets: I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea.
TSN To indefinitely suspend Waterloo operations in Iowa; Co's largest pork plant
*(US) DOE CRUDE: +15.0M V +14ME; GASOLINE: +1.0M V +4.5ME; DISTILLATE: +7.9M V +4ME
LB Court filings show Sycamore partners seeks to terminate Victoria's Secret deal - press
(EU) ECB widens collateral rules to mitigate impact of downgrades; to accept some junk-rated debt as collateral for loans - press
DVAX Collaborates with Valneva to advance vaccine development for COVID-19; Goal is to initiate clinical trials before end of 2020
AA Reports Q1 -$0.23 v -$0.29e, Rev $2.38B v $2.29Be; To cut costs

THURS 4/23
*(DE) GERMANY MAY GFK CONSUMER CONFIDENCE: -23.4 V -1.8E
UNA.NL Issues Q1 trading update: Rev €12.4B v €12.7B y/y;withdraws outlook; affirms dividend
*(FR) FRANCE APR PRELIMINARY PMI MANUFACTURING: 31.5 V 37.0E (3rd straight contraction and record low)
*(DE) GERMANY APR PRELIMINARY PMI MANUFACTURING: 34.4 V 39.0E (16th month of contraction and a record low)
*(EU) EURO ZONE APR PRELIMINARY PMI MANUFACTURING: 33.6 V 38.0E (15th straight month and record low)
*(UK) APR PRELIMINARY PMI MANUFACTURING: 32.9 V 42.0E (2nd straight contraction and record low)
*(US) INITIAL JOBLESS CLAIMS: 4.43M V 4.50ME; CONTINUING CLAIMS: 15.98M V 16.74ME
*(JP) Bank of Japan (BOJ) reportedly to consider unlimited bond buying at next meeting; Bank of Japan to double purchases of corporate bonds and commercial paper - Nikkei
*(US) APR PRELIMINARY MARKIT PMI MANUFACTURING: 36.9 V 35.0E
(US) Fed officials signal that April meeting is not likely to issue new announcements on asset purchases; will consider expansion of Main Street lending program to nonprofits - press
*(US) MAR NEW HOME SALES: 627K V 644KE
GILD Gilead antiviral drug remdesivir reportedly 'flops' in first randomized clinical coronavirus trial - Financial Times
*(EU) EU leaders talks have ended with no agreement on recovery package; European Commission tasked with presenting a formal proposal by May 6th
INTC CFO: Intel feels good about the underlying demand for chips; H1 will be stronger than we thought - press interview post-earnings
(US) Fed takes action to increase availability of intraday credit extended by Federal Reserve Banks
(US) House votes to pass $484B coronavirus package bill to boost small business program and hospitals - press (as expected)

FRI 4/24
SAN.FR Reports Q1 Business EPS €1.63 v €1.43e, Business Net €1.68B v €1.77B y/y, Rev €8.97B v €8.39B y/y
*(UK) MAR RETAIL SALES (EX-AUTO/FUEL) M/M: -3.7% V -4.0%E; Y/Y: -4.1% V -4.8%E
*(DE) GERMANY APR IFO BUSINESS CLIMATE: 74.3 V 79.7E; CURRENT ASSESSMENT SURVEY: 79.5 V 80.5E
*(US) MAR PRELIMINARY DURABLE GOODS ORDERS: -14.4% V -12.0%E; DURABLES (EX-TRANSPORTATION): -0.2% V -6.3%E
T CEO Stephenson to step down July 1st; COO John Stankey to assume role - CNBC
(US) Pres Trump: Postal Service should raise package prices fourfold; USPS doesn't want to hike prices because it doesn't want to insult Amazon
(US) Pres Trump: ticket purchases are one option to aid airlines; US could pre-pay for four to five years of tickets for the airlines

Markets show more stability as governments talk about ‘reopening’ plans and as funding markets peril recedes

TradeTheNews.com 

Weekly Market Update: Markets show more stability as governments talk about ‘reopening’ plans and as funding markets peril recedes

Fri, 17 Apr 04:15 PM EST/09:15 PM GMT

Coming out of the Easter break investors held cautious optimism, rooted in growing evidence that peak Covid-19 infections had likely passed for NYC and other harder hit parts of the Northeast and continental Europe. Confidence in improving functioning of key funding markets was further enhanced by another steady stream of corporate bond offerings for both investment-grade and higher yielding corporate debt. US stocks climbed higher to once again hit the best levels since the full onset of the coronavirus pandemic. The VIX fell back below 40 for the first time since early March and the S&P retook the 2,800 level. Large-cap tech remained the momentum driver, specifically names that appear best positioned to benefit from the pandemic trading landscape. FANG + Microsoft saw their percentage of the S&P 500 rise above 21% for the first time ever as Amazon and Netflix forged new all-time highs. Equities were boosted late in the week after promising early data was leaked on Gilead’s remdesivir antiviral in treatment of COVID-19, and on the White House releasing a broad guideline for states looking to reopen their economies.

Markets were still forced to confront an ever-mounting wall of worry related to the new pandemic reality. Weekly initial jobless claims surged another 5+ million, bringing the 4-week total above a staggering 22M newly unemployed. The Philly Fed survey registered its lowest reading since July 1980 and Empire manufacturing fell to levels never seen before. Monthly housing starts and permits plunged by double digit percentages. CEOs of key financial companies continued to suggest a V-shaped recovery was unlikely when discussing quarterly results while acknowledging despite a shifting focus towards reopening, economic conditions in many areas are still realistically quite some time from normalizing. Credit events emerged in both the retail and energy sectors, as firms were forced to look at restructuring options. The US government’s SBA relief fund maxed out while the Treasury and Congress struggled to reach any agreement to replenish those funds.

