Inflation jitters continue to drive markets

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Weekly Market Update: Inflation jitters continue to drive markets

Fri, 14 May 04:13 PM EST/09:13 PM GMT

This week’s trade commenced amid angst over the historic cyber-attack that forced the closure of the Colonial Pipeline. Reports of fuel shortages at key hubs in the Southeast added to already growing concerns around rising commodity prices. Tuesday’s surge in April CPI figures only fanned those fears and resulted in a significant sell off led by the tech-heavy NASDAQ, while US Treasury yields jumped to new cycle highs. Fears started to abate by Wednesday though, when word came from the White House the Colonial Pipeline would commence a restart sequence and would likely be up and running by this weekend. Also a slew of Fed officials underscored the central bank has no intention to withdrawing support measures at this time because they need to see several more months of data on jobs and inflation before determining when to begin even thinking about tightening monetary policy. Nevertheless, Friday’s University of Michigan sentiment reading saw its survey based inflation expectations jump to a decade high, matching the rise seen in market based TIPS breakevens earlier in the week.

Key commodities like lumber, copper and iron ore rolled over by the back half of week providing fertile ground for stocks to rebound. April PPI and retail sales figures failed to stoke the same overheating concerns as the CPI and bond markets lifted along with stocks. The VIX, after surging towards 30, slid back below 20 where it had entered the week. Bitcoin and other cryptos experienced another modest drawdown after Elon Musk’s comedic turn on SNL and news Tesla would no longer accept bitcoin for purchase of its cars. WTI crude futures drifted modestly lower amid the rekindling of the Israeli-Palestinian conflict. For the week, the S&P lost 1.4%, the DJIA slipped 1.1%, and the Nasdaq was off 2.3%.

In corporate news this week, Disney reported a miss on revenue and saw its Disney+ streaming service attract fewer users than the street had anticipated. DoorDash shares gained after it said its revenue tripled even as coronavirus cases begin to wane. Some of the ‘Reddit’ names had a strong week, as AMC gained traction, and Hertz shares doubled as it prepares to emerge from bankruptcy. Cryptocurrency exchange Coinbase reported its revenue tripled on a sequential basis, and the company said it would be including Dogecoin on its platform in the coming months. Sonos shares lifted after it posted a surprise earnings beat, raising its full year guidance and affirming long-term targets. McDonald’s announced plans to raise US wages by 10% on average and set a goal to reach an average level of $15/hour by 2024. Pershing Square’s Bill Ackman said he has taken a 6% stake in Domino’s, replacing his former stake in Starbucks.

SUN 5/9
(US) Colonial Pipeline: No time line for restart after cyber attack, main lines remains closed, smaller lateral times are operational; will bring system back online when safe
(US) White House has set up a task force to investigate Colonial Pipeline Security Breach, notes preliminary findings link group to Russia

MON 5/10
(US) Colonial pipeline spokesperson: aims to 'substantially' restore service by end of the week; segments of the pipeline are being brought back online in a stepwise fashion
(US) April NY Fed Survey of Consumer Expectations: median year-ahead inflation expectations increased to 3.4% from 3.2% in March
MSFT US Pentagon reportedly mulls ending JEDI cloud project valued up to $10B amid Amazon court fight - US financial press

TUES 5/11
2317.TW Foxconn iPhone production at India factory is down >50%; cites rise in COVID cases among co's Indian workforce; Co. has implemented a no-entry ban at its Tamil Nadu plant until late May - financial press
(US) Investor Stan Druckenmiller: Fed policy totally inappropriate and endangering USD status - CNBC comments following WSJ oped
(US) White House Press Sec Psaki: up to the states to continue with jobless benefits
BTC/USD SEC issues warning: Volatility and lack of regulation in bitcoin are risks, it is a highly speculative investment - press

WEDS 5/12
7203.JP Reports FY20/21 Net ¥2.25T v ¥2.04T y/y; Op ¥2.20T v ¥2.40T y/y; Rev ¥27.2T v ¥29.9T y/y; Announces ¥250B share buyback (up to 1.5% of shares outstanding) and 5 for 1 share split
1810.HK To be removed from US blacklist in Lawsuit settlement (as speculated)
*(UK) Q1 PRELIMINARY GDP Q/Q: -1.5% V -1.6%E; Y/Y: -6.1% V -6.1%E
DGE.UK Trading Update:Recommencing return of capital program of up to £4.5B to shareholders (update)
(US) Fed Vice Chair Clarida: likely to see only transitory effect on underlying inflation; expects inflation to return or perhaps run somewhat above 2% in 2022 and 2023
(US) Fed’s Rosengren (non-voter): FedNow instant payment system to begin in 2023; Fed is considering both technical and policy issues surrounding a central bank digital currency
*(US) DOE CRUDE: -0.4M V -2ME; GASOLINE: +0.4M V -0.5ME; DISTILLATE: -1.7M V -1ME
*(US) APR MONTHLY BUDGET STATEMENT: -$225.6B V -$208BE
SONO Reports Q2 $0.31 v -$0.22e, Rev $333M v $251Me; Raises FY21, Affirms LT targets
*(US) PRES BIDEN: THINKS WE WILL HAVE GOOD NEWS IN 24 HOURS RELATED TO COLONIAL PIPELINE
*(US) ENERGY SEC GRANHOLM: COLONIAL TO RESTART PIPELINE TODAY AT 17:00ET
TSLA CEO Musk: Suspending purchases using bitcoin, concerned about Bitcoin's environmental impact

THURS 5/13
005930.KR Plans to invest $151B in logic chips and foundry sectors by 2030 (prior $118B) - press
MCD Raises US wages by 10% in average to >$13/shr; To hire 10,000 new employees over next 3 months - press
*(US) APR PPI FINAL DEMAND M/M: 0.6% V 0.3%E; Y/Y: 6.2% V 5.8%E
005380.KR To invest $7.4B in the US by 2025; US facility to begin EV production in 2022
(US) Colonial Pipeline reportedly did pay hackers nearly $5M in ransom - press
*(US) TREASURY $27B 30-YEAR BOND AUCTION DRAWS 2.395%; BID TO COVER 2.22 V 2.18 PRIOR AND 2.23 OVER LAST 4 AUCTIONS
COIN Reports Q1 $3.05 v $3.88e, Rev $1.80B v $1.81Be
DIS Reports Q2 $0.79 v $0.31e, Rev $15.6B v $16.0Be
(US) Fed’s Bullard (non-voter, dove): Will be a judgment call by the Fed to discern transitory inflation from more persistent inflation pressures; Job market may be much tighter than data suggest
2002.TW Price hike planned for June will be lower than expected - Press

FRI 5/14
(IE) Ireland govt official: health service cyber attack may last for days
*(US) APR ADVANCE RETAIL SALES M/M: 0.0% V 1.0%E; RETAIL SALES (EX-AUTO) M/M: -0.8% V +0.6%E
(US) Atlanta Fed GDPNow cuts Q2 GDP forecast to 10.5% from 11.0%
(US) New York Fed Nowcast: cuts Q2 forecast to 4.9% from 5.1%

Hawkish speculation around Fed policy offset by surprisingly weak jobs report, as earnings season hits its peak

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Weekly Market Update: Hawkish speculation around Fed policy offset by surprisingly weak jobs report, as earnings season hits its peak

2021-05-07T16:16:12.727

Major stock indices continued to perform well this week with headline performance in the in Dow and S&P masking pockets of weakness in the smaller caps. Q1 earnings season headed down the back nine with corporate reports and conference calls remaining fraught with management handwringing about rising cost inflation. Nevertheless Fed officials were once again out en masse emphasizing the risk of an outbreak of runaway inflation remains remote despite warning signs of potential asset bubbles. Treasury Secretary Yellen was even forced to walk back clumsy comments regarding Fed policy on interest rates from a virtual summit on Tuesday which weakened the NASDAQ that morning. Copper prices rose to the highest levels in decade, lumber prices continued to surge, and dogecoin, crypto’s “meme coin” rocketed up another 100% ahead of Elon Musk’s appearance on SNL.

Friday’s April payrolls data came in well short of estimates, surprising nearly everyone on Wall Street, who after the fact attributed the miss to seasonal adjustments. Rates initially dropped with the US dollar while stock futures and most commodities rose on the belief the data further postpones the Fed’s desire to begin '“talking about talking about” tapering asset purchases. A jump in the labor force participation rate and a notable decline in the underemployment rate did suggest slack is coming out of the labor market as the pandemic subsides, but the data ratcheted up an ongoing labor-shortage debate. To that end, following the report, the US Chamber of Commerce called for an end to the $300-per-week supplemental federal unemployment benefit to help address the labor shortage, echoing what we have heard from a few red state governors already. President Biden addressed the report from the White House pushing back on that narrative, saying the report showed quite the opposite, by indicating more help is still sorely needed and that the government’s enhanced jobless benefits have not measurably restrained workers from returning to work. For the week, the S&P gained 1.2%, the DJIA was up 2.7%, but the Nasdaq lost 1.5% amid sector rotation.

