Markets remain strong, defying Delta fears

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Weekly Market Update: Markets remain strong, defying Delta fears

2021-08-06T16:07:52.393

Trading opened this week amid lingering concerns about the spreading Delta variant and its potential impacts on global growth. US government officials and corporate executives introduced new safety requirements and stepped up incentives to convince more people to get vaccinated and return to wearing masks. Also, certain pandemic-sensitive businesses indicated the Delta variant has begun to have a negative impact on their most recent booking trends. Those Covid concerns initially weighed on Treasury yields while stock indices held near all-time highs. Wednesday’s weak ADP employment number helped push the US 10-year back towards the Feb lows around 1.12% before a strong ISM services print reversed that course later in the session.

Wednesday, the Bank of England laid out parameters that will need to be met in order to commence tapering. Most notably MPC members wanted to see the Bank Rate rise to 0.5% before acting. The announcement was sandwiched between comments from several US Federal Reserve hawks. Vice Chairman Clarida headlined several FOMC members who stepped up their calls to commence tapering sooner, while expressing continued concerns about the potential stickiness of rising inflation. Those views were subsequently bolstered by Friday’s very robust July jobs report which surpassed expectations by a wide margin. Treasury yields pushed higher along with the dollar and metals prices slipped. Growth stocks lagged, holding back the NASDAQ, while banks and cyclical groups responded positively to higher interest rates. For the week, the S&P gained 0.9%, the DJIA added 0.8%, and the Nasdaq rose 1.1%.

In corporate news this week, Uber saw a bigger than expected EBITDA loss as driver incentive costs weighed on profits despite increased ridership. Rival Lyft posted its first quarterly profit on increased ridership and steadier costs. Clorox shares touched their lowest level since the pandemic started after missing on sales and guiding below consensus. Cigna beat on the top and bottom line but its cost concerns dragged healthcare names lower mid-week. Expedia’s earnings pointed to impacts in July from the Delta variant, amid growing uncertainty in the travel industry. Royal Caribbean and Norwegian Cruises also noted they have seen some recent impact from the renewed COVID spread. Square acquired Australia-based firm Afterpay for $29B as the payments company pushed into the lucrative 'buy now, pay later' space.


SUN 8/1
(HK) Macau July Casino Rev (MOP): 8.4B v 6.5B prior; Y/Y: 528.1% v 540.5%e (35% of pre-COVID levels)
APT.AU Australia-based 'buy now, pay later' firm Afterpay to be acquired by Square in all-stock deal, implied value of A$39B, A$126.21/shr
SQ Reports Q2 $0.66 adj v $0.32e, Rev $4.68B v $5.02Be
MON 8/2
5.HK Reports Q2 Net $3.39B v $192M y/y, adj Pretax $5.56B v $2.6B y/y, Rev $12.52B v $13.2B y/y; to reduce office space this year
HEIA.NL Reports H1 Net €896M v -€297M y/y, Op €1.63B v 85M y/y, Rev €9.97B v €9.87Be
GPN Reports Q2 $2.04 v $1.89e, Adj Rev $1.94B v $1.85Be; Raises Quarterly dividend 28.2% to $0.25 from $0.195 (indicated yield 0.52%); Enters new collaboration with AWS through Netspend
*(US) JULY FINAL MARKIT MANUFACTURING PMI: 63.4 V 63.1E (13th consecutive month of expansion)
(DE) Germany to begin offering vaccine booster shots beginning in Sept - NY Times
*(US) JULY ISM MANUFACTURING: 59.5 V 60.9E; PRICES PAID: 85.7 V 88.0E
(US) Atlanta Fed GDPNow: raises Q3 GDP forecast to 6.3% from 6.1%
ML.FR Michelin North America raises prices by up to 8% on certain replacement tyres, effective Sep 1st
MAERSKB.DK Reports prelim Q2 EBITDA $5.1B v $4.7Be, Rev $14.2B v $13.8Be; Raises guidance
(US) Treasury quarterly financing estimates: to borrow $673B in Jul-Sep quarter v $600Be (prior estimate to borrow $821B)
(US) Fed's Waller (hawk, voter): Personal opinion is that Fed could make an announcement on taper in Sept; If we get 800K to 1M new jobs in next two jobs reports we will have regained 85% of jobs lost, which is 'significant further progress' - CNBC
COLM Reports Q2 +$0.61 v -$0.12e, Rev $566.4M v $500Me; Raises guidance
NXPI Reports Q2 $1.46 v $2.32e, Rev $2.60B v $2.58Be; Guides Q3 Rev well above ests
SPG Reports FFO Q2 $3.24 v $2.37e, Rev $1.25B v $1.18Be; Raises dividend 7.7%
EMN Reports Q2 $2.46 v $2.32e, Rev $2.65B v $2.40Be; Raises guidance
TUES 8/3
BP.UK Reports Q2 adj Net $2.80B v $2.63Be, Rev $37.6B v $20.8B y/y; Launches $1.4B share buyback and raises dividend 4%
(TR) Turkey July CPI M/M: 1.8% v 1.6%e; Y/Y: 19.0% v 18.6%e
(HK) Macau govt said to have required negative COVID tests for all departures - press
880.HK Reports H1 (HK$) Net -1.47B v -1.41B y/y, Rev 5.22B v 4.37B y/y
IT Reports Q2 $2.24 adj v $1.74e, Rev $1.17B v $1.12Be; Increased the share repurchase authorization by $800M; Raises guidance 2nd time
- Adj EBITDA $355M v $192M y/y
DD Reports Q2 $1.13 v $0.94e, Rev $4.1B v $4.00Be; Raises guidance materially
(US) Fed’s Bullard (non-voter, hawk): More volatile economic regime emerging in US; Monetary policy needs to be more nimble
ETN Reports Q2 $1.72 v $1.55e, Rev $5.22B v $4.97Be; Raises guidance
BABA Reports Q2 $2.57 v $2.25e, Rev $31.9B v $32.7Be; Increases share buyback program by $5B to $15B
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -1.0% v -2.9% prior
CZR Reports Q2 $0.34 v -$0.26e, Rev $2.5B v $2.29Be; Adj EBITDA $1.0B
(US) Weekly API Crude Oil Inventories: -0.9M v -4.7M prior
LUMN To sell assets of local incumbent carrier operations in 20 states to Apollo Funds for $7.5B (vs ~$5B speculated)
WEDS 8/4
7203.JP Reports Q1 Net ¥897.8B v ¥158.8B y/y, Op ¥997.5B v ¥13.9B y/y; Rev ¥7.94T v ¥4.60T y/y
6758.JP Reports Q1 Net ¥211.8B v ¥193.6B y/y, Op ¥280.1B v ¥221.7B y/y, Rev ¥2.26T v ¥1.96T y/y
*(FR) FRANCE JULY FINAL SERVICES PMI: 56.8 V 57.0E (confirms 4th straight expansion)
*(DE) GERMANY JULY FINAL SERVICES PMI: 61.8 V 62.2E (confirms 3rd month of expansion and record high)
*(UK) JULY FINAL SERVICES PMI: 59.6 V 57.8E (confirms 5th month of expansion)
*(EU) EURO ZONE JUN RETAIL SALES M/M: 1.5% V 1.7%E; Y/Y: 5.0% V 4.4%E
TT Reports Q2 $1.92 v $1.90e, Rev $3.83B v $3.73Be; Raises FY21 Guidance
CVS Reports Q2 $2.42 v $2.07e, Rev $72.6B v $70.1Be; Raises guidance
EMR Reports Q3 $1.09 adj v $0.98e, Rev $4.70B v $4.60Be; Raises guidance
HZNP Reports Q2 $1.62 v $0.91e, Rev $832.5M v $707Me; Raises guidance
(US) SEC Chair Gensler: Repeats cryptos are speculative asset class and we need to provide regulation to avoid broad manipulation - CNBC
*(US) JULY ADP EMPLOYMENT CHANGE: +330K V +683KE (lowest reading since Feb)
(US) Fed’s Bullard (non-voter, hawk): There have been pretty good macroeconomic outcomes despite the pandemic
*(US) JULY ISM SERVICES INDEX: 64.1 V 60.5E
(US) Fed Vice Chair Clarida: If core inflation hits 3% this year, expects would consider it much more than a moderate overshoot of Fed's goal, conditions for raising interest rates could be met by end of 2022
*(US) DOE CRUDE: +3.6M V -2.5ME; GASOLINE: -5.3M V -1.5ME; DISTILLATE: +0.8M V -0.5ME
WDC Reports Q4 $2.16 v $1.46e, Rev $4.92B v $4.51Be; Guides Q1 strong
MELI Reports Q2 $1.37 v $0.09e, Rev $1.70B v $1.50Be
RCII Reports Q2 $1.63 v $1.37e, Rev $1.19B v $1.13Be; Raises guidance materially
COST Reports July total SSS +13.8% (ex-gas)
(US) White House Official: Biden Admin developing plan to require nearly all foreign nationals traveling to the US to be fully vaccinated - press
2282.HK Reports H1 (HK$) Adj EBITDA +116.0M v -885.7M y/y; Rev 2.4B v 257M y/y
THURS 8/5
SIE.DE Reports Q3 Net €1.5B v €535M y/y, Industrial Business EBITA €2.32B v €2.06Be, Rev €16.1B v €14.87Be
(US) Goldman Sachs raises end-2021 S&P 500 target from 4,300 to 4,700
(IL) Israel Defense Min Gantz: Israel is prepared to attack in Iran
(US) Biden Administration said to unveil goal and new car emissions standards later today, on Aug 5th - press
MRNA Reports Q2 $6.46 v $6.01e, Rev $4.35B v $4.29Be; Authorizes share buyback of up to $1B over 2 years
*(UK) BANK OF ENGLAND BANK (BOE) LEAVES INTEREST RATE UNCHANGED AT 0.10%; AS EXPECTED
CHH Reports Q2 $1.22 v $0.91e, Rev $278.3M v $289Me; JULY RevPAR +15% vs 2019
*(CZ) CZECH CENTRAL BANK (CNB) RAISES 2-WEEK REPURCHASE RATE BY 25BPS TO 0.75%; AS EXPECTED
*(US) INITIAL JOBLESS CLAIMS: 385K V 383KE; CONTINUING CLAIMS: 2.93M V 3.255ME
(US) Atlanta Fed GDPNow: cuts Q3 GDP forecast to 6.1% from 6.3%
NVAX Reports Q2 -$4.75 v -$3.76e, Rev $298.0M v $371Me; Delays US submission for COVID-19 vaccine clearance and targets lower and middle-income countries instead this year
FRI 8/6
MAERSKB.DK CEO: container industry is still not able to lift demand - post earnings comments
*(US) JULY UNEMPLOYMENT RATE: 5.4% V 5.7%E
*(US) JULY CHANGE IN NONFARM PAYROLLS: +943K V +858KE (highest print since Aug 2020 numbers)
*(US) JULY AVERAGE HOURLY EARNINGS M/M: 0.4% V 0.3%E; Y/Y: 4.0% V 3.9%E
EU reportedly plans to discuss reimposing travel restrictions on the US amid Delta variant spread – press
(US) JUN CONSUMER CREDIT: $37.7B V $23.0BE

