Sunday, June 26, 2022

Some signs of slower growth shift market sentiment, at least temporarily

TradeTheNews.com Weekly Market Update: Some signs of slower growth shift market sentiment, at least temporarily

6/24/2022 4:08:41 PM

US stocks came into the week extremely oversold after experiencing the worst back to back weekly performance since the financial crisis. After the long holiday weekend in the US, buyers stepped in aggressively on Tuesday, but little in the way of obvious catalysts had many opining it was likely nothing more than the beginnings of a bear market rally. As the week progressed though, sentiment showed clear signs of shifting as a significant drop in both global treasury yields and commodity prices breathed some renewed confidence into financial markets. Softening economic data suggested the global economy is clearly slowing, providing some hope that central banks won’t have to go as far with their verbal guidance and rate tightening to tame inflation and to hopefully avoid recession.

The prices of corn, wheat, copper, oil, and US natural gas have fallen in recent weeks, in some cases substantially. The US 10-year yield fell some 40 basis points from last week’s high. Friday’s final University of Michigan reading revised down the 5- to 10-year inflation expectations to 3.1% from 3.3% after Chairman Powell flagged that jump in surveyed expectations as a key determinate in raising rates 75 bps last week. The 2-year yield briefly dropped below 3% following the revision. Futures markets saw Federal Reserve tightening expectations recede. During the week, Chairman Powell testified on Capitol Hill underscoring the Fed has no alternative to being successful in getting inflation back to the 2% target, essentially stating that all options will be on the table when the FOMC raises rates again next month. On Friday, the leading Fed hawk, Bullard, reiterated rates remain far from neutral and they need to get to 3.5% quickly, but also noted he does expect to see a disinflation dynamic emerge in the business world first, and that once it starts to take hold the Fed could consider shifting course. For the week, the S&P gained 6.5%, the DJIA climbed 5.4%, and the Nasdaq rebounded 7.5%.

In corporate news this holiday-shortened week, FedEx reported a beat on Q4 revenue as higher rates and surcharges helped to offset a drop in package volume, and the shipping giant guided profits for the new fiscal year to be ahead of consensus. Kellogg announced plans to split into three separate companies, spinning off its cereal and plant-based divisions, in a move to bolster its snack business. Sanofi and GSK were the first to report a successful efficacy study against the Omicron variant with a COVID-19 Beta-containing vaccine, and they aim to make the shot available to the public later this year. Reports indicated that Franchise Group is considering lowering its bid for Kohl’s to be closer to $50/shr from the $60/shr level bandied about earlier this month. Zendesk entered a $10.2B go-private deal with a PE firm-led investor group after being the target of activist pressure and rejecting a higher $17B acquisition offer in February.

SUN 6/19
(US) Fed's Waller (hawk, voter): Future forward guidance on timing of lift off from zero-level interest rates should include rate hike path guidance; If the data comes in as I expect, I will support a similar-sized move at our July meeting - Society for Computational Economics conf
(FR) France President Macron loses absolute majority in parliament (keeps largest bloc); Le Pen far right, National Rally raises seats to 89 v 8 prior
(HK) Macau reported 21 positive covid cases Sunday (1st time in 8 months)
*(CN) CHINA PBOC MONTHLY LOAN PRIME RATE (LPR) SETTING: MAINTAINS 1-YEAR AND 5-YEAR RATE
(HK) Macau reports 34 positive COVID cases of Mon morning v 21 late Sunday

MON 6/20
(DE) Germany Econ Min Habeck: Unveils new measures to cut usage of natural gas; Will store as much natural gas as possible with a new set of measures, including an increased use of coal power plants
(TW) Taiwan May Export Orders Y/Y: 6.0% v 3.0%e
(FR) French left-wing NUPES alliance leadership to put forward a no-confidence vote against current French govt on July 5th - press
(RU) Russia Foreign Ministry: If cargo transit to Kaliningrad region is not restored by Lithuania in the near future, Russia reserves the right to take action to protect its national interests
(RU) Russia State Duma deputy Sheremet: The attack on platforms of Chernomorneftegaz untied Russia's hands; In the near future, retaliatory strikes will be carried out on Ukrainian decision-making centers
(EU) ECB chief Lagarde: Reiterates stance that ECB intends to raise the key interest rates by 25bps at the July and again at the Sept policy meeting; Will look at balance sheet size issue at a later stage
(UK) BOE's Mann (hawkish dissenter): 50bps move reduces the risk of domestic inflation being boosted by a weaker GBP currency (sterling); Bigger hikes by Fed and ECB could lift UK inflation
3333.HK Discloses received resumption guidance from HKEX on June 15th; The Company is actively pushing forward with its restructuring work; The audit work of the Group is being carried out in an orderly manner
(US) Pres Biden: Decision on pause on federal gas tax could be end of the week; Reiterates US recession is not inevitable
(IL) Israel PM Bennett and Foreign Min Lapid agree to dissolve Israel's parliament Knesset and go for new early elections; If the vote passes, Foreign Min Lapid will become interim PM - press
(FR) ECB's Villeroy (neutral, France): New ECB anti-fragmentation tool must backstop commitment to euro and send clear no-limits message; It should be available as much as necessary
(HK) Macau May Visitor Arrivals 601K v 605K prior

TUES 6/21
(US) Nomura analysts see US mild recession starting in Q4 2022 is now more likely than not; Forecast it will be followed by six more quarters of negative growth; Now expect rate cuts in H2 2023
(RU) Russia govt spokesperson Peskov: Ukraine crisis will be long; Russia will never trust the West anymore - MSNBC interview
(HK) Macau to conduct COVID antigen testing for all residents on June 22nd - press
(RU) Russia Security Council Secretary Patrushev: Russia retaliatory measures against Lithuania will have a serious negative impact on Lithuanian population
April Trucking Conditions Index (TCI) +3.21 v -7.38 (first negative reading since May 2020) - FTRintel.com
K To split into three companies; spinning off its U.S., Canadian, and Caribbean cereal and plant-based businesses
LUV Affirms Q2 Op Rev +12-15% v Q2'19, Capacity -7%, CASM-X +14-18%; Raises load factor 85-87% (prior 85%); Continues to expect solid profits ex items in Q2 and remaining of 2022 - filing
*(US) MAY EXISTING HOME SALES: 5.41M V 5.40ME
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -1.3% v +1.5% prior
TGT CEO: Sees tremendous amount of uncertainty in consumers; Supply chains are not getting better