In corporate news this week, amid a slew of corporate earnings, some travel companies released quarterly color as vaccination numbers accumulate in the US. Expedia shares rose as management sounded hopeful as the travel sector marches towards full reopening. Hilton noted its April bookings are exceeding the peak 2019 levels by almost 10%. TripAdvisor predicted its Q2 revenue would improve sequentially, both in absolute terms and as a percentage of 2019, despite Europe’s lagging recovery. Lyft said it would increase driver incentives in coming months to address supply and demand imbalances, while investors worried that rising Uber driver recruitment costs could dent profitability. PayPal shares lifted after posting big beats and reporting a record amount of volume flow as e-commerce continues its surge. Etsy fell after reporting mixed earnings and an underwhelming outlook for EBITDA and gross merchandise sales. Roku reported its highest growth in sales since it IPO’d in 2017.

Verizon divested its media unit, which includes Yahoo and AOL, to Apollo Funds for $5B, after purchasing the same assets for $9B less than four years ago. Home decor retailer At Home Group agreed to a go-private deal with PE firm Hellman & Friedman for $36/share, though the agreement includes a 40-day go-shop period. Facebook’s independent Oversight Board affirmed the suspension of former President Trump's account for the time being but called on management to review the proportionality of the ban within six months. Peloton announced a recall of 125K Tread+ treadmill units at a cost of $165M after 70 reported injuries and the death of a child.


SUN 5/2
(HK) Macau Apr Casino Rev (MOP): 8.4B v 8.3B prior; Y/Y: 1,014% v 1,054%e
Investor Warren Buffett: Seeing signs of inflation and spiking demand across its businesses - Annual report

MON 5/3
(TR) Turkey Apr CPI M/M: 1.7% v 1.8%e; Y/Y: 17.1% v 17.3%e (7th straight month of rising inflation)
*(DE) GERMANY APR FINAL MANUFACTURING PMI: 66.2 V 66.4E (confirms 10th month of expansion)
*(EU) EURO ZONE APR FINAL MANUFACTURING PMI: 62.9 V 63.3E (confirms 10th month of expansion and record high)
(EU) EU proposes to ease restrictions on non-essential travel to the region - statement
*(US) APR MARKIT FINAL MANUFACTURING PMI: 60.5 V 60.7E (10th consecutive month of expansion)
*(US) APR ISM MANUFACTURING: 60.7 V 65.0E; PRICES PAID: 89.6 V 86.1E
(US) NY Gov Cuomo: announces 'major reopening' of NY state on May 19th; most capacity restrictions will end across the tri-state region May 19th - press
(US) Atlanta Fed GDPNow raises Q2 GDP forecast to 13.2% from 10.4%
MSFT Bill and Melinda Gates to file for divorce, will continue to work together at their foundation

TUES 5/4
880.HK Reports Q1 (HKD) Net -647M v 409M y/y, , Rev 2.48B v 2.60Be
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -0.7% v -0.1% prior
(US) Treasury Sec Yellen: rates may have to Rise to stop economy overheating - Atlantic's virtual summit
(US) Atlanta Fed GDPNow raises Q2 GDP forecast to 13.6% from 13.2%
(CN) EU said to suspend efforts to ratify China-EU investment deal - AFP

WEDS 5/5
DPW.DE Reports Q1 Net €1.19B v €0.3B y/y, EBIT €1.9B v €1.87Be, Rev €18.9B v €15.5B y/y
MAERSKB.DK CEO: No signs of rising inflation in global economy; expects delays at Suez canal to be over during Q2 - post earnings comments
*(FR) FRANCE APR FINAL SERVICES PMI: 50.3 V 50.4E (confirms 1st expansion in 8 months)
*(DE) GERMANY APR FINAL SERVICES PMI: 49.9 V 50.1E (moves back into contraction)
*(EU) EURO ZONE APR FINAL SERVICES PMI: 50.5 V 50.3E (confirms 1st expansion in 8 months)
GM Reports Q1 $2.25 v $1.02e, Rev $32.5B v $33.3Be; Says chips shortage will Not impact growth and EV initiatives
*(US) APR ADP EMPLOYMENT CHANGE: +742K V +850KE (strongest reading since Sept 2020)
FB Affirms suspension of former Pres Trump's Facebook account for time being; FB-appointed oversight board finds Facebook failed to impose proper penalty and it was 'not appropriate to impose the indeterminate and standardless penalty of 'indefinite suspension'; calls for Facebook to review proportionality of the ban within 6 months
(DE) German Chancellor Merkel: sensible for EU to develop a trade agreement with the US; US remains Europe's most important ally
*(US) APR ISM SERVICES INDEX: 62.7 V 64.1E
*(US) DOE CRUDE: -8M V -2ME; GASOLINE: +0.7M V -1ME; DISTILLATE: -2.9M V -1ME
US Trade Rep Tai: US supports a waiver of vaccine patent protections at the WTO
COST Reports Apr total SSS +24.2% (ex-gas)
*(CN) CHINA NATIONAL DEVELOPMENT AND REFORM COMMISSION (NDRC) 'INDEFINITELY' HALTS ACTIVITIES UNDER CHINA AUSTRALIA ECONOMIC DIALOGUE

THURS 5/6
(FR) Royal Navy ships said to be ordered to Jersey as French fishermen prepare blockade - financial press
MT.NL Reports Q1 Net $2.29B v $1.21B y/y, EBITDA $3.24B v $1.73B y/y, Rev $16.2B v $14.2B y/y
VOW3.DE Reports Q1 Net €3.4B v €0.5B y/y, Op €4.8B v €0.9B y/y, Rev €62.4B v €55.1B y/y; chip shortage likely to have somewhat more pronounced effects in Q2 than before
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.00%; AS EXPECTED
*(UK) APR FINAL SERVICES PMI: 60.0 V 60.1E (confirms 2nd month of expansion and highest since Oct 2013 )
*(EU) EURO ZONE MAR RETAIL SALES M/M: 2.7% V 1.6%E; Y/Y: 12.0% V 9.4%E
TSLA Reportedly seeing exceptionally strong demand for its vehicles; Said to be already sold out for Q2 with 2 months left - Electrek
*(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.10%; AS EXPECTED
(CN) Reportedly top trade negotiators from China and US Biden administration may hold their first conversation soon to review the phase one trade deal - SCMP
*(US) Q1 PRELIMINARY NONFARM PRODUCTIVITY: 5.4% V 4.3%E; UNIT LABOR COSTS: -0.3% V -1.0%E
SQ Reports Q1 $0.17* adj v $0.16e, Rev $5.06B v $3.37Be

FRI 5/7
SIE.DE Reports Q2 Net €2.39B v €2.0Be, Industrial Business EBITA €2.1B v €1.59B y/y, Rev €14.7B v €14.1Be
Former FDA head Dr. Scott Gottlieb pontificates CDC should consider now to remove indoor mask mandate - CNBC
*(US) APR AVERAGE HOURLY EARNINGS M/M: 0.7% V 0.0%E; Y/Y: 0.3% V -0.4%E
*(US) APR CHANGE IN NONFARM PAYROLLS: +266K V +933KE (below lower-end of analyst expectations)
*(US) APR UNEMPLOYMENT RATE: 6.1% V 5.8%E
(US) USD dollar weaker after April Payroll data comes in below All analyst expectations
*(CA) CANADA APR NET CHANGE IN EMPLOYMENT: -207.1K V -150.0KE; UNEMPLOYMENT RATE: 8.1% V 8.0%E
(US) Atlanta Fed GDPNow cuts Q2 GDP forecast to 11.0% from 13.6%
(US) Treasury Sec Yellen: We believe we will reach full economic employment next year; Apr jobs report underscores the long climb back for the US economy - WH briefing
(US) MAR CONSUMER CREDIT: $25.8B V $20.0BE

Markets digest flood of earnings reports, improving data, and mixed reopening news

TradeTheNews.com 

Weekly Market Update: Markets digest flood of earnings reports, improving data, and mixed reopening news

2021-04-30T16:14:36.777

The week was characterized by more solid data, particularly from the US economy, where Consumer Confidence hit a 14-month high and personal income and spending numbers rose even more sharply than expected. The advance reading on US Q1 GDP was a few tenths below expectations but the 6.4% reading was still miles ahead of the Euro Zone’s Q1 contraction reported on Friday. Despite this and generally positive earnings results from many large-cap tech and consumer firms, equity markets struggled this week.

‘Reopening’ efforts continue in many regions though a surge of new Covid cases in India has raised concerns about a new virus variant spreading across Southeast Asia. As a result, several nations announced temporary bans on travelers from India. The FOMC’s latest policy statement downgraded the level of risk seen from the pandemic, and while Chairman Powell reiterated they will not be tapering QE any time soon, at least one hawk (Kaplan) said the committee should start discussing a plan for 2022. The US dollar slid the most in 9 months in April as the rest of the world's outlook brightened, though the dollar index perked up headed into the last day of the month. Meanwhile bitcoin steadied itself after last week’s slump. Commodity prices continued to climb, highlighted by a new all-time high in copper, and many corporations confirmed corresponding price raises during their earnings calls. For the week, the S&P edged up less than 0.1%, while the DJIA slipped 0.5% and the Nasdaq ended down 0.4%.