Market headwinds build entering traditionally choppy time of year

TradeTheNews.com 

Weekly Market Update: Market headwinds build entering traditionally choppy time of year

2021-07-30T16:03:12.207

The month long rally in U.S. stocks encountered stiffening headwinds this week. China's burgeoning regulatory crackdown on US listed corporations resulted in continued trepidation and fallout for investors in those stocks. Heavy US IPO issuance persisted, but signals like Robinhood’s less than stellar reception, suggested investors might be starting to balk at the onslaught of equity supply. Also economic data emerged that indicated the pace of economic growth may be downshifting. Quarterly earnings reports and conference calls continued to highlight the effects ongoing snarls in the global supply chain are having on corporate balance sheets, and are likely to persist for some time.

The Fed and Chairman Powell remained steadfast in their belief that emergency measures will stay in place for several more months at the very least. Wednesday’s FOMC statement emphasized more progress has been made towards the goals required to begin tapering, but a dovish tilt to answers in his press conference confirmed a view by many that the growing spread of the Covid Delta variant is weighing heavily on the Chairman’s mind. Friday saw things finish on a dour note following a disappointing Amazon earnings report, in particular. US Treasury yields finished lower on the week along with the Dollar. Bitcoin finally rallied up from 30K level to finish out consolidating closer the 40K. For the week, the S&P lost 0.4%, the DJIA fell 0.4%, and the Nasdaq ended 1.1% lower.

In corporate news this week, most headlines derived from the torrent of quarterly earnings, with Big Tech names front and center. Alphabet shares jumped after the search giant reported blowout numbers, noting YouTube's revenue nearly doubled amid a rebound in digital ad spending. Microsoft notched earnings and revenue beats, stating it expects growth to continue into next year. Facebook warned its sales growth rate is about to decelerate as Apple iOS restrictions and pandemic reopenings weigh on its outlook. A surprise revenue miss and disappointing outlook dealt Amazon shares their biggest daily drop since last September.

AMD posted beats on its top and bottom line and noted it is growing significantly faster than the market with strong demand across all parts of its businesses. UPS dropped despite a big earnings beat, as its operating margin outlook weighed on investor sentiment. Tesla reported its most profitable quarter in its history despite the global semiconductor shortage that has impaired the entire auto industry. Ford reported a surprise Q2 profit and said chip supply was improving though the situation ‘remains fluid.’ Boeing notched its first profit in almost two years as it saw 737 Max deliveries rise. Robinhood marked the weakest debut ever for an IPO of its size by a U.S. company, reportedly leaving underwriters nonplussed and speculating that the hybrid nature of the auction process may have confused investors.


SUN 7/25
(CN) China Industry Ministry (MIIT): To begin a crackdown on illegal internet activities

MON 7/26
*(DE) GERMANY JULY IFO BUSINESS CLIMATE: 100.8 V 102.5E (1st decline since Jan 2021)
AMZN Reportedly mulls to accept Bitcoin payments by end-2021, also investigating its own token for 2022 - press
RPM Reports Q4 $1.28 v $1.26e, Rev $1.74B v $1.69Be; Warns next 6mo of significant inflation, supply chain impacts
(US) Goldman Sachs cuts Q3 US GDP outlook 11% from 9.5% to 8.5%
LII Reports Q2 $4.57 v $4.32e, Rev $1.24B v $1.16Be; Affirms guidance & raises FY21 stock repurcase to $600M (prior $400M)
(US) Reportedly US will not lift any existing travel restrictions at this point citing Delta variant and potential increase in COVID-19 cases in coming weeks - financial press
WLTW Aon mutually agrees with Willis Towers Watson to terminate combination; Aon to pay $1B termination fee to WLTW
*(US) JUN NEW HOME SALES: 676K V 800KE
*(US) JULY DALLAS FED MANUFACTURING ACTIVITY INDEX: 27.3 V 32.3E
AMZN Denies they will accept Bitcoin this year, also denies it plans to launch a crypto coin in 2022 - press
TSLA Reports Q2 $1.45 adj v $0.90e, Rev $12.0B v $11.4Be; While we saw ongoing semiconductor supply challenges in Q2, we were able to further grow our production
INTC Reveals two breakthrough process technologies to accelerate process and packaging innovations; Set 2025 roadmap

TUES 7/27
700.HK WeChat stops new users registrations until early Aug due to security upgrade following new China govt regulations
(CN) China reportedly considering adding more national laws in Hong Kong basic law annex - press
UPS Reports Q2 $3.06 v $2.71e, Rev $23.4B v $23.1Be; Has no plans to buyback shares in 2021
SWK Reports Q2 $3.08 v $2.89e, Rev $4.30B v $4.20Be; Raises guidance significantly
GE Reports Q2 $0.05 v $0.03e, Rev $18.3B v $18.3Be; Aviation shows early signs of recovery
MMM Reports Q2 $2.59 v $2.25e, Rev $8.95B v $8.54Be; Raises guidance
RTX Reports Q2 $1.03 v $0.92e, Rev $15.9B v $15.8Be; Raises guidance
FISV Reports Q2 $1.37 v $1.29e, Rev $4.05B v $3.71Be; Raises guidance for second time
ADM Reports Q2 $1.33 adj v $0.99e, Rev $22.9B v $18.2Be; Expects strong momentum to continue in H2
WM Reports Q2 $1.27 v $1.18e, Rev $4.48B v $4.24Be; Raises guidance again; Focuses on disciplined pricing and cost management helped to offset the inflationary cost pressures we have seen
GLW Reports Q2 $0.53 v $0.51e, Rev $3.50B v $3.40Be
LECO Reports Q2 $1.67 v $1.46e, Rev $826M v $786Me
*(HU) HUNGARY CENTRAL BANK (MNB) RAISES BASE RATE BY 30BPS TO 1.20%; HIGHER-THAN-EXPECTED
PCAR Reports Q2 $1.41 v $1.38e, Rev $5.84B v $5.44Be
*IMF WORLD ECONOMIC OUTLOOK (WEO): MAINTAINS 2021 GDP GROWTH AT 6.0%
(CN) China government reportedly digging a new field for 'what appears to be 110 silos for launching nuclear missiles' - NYT
*(US) JULY CONSUMER CONFIDENCE: 129.1 V 124.0E
(US) Atlanta Fed GDPNow: cuts Q2 GDP forecast to 7.4% from 7.6%
(US) CDC confirms recommendation that vaccinated individuals should wear masks in public indoor settings in areas with high COVID-19 transmission rates; Kids wear masks when back to school - press
MSFT Reports Q4 $2.17 v $1.90e, Rev $46.2B v $44.1Be
GOOGL Reports Q2 $27.26 v $19.89e, Rev $51.0B v $46.1Be
AMD Reports Q2 $0.63 v $0.54e, Rev $3.85B v $3.60Be; Says growing significantly faster than the market with strong demand across all of our businesses
(US) Weekly API Crude Oil Inventories: -4.7M v +0.8M prior

