Monday, September 5, 2022

Headwinds grip markets again, capped by Russia gas supply antics, overshadowing a constructive jobs report

TradeTheNews.com Weekly Market Update: Headwinds grip markets again, capped by Russia gas supply antics, overshadowing a constructive jobs report

9/2/2022 4:02:25 PM

After finding resistance at the declining 200-day moving averages in mid-August, US stock markets continued to backtrack heading into September. By mid-week indices had retraced nearly half way back to the June lows and were trading below their 100-day moving averages which many opined was typical bear market behavior. Chairman Powell’s blunt message from Jackson Hole continued to reverberate globally with expectations for ECB and BOE tightening ratcheting higher which in turn pushed interest rates up and propelled the US dollar to new two decade highs. The US 2-year yield topped 3.5% for first time in 15-year years and the benchmark 10-year climbed to 3.25%. Geopolitics continued to add to the wall of worry as well. New China Covid lockdowns were introduced while Taiwan tensions festered and the US imposed a new license requirement for the export of high end semiconductor chips. The Russian war in Ukraine showed no signs of cooling as Gazprom’s “maintenance” on the Nord Stream 1 pipeline continued to halt the flow of gas into Europe. Also, rhetoric picked up from both sides heading into a G-7 meeting where leaders were set to introduce a price cap on Russian oil. Adding to the ominous landscape were a slew of PMI readings in Asia and Europe suggesting economies there remained in contraction territory.

The August US employment report was encouraging on several fronts, resulting in a rebound in risk appetite on Friday after buyers emerged late in the previous (Sept 1st) session. Fed officials will likely be pleased with the moderation seen in wage growth and perhaps the uptick in the unemployment rate. Reassuringly though, that unemployment rise was accompanied by a 0.3% rise in the labor force participation rate, providing some reason to hope that rising supply can be at least part of the solution to the current supply/demand imbalance in the labor market. Nevertheless, the data is unlikely to alter the Fed’s message, namely it will remain singularly focused on bringing inflation back under control by lifting the funds rate towards or above 4% into next year. Friday also saw European natural gas prices continue to back away from the current cycle highs, which have been inversely correlated with risk assets of late. For the week, the S&P lost 3.3%, the DJIA was off 3%, and the Nasdaq dropped 4.2%.

In corporate news this week, Nvidia shares dropped after it disclosed the US set new imits on exports of two of its most advanced AI chips to China, which could cost the chipmaker $400M in potential sales in Q3. Seagate slashed its Q1 outlook amid weaker economic trends in Asia and more supply chain disruptions. Netflix reportedly is setting ad prices for its new ad-supported tier at levels substantially higher than other platforms, as the streaming giant aims to launch the new offering to customers on the first of November. FDA authorized next-generation Omicron-specific COVID boosters this week, as it plans to roll out a combined 175M doses from Moderna and Pfizer-BioNTech this fall. Royal Caribbean, in an industry-first, said it planned to use SpaceX's Starlink to provide high-speed internet onboard its full cruise fleet.