This week in corporate news, a slew of earnings came down the pike, especially from the world of Big Tech. Microsoft topped estimates amid robust demand for its cloud computing products and an impressive rise in personal computer shipments. Tesla shares fell after reporting a beat on record profit largely powered by bitcoin trading and regulatory credits. Google’s Q1 saw robust ad sales and the search giant announced a $50B share buyback. Facebook’s strong ad sales helped boost its Q1 revenue by nearly 50%. Amazon stock rose after a blowout Q1 report, announcing it more than tripled its profit. Apple handily beat consensus across all of its product categories in Q2, and the tech giant raised its dividend and boost buybacks, as well. Starbucks’ Q2 sales underwhelmed investors as lockdowns abroad keep a lid on growth.

Thoma Bravo said it would snap up security software developer Proofpoint in a $12.3B deal in what would be the largest cloud acquisition by any PE firm yet. Realty Income announced it would merge with Vereit in all-stock deal with combined enterprise value of ~$50B and then spin off its office properties into a REIT. Verizon is said to be exploring the sale of its media assets, including Yahoo and AOL, in a package that could be valued at $4-5B, half of what they paid for the pair of companies.


SUN 4/25
(CN) PBOC Dep Gov Fan Yifei: PBOC will continue to crack down on cross-border gambling, said dealing with cross-border gambling is a long-term task - US financial press
MON 4/26
*(DE) GERMANY APR IFO BUSINESS CLIMATE SURVEY: 96.8 V 97.8E
AAPL Raises US investment target to $430B over five years (prior goal $350B set in 2018); To add 20K new jobs, $1B on new NC campus
PFPT To be acquired by Thoma Bravo for $176.00/shr in cash valued at $12.3B
*(US) APR DALLAS FED MANUFACTURING ACTIVITY INDEX: 37.3 V 30.0E
(US) Census Bureau: Texas to gain two seats in House of Representatives; NY and California to lose one seat each
TSLA Reports Q1 $0.93 v $0.79e, Rev $10.4B v $9.92Be; Affirms it expects to achieve 50% annual growth in deliveries
MAERSKB.DK Reports prelim Q1 Rev $12.4B, EBITDA $4B, EBIT $3.1B; raises FY guidance significantly

TUES 4/27
5.HK Reports Q1 Net $3.9B v $1.8B y/y, adj Pretax $6.4B v $3.0B y/y, Rev $13.3B v $13.7B y/y
UBSG.CH Reports Q1 Net $1.82B v $1.60B y/y, Adj Pretax $2.29B v $2.00B y/y, Rev $8.7B v $7.9B y/y
BP.UK Reports Q1 $0.78 v $0.43e, Rev $36.5B v $31.4Be; to buy back $500M in shares
UPS Reports Q1 $2.77 adj v $1.63e, Rev $22.9B v $20.4Be; No plans to buyback shares
GE Reports Q1 $0.03 v $0.02e, Rev $17.1B v $17.6Be
MMM Reports Q1 $2.77 adj v $2.25e, Rev $8.85B v $8.36Be
ADM Reports Q1 $1.39 v $1.00e, Rev $18.9B v $16.8Be
FISV Reports Q1 $1.17 v $1.13e, Rev $3.56B v $3.56Be
GLW Reports Q1 $0.45 v $0.42e, Rev $3.29B v $3.13Be; All segments grew double digits y/y, margin almost doubles
PCAR Reports Q1 $1.35 v $1.27e, Rev $5.41B v $5.20Be
PHM Raises FY21 deliveries to +30% (prior +20% y/y) - earnings call
(US) Nevada reports Mar casino gaming Rev $1.07B, +73% y/y; Las Vegas strip Rev $501.5M, +67.2% y/y (highest casino reading since Feb 2013)
*(US) APR RICHMOND FED MANUFACTURING INDEX: 17 V 22E
*(US) APR CONSUMER CONFIDENCE INDEX: 121.7 V 113.0E (highest level in 14 months)
TXN Reports Q1 $1.87 v $1.56e, Rev $4.29B v $3.97Be
GOOGL Reports Q1 $26.29 v $15.46e, Rev $45.6B (ex TAC) v $42.5Be; Authorizes $50B share buyback

WEDS 4/28
DBK.DE Reports Q1 Net +€908M v -€43M y/y, Rev €7.23B v €6.58Be
SAN.FR Reports Q1 Business EPS €1.61 v €1.53 y/y, Op €2.64B v €2.54B y/y, Rev €8.59B v €8.97M y/y
386.HK Reports Q1 (CNY) Net +18.5B v -19.2B y/y, Rev 577B v 555.5B y/y
(US) Pres Biden reportedly to propose capital gains tax for wealthy as high as 39.6%; To propose $1.8T education, child care and paid leave package - press
SHOP Reports Q1 $2.01 v $0.78e, Rev $989M v $856Me; Momentum continued into 2021 as digital commerce tailwinds
BA Reports Q1 -$1.53 v -$1.17e, Rev $15.2B v $14.4Be
ETH/USD Ethereum jumps to record high on report of EIB digital bond issuance - press
*(US) DOE CRUDE: +0.1M V 0ME; GASOLINE: +0.1M V 0ME; DISTILLATE: -3.3M V 0ME
*(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25% (AS EXPECTED); RISKS TO THE OUTLOOK REMAIN, INFLATION HAS RISEN BUT LARGELY REFLECTS TRANSITORY FACTORS
(US) Fed Chair Powell: it is not time yet to start talking about tapering; in the meantime we will monitor progress toward our goals - post-decision Q&A
GM Introduces Ultium Charge 360, a holistic charging approach to integrate charging networks; new partnership to have 60K public chargers from 7 networks on the same app in US & Canada, including Blink Charging, ChargePoint, EVgo, and Shell's Greenlots
F Reports Q1 $0.89 v $0.16e, Rev $36.2B v $31.1Be; Sees losing ~50% of planned Q2 production and 10% of planned H2 production citing chip shortage
FB Reports Q1 $3.30 v $2.36e, Rev $26.2B v $23.8Be
F Global semiconductor shortage may not be fully resolved until 2022 - earnings slides
VZ Reportedly exploring sale of media assets including Yahoo and AOL, package could be valued at $4-5B - press
2282.HK Reports Q1 (HK$) Adj EBITDA +84.4M v -122.7M y/y; Rev 2.3B v 2.1B y/y
005930.KR Reports final Q1 (KRW) Net 7.09T v 4.9T y/y; Op 9.38T v 9.3T prelim; Rev 65.4T v 65.0T prelim

THURS 4/29
AIR.FR Reports Q1 adj Net €362M v -€481M y/y, Adj EBIT €694M v €281M y/y, Rev €10.5B v €10.3Be
066570.KR Reports Prelim Q1 (KRW) Net 998.3B v 1.0T y/y; Op 1.52T v 1.52T prelim; Rev 18.81T v 18.81T prelim
NOKIA.FI Reports Q1 €0.07 v €0.01e, Rev €5.08B v €4.86Be
RDSA.NL Reports Q1 CCS EPS $0.42 v $0.37 y/y, Adj CCS Net $3.23B v $3.06Be, Rev $55.7B v $60.0B y/y*
UNA.NL Issues Q1 trading update: Rev €12.3B v €12.1Be; To commence up to €3B share buyback in May
BAVA.DK Reports new preclinical data for COVID-19 vaccine candidate ABNCoV2 confirming potential for broad protection against SARS-CoV2 Variants; May be looking at the first universal COVID-19 vaccine
*(DE) GERMANY APR NET UNEMPLOYMENT CHANGE: +9.0K V -10.0KE; UNEMPLOYMENT CLAIMS RATE: 6.0% V 6.0%E
3328.HK Reports Q1 (CNY) Net 21.95B v 21.5B y/y, NII 38.55B v 36.7B y/y
*(EU) EURO ZONE APR ECONOMIC CONFIDENCE: 110.3 V 102.1E
3988.HK Reports Q1 (CNY) Net 54.0B v 52.6B y/y, Op Income 157.9B v 148.5B y/y
VER To merge with Realty Income in all stock deal with combined EV of ~$50B
(US) Mayor De Blasio: To fully reopen NYC on July 1st
MA Reports Q1 $1.74 v $1.57e, Rev $4.2B v $3.97Be
*(DE) GERMANY APR PRELIMINARY CPI M/M: 0.7% V 0.5%E; Y/Y: 2.0% V 1.9%E
*(US) Q1 ADVANCE GDP ANNUALIZED Q/Q: 6.4% V 6.6%E; PERSONAL CONSUMPTION: 10.7% V 10.5%E
*(US) Q1 ADVANCE GDP PRICE INDEX: 4.1% V 2.6%E; CORE PCE Q/Q: 2.3% V 2.4%E
*(US) MAR PENDING HOME SALES M/M: 1.9% V 4.4%E; Y/Y: 25.3% V 27.5%E
(US) Labor Secretary Walsh: Most US gig workers should be classified as employees
(US) White House Press Sec Psaki: still evaluating report of directed energy attack near the White House
AMZN Reports Q1 $15.79 v $9.65e, Rev $108.5B v $105.1Be
SWKS Reports Q2 $2.37 v $2.34e, Rev $1.17B v $1.15Be
*(CN) CHINA APR MANUFACTURING PMI (GOVT OFFICIAL): 51.1 V 51.8E (13th month of expansion)