WED 7/28
DBK.DE Reports Q2 Net+€692M v -€77M y/y, Rev €6.24B v €5.9Be; scraps costs target
BAS.DE Reports Q2 Net +€1.7B v -€0.9B y/y, Adj EBITDA €3.2B v €1.1B y/y, Rev €19.8B v €19.8B prelim
PFE Reports Q2 $1.07 v $0.97e, Rev $19.0B v $17.5Be; Raises guidance due to higher anticipated COVID-19 vaccine Rev
TDY Reports Q2 $4.61 v $2.94e, Rev $1.12B v $1.00Be; Guides Q3 strong; raises FY21 guidance significantly
ADP Reports Q4 $1.20 v $1.13e, Rev $3.74B v $3.67Be
SHOP Reports Q2 $2.24 v $0.98e, Rev $1.12B v $1.04Be; Notes consumer spending remained strong
GSK.UK Reports Q2 Adj EPS 28.1p v 0.20pe, Rev £8.09B v £7.69Be
APH Reports Q2 $0.61 v $0.55e, Rev $2.66B v $2.47Be; The revolution in electronics is accelerating
NSC Reports Q2 $3.28 v $2.94e, Rev $2.80B v $2.75Be
*(US) JUN PRELIMINARY WHOLESALE INVENTORIES M/M: 0.8% V 1.1%E
*(US) DOE CRUDE: -4.1M V -2ME; GASOLINE: -2.3M V -1ME; DISTILLATE: -3.1M V -0.5ME
(US) Atlanta Fed GDPNow: cuts Q2 GDP forecast to 6.4% from 7.4%
*(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25% (AS EXPECTED); Made progress towards goals since setting out bar for tapering
(US) Fed Chair Powell: Fed will continue to support the economy until recovery is complete; Timing of tapering will depend on incoming data - post rate decision press conference
QCOM Reports Q3 $1.92 v $1.67e, Rev $8.00B v $7.58Be; Says it has more demand than supply in all products
F Reports Q2 +$0.13 v -$0.11e, Rev $26.8B adj v $21.5Be
FB Reports Q2 $3.61 v $3.03e, Rev $29.1B v $27.9Be; Expects Rev growth rate v 2019 levels to decelerate modestly in H2 2021
005930.KR Reports final Q2 (KRW) Net 9.45T v 5.5T y/y; Op 12.6T v 12.5T prelim (8.15T y/y); Rev 63.7T v 63.0T prelim (52.97T y/y)

THRS 7/29
AIR.FR Reports H1 adj Net +€2.23B v -€1.92B y/y, Adj EBIT €2.73B v -€1.55B y/y, Rev €24.64B v €18.9B y/y; board approves plans for a new freighter version of its A350 passenger jet
(DE) GERMANY JULY CPI NORTH RHINE WESTPHALIA M/M: 0.8% V 0.5% PRIOR; Y/Y: 4.1% V 2.5% PRIOR
CSGN.CH Reports Q2 (CHF) Net 253M v 1.16B y/y, Pretax 813M v 1.55B y/y, Rev 5.1B v 6.2B y/y
NOKIA.FI Reports Q2 €0.09 v €0.05e, Op €682M v €408Me; Rev €5.31B v €5.43Be; Raises guidance
NESN.CH Reports H1 (CHF) Net 5.9B v 5.8Be, Op 7.3B v 7.2Be, Rev 41.8B v 41.9Be
SAN.FR Reports Q2 Business EPS €1.38 v €0.67e, Op €2.27B v €1.60B y/y, Rev €8.74B v €8.4Be
VOW3.DE Reports H1 Net +€8.45B v -€1.02B y/y, Op €11.4B v €11.0B prelim, Rev €129.7B v €96.1B y/y; Trims deliveries outlook citing chip shortage income in H2
RDSA.NL Reports Q2 CCS $0.71 v $0.08 y/y, Adj CCS Net $5.53B v $5.20Be, Rev $61.8B (total rev and other income) v $32.5B y/y; Commences $2B share buyback, to raise dividend from Q2 onwards by 38%
AZN.UK Reports Q2 Core EPS $0.90* v $0.96 y/y, Rev $8.22B v $6.28B y/y; Raises guidance
DGE.UK Reports FY20/21 Preliminary Net £2.66B v £1.41B y/y, adj Op £3.75B v £2.14B y/y, Rev £12.7B v £12.5Be
066570.KR Reports final Q2 (KRW) Net -211.9B v +65.6B y/y; Op 1.11T v 1.1T prelim (495.4B y/y); Rev 17.1T v 17.1T prelim (12.8T y/y)
NOK CEO: chip shortage situation remains tight and to continue into 2022 - post earnings comments
(DE) GERMANY JULY NET UNEMPLOYMENT CHANGE: -91.0K V -29.0KE; UNEMPLOYMENT CLAIMS RATE: 5.7% V 5.8%E
(CN) China Finance Ministry (MOF): To remove steel products tax rebates for 23 items, confirms to raise export tariffs for certain steel products from Aug 1st
(EU) EURO ZONE JULY ECONOMIC CONFIDENCE: 119.0 V 118.2E (highest in over 20 years)
(DE) GERMANY JULY PRELIMINARY CPI M/M: 0.9% V 0.6%E; Y/Y: 3.8% V 3.2%E (highest annual pace since 1993)
MA Reports Q2 $1.95 adj v $1.72e, Rev $4.50B v $4.35Be
(US) INITIAL JOBLESS CLAIMS: 400K V 385KE; CONTINUING CLAIMS: 3.27M V 3.18ME
(US) Q2 ADVANCE GDP PRICE INDEX: 6.0% V 5.4%E; CORE PCE Q/Q: 6.1% V 6.1%E
(US) Nevada reports June casino gaming Rev $1.19B, +111% y/y; Las Vegas strip Rev $610.6M, +156% y/y
(US) JUN PENDING HOME SALES M/M: -1.9% V 0.1%E; Y/Y: -3.3% V -3.3%E
AMZN Reports Q2 $15.12 v $12.22e, Rev $113.1B v $115.1Be
- Guides Q3 Rev $106-112B +10-16% y/y v $119.2Be
AMZN CFO: Sees step down in Revenue growth continuing for the next few quarters, citing lapping growth from 2020 pandemic and additional mobility among customers getting out and doing more than shopping online - media call comments
X Reports Q2 $3.37 v $3.16e, Rev $5.03B v $4.70Be

FRI 7/30
*(DE) GERMANY Q2 PRELIMINARY GDP Q/Q: 1.5% V 2.0%E; Y/Y: 9.6% V 9.6%E
*(EU) EURO ZONE JULY ADVANCE CPI ESTIMATE Y/Y: 2.2% V 2.0%E (back above ECB's target); CPI CORE Y/Y: 0.7% V 0.7%E
*(EU) EURO ZONE Q2 ADVANCE GDP Q/Q: 2.0% V 1.5%E; Y/Y: 13.7% V 13.2%E
*(EU) EURO ZONE JUN UNEMPLOYMENT RATE: 7.7% V 7.9%E
CAT Reports Q2 $2.60 v $2.38e, Rev $12.9B v $12.4Be; Cites higher end-user demand for equipment and services
PG Reports Q4 $1.13 v $1.08e, Rev $18.9B v $18.3Be
XOM Reports Q2 $1.10 v $1.02e, Rev $67.7B v $63.7Be
*(US) JUN PERSONAL INCOME: +0.1% V -0.3%E; PERSONAL SPENDING: 1.0% V 0.7%E
(US) SEC Chair Gensler: Confirms SEC has asked staff to seek certain disclosures from offshore issuers associated with China-based operating companies
*(US) JULY CHICAGO PURCHASE MANAGERS INDEX: 73.4 V 64.2E
*(US) JULY FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 81.2 V 80.8E
(US) Atlanta Fed GDPNow: forecasts initial Q3 GDP at 6.1%

Brief bout of risk aversion quickly reverses

TradeTheNews.com 

Weekly Market Update: Brief bout of risk aversion quickly reverses

2021-07-23T16:05:17.287

This week’s trade opened amid a step sell off in global equity markets. Worries about a jump in global Covid cases, predominately attributed to the Delta variant induced the most aggressive one way stampede out of risk assets in months. Adding to the consternation were continued worries about rising inflation and the likely lingering effects on the supply chain another wave of the pandemic could exacerbate. Also, an intensifying crack down by Beijing on US-listed Chinese stocks continued to weigh heavily on that sector. Global interest rates plumbed to levels not seen since February highlighted by the US 10-year yield which briefly dipped below 1.15%. Oil slumped along with equities and the VIX surged 30%. Ultimately though, as seen several times since the very beginning of the pandemic, the bleeding stopped abruptly. The S&P tested the 50-day moving average and stocks quickly found support despite continued softness in yields. Mega-cap tech names were the stabilizer yet again, as strength there masked significant weakness in the Russel 2000 as a strong rebound ensued for the overall market.

Separately, earnings season picked up momentum and clear lines emerged. Managements that illustrated their ability to offset supply constraints and input cost pressures saw their shares outperform after releasing results. Economic data was mixed as preliminary looks at global July PMI readings held at robust levels, but US weekly jobless claims ticked unexpectedly higher and housing data indicated some moderation due to the surge in prices. The ECB met and adjusted its forward guidance to calibrate to the recently updated inflation target. Lagarde acknowledged the statement was not unanimously supported, but the revised forward guidance underscored the ECB’s commitment to maintaining an accommodative stance by keeping rates at their present or lower levels until inflation reaches target and maintains it for some time. By Friday, US treasury yields had nearly returned to where they ended last week and US indices outside of the small caps were in positive territory. For the week, the S&P rose 2%, the DJIA added 1.1%, and the Nasdaq was up 2.8%.

In corporate news this week, earnings season ramped up with some major names releasing their quarterly results. IBM saw its revenue rise for a second consecutive quarter and confirmed its FY outlook, though higher expenses weighed on earnings year on year. Netflix notched its lowest subscriber additions in several years and disappointed investors with a modest Q3 outlook. Intel beat on top and bottom line, but its continued loss of market share to AMD weighed on investors’ minds, and the CEO warned the semiconductor shortage could take a couple years to fully heal. Chipotle posted a big beat as customers returned to its restaurants this quarter and its digital sales continued a strong growth trajectory. Coatings giant PPG guided Q3 input and logistics costs higher sequentially and said it will continue to raise prices in order to offset expenses. On the airlines front, both American and Southwest posted their first monthly profits without government help since pre-COVID times. Investors saw a lot to like in Twitter’s quarter, as its advertising initiatives led to an unexpected bounce in revenue and its outlook beat street estimates. Snap posted its best quarter in four years, reporting strong growth in its daily active user and average rev per user metrics.