WEDS 6/22
(HK) Macau reports total 65 coronavirus cases during last outbreak during city wide testing
BAS.DE CEO: H2 2022 will probably be much more difficult that H1 as BASF will no longer be able to benefit from previously strained supply chains of competitors, high energy costs
*(UK) MAY CPI M/M: 0.7% V 0.7%E; Y/Y: 9.1% V 9.1%E (10th month above target and highest annual pace since Nov 1981)
(ES) ECB's De Guindos (Spain, neutral): Inflation to stay near current levels above 8% over coming months then ease after the summer
BA CEO: Global supply chain constraints will probably continue until at least the end of 2023; Industry will face further issues - Qatar Economic Forum
7203.JP Expects July production volume at 800K units; Guides initial July-Sept average volume at 850K/month; Affirms FY22 global volume at 9.7M units
DTG.DE Affirms FY22 Rev €48.0-50.0B, Adj EBIT 'significant increase y/y', Unit Sales 500-520K units; Notes easing of supply bottlenecks and that it can cushion a moderate economic downturn
(RU) Russia Foreign Ministry spokesperson Zakharova: Russia's response to Lithuania's actions will not be solely diplomatic; They will be in the practical field
(JP) Traders circulating unverified press piece that Bank of Japan (BOJ) could adjust its easy monetary policy around the autumn if Japanese yen (JPY) stabilises at a lower level around 140 against US dollar, sending inflation to temporary peaks near 3% and driving wage hikes into 2023
6688.HK Ant Group said to apply for key license as soon as by end-June - press
(CN) China Auto Industry Body CPCA: China car retail sales +55% m/m in the week of June 13th
(US) President Biden said to call on Congress on Wed, June 22nd to pass a 3-month suspension of the federal gasoline tax (gasoline $0.183/gal, diesel $0.243/gal) to help combat pump prices - press (as speculated)
(IL) Israel's parliament Knesset votes to disband itself with 110 votes out of 120 (others were absent) in initial step toward snap election - press
(CN) China President Xi: Call for enhancement of regulations for major payment platform companies - BRICS summit remarks
6502.JP Reportedly KKR, Blackstone and Brookfield are among other submitted initial bids for Toshiba; Offers said to be near ¥7,000/shr, valuing Toshiba at up to ~$22B - press
*(CZ) CZECH CENTRAL BANK (CNB) RAISES 2-WEEK REPURCHASE RATE BY 125BPS TO 7.00%; MORE-THAN-EXPECTED
*(US) FED CHAIR POWELL: PACE OF RATE HIKES WILL CONTINUE TO DEPEND ON INCOMING DATA AND EVOLVING ECONOMIC OUTLOOK; WE WILL MAKE OUR DECISIONS MEETING BY MEETING - TESTIMONY TO CONGRESS
(US) FDA said to be preparing to order Juul e-cigarettes off the US market following two-year review - press
(US) Association of American Railroads weekly rail traffic report for week ending June 18th: 501K total units, -2.5% y/y
*(US) TREASURY $14B 20-YEAR BOND REOPENING DRAWS 3.488% V 3.095% PRIOR, BID-TO-COVER 2.60 V 2.80 PRIOR AND 2.49 OVER LAST 8 REOPENINGS
KSS Franchise Group reportedly considering lowering bid closer to $50/shr from $60/shr - CNBC
CENX To shutter Kentucky aluminum mill for 9-12 months due to energy costs; No current plans to idle additional facilities

THURS 6/23
(HK) Macau said to be closing Cinemas, Gyms, and bars due to coronavirus outbreak - press
*(PH) PHILIPPINES CENTRAL BANK (BSP) RAISES OVERNIGHT BORROWING RATE BY 25BPS TO 2.50%; AS EXPECTED
*(FR) FRANCE JUN PRELIMINARY MANUFACTURING PMI: 51.0 V 54.0E (19th month of expansion but lowest reading since Nov 2020)
*(DE) GERMANY JUN PRELIMINARY MANUFACTURING PMI: 52.0 V 54.0E (confirms 24th month of expansion but lowest reading since July 2020); Notes German economy lost virtually all the momentum gained from the easing of virus related restrictions
*(EU) EURO ZONE JUN PRELIMINARY MANUFACTURING PMI: 52.0 V 53.8E (24th month of expansion)
*(DE) GERMANY ECON MIN HABECK STATEMENT ON ENERGY SECURITY; Confirms to trigger move to stage two** of German emergency gas plan (as speculated); Will not yet deploy price adjustment mechanism
*(NO) NORWAY CENTRAL BANK (NORGES) RAISES DEPOSIT RATE BY 50BPS TO 1.25%; MORE-THAN-EXPECTED; Notes rate will most likely be raised further by 25bps in Aug 2022
*(UK) JUN PRELIMINARY MANUFACTURING PMI: 53.4 V 53.6E (25th month of expansion but lowest print since July 2020); Notes business confidence slumped to a level which has in the past typically signalled an imminent recession
2408.TW President Lee: FY22 Rev may fall slightly y/y citing demand slowdown in consumer electronics spreads to cloud computing and data centers; DRAM demand from server manufacturers is set to weaken in H2 2022 - press interview
300750.CN Unveils EV battery with one-charge range of 1,000 kms (620 miles); To start production in 2023
(CN) China President Xi: Want high quality BRICS cooperation; We must abandon Cold War mentality - BRICS summit remarks
*(US) INITIAL JOBLESS CLAIMS: 229K V 226KE (matches 5-month high); CONTINUING CLAIMS: 1.32M V 1.32ME
RDUS Agrees to be acquired by Gurnet Point Capital and Patient Square Capital at $10/shr per share in cash plus a CVR of $1/shr payable upon TYMLOS contingencies
*(US) JUN PRELIMINARY S&P/MARKIT MANUFACTURING PMI: 52.4 V 56.0E (lowest since July 2020)
(US) Supreme Court voids New York law limiting gun possession, establishes Right to Carry in the state - press
(US) Fed's Bowman (voter): Fed must pay close attention to signs of rising long term inflation expectations; An additional 0.75% rate rise will be appropriate in July
ZAL.DE Guides Q2 GMV, Rev growth and Adj EBIT to be significantly below estimates due to deteriating macroeconomic conditions
WMT Reportedly developing new tools to switch and use multiple cloud providers; Aims to cut its reliance on big tech firms - press
OPEC+ reportedly set to reconfirm plans for Aug oil output hike of 648K bpd at meeting next week (prior 648K in July) - press
*(MX) MEXICO CENTRAL BANK (BANXICO) RAISES OVERNIGHT RATE BY 75BPS TO 7.75%; AS EXPECTED
FDX Reports Q4 $6.87 v $6.91e, Rev $24.4B v $24.3Be; Expect further momentum in fiscal 2023
TREE Cuts Q2 Rev $259-264M v $287Me, adj EBITDA $26-29M (prior Rev $283-293M, adj EBITDA $35-40M) as difficult economic forces 'have persisted and in many cases worsened'
(US) Fed bank stress test results: All banks passed this year's stress tests
(UK) Jun GfK Consumer Confidence: -41 v -40e (record low)