FRI 4/30
*(FR) FRANCE Q1 PRELIMINARY GDP Q/Q: 0.4% V 0.0%E; Y/Y: 1.5% V 1.0%E
AZN.UK Reports Q1 Core EPS $1.63 v $1.48e, Rev $7.32B v $7.26Be
*(DE) GERMANY Q1 PRELIMINARY GDP Q/Q: -1.7% V -1.5%E; Y/Y: -3.3% V -3.6%E
*(EU) EURO ZONE MAR UNEMPLOYMENT RATE: 8.1% V 8.3%E
*(EU) EURO ZONE APR ADVANCE CPI ESTIMATE Y/Y: 1.6% V 1.6%E; CPI CORE Y/Y: 0.8% V 0.8%E
*(EU) EURO ZONE Q1 ADVANCE GDP Q/Q: -0.6% V -0.8%E; Y/Y: -1.8% V -2.0%E
AAPL EU confirms it has charged Apple with antitrust violations over App Store payments in Spotify dispute - press
XOM Reports Q1 $0.65 adj v $0.59e, Rev $59.2B v $55.2Be; Affirms FY21 capex plan, to further cut costs
*(US) MAR PCE DEFLATOR M/M: 0.5% V 0.5%E; Y/Y: 2.3% V 2.3%E
*(US) MAR PERSONAL INCOME: 21.1% V 20.2%E; PERSONAL SPENDING: 4.2% V 4.1%E
(US) Apr Chicago Purchase Managers (PMI): 72.1 v 65.3e (highest level since December 1983)
*(US) APR FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 88.3 V 87.5E
(US) Biden Admin to ban travel to US from India by most non-US citizens due to pandemic - press
(US) White House: TSA extending face mask requirement for all travelers on US transportation through Sept 13th

Renewed optimism on vaccines and the economy hold up investor sentiment

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Weekly Market Update: Renewed optimism on vaccines and the economy hold up investor sentiment

2021-04-23T16:12:07.1

Stocks trading was choppy this week as sentiment wavered between concerns about fresh waves of Covid-19 infections around the world and optimism prompted by promising economic data. Investors were afforded an ability to comb through a swath of companies' projections and other key indicators to gauge whether the economic recovery can stay on track and justify current valuations. Headlines from Europe were largely constructive. The ECB indicated they were not even discussing tapering the PEPP program to this point, while a German court ruled in favor of the EU recovery fund clearing a path to German ratification. The Euro rallied to the best levels since March back above 1.2050.

US equity markets rebounded Friday recovering all of Thursday's jolt lower, after reports surfaced that President Biden is considering nearly doubling capital-gains taxes on the wealthy to pay for his American Families plan. Crypto markets sold off hard on the tax headlines but too rebounded on Friday. Interest rates remained relatively stable with the US 10-year yield staying in the mid 1.5% range. S&P futures touched a new all-high before Friday’s closing bell, but the Dow, S&P and NASDAQ all finished the week marginally lower.

In corporate news this week, as earnings season ramps up, IBM reported a Q1 above estimates and affirmed its FY outlook, notching revenue growth for the first time in five quarters. Netflix shares fell after subscription numbers saw a slowdown and its forecast missed expectations. Canadian National made a $325/shr rival bid for Kansas City Southern, higher than Canadian Pacific’s earlier offer, and reports late in the week suggested KSU would consider CN’s the superior proposal with both offers expected to face regulatory scrutiny. The UK government said it planned to look into the national security implications of Nvidia’s purchase of British semiconductor design ARM Holdings, casting a pall over the likelihood of the deal’s closure. Herman Miller announced it planned to acquire rival furniture retailer Knoll in a $25/shr cash and stock deal. Shares of Phillip Morris and Altria took a hit on reports the Biden administration is considering a rule to lower allowable nicotine levels in cigarettes, as well as a law to ban menthol brands.

SUN 4/18
GXY.AU Orocobre to acquire Galaxy in all share transaction, merger valued at A$4.0B

MON 4/19
KO Reports Q1 $0.55 v $0.50e, Rev $9.02B v $8.47Be
KNL To be acquired by Herman Miller for ~$25.06 in cash and stock deal valued at ~$1.8B
BMW.DE Reports prelim Q1 Pretax €3.76B v €798M y/y; ahead of market expectations
XXII Biden administration said to consider rule to lower allowable nicotine levels in cigarettes, as well as law to ban menthol cigarettes - press
IBM Reports Q1 $1.77 v $1.67e, Rev $17.7B v $17.4Be
UAL Reports Q1 -$7.50 v -$6.97e, Rev $3.22B v $3.25Be
STLD Reports Q1 $2.10 v $1.98e, Rev $3.54B v $3.28Be
RIO.AU Reports Q1 Pilbara iron ore shipments 77.8Mt v 72.9Mt y/y; Pilbara iron production 76.4Mt v 77.8Mt y/y

TUES 4/20
PG Reports Q3 $1.26 v $1.19e, Rev $18.1B v $17.8Be; Began broadly raising prices in mid-to-high single digit percentages
MAN Guides Q2 Rev +36-40% (+27-31% cc), gross profit margin 15.5-15.7%, op profit margin 2.3-2.5% - earnings slides
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -0.1% v +0.3% prior
*(US) JURY IN GEORGE FLOYD CASE FINDS DEFENDANT CHAUVIN GUILTY ON ALL COUNTS
DISCORD.IPO Discord reportedly ends deal talks with Microsoft; Discord plans to remain independent and to consider potential IPO - press

WEDS 4/21
ROG.CH Reports Q1 (CHF) Rev 14.9B v 15.1B y/y; affirms outlook
ERICB.SE Reports Q1 (SEK) Net 3.2B v 2.3B y/y; adj Op 5.3B v 5.0Be; Rev 49.8B v 52.7Be
HEIA.NL Reports Q1 Net €168M v €94M y/y; Organic beer volume 0.0% v -4.1%e
ASML.NL Raises FY21; Strong demand across markets drives expected Rev growth towards 30% (prior 'low double-digit growth, but could be increased') - earnings slides
(EU) German Court said to reject EU Recovery Fund related injunction - press
KNX Reports Q1 $0.83 v $0.70e, Rev $1.22B v $1.19Be; Demand is at unprecedented levels and expected to continue into 2022
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS EXPECTED; Announces taper process for QE bond buying
*(US) DOE CRUDE: +0.6M V -2.5ME; GASOLINE: +0.1M V 0ME; DISTILLATE: -1.1M V -0.5ME
(US) TREASURY $24B 20-YEAR BOND REOPENING DRAWS 2.144%, BID-TO-COVER 2.42 v 2.51 PRIOR
CACI Reports Q3 $4.78 v $3.69e, Rev $1.55B v $1.58Be (update)
EFX Reports Q1 $1.97 v $1.52e, Rev $1.21B v $1.12Be
2303.TW Said to be increasing prices for chips with 8-inch and 12-inch wafers by ~15% in July; IC sources say the co. plans to raise prices by 40% in 2022 - Press

THURS 4/22
CSGN.CH Reports Q1 (CHF) Net -252M v +1.31B y/y, Pretax -757M* (ex-everything 3.6B) v 1.20B y/y, Rev 7.57B v 5.78B y/y; Sees CHF600M impact US hedge fund matter in Q2
SAP.DE Reports final Q1 (Non-IFRS) EPS €1.40 v €1.04 prelim, Op €1.74B v €1.48B y/y, Rev €6.35B v €6.35B prelim; affirms outlook
NESN.CH Reports Q1 (CHF) Rev 21.1B v 20.3Be; Affirms outlook
*(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
*(US) MAR EXISTING HOME SALES: 6.01M V 6.11ME
(US) Pres Biden reportedly to propose capital gains taxes as high as 39.6% for those making over $1M per year (current capital gains rate is 20%); would add up to 43.4% if you include already-enacted 3.8% investment income tax - press

FRI 4/23
*(UK) DMO UPDATES ITS FY21/22 FINANCING REMIT: Cuts issuance from £295.9B to £252.6B
*(FR) FRANCE APR PRELIMINARY PMI MANUFACTURING: 59.2 V 59.0E (5th month of expansion)
*(EU) EURO ZONE APR PRELIMINARY PMI MANUFACTURING: 63.3 V 62.0E (10th month of expansion and record high)
(EU) ECB, BOE, SNB, BoJ, Fed and other central banks said to discontinue 3-month USD liquidity operations from July 1st - press
*(UK) APR PRELIMINARY PMI MANUFACTURING: 60.7 V 59.0E (11th straight expansion and highest reading since July 1994)
*(RU) RUSSIA CENTRAL BANK (CBR) RAISES KEY 1-WEEK AUCTION RATE BY 50BPS TO 5.00%; MORE-THAN-EXPECTED
HON Reports Q1 $1.92 v $1.80e, Rev $8.45B v $8.13Be; Seeing promising signs of rapid recovery in some markets