SUN 7/18
OPEC+ said to agreed to ease oil output cuts from Aug 2021 and to extend supply agreement until the end-2022 - press
(CN) China Govt has signaled that Hong Kong is the preferred place for Chinese companies to IPO (not New York) and will exempt any Chinese company from requiring approval from cybersecurity regulatory body if they IPO in Hong Kong v other offshore markets - press
(HK) Macau Responsible Gaming Association President Wai-kit: Recent closure of satellite casinos does not imply the start to more wide spread closures; but there will be some difficulty in reaching MOP130B in gaming rev in 2021 - HK press
MON 7/19
*(US) JULY NAHB HOUSING MARKET INDEX: 80 V 81E
(CA) Canada to begin allowing fully vaccinated US visitors into the country for non-essential travel beginning Aug 9th
(DE) US and Germany reportedly to announce deal over dispute regarding Nord Stream 2 nat gas pipeline in coming days - press
JBHT Reports Q2 $1.61 v $1.55e, Rev $2.91B v $2.72Be
IBM Reports Q2 $2.33 v $2.25e, Rev $18.7B v $18.2Be
PPG Reports Q2 $1.94 v $2.19e, Rev $4.36B v $4.42Be; Guides Q3 input and logistics costs higher q/q
STLD Reports Q2 $3.40 v $3.43e, Rev $4.47B v $4.17Be
BHP.AU Reports Q4 Waio Iron Ore Production: 72.8Mt v 75.6Mt y/y, Attributable Iron Ore Production: 65.2Mt v 66.7Mt y/y
AAPL To postpone return to office until earliest October, due to COVID, will give 1 month notice before return - press
TUES 7/20
(HK) Macau Jun Visitor Arrivals 528.5K, +2,000% y/y
UBSG.CH Reports Q2 Net $2.0B v $1.2B y/y, Adj PBT $2.6B v $1.6B y/y, Rev $8.98B v $7.4B y/y, To buyback $600M in shares in Q3 (under existing buyback program)
ALO.FR Reports Q1 Rev €3.70B v €1.51B y/y; Affirms H1 FCF
TRV Reports Q2 $3.45 v $2.35e, Rev $8.69B v $8.29Be
PM Reports Q2 $1.57 v $1.54e, Rev $7.59B v $7.84Be; Announces up to $7B share buyback; Raises FY21 Guidance
HCA Reports Q2 $4.36 v $3.17e, Rev $14.4B v $13.6Be; Raises guidance significantly
MAN Reports Q2 $2.02 v $1.42e, Rev $5.30B v $5.17Be; Guides Q3 well-above est's
ALLY Reports Q2 $2.33 v $1.49e, Rev $2.09B v $1.86Be
*(US) JUN HOUSING STARTS: 1.64M V 1.59ME; BUILDING PERMITS: 1.60M V 1.70ME
PPG Exec: Guides Q3 material costs inflated by as much as 20% y/y; Guides Q4 positive cost pass-through offsets - earnings call comments
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -2.9% v -3.6% prior
(US) Atlanta Fed GDPNow: raises Q2 GDP forecast to 7.6% from 7.5%
ISRG Reports Q2 $3.92 v $3.16e, Rev $1.46B v $1.28Be
UAL Reports Q2 -$3.91 v -$4.17e, Rev $5.47B v $5.31Be
(US) Weekly API Crude Oil Inventories: +0.8M v -4.1M prior (1st build in 9 weeks)
JNJ New study finds one dose of J&J COVID vaccine is less effective against Delta and Lambda variants; adds to evidence that those inoculated with J&J vaccine may need second dose, ideally of mRNA variety - NYT
AAPL Said will not introduce new 4G phones or iPhone Mini next year (2022), will only introduce 5G phones - Nikkei
WEDS 7/21
NOVN.CH Reports Q2 Core EPS $1.66 v $1.52e, Rev $12.96B v $12.53Be; Affirms outlook
SAP.DE Reports Q2 Net €1.40B v €59M y/y Op €1.92B v €1.90Be, Rev €6.67B v €6.74B y/y; Raises outlook
DAI.DE Reports Q2 Net +€3.70B v -€1.91B y/y, adj EBIT €5.42B v €5.42B prelim, Rev €43.5B v €42.7Be; Says listing of Daimler Trucks is on track; Comments on chip shortage impact
ANTM Reports Q2 $7.03 v $6.34e, Op Rev $33.3B v $33.2Be; Raises guidance
JNJ Reports Q2 $2.48 v $2.28e, Rev $23.3B v $22.3Be; Raises FY21 outlook
KO Reports Q2 $0.68 v $0.57e, Rev $10.1B v $9.49Be; Raises FY21 outlook
(US) Deputy Sec of State Sherman to meet with China's Wang Yi; the talks are expected to be held on Sun and Mon (Jul 25-26th) - financial press
(UK) Brexit negotiator Frost: Clear circumstances to justify Article 16, but not there yet; Today's proposals will require a significant change to NI protocol
STX Reports Q4 $2.00 v $1.86e, Rev $3.01B v $2.96Be; Guides Q1 well-above ests
UAL CEO: Bookings are getting stronger every day, not seeing any impact from Delta variant; Confident United to be profitable in Q3 and Q4 - CNBC
KNX Reports Q2 $0.98 v $0.87e, Rev $1.32B v $1.30Be; Raises FY21 EPS guidance for second time
(EU) EU spokesperson: We take note of statement made by UK's Frost today; We will not agree to a renegotiation of the Northern Ireland protocol
*(US) DOE CRUDE: +2.1M V -3.5ME; GASOLINE: -0.1M V -1ME; DISTILLATE: -1.3M V +1ME
(US) TREASURY $24B 20-YEAR BOND REOPENING DRAWS 1.890%, BID-TO-COVER 2.33 v 2.40 PRIOR
(US) Fed Chair Powell reportedly has wide support among top Biden aides to be renominated for a second term but advisers have not discussed it with Biden yet; decision on reappointment not expected before Sept - press
BHP.AU Reached agreement to supply nickel to Tesla (securing a non-Chinese supply)
THURS 7/22
ROG.CH Reports H1 (CHF) Core EPS 10.56 v 10.44 y/y, Core Op 11.7B v 11.8B y/y, Rev 30.7B v 29.3B y/y
UNA.NL Reports H1 Net €3.49B v €3.56B y/y; Rev €25.8B v €25.7B y/y
V Acquires cloud-based platform for currency exchange services Currencycloud for £700M
DOW Reports Q2 $2.72 v $2.48e, Rev $13.9B v $12.7Be
T Reports Q2 $0.89 adj v $0.78e, Rev $44.0B v $42.6Be
DOW Guides Q3 Rev ~$13.8-14.3B v $12.1Be - earnings slides
*(EU) ECB LEAVES MAIN REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
UNA.NL CEO: We expect to grow volumes this year in emerging markets, do not expect collapse in volumes because of price - post earnings comments
*(US) INITIAL JOBLESS CLAIMS: 419K V 350KE; CONTINUING CLAIMS: 3.24M V 3.10ME
(EU) ECB chief Lagarde: Revised forward guidance to underline commitment to maintain an accommodative stance - Prepared Remarks
*(US) JUN EXISTING HOME SALES: 5.86M V 5.90ME
(EU) ECB's Weidmann (Germany) and Wunsch (Belgium) said to oppose the ECB's new rate guidance - press
INTC Reports Q2 $1.28 v $1.06e, Rev $19.6B v $18.0Be; Guides Q3 Rev well ahead of ests; Raises FY21 again
COF Reports Q2 $7.71 v $4.78e, Rev $7.4B v $7.10Be
INTC CEO: chip industry could take a couple of years to fully catch up to surging demand for semiconductors - media interview
FRI 7/23
PFE Pfizer/BioNTech vaccine was reportedly ~39% effective in protection from delta variant in Israel in recent weeks - press
*(FR) FRANCE JULY PRELIMINARY PMI MANUFACTURING: 58.1 V 58.3E (8th month of expansion, but lowest reading since Feb 2021)
*(DE) GERMANY JULY PRELIMINARY PMI MANUFACTURING: 65.6 V 64.1E (13th month of expansion)
*(EU) EURO ZONE JULY PRELIMINARY PMI MANUFACTURING: 62.6 V 62.5E (13th month of expansion)
*(UK) JULY PRELIMINARY PMI MANUFACTURING: 60.4 V 62.4E (14th straight expansion)
HON Reports Q2 $2.02 v $1.94e, Rev $8.81B v $8.53Be; Raises guidance
KMB Reports Q2 $1.47 v $1.73e, Rev $4.72B v $4.78Be; Says facing significantly higher input costs and a reversal in consumer tissue volumes; Cuts FY21 outlook
(US) JULY PRELIMINARY MARKIT PMI MANUFACTURING: 63.1 V 62.0E

Initial Q2 earnings unable to stave off resurgent inflation and Covid concerns

TradeTheNews.com 

Weekly Market Update: Initial Q2 earnings unable to stave off resurgent inflation and Covid concerns

2021-07-16T16:25:01.223

Markets struggled to find direction this week as concerns about Covid variants and the potential for a prolonged period of inflation weighed on sentiment despite a solid start to the Q2 earnings season. US data showed higher-than-expected inflation which may be eroding consumer confidence readings, though advanced retail sales were above forecast. Tuesday’s CPI data came in hot, with the 5.4% y/y reading at its highest annual rate since mid-2008, the crescendo of the housing bubble. Fed officials continued to drop hints about future plans for tapering QE, including the Chicago Fed’s Evans suggesting unemployment reaching 4.5% by year end could dictate some adjustment. For his part, Chair Powell remained steadfast in his stance that tapering is still ‘a ways off’ in Congressional testimony.