FRI 6/24
SAN.FR Sanofi-GSK first to report a successful efficacy study against Omicron with COVID-19 Beta-containing vaccine; Primary vaccination delivers 64.7% efficacy and 75.1% for previously infected with COVID-19
(RU) Pro-Ukrainian head of Luhansk region: Ukrainian forces will have to leave destroyed Severodonetsk city (**Note: the biggest city not yet occupied in Luhansk region)
*(UK) MAY RETAIL SALES (EX-AUTO/FUEL) M/M: -0.7% V -0.9%E; Y/Y: -5.7% V -5.0%E
*(DE) GERMANY JUN IFO BUSINESS CLIMATE SURVEY: 92.3 V 92.8E
(DE) German Economy Ministry reportedly considers plan to transform suspended Nord Stream 2 pipeline into connection for LNG terminal in Baltic Sea - German press
MMK.UK Exec: company is working at 55% of capacity
(UR) Ukraine Foreign Min Kuleba: Ukrainian side is ready to discuss with Russia the return to the state borders as of Feb 24th before invasion
(AU) Reserve Bank of Australia (RBA) Gov Lowe: Still receiving price pressures from supply chain issues; Not expecting there to be any kind of recession
(US) Fed’s Bullard (voter, hawk): Rates are still far from neutral; Want to move up rates to 3.50% by end-2022
(ES) ECB's De Guindos (Spain, neutral): Size of Sept hike is data dependent; Uncertainty in EU is huge; Starting to see wage demands on the rise; Monitoring second-round effects closely
ZEN To be acquired by investor group led by Hellman & Friedman and Permira at $77.50/shr in cash for $10.2B
USAK To be acquired by DB Schenker for $31.72/shr in cash to create premier North American transportation solutions provider
*(US) JUNE FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 50.0 V 50.2E (Record low); 5-10 year inflation expectations revised lower
*(US) MAY NEW HOME SALES: 696K V 590KE; Months supply: 7.7 v 9.0 prior
*SUPREME COURT OVERTURNS ROE V. WADE; UPHOLDS 15-WEEK ABORTION BAN IN MISSISSIPPI BY 6-3 VOTE
Airline group: Important FAA air traffic center has been understaffed for much of last month which has 'crippled' East Coast traffic flows
(US) Weekly Baker Hughes Rig Count: 753 v 740 w/w (+1.8% w/w)

Sunday, June 19, 2022

Monetary policy tightens further triggering more asset reallocation

TradeTheNews.com Weekly Market Update: Monetary policy tightens further triggering more asset reallocation

6/17/2022 4:10:24 PM

It was another harrowing week for investors and their portfolios. The realization that global central banks were accelerating tightening plans in an attempt to ward of surging inflation resulted in further carnage across nearly all asset classes. The die was cast on Monday when the Fed leaked its concerns about last week’s troubling inflation data, effectively greenlighting a 75 bps hike ahead of Wednesday’s FOMC meeting. US Treasury yields surged to new cycle highs and included eye popping jumps at the short end of the US curve, which destabilized stock markets further and induced some hand-wringing around Treasury market functioning. Before Wednesday’s Fed announcement the ECB felt the need to hold an emergency meeting to discuss and underscore its determination to deal with fragmentation though the rate normalization process.

The Fed followed through and did raise by 75 basis points, even though Chairman Powell had essentially ruled out such a large move at the last meeting six weeks prior. Importantly, the dot plot took up the median Fed funds rate forecast significantly. Fed officials singled they now wanted to see rates rise definitively into restrictive territory (~3.4%) by the end of this year, making it clear they are no longer going to be satisfied with stopping at ‘neutral’ to reassess. That did bring the Fed closer to market-based projections for rates and provided a brief respite in the selloff. A host of other global Central banks including in the UK and Brazil also tightened policy this week, but it was a surprise 50 bps hike by the Swiss National Bank that authored another leg lower for risk. The SNB also indicated it could intervene in FX markets both ways and was no longer singularly concerned about Franc strength. The news was not received well by capital markets, which saw another round of intense selling in both equity and bond markets. Some noted that the SNB’s significant holdings of high-profile US equities may have exacerbated the market indigestion.

US economic data added to investors’ jitters after readings for monthly housing starts & permits, the Philly Fed, Empire manufacturing, advanced retail sales, and weekly initial jobless claims all missed expectations by fairly wide margins. The deceleration in the data coupled with the incoming tide of rising rates fanned worries around growth and a possible recession. Those concerns coupled with growing speculation that the severe energy squeeze in Europe could prompt Western officials to put pressure on Ukraine’s Zelensky to come to the barging table. Crude oil prices rolled over and the energy complex served as a further drag on equity markets. The carnage in the crypto markets continued, with Bitcoin testing the $20K handle amid swirling speculation around forced liquidations by key players in the crypto/defi markets. The S&P plunged 5.8% this week, its biggest drop since March 2020, while the DJIA and Nasdaq each lost about 4.8%.

In corporate news this week, Kroger posted a beat on its top and bottom line, but reported shrinking margins as the grocer aimed to attract cost-conscious customers with more deals and private-label products. The real estate sector saw some layoffs, with Compass announcing plans to cut 10% of its workforce and Redfin following suit with an 8% reduction. Chemical products manufacturer Olin said it has experienced weaker than anticipated epoxy resin demand in North America and South America in Q2 and plans to halt production at one Texas facility.

Toyota suspended operations at some domestic plants amid further semiconductors parts shortages, lowering its June production outlook by 50K units. FedEx shares lifted sharply after raising its dividend by 50% and coming to an agreement with activist investor DE Shaw to add three new directors to its board. Warehouse leader Prologis announced it would acquire real estate agency Duke Realty in an all-stock deal valued at $26B as part of a move to gain properties in key markets like Southern California, South Florida, and New Jersey.


SUN 6/12
(CN) China Defense Minister Wei says will "fight to the very end" if anyone dares to try and split off Taiwan from China; China military officials repeatedly stated Taiwan Strait is not in international waters - press
(JP) Japan Chief Cabinet Sec Matsuno: Ready to take appropriate actions on FX market if needed; Nothing new in view expressed in US Treasury Dept latest currency report