Q1 earnings reports start strong, amplified by solid economic data

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Weekly Market Update: Q1 earnings reports start strong, amplified by solid economic data

2021-04-16T16:03:13.2

A strong start to earnings season from banks and a handful of deep cyclical companies combined with data showing the economy is growing at a rapid clip propelled stocks higher this week. The Dow gained a foothold above 34,000 for the first time and by Friday the S&P notched its 23rd all-time closing high this year. Weekly initial jobless claims fell to the lowest level since the onset of the pandemic more than a year ago, and a host of key readings including manufacturing and retail sales trounced consensus expectations. Adding to the momentum was a notable drop in U.S. government bonds yields, perhaps surprising some investors, in a week where the Treasury dumped another $124B in coupon supply onto the market. Oil prices rose and the Greenback fell to the lowest levels in about a month. Bitcoin also hit another new all-time high amid the direct listing launch of Coinbase, a popular crypto exchange. For the week, the S&P gained 1.4%, the DJIA was up 1.2%, and the Nasdaq added 1.1%.

In corporate news this week, the CDC issued a surprise announcement on Tuesday to recommend a pause on J&J vaccine distribution following six reported blood clot cases, and the regulatory agency plans to hold meetings late next week to further discuss the issue. Earnings season kicked off as the big financial houses released quarterly reports. JP Morgan posted a big beat on earnings amid strong trading, though loan demand remained challenged. Goldman Sachs and Bank of America both beat the street on Q1 profits and revenues amid strength in their investment banking and trading divisions. Morgan Stanley also saw strong numbers from its trading operations, though the bank noted its Archegos-attributed losses reached over $900M.

Alcoa reported a solid quarter, raising its FY21 alumina shipment guidance and pointing to an improvement in profitability and top-line growth. Dell announced it would spin off its 81% ownership stake in VMware following months of negotiations, a move that would generate $9B in proceeds for Dell as it seeks to pay down debt. Microsoft said it would acquire speech recognition and conversational AI services company Nuance for $19.7B, the software giant’s largest deal since it purchased LinkedIn five years ago. Thermo Fisher announced it would buy drug development researcher PPD for $17B in a boost to its pharmaceutical services business.


SUN 4/11
9988.HK CEO Zhang: Do not see material negative impact from exclusivity change required by regulator, will do more to help merchants lower operating costs; unaware of any other investigations by SAMR - post fine conference call

MON 4/12
SEV.FR Veolia and Suez reach agreement on merger; Suez to be acquired for €20.50/shr by May 14th
*(EU) EURO ZONE FEB RETAIL SALES M/M: 3.0% V 1.7%E; Y/Y: -2.9% V -5.3%E
UBER Reports Mar Gross Bookings reached highest level in history; Mobility Gross Bookings run-rate >$30B; On track to achieve FY21 adj EBITDA profitability - filing
NUAN Confirms to be acquired by Microsoft for $56.00/shr in cash in deal valued at $19.7B
(US) March NY Fed Survey of Consumer Expectations: Consumer optimism is rising amid higher inflation expectations
NVDA To release its first data center CPU, a processor for giant AI and high performance computing workloads
*(US) TREASURY'S $38B 10-YEAR NOTE REOPENING DRAWS 1.680%; BID-TO-COVER RATIO: 2.36 V 2.38 PRIOR AND 2.41 OVER THE LAST 8 REOPENINGS
*(US) MAR MONTHLY BUDGET STATEMENT: -$660B V -$658.0BE
(US) SEC said to have told accountants that warrants do not count as equity, trying to calm down SPAC frenzy with accounting talks
(CN) Treasury Sec Yellen reportedly will Not designate China as a currency manipulator in biannual report – press

TUES 4/13
*(UK) FEB MONTHLY GDP M/M: 0.4% V 0.5%E
*(DE) GERMANY APR ZEW CURRENT SITUATION SURVEY: -48.8 V -54.1E
AGC Confirms to merge in deal to go public with Grab, a Superapp for Deliveries, Mobility and Financial Services in Southeast Asia, in deal valued at $39.6B (largest SPAC deal so far)
FAST Reports Mar net sales $531.4M, +12.4% y/y
JNJ US FDA and CDC confirm recommending pause on J&J vaccine after 6 reported blood clotting cases
*(US) MAR CPI M/M: 0.6% V 0.5%E; Y/Y: 2.6% V 2.5%E
(UK) BOE chief economist Haldane to step down from role following June meeting - press
SAP.DE Reports prelim Q1 (Non-IFRS) EPS €1.04 v €0.85 y/y; Op profit +24% y/y; Rev €6.35B v €6.52B y/y; Cloud Rev +13% y/y at cc; raises FY21 guidance
*(US) TREASURY $24B 30-YEAR BOND REOPENING DRAWS 2.320%; BID TO COVER 2.47 V 2.28 PRIOR AND 2.39 OVER LAST 8 REOPENINGS

WEDS 4/14
IEA Monthly Oil Report: oil prices may be pressured in coming months on supply
JPM Reports Q1 $3.31 adj v $3.05e, Managed Rev $33.1B v $30.1Be; Loan demand still "challenged"
*(US) DOE CRUDE: -5.9M V -2.5ME; GASOLINE: +0.3M V +0.5ME; DISTILLATE: -2.1M V +1ME
F To schedule downtime at plants for weeks of April 19th and 26th due to chip shortage - press
DELL Dell Technologies to spin-off 81% of VMWare stake as a public co
NSANY Adjusting production schedules at North American plants for rest of April due to semiconductor shortages
JNJ CDC advisory panel on JNJ's Covid vaccine decides Not to vote today; says need more data and will reconvene as quickly as possible

THURS 4/15
2330.TW Reports Q1 (NT$) Net 139.7B v 117.1B y/y, Op 150.5B v 128.5B y/y, Rev 362.4B v 310.6B y/y; Says chip shortage could continue into 2022
BAC Reports Q1 $0.86 v $0.65e, Rev $22.8B v $21.9Be - press
*(TR) TURKEY CENTRAL BANK (CBRT) LEAVES ONE-WEEK REPO RATE UNCHANGED AT 19.00%; AS EXPECTED
PPD Confirms to be acquired by Thermo Fisher for $47.50/shr in cash valued at $17.4B plus $3.5B assumption of debt
*(US) APR EMPIRE MANUFACTURING: 26.3 V 20.0E
*(US) MAR ADVANCE RETAIL SALES M/M: 9.8% V 5.8%E; RETAIL SALES (EX-AUTO) M/M: 8.4% V 5.0%E
*(US) APR PHILADELPHIA FED BUSINESS OUTLOOK: 50.2 V 41.5E
DAL Reports Q1 -$3.55 v -$2.94e, Rev $4.15B v $3.87Be; saw cash generation in Mar
*(US) MAR INDUSTRIAL PRODUCTION M/M: 1.4% V 2.5%E; CAPACITY UTILIZATION: 74.4% V 75.6%E
*(US) APR NAHB HOUSING MARKET INDEX: 83 V 83E
(US) Atlanta Fed GDPNow raises Q1 GDP to 8.3% from 6.0%
JBHT Reports Q1 $1.37 v $1.18e, Rev $2.62B v $2.49Be
AA Reports Q1 $0.79 v $0.48e, Rev $2.87B v $2.66Be
DAI.DE Reports Q1 Prelim Adj EBIT €4.97B v €3.99Be (vs €719M y/y)
*(CN) CHINA Q1 GDP Q/Q: 0.6% V 1.4%E; Y/Y: 18.3% V 18.5%E (record annualized growth)

FRI 4/16
(TR) Turkey said to have banned payments in Cryptocurrencies; effective Apr 30th
*(EU) EURO ZONE MAR FINAL CPI Y/Y: 1.3% V 1.3%E; CPI CORE Y/Y: 0.9% V 0.9%E
(CN) China reportedly has given permission to import large amounts of Gold - press
*(US) MAR HOUSING STARTS: 1.739M V 1.613ME; BUILDING PERMITS: 1.766M V 1.750ME
*(US) APR PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 86.5 V 89.0E; 1-year inflation expectations: 3.7% v 3.3%e

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Signs of inflation creep in to data and corporate reports as growth momentum around ‘reopening’ continues

2021-04-09T16:04:07.073

Stocks have moved higher this week, led by sharp gains for technology companies after markets greeted last Friday’s US March jobs report overwhelmingly favorably. Bond markets calmed, with yields dropping for four straight days before ticking higher on Friday in the wake of hotter than expected PPI readings in both the US and China. Robust PMI readings globally appeared to encourage investors to double down on bets that economic growth will pick up as Covid-19 vaccines and government support help revitalize social and business activity. Federal Reserve officials gave reassurances that the central bank will continue with policy measures aimed to support the recovery despite the expected near term pick-up in inflation. The US dollar experienced a modest decline induced by a rebound in the Euro around the release of the March ECB minutes. The VIX volatility index plumbed to its lowest levels in more than a year, raising some concerns about market complacency amid a notable decline in US equity volumes. For the week, the S&P gained 2.7%, the DJIA added 2%, and the Nasdaq was up 3.1%.