On the political front, Democrats on Capitol Hill arrived at a $3.5T budget for spending and tax plans, including a Medicare expansion. Sino-American tension grew as the Biden Administration issued a business advisory, warning companies of the risks around China’s growing influence in Hong Kong, which Beijing strongly objected to. Crude oil prices were pointed lower for most of the week on reports that Saudi Arabia has given in to UAE demands to ease production restrictions. There was also a modest sell off in stocks, though a flight to safety was not especially apparent as gold was about flat and demand was lackluster in the 10- and 30-year Treasury auctions. For the week, the S&P lost 1%, the down slipped 0.5%, and the Nasdaq fell 1.9%.

In corporate news this week, earnings season kicked off as major banks began reporting their quarterly results. JPMorgan traded lower despite reporting its Q2 profit more than doubled year on year, while Goldman Sachs jumped after big beats on both its top and bottom line. Bank of America shares fell after low interest rates squeezed its Q2 revenue. Wells Fargo was the only lender out of the four biggest to post an increase in revenue last quarter, notching its highest revenue since before COVID started. Morgan Stanley beat Wall Street consensus estimates despite weak results in its fixed-income, currency and commodities segments.

Delta Airlines reported a beat on its top and bottom line, noting that it sees domestic leisure travel as fully recovered now to 2019 levels. Union Pacific said it would suspend shipments for 7 days from West Coast ports to Chicago in order to ease congestion on the tracks. Netflix announced it would be entering the video game market and planned to offer streaming games beginning next year. Apple is reportedly seeking to boost iPhone production by 20% in the current year - press


SUN 7/11
6758.JP Expect that robots will takeover manufacturing of TVs, cameras and smartphones, unmanned production lines expected to cut costs by 70% at main TV factory in Malaysia by 2023 v 2018 - FT
000660.KR Started mass production of of 8GB LPDDR4 mobile DRAM based on 1a-nm EUV process this month; Expect 1a-nm DRAM to alleviate supply and demand conditions

MON 7/12
LCAP Announces business Combination with MSP Recovery, a Leader in Data-Driven Solutions, Recovering Improperly Paid Benefits on Behalf of Medicare, Medicaid and Commercial Payers in deal valued at $32.6B
(US) June NY Fed Survey of Consumer Expectations: Median inflation expectations increased 0.8ppts in June to 4.8% at the one-year horizon
AVGO Reportedly in talks to acquires SAS Institute Inc for as much as $20B - press
*(US) TREASURY'S $38B 10-YEAR NOTE REOPENING DRAWS 1.371%; BID-TO-COVER RATIO: 2.39 V 2.58 PRIOR AND 2.44 OVER THE LAST 8 REOPENINGS
MCD Franchisees agree to adopt employee incentive plan which includes childcare and other benefits - press

TUES 7/13
MDCA Raises FY21 Organic Rev ~+9-11% (prior 7-9%), adj EBITDA $200-210M (prior $190-200M), citing continues strong demand in Q2 - filing
(HU) Hungary Fin Min Varga: OECD "two-pillar" minimum global tax proposal "far from acceptable"
JPM Reports Q2 $3.03 adj (ex reserve release) v $3.05e, Managed Rev $31.4B v $30.0Be; Ave loans "flat" q/q
FAST Reports Jun net sales $533.4M +1.7% y/y
GS Reports Q2 $15.02 v $9.57e, Rev $15.4B v $11.5Be; Confirms to raise dividend 60% to $2.00/shr from $1.25/shr (indicated yield 2.17%)
CAG Reports Q4 $0.54 v $0.52e, Rev $2.74B v $2.74Be; Now expect FY22 input cost inflation to be materially higher than we anticipated at the end-Q3; Raises annual dividend to $1.25/shr from $1.10/shr
BINANCE.IPO Suspends withdrawals GBP and EUR as payment provider Clear Junction has stopped facilitating them
(HK) Biden administration to issue a business advisory warning companies of growing China influence in Hong Kong, increasing the risk of operating in HK - press
*(US) JUN CPI M/M: 0.9% V 0.5%E; Y/Y: 5.4% V 4.9%E (highest annual rate since Jun 2008)
*(US) TREASURY $24B 30-YEAR BOND REOPENING DRAWS 2.00%; BID TO COVER 2.19 V 2.29 PRIOR AND 2.40 OVER LAST 8 REOPENINGS
*(US) JUN MONTHLY BUDGET STATEMENT: -$174.2B V -$192.0BE
AAL Guides Q2 -$1.76 to -$1.67 v $2.32e, Raises Q2 Rev -37% vs 2019 (prior -40% vs 2019), guides Q2 ASMs -24.6% vs 2019 (prior -25% to -20% vs 2019)
(US) Fitch affirms United States sovereign rating at AAA; Outlook Negative
(US) Weekly API Crude Oil Inventories: -4.1M v -8.0M prior (8th straight weekly draw)
AVGO Reportedly no longer in talks to acquire SAS Institute for $20B - press
AAPL Said to be seeking 20% increase in iPhone production in the current year - press
(US) Senator Schumer (D-NY): Senate Democrats have arrived at a $3.5T budget deal for spending and tax plans; budget to include Medicare expansion

WEDS 7/14
*(UK) JUN CPI M/M: 0.5% V 0.2%E; Y/Y: 2.5% V 2.2%E (2nd month annual pace above BOE target and highest since 2018)
BAC Reports Q2 $1.03 v $0.78e, Rev $21.5B v $21.8Be; Says consumer spending significantly surpassed pre-pandemic levels, loan levels have begun to grow; Total Loans & Leases -0.08% y/y
(AE) UAE and Saudi Arabia said to have reached compromise in oil production deal - press
DAL Reports Q2 -$1.07 v -$1.37e, Rev $7.13B v $6.30Be; Says domestic leisure travel is fully recovered to 2019 levels
DAL CEO: we are in a full recovery of our business - CNBC interview
MAR CEO: US recovery has been led by leisure with Strong pricing power - CNBC interview
*(US) JUN PPI FINAL DEMAND M/M: 1.0% V 0.6%E; Y/Y: 7.3% V 6.7%E
(US) Fed chief Powell semi-annual testimony in House Committee on Financial Services: Still a ways off from meeting tapering threshold; Long term inflation expectations are consistent with Fed goals
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS EXPECTED; CUTS QE BOND BUYING PROGRAM TO C$2B PER WEEK FROM C$3B
*(US) DOE CRUDE: -7.9M V -4ME; GASOLINE: +1.0M V -2ME; DISTILLATE: +3.7M V +1ME (8th straight weekly decline in crude stocks; Crude stocks fall to lowest since Jan 2020)
(US) Fed Chair Powell: If Fed sees inflation remaining materially higher for a period of time, threatening inflation expectations, then the Fed will change its policy - testimony to House Committee on Financial Services
(US) FEDERAL RESERVE BEIGE BOOK: ECONOMY STRENGTHENED FROM LATE MAY TO EARLY JULY; OUTLOOK FOR DEMAND IMPROVED FURTHER BUT SOME EXPRESSED UNCERTAINTY OR PESSIMISM OVER EASING OF SUPPLY CONSTRAINTS
AIG To sell 9.9% equity stake in Life & Retirement business to Blackstone for $2.2B cash; To sell certain affordable housing assets to Blackstone Real Estate Income Trust, Inc. for $5.1B
NFLX Entering video game market, will offer streaming games next year; former Electronic Arts, Zynga and Facebook executive Mike Verdu to lead - press
*(CN) CHINA Q2 GDP Q/Q: 1.3% V 1.0%E; Y/Y: 7.9% V 8.0%E (**Note prior quarter growth revised lower by 33%)

THURS 7/15
2330.TW Reports Final Q2 (NT$) Net 134.4B v 120.8B y/y; Op 145.7B v 131.1B y/y, Rev 372.2B v 372.2B prelim; Says auto chip shortages to be gradually reduced for customers starting Q3
(UK) BOE’s Saunders (dove): Withdrawing stimulus may be appropriate fairly soon; any rate rise in the next year will likely be limited
WIT Reports Q1 (INR) Net 32.4B v 28.3Be, Rev 182.5B v 176.3Be; Guides Q2 Rev above cons ests
PAG Reports prelim Q2 adj >$4.00 v $2.04e citing strength of the auto and commercial truck retail model
AXTA Announces Global Price Increases across all of its global lines of business, effective immediately
*(US) JULY EMPIRE MANUFACTURING: 43.0 V 18.0E (record high)
*(US) INITIAL JOBLESS CLAIMS: 360K V 350KE; CONTINUING CLAIMS: 3.24M V 3.30ME
*(US) JULY PHILADELPHIA FED BUSINESS OUTLOOK: 21.9 V 28.0E
(US) Fed Chair Powell: bar for the Fed to start tapering asset purchases is still a ways off - Senate testimony
(US) Fed's Evans (dove, voter): if unemployment is at 4.5% by the end of the 2021, would guess some adjustment in stance would be appropriate
AA Reports Q2 $1.49 adj v $1.35e, Rev $2.83B v $2.61Be; Raises FY21 shipment outlook
- Raises FY21 aluminum shipments 2.9-3.0M metric tons, total annual bauxite shipments 50-51M dry metric tons, total alumina shipments 14.1
RIO.AU Reports Q2 Pilbara iron ore shipments 76.3Mt v 86.7Mt y/y; Pilbara iron ore production 75.9Mt v 83.2Mt y/y
(CN) China Carbon Emissions Market opens up at CNY48/ton