WTI crude dropped back below $20 amid continued large builds in inventory readings and mounting forecasts for severe demand destruction that will more than likely offset the recent OPEC+ agreement. US Treasury yields tracked lower once again. The 10-year dropped back below 65 bps and the 2-year slipped below 20 bps for the first time since 2011. For the week, the S&P gained 3% and peaked above its 50-day moving average for the first time since February, while the DJIA added 2.2%, and the Nasdaq surged 6.1%.

In corporate news this week, major US banks kicked off earnings season. Bank of America, Goldman and Citigroup saw their profits take a hit, while JPMorgan among others warned of loan losses and defaults on the horizon as COVID-19 wreaks havoc on the economy. Teladoc issued encouraging preliminary Q1 numbers as the rising adoption of telehealth providers buoyed revenue and adjusted EBITDA. Apple announced its long-awaited second-generation iPhone SE, which featured a faster chip and improved single-camera system, arriving on sale this week at $399. Verizon acquired video conference technology provider BlueJeans Network for around $500M as the work-from-home movement surges amid the coronavirus lockdown. Chinese regulators officially gave conditional approval for Nvidia to purchase Mellanox for $125/share in cash, in line with recent reporting. Boeing said it’s ready to reopen its Puget Sound facility and resume commercial aircraft production by next week, which gave a boost to sentiment after Thursday’s market close. Berkshire Hathaway accepted Occidental shares in lieu of cash dividends (and then immediately sold those extra shares), after Warren Buffett’s holding company bought $10B in preferred shares last year. Diamond Offshore elected not to make a semiannual interest payment due on 2039 notes and said it intends to utilize a 30-day grace period.


MON 4/13
FDA Clears First Saliva Collection for Coronavirus COVID-19 (SARS-CoV-2) for Emergency Use Authorization (EUA)
(US) Former presidential candidate Sen Sanders endorses VP Biden for President
NY Gov Cuomo: any plan for reopening must fit the facts and circumstance; New York, New Jersey, Connecticut, Pennsylvania, Rhode Island and Delaware to set up a working group to draft plan to reopen economy
(US) New York Fed to reduce the frequency of some repo operations during this monthly period in light of more stable repo market conditions
*(CN) CHINA MAR TRADE BALANCE: $19.9B V $20.0BE
TUES 4/14
JPM Reports Q1 $0.78 v $2.49e, Managed Rev $29.1B v $29.0Be
FAST Reports Q1 $0.35 v $0.34e, Rev $1.37B v $1.36Be
(US) Former President Obama to endorse VP Joe Biden in a video to be released this morning - NBC News
BA Reports Mar deliveries 20, Net orders -282; Q1 deliveries 50
(US) Treasury Sec Mnuchin: Most major airlines to participate in PPP, talks continue with other airlines

WEDS 4/15
BAC Reports Q1 $0.40 v $0.65e, Rev $22.8B v $22.5Be; committed to no COVID-19 layoffs in 2020
(DE) German Fin Min Scholz: Europe needs joint EU answers on post crisis economic revival for region
*(US) APR EMPIRE MANUFACTURING: -78.2 V -35.0E (record low)
*(US) MAR ADVANCE RETAIL SALES M/M: -8.7% V -8.0%E (record drop); RETAIL SALES (EX-AUTO) M/M: -4.5% V -5.0%E
OXY Berkshire files to sell 17.3M shares - filing
*(US) MAR INDUSTRIAL PRODUCTION M/M: -5.4% V -4.0%E; CAPACITY UTILIZATION: 72.7% V 74.0%E
*(US) DOE CRUDE: +19.2M V +11ME; GASOLINE: +4.9M V +6.5ME; DISTILLATE: +6.3M V +1.5ME
(US) Small Business Paycheck Protection Program (PPP) expected to run out of initial $350B allocation later today - press

THURS 4/16
(DE) German Fin Min Scholz: Looks to reduce additional debt from 2023 - financial press
CODX COVID-19 test technology validated for use on saliva samples
MLNX China said to give conditional approval of Nvidia's purchase (in-line with recent speculation) - financial press
*(US) APR PHILADELPHIA FED BUSINESS OUTLOOK: -56.6 V -32.0E (lowest since Jul 1980)
VZ Reportedly to acquire cloud video conferencing company BlueJeans Network for $500M - press
(US) New York Gov Cuomo: Extends NY lockdown to May 15th
*(US) US President Trump tells governors that the states can take time before easing measures; sets out 3 Phases of guidelines for reopening state economies
GILD Stat News: early data from remdesivir trials in Covid-19 has been positive (update)
BA To resume commercial aircraft production at Puget Sound in phased approach beginning next week
RIO.AU Reports Q1 Pilbara iron ore shipments 72.9Mt v 69.1Mt y/y; Pilbara iron production 77.8Mt v 76.0Mt y/y
*(CN) CHINA Q1 GDP Q/Q: -9.8% V -12.0%E; Y/Y: -6.8% V -6.0%E (1st contraction since 1976)

FRI 4/17
*(EU) EURO ZONE MAR FINAL CPI Y/Y: 0.7% V 0.7%E; CPI CORE Y/Y: 1.0% V 1.0%E
PG Reports Q3 $1.17 v $1.11e, Rev $17.2B v $17.0Be
STT Reports Q1 $1.62 v $1.35e, Rev $3.07B v $2.91Be