In corporate news this week, many firms noted inflation pressures in their business. Construction materials manufacturer RPM International noted it was implementing price increases aggressively to offset inflationary and supply pressures. Meanwhile, packaged foods giant ConAgra said it has begun to experience elevated inflation in cost of goods sold and that it expects these pressures to accelerate over the next few quarters. Apple became the latest company to suffer from the global semiconductor shortage, with press reports indicating MacBook and iPad production are being delayed. On the same issue, GM and Ford announced they would idle some more factories temporarily, and Ford said it would cancel planned summer shutdowns to make up the production gap. Boeing’s 737 MAX program suffered another embarrassing setback as the company told over a dozen airlines that they would have to ground about 90 recently delivered planes due to an electrical issue that may take days to fix. The CDC bent to pressure from the cruise industry saying cruises could restart in mid-summer with certain restrictions, rather than wait until November. In M&A related news, Twitter reportedly held discussion about a potential $4B bid for audio-chat app Clubhouse but talks have since broken off.


MON 4/5
(TR) Turkey Mar CPI M/M: 1.1% v 1.1%e; Y/Y: 16.2% v 16.2%e (6th straight month of rising inflation)
*(US) MAR ISM SERVICES INDEX: 63.7 V 59.0E (record high)
(US) Sen Manchin (D-WV): the corporate tax rate should be at 25%; would not support raising it to 28% - radio interview
(US) Senate parliamentarian rules that Democrats can use a third budget reconciliation this year to pass additional legislation - financial press

TUES 4/6
*(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 0.10%; AS EXPECTED
*(EU) EURO ZONE FEB UNEMPLOYMENT RATE: 8.3% V 8.1%E
(RU) Russia Defense Ministry said to have started military readiness check-ups to inspect the whole of its armed forces - press
*IMF UPDATE ITS WORLD ECONOMIC OUTLOOK (WEO): RAISES 2021 GDP GROWTH FORECAST FROM 5.5% TO 6.0%
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +0.3% v -3.8% prior
005930.KR Reports prelim Q1 (KRW) Op 9.30T v 8.9Te; Rev 65.0T v 61.5Te
(US) CDC says cruises could restart in mid-summer with restrictions

WEDS 4/7
*(DE) GERMANY MAR FINAL PMI SERVICES: 51.5 V 50.8E (confirmss 1st expansion in 6 months);
*(EU) EURO ZONE MAR FINAL PMI SERVICES: 49.6 V 48.8E (confirms 7th straight contraction)
(UK) MAR FINAL PMI SERVICES: 56.3 V 56.8E (confirms 1st expansion in 5 months)
RPM Reports Q3 $0.38 v $0.34e, Rev $1.27B v $1.20Be; currently implementing appropriate price increases and changes in terms
*(US) DOE CRUDE: -3.5M V -1.5ME; GASOLINE: +4.0M V -1ME; DISTILLATE: +1.5M V +0.5ME
(US) Feb Consumer Credit: $27.6B v $2.8Be
TWTR Reportedly recently discussed a potential $4B takeover of audio-chat app Clubhouse but talks no longer ongoing - press
JNJ Mass vaccination site in Denver, Colorado using JNJ Coronavirus vaccines was shut down temporarily due to 18 recipients having unspecified adverse side effects - press

THURS 4/8
AAPL Reportedly MacBook and iPad production are being delayed due to chip shortage - Nikkei
CAG Reports Q3 $0.59 v $0.58e, Rev $2.77B v $2.72Be; Has begun to experience elevated inflation in cost of goods sold
*(US) INITIAL JOBLESS CLAIMS: 744K V 680KE; CONTINUING CLAIMS: 3.73M V 3.64ME
GM To further cut production at several North American facilities due to semiconductor shortage
F Ford to idle three additional plants for one week due to semiconductor shortage; will cancel planned summer shutdowns to make up production gap - press

FRI 4/9
BA Recommended to 16 customers to address a potential electrical issue in a specific group of 737 MAX airplanes prior to further operations; working closely with US FAA
*(US) MAR PPI FINAL DEMAND M/M: 1.0% V 0.5%E; Y/Y: 4.2% V 3.8%E; PPI (ex-food/energy) M/M: 0.7% v 0.2%e; Y/Y: 3.1% v 2.7%e
AMZN Majority of Alabama workers have voted against unionization; Union files objection saying the company exerted influence on the vote
(US) President Biden releases skinny FY22 budget proposal including $1.52T for discretionary spending, +8.4% y/y; requests $769B in non-defense discretionary spending, +16% y/y

Q1 ends on an optimistic note

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Weekly Market Update: Q1 ends on an optimistic note

2021-04-01T17:48:10.05

Q1 drew to close this week with US stock markets once again testing new all-time highs. Heading into the Easter break the S&P topped 4,000 for the first time while the NASDAQ surged amid renewed interest in growth sectors, namely technology shares. President Biden outlined his vision for over $2T in infrastructure spending the Democrats are widely expected to push through Congress along with a package of high income and corporate tax increases, but the measures are clearly going to receive stiff oppositions from Republicans. The “Ever Given” was finally refloated allowing traffic to resume in the Suez Canal. Economic data stayed markedly upbeat despite the institution of additional lock down measures across much of Europe. US vaccine numbers continued to climb and on Friday Pfizer released a new batch of data showing its vaccine was 100% effective in preventing COVID-19 cases in South Africa (among 800 subjects), where the worrisome B.1.351 variant remains prevalent.

A calmer tenor in the global rates markets likely kept the door open for improving stock sentiment as well. The US 10-year yield appears to have encountered some resistance around 1.75% ahead of a quirky release for the March jobs report on Friday when most major financial markets including in the US are closed. Global central bank officials continued to stress the need to keep policy loose coming out of the pandemic and don’t intend to move proactively even if inflation begins to rise. WTI crude prices hovered around $60/bbl after OPEC+ producers agreed to roll over production cuts this month, and the Saudis indicated they would gradually start taking back their unilateral 1M bpd output cut in May while the cartel eased production cuts by similar amount. The US Dollar stayed strong largely on the back of a softer Euro as Europe continued to lag the US in terms of vaccination numbers. For the week, the S&P gained 1.1%, the DJIA added 0.3%, and the Nasdaq was up 2.6%.

In corporate news this week, Micron shares jumped after posting beats and forecasting a strong sales and earnings outlook. Reports also circulated that Western Digital and Micron were individually considering a potential $30B deal for Kioxia Holdings Corp, the memory manufacturer spun off from Toshiba in 2018. American Airlines improved its business outlook, raising Q1 capacity guidance and noting its seven-day average of net bookings has hit ~90% of 2019 levels. Delta announced it would lift its block on selling the middle seat on flights beginning May 1st, the last of the major carriers to end the COVID-era restriction. Lululemon reported a beat on its top and bottom line in Q4, while its outlook disappointed the Street as post-pandemic reopening questions remain. Visa confirmed it would be the first major payments network to settle transactions using USD Coin, a stablecoin powered by the Ethereum blockchain. PayPal launched "Checkout with Crypto,” a service for customers to use crypto holdings to pay at online merchants globally.

SUN 3/28
386.HK Reports FY20 (CNY) Net 32.9B v 57.5B y/y; Rev 2.1T v 2.97T y/y
8604.JP Guides to potentially has a loss as much as $2.0B at US unit, related to transactons with a US client; Cancelling issuance of USD denominated bonds
(EG) Stuck Suez Canal ship "Ever Given" has been successfully refloated

MON 3/29
CSGN.CH Exiting positions after US hedge fund default (failed to meet margin requirements), premature to quantify exact size of loss, could be "highly significant" to Q1 results
CSGN.CH Reportedly expected loss due to US hedge fund default estimated to be between $3-4B - FT
V Confirms first major payments network to settle transactions in USD Coin (USDC) with Visa over Ethereum
AAL Raises Q1 Capacity -45% to -40% (prior -45%); As of Mar 26th 7-day avg of net bookings ~90% of 2019 levels
(EG) Suez Canal authority official: traffic in the Suez Canal has resumed after the stranded ship was refloated
*(US) MAR DALLAS FED MANUFACTURING ACTIVITY INDEX: 28.9 V 16.8E
(US) CDC director Walensky: new US COVID cases have risen 10% in last week; deaths are now rising along with cases and hospitalizations