FRI 7/16
*(EU) EURO ZONE JUN FINAL CPI Y/Y: 1.9% V 1.9%E; CPI CORE Y/Y: 0.9% V 0.9%E
*(US) JUN ADVANCE RETAIL SALES M/M: +0.6% V -0.3%E; RETAIL SALES (EX-AUTO) M/M: +1.3% V +0.4%E
KSU Exec: Saw core pricing gains in the quarter - conf call comments
*(US) JULY PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 80.8 V 86.5E
(US) Atlanta Fed GDPNow: cuts Q2 GDP forecast to 7.5% from 7.9%
UNP Suspends shipments for 7 days from West Coast ports to Chicago to ease congestion – press

Fed dodges ‘taper tantrum’; corporate news remains upbeat

TradeTheNews.com 

Weekly Market Update: Fed dodges ‘taper tantrum’; corporate news remains upbeat

2021-06-18T16:04:00.847

All eyes were on the US Federal reserve coming into this week. Before Wednesday’s announcement US manufacturing data missed expectations, rates remained benign and key commodity prices outside of oil continued to fade further from the recent spike highs. That had many predicting the Fed would take up their forecasts for growth, inflation and rates in the quarterly SEP projections, which it did. Chairman Powell did stress what he still saw as the transitory nature of much of the current inflation push and reiterated the Fed dot plot should not be construed as a forecast and taken with a large grain of salt. Regardless, the median FOMC projection pulled forward two rate hikes into 2023 inducing a hawkish surprise for global markets. Stocks came under pressure along with gold and the US dollar rallied. Growth stocks came back into favor relative the value and banks in particular. Rates initially popped but the long end of the US Treasury curve quickly turned lower as traders put on flatteners in response the belief that Fed officials would not let inflation run away from them. On Friday the S&P tested the 50-day moving average for the first time in roughly a month. St. Louis Fed’s Bullard underscored Wednesday’s FOMC signal when he emphasized the hawkish shift was necessary given recent data, while also noting he currently expected the first Fed rate hike in late 2022. For the week, the S&P lost 1.9%, the DJIA fell 3.5%, and the Nasdaq slipped 0.3%.

In corporate news this week, the European Union and the United States confirmed plans to extend tariff suspensions on aircraft for five years, putting a hold on the long-running dispute between Boeing and Airbus. Bank of America CEO Moynihan said his firm is seeing consumers credit/debit card spending up 20% v 2019 year to date, while JPMorgan CEO Dimon said his bank is prepared for higher rates and more inflation, as they also see card spending running up 20% versus 2019.

GM raised its planned spend on electric cars, saying it will boost EV and AV investments to $35B through 2025, up from its $27B prior investment, along with adding two more battery factories in the US. Ford raised its Q2 earnings guidance, citing improvement in its automotive business since April, driven by lower-than-anticipated costs and favorable market factors, despite the chip shortage running into next year. Another arrow was added to the quiver in the battle against COVID-19 as the Novavax vaccine was shown to be safe and effective in a US clinical trial. CureVac shares, however, plunged after reporting a disappointing 47% efficacy results for its COVID-19 vaccine candidate. Oracle shares dipped after coming up short on its Q1 earnings outlook, and the software giant said it planned to double cloud capex in 2022 in an effort to boost market share.


SUN 6/13
BTC/USD Tesla's Musk: Tesla only sold ~10% of holdings to confirm BTC could be liquidated easily without moving market. When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions." - tweet

MON 6/14
(AT) ECB's Holzmann (Austria): ECB is not in a dangerous zone but inflation concerns are rising
NVAX COVID-19 vaccine demonstrates 90% overall efficacy and 100% protection against moderate and severe disease in PREVENT-19 Phase 3 trial; Intends to file for regulatory approvals in Q3 2021
BAC CEO Moynihan: seeing our consumers credit/debit card spending up 20% v 2019 YTD - CNBC
(US) May NY Fed Survey of Consumer Expectations: Median year-ahead inflation expectations rise to 4.0% from 3.4% prior month (seventh consecutive monthly increase and a new series high)
JPM CEO: JPMorgan is prepared for higher rates and more inflation; card spending running +20% v 2019 - MS conf comments
(UK) PM Johnson: confirms pushes back full reopening of UK by four weeks to July 19th; we are concerned about the Delta COVID variant

TUES 6/15
(EU) EU and US resolve Boeing/Airbus 17-year trade tariffs dispute (as speculated) - press
(EU) EU, US confirm to extend tariff suspension on aircrafts by 5 years
*(US) JUN EMPIRE MANUFACTURING: 17.4 V 22.7E
*(US) MAY PPI FINAL DEMAND M/M: 0.8% V 0.5%E; Y/Y: 6.6% V 6.2%E
*(US) MAY ADVANCE RETAIL SALES M/M: -1.3% V -0.8%E; RETAIL SALES (EX-AUTO) M/M: -0.7% V 0.4%E
*(US) JUN NAHB HOUSING MARKET INDEX: 81 V 83E
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -1.3% v -0.9% prior
(US) Atlanta Fed GDPNow raises Q2 GDP forecast to 10.5% from 9.3%
(US) TREASURY $24B 20-YEAR BOND REOPENING DRAWS 2.120%, BID-TO-COVER 2.40 v 2.42 PRIOR
ORCL Reports Q4 $1.54 v $1.31e, Rev $11.2B v $11.1Be
(US) FTC confirms big tech critic Lina Khan sworn in as the Chair of the agency

WED 6/16
*(CN) CHINA NATIONAL RESERVE ADMIN (SRB): WILL RELEASE RESERVES OF COPPER ALUMINIUM AND ZINC IN NEAR TERM
*(UK) MAY CPI M/M: 0.6% V 0.3%E; Y/Y: 2.1% V 1.8%E (first time above the BOE target level since July 2019)
*(US) MAY HOUSING STARTS: 1.572M V 1.630ME; BUILDING PERMITS: 1.68M V 1.730ME
NUE Reports prelim Q2 $4.60-4.70 v $4.49e; Believes that these strong market conditions will continue in Q3
GM Confirms to boost EV and AV Investments to $35 Billion through 2025 up from $27B prior investment; raises H1 adj EBIT $8.5-9.5B (prior to be significantly better then prior outlook)
*(US) DOE CRUDE: -7.4M V -3ME; GASOLINE: +2.0M V -1ME; DISTILLATE: -1.0M V 0ME
(US) House Antitrust Chair Cicilline (D-RI): Antitrust legislation would ban Apple from pre-installing apps
*(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25% (AS EXPECTED); IOER RAISED TO 0.15% V 0.10%E; MOVES UP TIMETABLE FOR POTENTIAL HIKES TO 2023; FOMC PROJECTIONS SHOW TWO HIKES BY END OF 2023
(US) Fed Chair Powell: Possibility inflation could turn out to be higher and more persistent than we expect; Bottleneck effects have been larger than anticipated - post rate decision press conference
WLTW US antitrust regulators file suit to block Aon's $30B deal for Willis Towers Watson - press
(US) SEC seeks further comment on VanEck's bitcoin ETF, postponing decision on whether to approve it - press
LEN Reports Q2 $2.95 v $2.34e, Rev $6.43B v $6.16Be
CVAC Provides update on Phase 2b/3 Trial of first-generation COVID-19 vaccine candidate, CVnCoV; Interim efficacy 47%, statistical success criteria not met at second interim analysis; study progressing to final analysis within the next few weeks

THURS 6/17
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.00%; AS EXPECTED; raises rate path outlook
(NO) Norway Central Bank (Norges) Gov Olsen: could raise rates twice in 2021 - post rate decision press conference
*(EU) EURO ZONE MAY FINAL CPI Y/Y: 2.0% V 2.0%E; CPI CORE Y/Y: 1.0% V 0.9%E
F Raises Q2 adj EBIT 'significantly better' y/y and exceed expectations, citing improvement in automotive business since April is being driven by lower-than-anticipated costs and favorable market factors
*(US) INITIAL JOBLESS CLAIMS: 412K V 360KE; CONTINUING CLAIMS: 3.52M V 3.43ME
*(US) JUN PHILADELPHIA FED BUSINESS OUTLOOK: 30.7 V 31.0E
DELL DISH and Dell Technologies to partner to build the nation's first Open RAN 5G Edge infrastructure
ADBE Reports Q2 $3.03 v $2.81e, Rev $3.84B v $3.73Be

FRI 6/18
(JP) BOJ Gov Kuroda: Corporate financing likely to remain under stress; will take a while for pandemic to subside - post rate decision press conference
(RU) Moscow city reports 9,056 new COVID cases (highest since pandemic began)
(US) Fed’s Bullard (non-voter, hawk): acknowledges FOMC has been surprised to the upside over last 6 months; natural that Fed has tilted a little bit more hawkish here
(US) New York Fed Nowcast: cuts Q2 forecast to 3.7% from 4.2%; cuts Q3 forecast to 4.4% from 5.3%

TradeTheNews.com 

Markets buy into transitory inflation hypothesis

2021-06-11T16:03:48.837

U.S. stocks edged higher through much of the week, putting the S&P 500 on track to notch a fresh record and its third consecutive week of gains. Equity markets largely held an underlying bid alongside continued volatility in the meme stocks and notable buying in global bond markets. US Treasury yields retreated to the lowest levels in nearly three months while TIPS breakeven spreads narrowed despite a May CPI print that marked the highest annual inflation rate in roughly 13-years at 5%. Inflation worries persisted for many, including those who will now have to pay more for Chipotle burritos and Shake Shack chicken sandwiches. For now, bond traders appear to be on the same page as most central bankers when it comes to their transitory view of the current inflation environment, and that was evident in the solid investor demand seen for another $75B in US coupon supply this week.