MON 6/13
(CN) Beijing Sport Authority has suspended all sports events effective from today (June 13th) due to COVID control until further notice
BTC/USD Crypto lender Celsius pauses withdrawals, swap and transfers between accounts citing ‘extreme market conditions’ - TechCrunch
(FR) French Pres Macron's alliance Ensemble seen to win between 262-301 seats with 289 needed for outright majority following 1st round of legislative elections; Turnout hit a record low of 47%
*(UK) APR MONTHLY GDP M/M: -0.3% V +0.1%E (2nd consecutive contraction)
DPW.DE Said to be raising prices for some parcel categories - press
(CN) Beijing official: COVID-19 bar outbreak still risks spreading to community; Reports 45 local cases by 15:00 on June 13th
- Epidemic control at critical juncture
DRE Confirms to be acquired by Prologis in all-stock deal valued at $26.0B; Deal to create immediate accretion of approximately $310-370M from corporate general and administrative cost savings
(EU) Reportedly ECB increasingly determined not to divulge plans to tackle 'fragmentation' as it remains resolved to address bond market stress - press
(US) NY Fed takes $2.21T in RRP program at 0.80%; 97 participating and accepted counterparties (record high, surpassing $2.160T on Friday)
ORCL Reports Q4 $1.54 v $1.38e, Rev $11.8B v $11.6Be
*(US) CNBC'S LIESMAN: FED "VERY LIKELY" TO RAISE RATES BY 75BPS THIS WEEK
5019.JP Said to be closing unit Seibu Oil Refinery in Yamaguchi by end of March 2024 - press

TUES 6/14
*(UK) APR ILO UNEMPLOYMENT RATE: 3.8% V 3.6%E
AKZA.NL Cuts Q2 outlook citing effect of China lockdowns and the slower start to the EMEA DIY season; Notes negative Op income impact of €40M and says June's rebound is not enough yet; Accelerates adjustments in its cost base for H2
*(DE) GERMANY MAY FINAL CPI M/M: 0.9% V 0.9%E; Y/Y: 7.9% V 7.9%E
(CN) Beijing official: Beijing must go all out, its a race against time to block the spread of bar-linked Covid outbreak
(NL) ECB’s Knot (Netherlands, hawk): ECB must raise rates by >25bps in Sept and not limited to 50bps, if conditions remain the same
*(DE) GERMANY JUN ZEW CURRENT SITUATION SURVEY: -27.6 V -31.0E; EXPECTATIONS SURVEY: -28.0 V -26.8E
(US) As long speculated, US Pres Biden said to be leaning toward removing some products from the Trump administration's China tariffs list; Potential announcement expected as early as in June - Axios
MA Mastercard SpendingPulse forecasts 7.5%* growth for US Back-to-School Retail Sales; Est to be +18.3% vs 2019
CNM Reports Q1 $0.50 v $0.35e, Rev $1.60B v $1.06B y/y; Raises FY22 outlook
(US) White House confirms US Pres Biden to visit Israel and Saudi Arabia on July 13-16th
*(US) MAY PPI FINAL DEMAND M/M: 0.8% V 0.8%E; Y/Y: 10.8% V 10.9%E
WFC CFO: Mortgage banking income could be down 50% v Q1; Q2 trading will be up a little bit y/y - Morgan Stanley conf comments
COMP Said to cut ~10% of workforce due to slowdown in US housing market - press
RDFN Asking ~8% of workforce to leave the Co, could be facing years, not months of fewer home sales; To incur Q2 pretax charge of $9.5-10.5M - filing
OLN Experienced weaker than anticipated epoxy resin demand in North America and South America in Q2; Halts Freeport, TX plant production
*(CN) CHINA MAY INDUSTRIAL PRODUCTION Y/Y: +0.7% V -0.9%E; YTD Y/Y: 3.3% V 3.1%E

WEDS 6/15
(EU) ECB to hold ad hoc governing council meeting on Wed, June 15th to discuss current market conditions and recent sell-off in government bond markets
(CN) Shanghai to conduct mass testings across all districts during every weekend by end-July 2022 - press
NUE Guides Q2 $8.75-8.85 v $8.65e; Continue to benefit from robust demand in nonresidential construction markets
*(US) JUN EMPIRE MANUFACTURING: -1.2 V +2.3E
*(US) MAY ADVANCE RETAIL SALES M/M: -0.3% V +0.1%E; RETAIL SALES (EX-AUTO) M/M: 0.5% V 0.7%E
OMV.AT CEO: The Schwechat oil refinery (200K bpd) is running at ~20% capacity after earlier mechanical incident
(HK) JP Morgan: Macau gaming law largely unchanged from initial draft; low GGR implies bonds could trade more on dollar price than yields
*(US) JUN NAHB HOUSING MARKET INDEX: 67 V 67E (lowest since June 2020)
(US) Association of American Railroads weekly rail traffic report for week ending June 11th: 510K total units, -3.6% y/y
(US) Atlanta Fed GDPNow: Cuts Q2 GDP forecast to 0.0% from 0.9%
*(US) FOMC RAISES TARGET RANGE BY 75BPS TO 1.50-1.75% (AS SPECULATED); BALANCE SHEET REDUCTION TO PROCEED AT ANNOUNCED PACE; SEES ONGOING RATE HIKES TO BE APPROPRIATE
(US) Fed Chair Powell: We have resolve on price stability; We are moving expeditiously on rates - post rate decision prepared remarks
*(US) FED CHAIR POWELL: DOES NOT EXPECT 75BPS HIKES TO BE COMMON; EITHER 50BPS OR 75BPS RAISE SEEMS MOST LIKELY AT NEXT MEETING - POST RATE DECISION COMMENTS
*(AU) AUSTRALIA JUN CONSUMER INFLATION EXPECTATION: 6.7% V 5.0% PRIOR [highest since at least 2008]
ABT Said to have halted production of Elecare specialty baby formula, due to flooding in Michigan; expects the halt to last for a 'few weeks'

THURS 6/16
ASC.UK Issues Q3 trading update: Q3 Rev £983.4M v £987.9M y/y; Cuts FY22 Rev +4-7% (prior +10-15%)
(RU) Russia govt spokesperson Peskov: Russia and US are now at very, very hot point of confrontation
005930.KR Reportedly temporarily halting new procurement orders and asking multiple suppliers to delay or reduce shipments of components and parts for few weeks citing swelling inventories and inflation concerns - Nikkei
*(CH) SWISS NATIONAL BANK (SNB) RAISES KEY RATES BY 50BPS TO -0.25%; NOT EXPECTED; Do not rule out further rate hikes in foreseeable future to stabilize inflation
(CN) Beijing official: Efforts to contain the bar-linked COVID outbreak in Beijing has shown effect; Reports zero new community COVID cases on June 16th
*(TW) TAIWAN CENTRAL BANK (CBC) RAISES BENCHMARK INTEREST RATE BY 12.5BPS TO 1.50%; LESS-THAN-EXPECTED
(IN) India said to propose settling trade with Russia in Indian rupees (INR); Officials may agree plan as soon as next week - press
*(RU) RUSSIAN OFFICIAL: FURTHER ISSUES WITH GAS TURBINES FOR NORD STREAM 1 GAS PIPELINE MAY LEAD TO ITS SUSPENSION - RUSSIAN PRESS
TM To suspend operations at some domestic plants due to semi conductors parts shortages; Cuts June Production ~750K units (prior 800K units) - press
*(UK) BANK OF ENGLAND (BOE) RAISES BANK RATE BY 25BPS TO 1.25%; AS EXPECTED
*(UK) BOE JUN MINUTES: VOTED 6-3 TO RAISE BANK RATE BY 25BPS; (Haskel, Mann and Saunders dissented for a bigger 50bps hike as during May meeting)
JBL Reports Q3 $1.72 v $1.62e, Rev $8.3B v $8.21Be; Raises FY22 outlook; Notes solid demand in key areas of its business and expects ongoing momentum
KR Reports Q1 $1.45 v $1.28e, Rev $44.6B v $44.2Be; Raises slightly FY22 outlook
VAC Raises FY22 outlook; Continues to see very high owner occupancies at our resorts and expect adj development profit margin to remain strong for FY22
*(US) JUN PHILADELPHIA FED BUSINESS OUTLOOK: -3.3 V +5.0E (1st negative reading since May 2020); New Orders: -12.4 v 22.1 prior
*(US) INITIAL JOBLESS CLAIMS: 229K V 217KE; CONTINUING CLAIMS: 1.31M V 1.30ME
(EU) ECB chief Lagarde: ECB plans to put limit on bond spreads; Crisis tool will address irrational moves; Would kick in if spreads go too far, too fast - comments to Eurogroup ministers
ADBE Reports Q2 $3.35 v $3.30e, Rev $4.39B v $4.34Be; Cuts FY22 Rev and EPS outlook
X Guides Q2 $3.83-3.88 v $3.33e, adj EBITDA $1.6B v $1.29B y/y