TUES 3/30
6723.JP Damaged Chip plant is likely to restart 'on schedule' (within 1-month), ~75% of work in process was undamaged by fire
*(EU) EURO ZONE MAR ECONOMIC CONFIDENCE: 101.0 V 96.0E
*(US) MAR CONSUMER CONFIDENCE: 109.7 V 96.9E (highest reading since March 2020)
LULU Reports Q4 $2.58 v $2.49e, Rev $1.73B v $1.66Be
*(CN) CHINA MAR MANUFACTURING PMI (GOVT OFFICIAL): 51.9 V 51.2E (13th month of expansion)

WEDS 3/31
*(UK) Q4 FINAL GDP Q/Q: 1.3% V 1.0%E; Y/Y: -7.3% V -7.8%E
*(DE) GERMANY MAR UNEMPLOYMENT CHANGE: -8.0K V -3.0KE; UNEMPLOYMENT CLAIMS RATE: % V 6.0%E
*(EU) EURO ZONE MAR ADVANCE CPI ESTIMATE Y/Y: 1.3% V 1.4%E; CPI CORE Y/Y: 0.9% V 1.1%E
*(US) MAR ADP EMPLOYMENT CHANGE: +517K V +550KE
*(US) MAR CHICAGO PURCHASE MANAGERS INDEX (PMI): 66.3 V 61.0E (highest March reading since 2011)
*(US) FEB PENDING HOME SALES M/M: -10.6% V -3.0%E; Y/Y: -2.7% V +6.5%E
*(US) DOE CRUDE: -0.9M V -0.5ME; GASOLINE: -1.7M V +1ME; DISTILLATE: +2.5M V +0.5ME
MSFT Awarded U.S. Army contract for AR headsets, worth up to $22B over 10 years - press
MU Reports Q2 $0.98 v $0.95e, Rev $6.24B v $6.18Be
2330.TW To invest $100B over 3-years to increase chip fabrication capacity - Company Statement
2330.TW Said to be requesting that clients accept higher prices - Nikkei

THRS 4/1
(HK) Macau Mar Casino Rev (MOP): 8.3B v 7.3B prior; Y/Y: 58.0% v +135.6% prior
*(IT) ITALY MAR MANUFACTURING PMI: 59.8 V 59.8E ((9th month of expansion and highest since Mar 2000)
*(DE) GERMANY MAR FINAL MANUFACTURING PMI: 66.6 V 66.6E (confirms 9th month of expansion and record high)
*(EU) EURO ZONE MAR FINAL MANUFACTURING PMI: 62.5 V 62.4E (confirms 9th month of expansion and record high)
*(US) INITIAL JOBLESS CLAIMS: 719K V 675KE; CONTINUING CLAIMS: 3.79M V 3.75ME
*(US) MAR FINAL MARKIT MANUFACTURING PMI: 59.1 V 59.1E
*(US) MAR ISM MANUFACTURING: 64.7 V 61.5E; PRICES PAID: 85.6 V 85E (highest ISM Manufacturing reading since 1983)
OPEC+ members support a 1-month roll over of production cuts; agree to gradual production increases from May through July

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Equity Markets Whipsaw Around Growth Risks and Central Bank Commentary

2021-03-26T16:11:08.667

Global growth worries resurfaced this week weighing on interest rates initially while causing rising volatility in stock markets. Germany followed a host of EU countries by re-introducing pandemic lockdown measures while issues surrounding vaccine distribution in both Europe and Asia lingered. Adding to the consternation, tensions between China and the West ratcheted higher amid a new round of human rights sanctions on Chinese individuals, and global supply chains were threatened by the grounding of a large tanker in the Suez Canal halting all traffic there indefinitely.

Equity markets stabilized mid-week amid another significant chorus of Central Bank speakers that emphasized they would not be pre-emptively pulling away the punch bowl anytime soon. Also reassuring macro-economic and corporate data suggesting the broader reopening has momentum buoyed risk appetite. Value, namely cyclical and reflation trade sectors, continued modestly outperform growth and more speculative asset classes. Small caps and the Russell 2K lagged the Dow and S&P. Crude prices dipped early in the week before recovering and the US dollar index stayed at the highest levels since Thanksgiving and the Euro dipped below 1.18. Bitcoin slumped back towards 50K before recovering into week's end. For the week the S&P gained 1.6%, the Dow added 1.4% while the NASDAQ lost 0.6%.

In corporate news this week, AstraZeneca adjusted its COVID efficacy statistics downward to 76% from 79% after a rebuke from the NIH who had been overseeing the study. Intel announced a change of course for its core strategy, shifting to production of other companies’ chips, as well as planning for a new research collaboration with IBM and a $20B investment to build two new fabs in Arizona. Adobe shares lifted after blowing away Q1 expectations and raising its outlook, pointing to strong growth in its digital subscriptions revenue. Darden posted a Q3 beat, raising its dividend and authorizing a new stock buyback, along with announcing a raise in hourly pay for its restaurant workers. Semiconductor manufacturer MagnaChip entered into an all-cash go-private transaction with Wise Road Capital at $29/shr. Kansas City Southern agreed to be acquired by Canadian Pacific for ~$275/shr, which would create the first U.S.-Mexico-Canada rail network. Microsoft is reportedly in talks to purchase communications company Discord for $10B, though the potential deal is not said to be imminent.

SUN 3/21
KSU To be acquired by Canadian Pacific for ~$275/shr to create first U.S.-Mexico-Canada rail network in $29B cash-stock deal
6723.JP CEO Shibata: Expect the fire at Aoki plant to have a big impact on supply of auto chips

MON 3/22
(TW) Said that the auto industry chip shortages will become worse in H1 2021 - Press
AZN.UK AZD1222 US Phase III trial met primary efficacy endpoint in preventing COVID-19 at interim analysis; 79% vaccine efficacy at preventing symptomatic COVID-19 and 100% efficacy against severe or critical disease and hospitalisation
(CN) EU imposes sanctions against Chinese individuals responsible for the alleged mistreatment of the country’s minority Uyghur population - press
(US) Fed Chair Powell: FED Not in decision mode on Central Bank Digital Currency (CBDC) project
*(US) FEB EXISTING HOME SALES: 6.22M V 6.50ME
(US) Fed Chair Powell: Recovery seems to be strengthening, coming faster than expected; labor market conditions have recently improved; reiterates committed to suing full range of tools to support the economy - testimony for tomorrow
(DE) German Chancellor Merkel: Confirms tighter lockdown from April 1-5th, supermarkets only to be open April 3rd; Case numbers are rising exponentially due to UK variant, in a race to get vaccinated, in a very serious situation now

TUES 3/23
*(US) MAR RICHMOND FED MANUFACTURING INDEX: 17 V 16E
*(US) FEB NEW HOME SALES: 775K V 870KE
(US) Fed’s Brainard: Fed will form a new committee to monitor climate risks; climate change is already imposing substantial economic costs; mandatory disclosures on climate is likely important
ADBE Reports Q1 $3.14 v $2.79e, Rev $3.91B v $3.77Be
INTC Issues strategy for manufacturing, innovation and product; Plans for new research collaboration with IBM; targets $20B investment to build two new fabs in Arizona
(EG) Suez Canal reportedly has been blocked for several hours as a large container ship is stuck - press

WEDS 3/24
*(UK) FEB CPI M/M: 0.1% V 0.5%E; Y/Y: 0.4% V 0.8%E
TSLA CEO Musk tweets: customers can now buy a Tesla with bitcoin; BTC paid will not be converted to fiat money
700.HK Reports Q4 (CNY) Net 59.3B v 21.6B y/y, Op 63.7B v 28.6B y/y, Rev 133.7B v 105.8B y/y; Raises annual dividend 33% to HK$1.60/shr
*(UK) MAR PRELIMINARY MANUFACTURING PMI: 57.9 V 55.0E (10th straight expansion and highest reading since Nov 2017)
*(US) FEB PRELIMINARY DURABLE GOODS ORDERS: -1.1% V +0.5%E; DURABLE GOODS (EX-TRANSPORTATION: -0.9% V +0.5%E
GM Spokesperson: announces more production cuts related to semiconductor chip shortage - press
*(US) MAR MARKIT PRELIMINARY MANUFACTURING PMI: 59.0 V 59.5E
*(US) DOE CRUDE: +1.9M V 0ME; GASOLINE: +0.2M V +0.5ME; DISTILLATE: +3.8M V 0ME
(US) Over 70 House Democrats and 10 senators call on Pres Biden to ensure 60% of vehicles on the road by 2030 are zero-emission models - press
(US) CDC order limiting cruising will stay in effect until Nov 1st; phased approach will continue - press
RAD Cuts FY21 Rev $24.0B v $24.2Be (prior $23.9-24.2B), adj EBITDA $425-435M (prior $490-520M), SSS +3.5% y/y (prior +3.5-4.5%)
KBH Reports Q1 $1.02 v $0.87e, Rev $1.14B v $1.21Be