The ECB pushed back on inflation worries as new staff projections predicted EU inflation will likely to stay below the ECB target over the coming years. The ECB left rates, as well as, the duration, size, and cadence of PEPP purchases unchanged, but in her press conference ECB chief Lagarde acknowledged there were some who wanted to begin debate on tapering PEPP purchases. WTI crude broke above $70/bbl for the first time in over 2 years as DOE data showed the third week in a row of bigger than expected drawdowns in crude oil stockpiles. Bitcoin prices found a floor after falling towards $30K early in the week. The VIX volatility index plumbed to its lowest levels since before the pandemic amid dwindling equity volumes. For the week, the S&P gained 0.4%, the DJIA fell 0.8%, and the Nasdaq rose 1.9%.

In corporate news this week, Biogen received FDA approval for the first Alzheimer’s drug in 20 years, which some biotech analysts said could be the most lucrative product in pharmaceutical history. Investor sentiment cooled on Campbell Soup after the food giant cut its guidance slightly, noting it is being impacted by a rising inflationary environment. GameStop reported a beat on its top and bottom line in its Q1 results, and the Reddit favorite appointed two former Amazon executives as its new CEO and CFO.

Ford said it plans to enter the small truck market with its Ford Maverick, a new affordable 40-mpg hybrid model with pricing starting under $20,000. A Volkswagen executive predicted that this week will mark the lowest point of the supply crisis, though chip manufacturer Flex said it doesn't expect the underlying global chip shortage to ease until mid-2022. Lordstown Motors shares dropped after disclosing a ‘going concern’ that its current cash levels are not sufficient to begin commercial production of vehicles, though management did note it is in talks for potential new funding. Vulcan Materials announced it would acquire US Concrete, a supplier of aggregates and ready-mixed concrete, as the company expands its geographic footprint in some of the biggest US states. China ride-hailing giant Didi Chuxing filed for its IPO to begin trading in the US in July, where it could be valued above $70B. Taiwan Semi is reportedly considering further expanding its capacity in the US by building a chip packaging plant in the states, which would be its first such facility outside of Taiwan.


MON 6/7
(SG) World’s 3rd largest chip manufacturer, Flex, doesn't expect global chip shortage to ease until mid-2022 - FT
VPCC Dave, a leading Banking app to merge with VPC Impact Acquisition Holding III in deal to become public, in deal valued at ~$4.0B
QTS To be acquired by Blackstone at $78.00/shr for a total transaction value of $10B
USCR To be acquired by Vulcan Materials for $74.00/shr in cash valued at $1.29B
MIC Confirms to sell Atlantic Aviation unit for $4.48B in cash and assumed debt and reorganization obligations
ONEM To acquire Iora Health in all-stock transaction, deal valued at ~$2.1B
*(US) APR CONSUMER CREDIT: $18.6B V $20BE

TUES 6/8
*(EU) EURO ZONE Q1 FINAL GDP Q/Q: -0.3% V -0.6%E; Y/Y: -1.3% V -1.8%E
THO Reports Q3 $3.29 v $2.36e, Rev $3.46B v $3.02Be; Sees no signs of demand slowing backlog up > 5x y/y
ASO Reports Q1 $1.84 v -$0.14 y/y, Rev $1.58B v $1.14B y/y; Raises guidance significantly
F Launches 2022 Ford Maverick hybrid pickup truck starting for less than $20K (update)
(US) Atlanta Fed GDPNow cuts Q2 GDP forecast to 9.4% from 10.3% (though was updated to 9.3% on June 4th)
(US) US and EU are reportedly prepared to agree on a resolution to major trade disputes; will promise to end aircraft and metals disputes in 2021, according to draft summit conclusions - press
CMG Discloses raised prices 3.5-4.0% across the menu last week - press
(CN) US Senate passes $250B bill focused on technology and competing against China economically on a 68-32 vote
(CN) CHINA MAY CPI M/M: -0.2% V -0.1%E; Y/Y: 1.3% V 1.6%E: NDRC comments to keep goods prices linked to livelihoods 'stable'

WEDS 6/9
UPS Targets FY23 Rev $98-102B, adj Op margin 12.7-13.7%; Announces strategic priorities
XPO Raises Q2, FY21 outlook; files form 10 registration statement for previously announced plan spin off of GXO Logistics
MAAC Datavant and Ciox Health Announce $7B Merger, Creating the Largest Neutral and Secure Health Data Ecosystem enabling secure exchange of health data
(EU) EU's Sefcovic: UK has to abide by its legal obligations on border control; Considering "all options" including cross retaliation that includes quotas and tariffs
*(US) DOE CRUDE: -5.2M V -2.5ME; GASOLINE: +7.0M V +0.5ME; DISTILLATE: +4.4M V +1.5ME
(US) Sec Chair Gensler: SEC to undertake broad review of stock market structure, considering changes to exchange and broker pricing rules - press
*(US) TREASURY'S $38B 10-YEAR NOTE REOPENING DRAWS 1.497%; BID-TO-COVER RATIO: 2.58 V 2.36 PRIOR AND 2.40 OVER THE LAST 8 REOPENINGS (highest BTC since last July)
VOW3.DE Exec: believe we have reached the lowest point of the supply crisis - press interview
(TW) US and Taiwan reportedly to hold high-level trade talks as soon as Thursday, Jun 10th - press
(CN) China PBOC Gov Yi Gang: Sees CPI in 2021 <2.0%; China Potential Economic growth has decreased to a certain extent - Comments at Lujizui Forum

THURS 6/10
ASH Affirms FY21 Adj EBITDA guidance; Warns of Q3 supply-chain financial impacts
(EU) EU Commission President Von Der Leyen: Sees fundamental gaps in execution of Northern Ireland Protocol; Need to know source and origin of Covid-19 pandemic
SLB Announce strategic collaboration with Panasonic Energy of NAon new battery-grade lithium production process; Aims to reduce mining effort from ~year to "weeks"
*(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
(EU) ECB maintains Pandemic Bond Buying Program (PEPP) size at €1.85T with program running until at least March 2022 or until crisis ends
*(US) INITIAL JOBLESS CLAIMS: 376K V 370KE (fresh pandemic low); CONTINUING CLAIMS: 3.50M V 3.67ME (lowest level for initial claims since March 2020)
*(US) TREASURY $24B 30-YEAR BOND REOPENING DRAWS 2.172%; BID TO COVER 2.29 V 2.57 PRIOR AND 2.39 OVER LAST 8 REOPENINGS
*(US) MAY MONTHLY BUDGET STATEMENT: -$132B V -$250.0BE
DIDI Reportedly Xiaoju Kuaizhi files for $100M IPO ADS to list on NASDAQ under ticker DIDI - press

FRI 6/11
IEA Monthly Oil Report: Sees demand back at pre-pandemic levels by end 2022
(US) JUN PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 86.4 V 84.4E; 1-year inflation expectations: 4.0% v 4.7%e
(US) New York Fed Nowcast: cuts Q2 forecast to 4.2% from 4.4%; cuts Q3 forecast to 5.3% from 5.4%

Speculative ‘meme’ frenzy draws focus away from infrastructure talks, solid data, and upbeat guidance from automakers

TradeTheNews.com 

Weekly Market Update: Speculative ‘meme’ frenzy draws focus away from infrastructure talks, solid data, and upbeat guidance from automakers

2021-06-04T16:03:29.743

Much of the focus this week was unavoidably on a renaissance of the meme stocks. Wild volatility in AMC shares and historic options volumes sparked a revival of the Reddit trade. It didn’t go unnoticed that the speculative pocket jumped as Bitcoin prices continued to retreat along with most other cryptos. The environment may have been ripe for a resurgence in highly speculative trade as markets appeared to be in a bit of holding pattern as earnings season ends. Most market participants saw their focus shift towards Friday’s May jobs report as well key central bank meetings later this month for more clarity.

The Biden Administration and the Republicans continued to offer proposals aimed at reaching a deal on infrastructure, but despite what appeared to be a significant concession on corporate tax rates from the President, rhetoric suggested a deal is not likely in the offing. Friday’s US Labor Department data showed the U.S. economy added fewer jobs than economists had expected, while the unemployment rate fell more than expected. Wage data did suggest employers are being forced to pay more to find workers. Regardless, the mixed data suggested the Federal Reserve can continue to be patient before paring back its extraordinary support for the economy, and that notion was underscored by the Fed’s Mester in an interview after the data release. Equity markets bounced on the jobs data while Treasury yields the US dollar gave back some of their gains seen earlier in the week. Most commodity prices moved higher led by a rebound in gold prices. WTI crude prices finished the week at levels not seen since the very early days of 2020. For the week, the S&P gained 0.6%, the DJIA added 0.7%, and the Nasdaq was up 0.5%.

In corporate news this week, GM raised its H1 outlook to be ‘significantly better’ than its prior guidance, pointing to its prioritization of semiconductor usage amid shortages, and the car maker remains ‘optimistic’ about full year prospects. Engine No. 1 was expected to win a third board seat at Exxon, after winning two seats decisively last week, as the activist investor pushes management to focus on climate change issues. Brazilian meat producer JBS Foods disclosed a cyberattack on its systems in Australia and Canada, forcing it to shut down several meat production facilities, even in the US, as officials sought to contain the fallout.