FRI 6/17
TSCO.UK Reports Q1 Rev £13.6B, +2.0% y/y (LFL); Sees some early indications of changing customer behaviour as a result of the inflationary environment
(JP) BOJ Gov Kuroda: To continue with Yield Control (YCC) until inflation target is achieved; will not hesitate to ease further if needed - post rate decision press conference
TSCO.UK CEO: Seeing higher frequency of shopping trips but basket sizes are coming down - post earnings comments
(CN) Beijing official: Spreading risks decline for Beijing COVID outbreak
(CN) Shanghai govt offers a CNY10K subsidy to a car owner who scraps an old passenger car and purchases a pure EV from authorized retailers before Dec 31, 2022 - press
*(EU) EURO ZONE MAY FINAL CPI Y/Y: 8.1% V 8.1%E; CPI CORE Y/Y: 3.8% V 3.8%E
(EU) EU Commission confirms its opinion to grant EU candidacy status to Ukraine and Moldova
(RU) Russia Pres Putin: Trust in global currencies has been undermined by our partners - speech at annual economic forum
*(US) MAY INDUSTRIAL PRODUCTION M/M: 0.2% V 0.4%E; CAPACITY UTILIZATION: 79.0% V 79.2%E
*(US) MAY LEADING INDEX: -0.4% V -0.4%E
(US) Fed's George (FOMC voter, dissenter): I dissented at meeting because I viewed 75bps move as adding policy uncertainty simultaneous with start of balance sheet runoff
(US) Fed's Kashkari (dove, non-voter): I supported a 75bps hike in June and could support another 75bps hike in July; We must be cautious about too much front-loading on rate hikes

Saturday, June 11, 2022

China emerges from Covid lockdowns; Headline inflation still rising, pushing speculation that central banks will move rates even faster

TradeTheNews.com Weekly Market Update: China emerges from Covid lockdowns; Headline inflation still rising, pushing speculation that central banks will move rates even faster

6/10/2022 4:03:59 PM

Heading into this week investors seemed to be riding a wave of cautious optimism. The gradual reopening of the Chinese economy and all signs pointing to continued strength in the US consumer appeared to have put a floor under stocks. The US 10-year treasury yield remained below 3% inducing some bargain hunting in technology shares. The mood soured, however, as oil prices continued to climb and investors refocused on elevated inflation and central bank tightening. Thursday the ECB confirmed they would start raising rates by 25 basis points in July and perhaps boost the pace to 50 bps in September. European Treasury yields began rising aggressively and the Euro sold off. The spread between 10-year Italian and German government bonds, a widely followed barometer of eurozone financial stress, widened to the highest level since May 2020. US stock markets rolled over late in the session as well, after initial jobless claims jumped to the highest level since January, rekindling lingering stagflation worries ahead of key US inflation data.

Friday’s May CPI numbers were the gut punch many investors had feared. Headline consumer prices returned to the highest annual pace since 1981, spurred by surging energy and food prices. Airfares and a rebound in used car prices boosted the core component, but came alongside a sharp acceleration in shelter costs, which may be viewed as a red flag for the Fed. Interest rates led by the short-end popped, resulting in significant flattening and sporadic inversions across the US Treasury curve. The US 2-year yield jumped above 3% for the first time since 2008 and futures markets quickly began pricing in 50 bps hikes at each of the next three FOMC meetings. Equity markets were slammed with the S&P careening back towards 3900 for the first time in weeks. Decliners led advancers by an 11:1 margin on the NYSE while oil prices barely budged. For the week, the S&P lost 5.1%, the DJIA was down 4.6%, and the Nasdaq fell 5.6%, suffering their worst losses since the week ended Jan 21.

In corporate news this week, Target issued a profit warning as it plans to cut vendor orders and slash prices in a move to reduce its bloated inventory amid unusually high transportation and fuel costs. Apple announced it would enter the ‘buy now, pay later’ space, launching the new credit product everywhere Apply Pay is accepted. Scotts Miracle-Gro cut its guidance for the year even amid strong consumer retail sales as it expects declines in its higher margin fertilizer and grass seed units. In the hospitality sector, however, Marriott says it is not seeing any hits to demand from uncertainties surrounding the economy, with its Memorial Day RevPAR rates coming in well above 2019 levels. Airline stocks briefly took off on reports that the CDC will drop requirements for travelers to test Covid negative before entering the US.