THURS 3/25
(EG) Suez Canal stuck ship clearance reportedly could now take days to weeks - FT
DRI Reports Q3 $0.98 v $0.71e, Rev $1.73B v $1.62Be; Authorizes new $500M share buyback; Raises Quarterly dividend 137.8% to $0.88 from $0.37 (indicated yield 2.63%)
*(US) INITIAL JOBLESS CLAIMS: 684K V 730KE; CONTINUING CLAIMS: 3.87M V 4.00ME
*(US) Q4 FINAL GDP PRICE INDEX: 2.0% V 2.1%E; CORE PCE Q/Q: 1.3% V 1.4%E
(US) Nevada reports Feb casino gaming Rev $772.4M, -25.9% y/y; Las Vegas strip Rev $348.5M, -41.6% y/y
(US) White House: Tracking Suez Canal Situation closely

FRI 3/26
(EG) Suez Canal stuck ship clearance said to take now 'at least' a week - press
NIO Cuts Q1 deliveries ~19.5K vehicles (prior 20-25K); To temporarily suspend vehicle production in Hefei facility citing semiconductor chip shortage
3328.HK Reports FY20 (CNY) Net 78.3B v 77.3B y/y, NII 153.3B v 144.1B y/y
*(DE) GERMANY MAR IFO BUSINESS CLIMATE: 96.6 V 93.2E
(DE) Germany Public Health RKI Institute chief Wieler: COVID situation to get worse in coming weeks
MX Enters into $29/shr definitive agreement with Wise Road Capital in an all-cash take private transaction valued at $1.4B
*(US) FEB PERSONAL INCOME: -7.1% V -7.2%E; PERSONAL SPENDING: -1.0% V -0.8%
*(US) FEB PCE DEFLATOR M/M: 0.2% V 0.3%E; Y/Y: 1.6% V 1.6%E

TradeTheNews.com 

 Rising yields continue to take the air out of stocks and commodities; Fed affirms dovish stance

2021-03-19T16:15:31.337

Investors and markets continued to grapple with rising interest rates this week despite the US Federal Reserve doubling down with yet another highly dovish FOMC meeting. Fed Chair Powell reiterated now is still not the right time to begin discussions about tapering. By emphasizing he wants to see “actual” progress towards both the employment and inflation mandates, not just the forecasted progress as indicated in the latest round of SEP projections, the Chairman’s message remained clear. The Fed is still comfortable with letting the economy run hot as it emerges from the pandemic given the incomplete jobs recovery and continued subpar inflation. The benchmark US 10-year surged to 1.75% for the first time in more than a year after the meeting and the curve continued to steepen. By Friday, many Wall Street analysts had raised their forecasts calling for the 10-year yield to reach 2% by this summer.

Some stock indices reached new high water marks early on before volatility tied to rising interest rates and concerns surrounding pandemic weighed on sentiment into week’s end. Significant portions of Europe announced plans to return to lockdowns to fight rising Covid variant cases which resulted in weakness in the Euro. Bitcoin stayed near $60K buoyed by the Fed messaging. WTI crude prices traced back towards $60/bbl and the VIX appeared to put a bottom in below 20 in the immediate aftermath of the FOMC decision. For the week, the S&P lost 0.8%, the DJIA was fell 0.5%, and the Nasdaq dropped 0.8%.

In corporate news this week, Nike shares slipped after missing revenue estimates for Q3, though the shoe giant pointed to congestion at backlogged US ports as the reason for stymied sales numbers. FedEx posted a beat on its Q3 earnings thanks to a robust holiday shipping season and strong margins. Some airlines gave an update this week on the current air travel situation. Southwest said it was seeing a rise in leisure bookings that could counter the diminished business travel sector. JetBlue said that, despite trends remaining choppy, in recent weeks they have experienced improved bookings. Homebuilder Lennar notched a big earnings beat amid continued ‘robust market conditions,’ noting margins remained high and deliveries improved. Volkswagen announced a large expansion of its electric vehicle plans this week, with major battery cell production investments in Europe, while targeting one million EV unit sales in 2021. Hartford Financial Services Group confirmed the receipt of an unsolicited non-binding acquisition proposal from Chubb, reportedly valued in the $21B range, and said it would carefully consider the proposal.


SUN 3/14
(IN) India said to propose a law that ban & criminalize cryptocurrency, including Bitcoin, imposes penalties to mining, trading, and possession of Cryptocurrency - India press citing Govt official

MON 3/15
LUV Raises Mar Rev -20% to -15% y/y (prior -30% to -20% y/y), Load factor 60-70% (prior 65-70%); Recently experienced an increase in bookings farther out in the booking curve - filing
SJR To be acquired by Rogers for C$40.50/shr in ~C$26B cash deal
STAY Blackstone and Starwood Capital Group confirm they will acquire Extended Stay America for $19.50/sh cash in $6B deal
*(US) MAR EMPIRE MANUFACTURING: 17.4 V 14.5E
IPI Raises Trio price by $20/ton, effective March 15th

TUES 3/16
VOW3.DE Targets FY21 EV sales 1M units; Expects business to recover significantly y/y
*(DE) GERMANY MAR ZEW CURRENT SITUATION SURVEY: -61.0 V -62.0E V -67.2 PRIOR; EXPECTATIONS SURVEY: 76.6 V 74.0E
*(US) FEB ADVANCE RETAIL SALES M/M: -3.0% V -0.5%E; RETAIL SALES (EX-AUTO): M/M: -2.7% V +0.1%E
*(US) FEB INDUSTRIAL PRODUCTION M/M: -2.2% V 0.3%E; CAPACITY UTILIZATION: 73.8% V 75.5%E
*(US) MAR NAHB HOUSING MARKET INDEX: 82 V 84E
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -3.8% v +15% prior
(US) TREASURY $24B 20-YEAR BOND REOPENING DRAWS 2.290%, BID-TO-COVER 2.51 v 2.28 PRIOR (Strongest BTC on 20-year auction since last June)
(US) Atlanta Fed GDPNow cuts Q1 GDP to 5.9% from 8.4%
CHIME.IPO Reportedly held early stage talks with banks about going public in 2021, could be valued at $30B - press
LEN Reports Q1 $2.04 adj v $1.65e, Rev $5.33B v $5.08Be
UBER Plans to give ~80K UK drivers 'worker' status following a court ruling; drivers to receive vacation pay, pension payments, and guaranteed minimum wage - filing
(RU) US government is expected to impose sanctions on Russia by as early as next week , the sanctions would relate to alleged meddling in the 2020 US election - financial press
7267.JP Said to suspend some production at All US and Canada plants citing supply chain issues - Press

WEDS 3/17
IEA Monthly Oil Report: Oil demand will return to 2019 level by 2023; Oil glut remains despite improving demand - Does NOT see supercycle
*(EU) EURO ZONE FEB FINAL CPI Y/Y: 0.9% V 0.9%E; CPI CORE Y/Y: 1.1% V 1.1%E
(RU) US Pres Biden: think Russia President Putin is a killer and will pay a price for meddling in US elections
*(US) FEB HOUSING STARTS: 1.421M V 1.560ME; BUILDING PERMITS: 1.682M V 1.750ME
*(US) DOE CRUDE: +2.4M V +1.5ME; GASOLINE: +0.5M V -2.5ME; DISTILLATE: +0.3M V -1.5ME
762.HK FCC initiates proceeding to revoke China Unicom allowances; finds Unicom did not dispel serious concerns - press
*(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25% (AS EXPECTED); ECONOMY'S PACE HAS PICKED UP; INFLATION CONTINUES TO RUN BELOW 2 PERCENT
(US) Fed Chair Powell: it is not time to start talking about tapering yet; we want to see actual progress, not forecast progress - post-decision Q&A

THURS 3/18
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.00%; AS EXPECTED; Revises rate path outlook to "gradual rise in H2 2021" from "remain at current level for some time to come"; raises 2022 and 2023 rate outlook
*(UK) BANK OF ENGLAND BANK (BOE) LEAVES INTEREST RATE UNCHANGED AT 0.10%; AS EXPECTED
*(UK) BOE VOTED 9-0 TO LEAVE INTEREST RATES UNCHANGED
*(US) MAR PHILADELPHIA FED BUSINESS OUTLOOK: 51.8 V 23.3E (highest since 1973)
*(US) INITIAL JOBLESS CLAIMS: 770K V 700KE; CONTINUING CLAIMS: 4.12M V 4.03ME
AZN (EU) EMA statement on vaccine: concludes AstraZeneca COVID vaccine benefits outweigh risks; vaccine is not associated with blood clots; says vaccine is safe and effective
(FR) France PM Castex: New lockdown measures will begin Friday (Mar 19th) at midnight and last for four weeks; will be implemented in 16 departments regions including Paris
HIG Confirms receipt of unsolicited non-binding proposal from Chubb; to carefully consider the proposal
FDX Reports Q3 $3.47 adj v $3.21e, Rev $21.5B v $20.0Be
NKE Reports Q3 $0.90 v $0.75e, Rev $10.4B* v $10.9Be; Sees resuming share buyback under existing plan in Q4 2021

FRI 3/19
(US) Fed: temporary change to supplementary leverage ratio (SLR) for bank holding companies will expire as scheduled on March 31; Treasury market has stabilized
(US) New York Fed Nowcast: cuts Q1 forecast to 6.3% from 8.6%; cuts Q2 forecast to 1.2% from 4.0%