Amazon confirmed plans to hold its Prime Day event on June 21-22nd in the US and globally, moving its annual sale back to the midyear timeframe it has held since 2015. Cloudera agreed to a $16 per share go-private deal with PE firms KKR and Clayton Dubilier & Rice, an offer that is only slightly above its 2017 IPO price. Etsy said it planned to acquire global fashion resale marketplace Depop for $1.63B as the online seller tries to move into the vintage 2000s streetwear market. Facebook maintained its suspension of former President Trump’s account on all its platforms for two years, and said he would only be reinstated ‘if conditions permit.’


SUN 5/30
*(CN) CHINA MAY MANUFACTURING PMI (GOVT OFFICIAL): 51.0 V 51.1E (14th month of expansion)

MON 5/31
(US) US regulators reportedly signal bigger role in cryptocurrencies market - FT
(IL) Israel Opposition parties said to have reached a deal that would remove PM Netanyahu from office - Wapo
(CN) China Politburo to hold a major meeting on optimizing nationalist policies and how to deal with an aging population; will allow three children per couple - Xinhua
(CN) China Education Ministry reportedly mulling to create a new division to oversee all private education platforms and online education firms - press
*(DE) GERMANY MAY PRELIMINARY CPI M/M: 0.5% V 0.3%E; Y/Y: 2.5% V 2.3%E (highest annual pace since 2011)
ATL.IT Atlantia investors said to have approve Autostrade sale to Italy state lender CDP - press
JBSS3.BR Disclosed cyber attack on systems in Australia and Canada - press

TUES 6/1
(CN) China Vice Premier Liu He held talks with US Treasury Sec Yellen, both expressed willingness to maintain communications and that economic ties are important - Xinhua
*(US) MAY DALLAS FED MANUFACTURING ACTIVITY INDEX: 34.9 V 36.3E
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -0.9% v -0.2% prior
*(US) MAY ISM MANUFACTURING: 61.2 V 60.9E; PRICES PAID: 88.0 V 89.0E
*(US) MAY FINAL MARKIT MANUFACTURING PMI: 62.1 V 61.5E (11th consecutive month of expansion)
CLDR Confirms entered into going-private deal with PE firms KKR and CD&R for $16.00/shr in $5.3B cash deal - filing
*(EU) EURO ZONE APR UNEMPLOYMENT RATE: 8.0% V 8.1%E
*(EU) EURO ZONE MAY ADVANCE CPI ESTIMATE Y/Y: 2.0% V 1.9%E; CPI CORE Y/Y: 0.9% V 0.9%E (above ECB target for 1st time since Nov 2018)
*(EU) EURO ZONE MAY FINAL MANUFACTURING PMI: 63.1 V 62.8E (confirms 11th month of expansion)
*(DE) GERMANY MAY NET UNEMPLOYMENT CHANGE: -15.0K V -9.0KE; UNEMPLOYMENT CLAIMS RATE: 6.0% V 6.0%E
(HK) Macau May Casino Rev (MOP): 10.4B v 8.4B prior; Y/Y: 492.2% v 467%e

WEDS 6/2
(US) US Trade Rep Tai: USTR suspending new retaliatory tariffs [related to digital taxes] for up to 180 days, provides time for OECD G20 talks
NTAP Reports Q4 $1.17 v $1.12e, Rev $1.56B v $1.50Be; Raises dividend 4%
(IL) Israel opposition leader Yair Lapid notifies the President that he has formed a coalition with Naftali Bennett for a govt; move would oust PM Netanyahu after 12 years in power - press
(US) Federal Reserve Board announces plans to begin winding down the portfolio of the Secondary Market Corporate Credit Facility
(UK) Chancellor of the Exchequer Sunak (Fin Min): US proposals on global tax reform appear to meet UK's objectives

THURS 6/3
(TR) Turkey May CPI M/M: 0.9% v 1.3%e; Y/Y: 16.6% v 17.3%e (1st decline in annual pace in 8 months)
*(FR) FRANCE MAY FINAL PMI SERVICES: 56.6 V 56.6E (confirms 2nd straight expansion)
*(DE) GERMANY MAY FINAL PMI SERVICES: 52.8 V 52.8E (confirms move back into expansion and highest reading since July 2020)
*(UK) MAY FINAL PMI SERVICES: 62.9 V 61.8E (confirms 3rd month of expansion and highest reading since May 1997)
DAL Raises Q2 pretax -$1.2B to -$1.0B (prior -$1.5 to -1.0B), Rev $6.0-6.2B v $6.35Be (prior -55% to -50%); Expects H2 2021 pretax profit - filing
*(US) MAY ADP EMPLOYMENT CHANGE: +978K V +650KE
*(US) Q1 FINAL NONFARM PRODUCTIVITY: 5.4% V 5.5%E; UNIT LABOR COSTS: +1.7% V -0.4%E
GM Raises H1 results significantly better than prior guidance, citing prioritization of chip usage
*(US) MAY ISM SERVICES INDEX: 64.0 V 63.0E (all time high)
(US) Reportedly President Biden offering 15% tax floor instead of a corporate tax rate hike to 28% in effort get Republicans to support his infrastructure plan - Washington Post
*(US) DOE CRUDE: -5.1M V -2.5ME; GASOLINE: +1.5M V -1.5ME; DISTILLATE: +3.7M V -1ME
(US) Biden administration unveils strategy for global vaccine sharing; allocates first 25M doses to be shared globally (out of 80M promised by end of June)
AVGO Reports Q2 $6.62 v $6.44e, Rev $6.61B v $6.51Be
COST Reports May total SSS +14.7% (ex-gas)
FB Reportedly plans to end special treatment for politicians after Trump ban; would reverse position that all speech from elected officials is inherently newsworthy - The Verge
2449.TW Said to be testing all workers following discovery of cluster of virus infections - Taiwan press

FRI 6/4
*(EU) EURO ZONE APR RETAIL SALES M/M: -3.1% V -1.5%E; Y/Y: 23.9% V 25.0%E
*(US) MAY CHANGE IN NONFARM PAYROLLS: +559K V +674KE
(US) US FBI Director Wray: Russian actors are chiefly responsible for ransomware attacks in US - financial press
*(US) UNEMPLOYMENT RATE: 5.8% V 5.9%E
*(US) MAY AVERAGE HOURLY EARNINGS M/M: 0.5% V 0.2%E; Y/Y: 2.0% V 1.6%E
2449.TW To suspend domestic production for two days after COVID breakout
(EU) EURO ZONE APR RETAIL SALES M/M: -3.1% V -1.5%E; Y/Y: 23.9% V 25.0%E
(US) US FBI Director Wray: Russian actors are chiefly responsible for ransomware attacks in US - financial press
(US) MAY CHANGE IN NONFARM PAYROLLS: +559K V +674KE
(US) UNEMPLOYMENT RATE: 5.8% V 5.9%E
(US) MAY AVERAGE HOURLY EARNINGS M/M: 0.5% V 0.2%E; Y/Y: 2.0% V 1.6%E
FB To maintain former Pres Trump suspension for two years and he will only be reinstated 'if conditions permit'

Reopening Economy Gathers Momentum But Yet to Sway Central Bankers

TradeTheNews.com 

Weekly Market Update: Reopening Economy Gathers Momentum But Yet to Sway Central Bankers

2021-05-28T16:03:33.517

- US stock markets climbed back to within striking distance of all-time highs in some cases, as May drew to a close. Growth and highly speculative groups outperformed that of the traditional value sectors. The mime/reddit stocks, in particular, recaptured investors’ imagination led by AMC which saw another round of dizzying gains sparking further debate over excessive risk taking within financial markets. Positive late-season retail earnings reports, and corporate commentary indicated consumer strength has returned to 2019 levels, and even accelerated into the current quarter. New home sales figures seemed to suggest that the surge is US home prices has caused some buyers to walk away from newly built homes. On Friday President Biden released the details of a $6T budget that is sure to get push back from Republicans as the infrastructure debate looked to drag into June.
- Inflation remained the overarching topic foremost in most investors’ minds. The narrative didn’t really change much though, despite the fact the Fed’s preferred measure of inflation, core PCE, saw the April y/y number reach its highest level since the early 90’s. Ahead of Friday’s PCE print a chorus central bankers on both sides of the Atlantic continued to stress what they believed was the transitory nature of the current price increases would allow them to remain decidedly patient in withdrawing support, while also hinting the time to start talking about tapering asset purchases could be coming at upcoming meetings. To that end the Kansas City Fed confirmed this year’s Jackson Hole meeting in August would be in person. Bitcoin continued to back away from all-time highs while WTI crude prices rallied into next week’s OPEC+ meeting. Treasury yields broadly moved lower spurred by central bankers’ comments. The Chinese Yuan broke out to its strongest level against the US Dollar in roughly 3-years. For the week the S&P rose 1.2%, Dow gained ~1% and the NASDAQ jumped 2%.
- In corporate news this week, Salesforce reported better-than-expected growth momentum in its Q1 and raised guidance, as the company nears completion of its Slack acquisition. Toll Brothers posted record earnings and said they continued to raise prices in excess of cost increases amid a rise in first-time buyers. Costco shares slipped as investors didn’t find its Q3 beat on top and bottom line to be good enough. Ulta Beauty shares lifted after the cosmetics chain reported better-than-expected profit and raised its full year guidance. Amazon confirmed an agreement to acquire MGM Studios for $8.5B as it aims to bolster its Prime library. A Dutch court ruled that Royal Dutch Shell has a legal responsibility to cut greenhouse gases by 45% by 2030. Two candidates from activist hedge fund Engine No 1 were elected to the Exxon board, along with potentially a third, after calling for changes to the oil and gas company’s climate change plans. Royal Caribbean received its first CDC approval to begin test cruises with volunteer passengers in June on one ship departing from South Florida.