SUN 6/5
(CN) Beijing to further ease COVID-related curbs, to permit indoor dining on Mon (Jun 6th); the resumption of indoor dining does not apply to Fengtai and certain parts of the Changping district - financial press
*(CN) CHINA MAY CAIXIN PMI SERVICES: 41.4 V 46.0E (3rd straight contraction)
MON 6/6
FAST Reports May net sales $589.2M, +23.5% y/y
AAPL Announces Buy Now Pay Later, will be available everywhere that Apple pay is accepted; Introduces IOS 16, will have new intelligence and personalization - WWDC conf
MAR CEO: Forward bookings in EU are now 50% above 2019 levels; We are not seeing any hits to demand from uncertainties surrounding economy - CNBC
(US) Reportedly SEC's Gensler to outline proposal for significant stock market structure reforms on June 8th - press
(UK) PM Boris Johnson wins Conservative Party confidence vote
TUES 6/7
(CN) Shanghai port's daily container throughput said to have returned to more than 95% of its normal levels; Cargo volume in the sea and airports continue to rise - Chinese press
*(DE) GERMANY APR FACTORY ORDERS M/M: -2.7% V +0.4%E; Y/Y: -6.2% V -4.1%E (3rd decline in a row)
UMC Reports May (NT$) Rev 24.4B, +42.1% y/y; YTD May Rev 110.7B, +37.2% y/y
(EU) EU countries and lawmakers have reached an agreement on single mobile charging port; EU common charging port to become USB-C by fall 2024
TGT Cuts Q2 Op margin ~2% (prior around 5.3%**), Guides H2 Op margin ~6% (prior guided FY22 ~6.0%); Plans to cut prices and address the impact of unusually high transportation and fuel costs
ASO Reports Q1 $1.73 v $1.40e, Rev $1.47B v $1.43Be; Cuts outlook; Authorizes $600M buyback (20% of market cap)
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +1.5% v -2.9% prior
(US) Energy Dept releases proposal to acquire $4.3B worth of enriched uranium from domestic sources in effort to cut dependence on Russia - press
*(US) APR CONSUMER CREDIT: $38.1B V $35.0BE
OI Raises Q2 >$0.65 v $0.58e (prior: $0.55-0.60)
2330.TW Chairman: Guides FY22 Rev +30% y/y (prior above mid to high end 20% in USD terms); Speeding up investment for capacity for advanced and specialty chips due to demand; 2NM chip development on schedule - General Shareholders' Meeting
WEDS 6/8
(RU) Russia said to consider increasing wheat export duties by 10% - Russian press
*(IN) INDIA CENTRAL BANK (RBI) RAISES REPURCHASE RATE BY 50BPS TO 4.90%; MORE-THAN-EXPECTED
CSGN.CH Issues trading update: Sees likely loss in Q2; To operate with 13.5% CET1 near term
(UR) Ukraine Agriculture Min Solskyi: Warning of catastrophic food price increases
(CN) Beijing official: Beijing reports zero community COVID cases for 5th straight day; Cut off the current and past transmission chain
(TR) Turkey Foreign Min Cavusoglu: Sees a a will to return to negotiations between Russia and Ukraine; Talks with Russia's Lavrov was fruitful; Turkey ready to adopt UN's reasonable plan regarding Ukraine grain
CF CF Fertilisers UK Announces Proposals to Restructure Operations to Enable Continued Supply of Fertiliser, Carbon Dioxide and Other Industrial Products to Customers in the UK
(IN) India reportedly could soon allow wheat exports of 1.2Mt stuck at its ports - financial press
MRNA Releases new clinical data on its Omicron-containing bivalent COVID booster candidate, mRNA-1273.214; Phase 2/3 trial met all primary endpoints
SMG Cuts FY22 $4.50-5.00 v $7.00e, US consumer sales -6% to -4% y/y (prior adj EPS low end of prior range)
(US) Association of American Railroads weekly rail traffic report for week ending June 4th: 476K total units, -2.8% y/y
(US) Atlanta Fed GDPNow: maintains Q2 GDP forecast at 0.9%
(US) Freeport LNG: Texas Liquefaction facility to be shut for at least 3 weeks following fire (~20% of US production cap)
*(CN) CHINA MAY TRADE BALANCE: $78.8B V $57.7BE; Exports +16.9% v 8.0%e
THURS 6/9
(CN) Beijing suspends all entertainment in Chaoyang district (largest in the city) citing coronavirus containment - State media; Beijing reports new bar cluster found after testing for COVID, according to later report
(RU) Russia State Duma deputy Delimkhanov: Russian special military operation in Ukraine would be completed by end-2022
(UK) UK Tobacco review confirms to recommend raising the legal smoking age to 21 from 18; Recommends a tobacco licence for retailers
(CN) Reportedly China's financial regulators have started early stage discussions on a potential revival of Jack Ma's Ant Group IPO as another measure to ease crackdown of tech industry - press
(CN) Shanghai City Official: Seven districts will carry out mass covid testing over the weekend
(CN) China Securities Regulatory Commission (CSRC): Not conducting any assessment or research work on reviving Ant Group's IPO; Will support eligible platform companies to list at home and abroad
NVAX Reportedly US FDA decision on Novavax's COVID vaccine may be delayed - CNBC
6688.HK (CN) China central leadership reportedly gave initial nod to Ant Group to revive IPO plans in Shanghai and Hong Kong - press
*(EU) ECB LEAVES 7-DAY MAIN REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED; Signal to hike rates by 25bps at July meeting and 'gradual, but sustained' path of further rate increases beyond Sept 2022 to be appropriate
*(EU) ECB ENDS APP BOND BUYING PROGRAM; EFFECTIVE JULY 1ST, as expected
*(EU) ECB UPDATES STAFF PROJECTIONS: Raises 2022-2024 inflation forecasts, cuts GDP outlook
NTR.CA Plans to increase potash production capability by 18M tons by 2025; Plans additional $2B share buyback; To hire 350 people
*(US) INITIAL JOBLESS CLAIMS: 229K V 206KE (highest since mid Jan); CONTINUING CLAIMS: 1.31M V 1.30ME
(EU) ECB chief Lagarde: Policy is not about catching up to the Fed; Focused on inflation within the region and bringing it back to target in the medium term - Q&A
(EU) Some ECB policy makers said to have wanted a 50bps hike in July; saw no need for spread-fighting tool yet - press
*(US) Q1 FINANCIAL ACCOUNT HOUSEHOLD CHANGE IN NET WORTH: -$0.544T V +$4.86T PRIOR (1st decline since Q1 2020)
*(US) TREASURY $19B 30-YEAR BOND REOPENING DRAWS 3.185% V 2.815% PRIOR; BID TO COVER 2.35 V 2.30 PRIOR AND 2.33 OVER LAST 8 REOPENINGS
(US) NY Fed takes $2.142T in RRP program at 0.80%; 101 participating and accepted counterparties (record high, surpassing $2.140T yesterday)
(KR) Said that striking truckers have stopped and turned around non union truckers that tried to enter into the Petrochemical complex in Ulsan - Press
DOCU Reports Q1 $0.38 v $0.46e, Rev $589M v $581Me; Cuts FY billings outlook
FRI 6/10
TSM Reports May (NT$) Rev 185.7B v 112.4B, +65% y/y
(JP) Japan Top Currency Official Kanda: Will watch FX moves with more urgency and its impact upon economy; To respond appropriately as needed
*(RU) RUSSIA CENTRAL BANK (CBR) CUTS KEY ONE-WEEK AUCTION RATE BY 150BPS TO 9.50%; MORE-THAN-EXPECTED; Brings key rate back to pre-Ukraine war level
(EU) NATO Sec Gen Stoltenberg to visit Sweden and Finland on June 12-13th - press
(US) CDC to lift requirement for travelers to test COVID negative before entering the US, effective June 12th - press
(US) JUNE PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 50.2 V 58.1E (record low)
(US) Atlanta Fed May Sticky-CPI annualized 7.5% v 7.1% m/m, core 7.3% v 7.1% m/m
(US) USDA WASDE Crop Report End 2021/2022 US Stocks (M bu): Soybeans: 205 v 217e; Corn: 1,485 v 1,438e; Wheat: 655 v 661e
(SA) CNN reporter: Senior US officials have conveyed to Saudi Arabia that the US is prepared to move forward with a 'reset of the relationship'
(US) NY Fed takes $2.16T in RRP program at 0.80%; 99 participating and accepted counterparties (record high, surpassing $2.140T yesterday)

Saturday, June 4, 2022

Inflation continues to put tensions on the market; Central bankers ready to keep tightening policy

TradeTheNews.com Weekly Market Update: Inflation continues to put tensions on the market; Central bankers ready to keep tightening policy

6/3/2022 4:01:52 PM

Stock markets came out of the Memorial Day break riding some momentum, but worries about inflation and growth resurfaced as the week progressed. Eurozone CPI hit another record high, resulting in ECB members ratcheting up rhetoric about the path of rates which are set to starting rising next month. China appeared to be steadily coming out of the lockdown measures in Shanghai and Beijing prescribed by President Xi’s zero tolerance directive. Regardless, Chinese PMI data stayed in contraction territory for the third straight month amid another deluge of stimulative policy measures from Chinese officials. Overall the mood was dampened by noteworthy comments from several US corporate luminaries. JP Morgan CEO Dimon had tongues wagging after his tone changed drastically from where it was just one week ago at the bank’s investor day. He noted that investors had better brace themselves for an economic “hurricane” that could be coming despite things still looking reasonably bright. His dour outlook was reinforced by commentary from BlackRock’s CEO Fink and Tesla’s mercurial leader Elon Musk. Friday’s May jobs report sent Treasury yields to the highs of the week after payrolls topped expectations and April was revised higher. Though, largely in line with expectations the overall report seemed to support what we heard from the Federal Reserve’s recently minted vice-chair Brainard, who on Thursday indicated she really didn’t expect to see the case for a Fed pause to develop, even after they raise rates 100 basis points more over the next two meetings. After another strong employment report on Friday, President Biden said we are moving to a period of more ‘steady’ growth and should not expect to see ‘blockbuster’ jobs data every month going forward.

Oil prices rose despite a bit of an olive branch from OPEC+ producers. At their regularly scheduled meeting delegates agreed to raise production by roughly 650K bpd in July and August, up from the previous agreed upon deal to bring on roughly 430K bpd/month. The news was viewed as a marginal concession to the Biden Administration as speculation swirled that POTUS was set to announce plans to travel to Saudi Arabia and meet with Crown Prince MBS. The US dollar traded mostly sideways, but held within striking distance of recent multi year highs as various corporations, headlined by Microsoft, acknowledge that the surging Greenback remains a steady headwind to their 2022 forecasts. For the week, the S&P slipped 1.2%, the DJIA lost 1%, and the Nasdaq was off 1%.

In other corporate news this week, Salesforce Inc. topped analyst estimates and raised its earnings forecast, noting it so far had not seen any material impacts from the broader economic environment. Hormel beat street consensus but lowered its EPS outlook and said it expects some large Q3 supply gaps in its turkey supply chain caused by flock losses to date.

Capri Holdings saw strong profits and sales this quarter, though the fashion company cut its outlook for the rest of the year. Furniture giant RH gave a similar outlook, posting an excellent quarter but cutting its FY22 guidance after seeing softer demand in the last few months.

Tesla CEO Musk in an email to employees said the EV maker would pause all hiring worldwide and that the company needed to make a 10% reduction in salaried staff. Meta COO Sheryl Sandberg announced she would be stepping down, though she planned to remain on the board. Harley Davidson confirmed it planned to resume production on June 6th after a two-week-long suspension caused by supplier issues. A report said that Boeing was also suffering supply chain constraints, causing a pause in 737 production for 10 days in last month.


SUNDAY 5/29
(CN) Shanghai unveils policies to support domestic economy; More tax cuts and reducing rents; To boost financial support to foreign trade firms; Vows measures to last till end-2022; the measures will ease the burden for cos. by CNY300B or $44.8B [including measures announced in Mar]
- 05/29 (UR) US Biden Administration reportedly approved sending long-range mobile rocket launchers (MLRS) to Ukraine; Likely be announced during upcoming week - NYT
05/29 (EU) EU envoys said to discuss the revised 6th package of Russia sanctions which excludes Druzhba oil pipeline today, May 29th - press
05/29 TSLA Reportedly production of Tesla’s Shanghai gigafactory has now recovered to the pre-lockdown level; Expected to be back to normal levels in June 2022 - press
05/29 (DE) Germany Econ Min Habeck: The unity of EU countries regarding sanctions against Russia is beginning to crumble
05/29 (CN) Beijing reopened parts of its public transportation, along with certain malls; Health official said COVID outbreak is under control, but risk of rebound exists - financial press
MONDAY 5/30
*(DE) GERMANY MAY CPI NORTH RHINE WESTPHALIA M/M: 0.9% V 0.6% PRIOR; Y/Y: 8.1% V 7.7% PRIOR
(DE) Germany's coalition govt and the conservative CDU/CSU alliance agree on €100B boost to the Germany’s military spending
(CN) China's Immigration Administration: Containers ships will be allowed to call on a different port than scheduled in emergency situations
(CN) China Finance Ministry: Affirms current subsidy policy for purchase of new energy vehicles will be terminated on Dec 31, 2022; Will continue to improve subsidy policy for purchase of NEVs
*(DE) GERMANY MAY PRELIMINARY CPI M/M: 0.9% V 0.5%E; Y/Y: 7.9% V 7.6%E (highest annual pace since start of the monthly statistic in 1963)
(UR) Pres Biden: US will not send Ukraine rocket systems that can reach into Russia
(US) Fed's Waller (hawk, voter): Fed should raise interest rates by 50bps each time at more than its next two meetings; Inflation remains alarmingly high
*(EU) EU leaders agree in principle on oil sanctions against Russia; EU agrees to ban 90% of Russia oil imports by the end of 2022
*(CN) CHINA MAY MANUFACTURING PMI (GOVT OFFICIAL): 49.6 V 48.9E [3rd straight month of contraction]
TUESDAY 5/31
(CN) China Cabinet issues various policies to stabilize the economy; to continue pushing actual loan rates to decline - financial press
DSMN.NL DSM and Firmenich to merge in stock-cash deal; DSM's shareholders to own in aggregate 65.5% of DSM-Firmenich
*(EU) EURO ZONE MAY CPI ESTIMATE Y/Y: 8.1% V 7.8%E; CPI CORE Y/Y: 3.8% V 3.6%E (record high)
*(IT) ITALY MAY PRELIMINARY CPI M/M: 0.9% V 0.6%E; Y/Y: 6.9% V 6.3%E
*(US) MAY CONSUMER CONFIDENCE: 106.4 V 103.8E
*(US) MAY DALLAS FED MANUFACTURING ACTIVITY INDEX: -7.3 V +1.5E
CRM Reports Q1 $0.98 v $0.93e, Rev $7.41B v $7.37Be
HPQ Reports Q2 $1.08 v $1.06e, Rev $16.5B v $16.1Be
(US) Supreme Court temporarily blocks Texas social media law that had restricted 'viewpoint discrimination' by Twitter and Facebook
CRM Exec: So far not seeing any material impacts from the broader economic environment, after speaking with 100's of customers - earnings call comments
(US) Treasury Sec Yellen: I was wrong last year on Inflation Path; Inflation #1 concern for President Biden who shares priority with US Fed to slow inflation
WEDNESDAY 6/1
(HK) Macau May Casino Rev (MOP) 3.34B v 2.68B prior; Y/Y -68.0% v -68.1% prior
*(IT) ITALY MAY MANUFACTURING PMI: 51.9 V 53.6E (23rd month of expansion but lowest since Jun 2020)
*(EU) EURO ZONE APR UNEMPLOYMENT RATE: 6.8% V 6.8%E
DASH Raises Q2 Marketplace GOV $12.5-12.7B ($12.8-13.0B inc Wolt) (prior $12.1-12.5B), Affirms Adj EBITDA $0-100M; Completes acquisition of Wolt
CPRI Reports Q4 $1.02 v $0.82e, Rev $1.49B v $1.40Be; Authorizes new $1B repurchase program (14% market cap)
SPGI After cutting 4 wks ago; Suspends FY22 outlook due to extraordinarily weak market conditions for its Ratings Business; Expects to reintroduce with Q2 earnings
*(US) MAY FINAL S&P/MARKIT MANUFACTURING PMI: 57.0 V 57.5E
*(US) MAY ISM MANUFACTURING: 56.1 V 54.5E; PRICES PAID: 82.2 V 80.5E
*(US) APR JOLTS JOB OPENINGS: 11.4M V 11.3ME
JPM CEO Dimon: Best protection against a downturn is a conservative balance sheet; Better brace yourself; Economy is like a hurricane - Bernstein conf comments
(US) Association of American Railroads weekly rail traffic report for week ending May 28th: 514K total units, -3% y/y
(US) Atlanta Fed GDPNow: Cuts Q2 GDP forecast to 1.3% from 1.9%
FB Sheryl Sandberg stepping down as COO; CEO Zuckerberg says Javier Olivan will become Meta's new COO - press
(CN) China said to have ordered state-owned policy banks to establish CNY800B (~$120B) line of credit for infrastructure projects - press
(CN) China Finance Minister Liu Kun : China will fully utilize its fiscal tools to achieve its goals for carbon emissions peaking and then becoming neutral - Economic Daily Op-Ed
(SA) Saudi Arabia reportedly indicated to its western allies that it is prepared to pump more oil if Russia output falls substantially under sanctions - FT
THURSDAY 6/2
*(CH) SWISS MAY CPI M/M: 0.7% V 0.3%E; Y/Y: 2.9% V 2.6%E (4th month above target and fastest annual pace in 14 years)
DTG.DE Exec: Global semiconductor shortage is easing; Factories working though order backlog
(CN) China National Health Commission (NHC) official Mi Feng Warn against excessive COVID curbs in low-risk areas
(TW) Taiwan bans exporting chips operating higher than 25 MHz and offering performance higher than 5 GFLOPS to Russia and Belarus
V Reports Apr/May volume (ex-Russian operations): +40% v 2019, +2% m/m - filing
HRL Reports Q2 $0.48 v $0.46e, Rev $3.10B v $3.03Be; In Q3 expects large supply gaps in the Jennie-O Turkey Store vertically integrated supply chain, caused by flock losses to date
(CN) Beijing city official: Will resume domestic and international flights to and from the city in an orderly way
*(US) Q1 FINAL NONFARM PRODUCTIVITY: -7.3% V -7.5%E; UNIT LABOR COSTS: 12.6% V 11.6%E
*(US) INITIAL JOBLESS CLAIMS: 200K V 210KE; CONTINUING CLAIMS: 1.31M V 1.34ME
OPEC JMMC recommends 648K bpd increment for both July and Aug (v current 432K)
MSFT Cuts Q4 $2.24-2.32 v $2.34e, Op $20.6-21.3B, Rev $51.9-52.7B v $52.9Be (prior $2.28-2.35, Op $20.90-21.60B, Rev $52.4-53.2B) citing FX headwinds
(US) Fed’s Brainard (vice chair): Right now very hard to see case for a pause, seeing some signals of strength on economy but also some signs of cooling - CNBC
V CEO: Inflation is not having obvious impact on consumer spending
COST Reports May total SSS +11.8% (ex-gas and FX)
(SA) President Biden plans to travel to Saudi Arabia and will meet Saudi Crown Prince MBS; Will add the visit to a previously scheduled trip to Europe and Israel - NYT
(CN) Reportedly Russian officials are frustrated by the level of China's support; China chafes at Russia's requests, leaders in China want to expand assistance for Russia without triggering US sanctions - Washington Post
(US) Pres Biden: Calls for a ban on assault weapons and high-capacity magazines; There is a serious mental health crisis in the country, and we need more mental health services
FRIDAY 6/3
(CN) China May Vehicle Sales 1.77M, -17.1% y/y, +49.6% m/m - CAAM
TSLA *CEO MUSK PAUSES ALL HIRING WORLDWIDE; NEED TO MAKE ABOUT 10% REDUCTION IN STAFF - PRESS CITING EMAIL STATEMENT
(EU) EU council formally adopts 6th package of sanctions against Russia; Confirms phasing out of Russian oil will take from 6 months for crude oil to 8 months for other refined petroleum products
(DE) German Network Regulator: 40% discount agreed for entry points from LNG terminals agreed; effective from 2023
(US) Biden administration reportedly in talks with ally countries on tech completion alightment against China - US financial press
(EU) EU countries reportedly to meet on June 7th to fine tune plan on single mobile charging port; Likely to reach an agreement - financial press
(US) May preliminary Class 8 truck orders 13.3K, -13% m/m, -43% y/y - FTRintel.com (lowest since Nov 2021)
*(US) MAY CHANGE IN NONFARM PAYROLLS: +390K V +318KE
*(US) MAY UNEMPLOYMENT RATE: 3.6% V 3.5%e; Labor Force Participation Rate: 62.3% up 0.1% m/m, inline
*(US) MAY ISM SERVICES INDEX: 55.9 V 56.5E
BA Reportedly paused 737 production for 10 days in May due to supply chain constraints - press