MON 8/29
European gas futures fell down 13% (most since Apr 2022) after Germany said its gas storage is filling up faster than planned ahead of winter
(DE) German Econ Min Habeck: Gas storage around 83%, we can wait for the market to calm down; Will not have a Lehman effect on gas market
(RU) Pro-Russian Telegram channels confirm Ukrainian counteroffensive in many areas of Kherson region; Notes there is a big risk of losing Kherson, many losses among Russian troops
(CZ) Czech Industry Min: Formally calls for EU emergency energy meeting for Fri, Sept 9th; Propose to cap prices of gas used for power generation
(EU) EU Commission President Von der Leyen: EU preparing power market emergency intervention, working on structural reform of power market
*(US) AUG DALLAS FED MANUFACTURING ACTIVITY INDEX: -12.9 V -12.7E
(US) FDA reportedly to authorize next-generation COVID boosters this Weds; Plans to roll out a combined 175M doses of new boosters from Moderna and Pfizer-BioNTech - Politico
TUES 8/30
*(DE) GERMANY AUG CPI NORTH RHINE WESTPHALIA M/M: 0.3% V 1.1% PRIOR; Y/Y: 8.1% V 7.8% PRIOR (highest annual pace since 1963)
(CN) Sichuan and Chonqing provinces in China said to have resumed power for all industrial and business on Aug 30th - press
(IQ) Iraq State Organization for Marketing of Oil (SOMO): Oil exports operations not affected by recent incidents; Have capacity to boost exports, can increase exports to Europe if asked
FSLR To invest up to $1.2B in scaling production of American-made responsible solar by 4.4 GW; To build new, 3.5 GW manufacturing facility in the US Southeast; expected to commence production in 2025
(CN) China's 20th National Congress of the Chinese Communist Party said to be held on Oct 16th - press
BBY Reports Q2 $1.54 v $1.29e, Rev $10.3B v $10.2Be; Commences an enterprise-wide restructuring initiative; Maintains paying quarterly dividend at $0.88/shr
*(DE) GERMANY AUG PRELIMINARY CPI M/M: 0.3% V 0.4%E; Y/Y: 7.9% V 7.8%E (matches highest annual pace seen this year and since start of the monthly statistic in 1963)
(US) Nevada reports Jul casino gaming Rev $1.32B, -3.2% y/y; Las Vegas strip Rev $774M, -2.4% y/y
*(US) JULY JOLTS JOB OPENINGS: 11.239M V 10.375ME
(EU) EU Commission President Von der Leyen: EU has reached average 80% gas storage target
(US) Joe Biden files papers to run for re-election in 2024 - press
V August US payments volume on a year-over-year basis was up 11%, flat with July, while Credit and Debit grew 17% and 7%, respectively, both up 1 point from July
RCL To use SpaceX's Starlink in an industry first to provide high-speed internet onboard full cruise fleet
HPQ Reports Q3 $1.04 v $1.04e, Rev $14.7B v $15.5Be; Cuts FY outlook
*(CN) CHINA AUG MANUFACTURING PMI (GOVT OFFICIAL): 49.4 V 49.2E (2nd straight contraction)
(JP) Japan PM Kishida: No change in stance to reduce dependence on nuclear; safety remains prerequisite for using nuclear power
WEDS 8/31
*(FR) FRANCE AUG PRELIMINARY CPI M/M: 0.4% V 0.6%E; Y/Y: 5.8% V 6.1%E
(CN) China Foreign Ministry Spokesperson Zhao: China opposes US Arizona governor's visit to Taiwan
*(DE) GERMANY AUG NET UNEMPLOYMENT CHANGE: +28.0K V +28.5KE; UNEMPLOYMENT CLAIMS RATE: 5.5% V 5.4%E
*(IT) ITALY AUG PRELIMINARY CPI EU HARMONIZED Y/Y: 9.0% V 8.2%E (EARLY RELEASE)
(DE) German Chancellor Scholz: Early steps on energy security mean we will get through winter; Will take measures to ensure energy prices do not go through the roof - briefing on energy situation
BBBY Discloses it may offer, issue and sell shares of indeterminate amount - filing
(CN) China reportedly seeks to quicken process of expanding domestic demand; To attract more private investment - press
*(US) AUG ADP EMPLOYMENT CHANGE: +132K V +300KE; Notes job growth slowed for second-straight month in Aug
STX Cuts Q1 EPS meaningfully below $1.20 v $1.41e, Rev $2.0-2.2B v $2.60Be (prior $1.20, Rev $2.35-2.65B); Weaker economic trends in certain Asian regions have amplified customer inventory corrections and supply chain disruptions
(US) Association of American Railroads weekly rail traffic report for week ending Aug 27th: 512K total units, +1.4% y/y
COST Reports Aug total SSS +8.7% (ex-gas and FX); Q4 total SSS +10.4% (ex-gas and FX), Net Sales $70.8B v $61.4B y/y
NVDA US govt imposes a new license requirement, effective immediately, for any future export to China and Russia of A100 and H11 integrated circuits; May impact ability to complete its development of H100 and may require co to transition certain operations out of China - filing
NFLX Aims for Nov 1st launch of ad-supported service; Buyers say ad prices are substantially higher than most other platforms - press
(CN) Chengdu city, China [21M residents] announces lockdown; To conduct mass COVID testing from Sept 1-4th
THURS 9/1
(HK) Macau Aug Casino Rev (MOP) 2.2B v 0.4B prior; Y/Y -50.7% v -95.3% prior (-47.5%e)
(TW) Taiwan Defence Ministry: Shot down new 'unidentified' civilian drone in Kinmen offshore island [**Note: first reported it was Chinese drone]
*(ES) SPAIN AUG MANUFACTURING PMI: 49.9 V 48.5E (2nd consecutive contraction)
(TW) Taiwan Defense Ministry: China continues to strengthen its combat preparedness for an attack on Taiwan; China's drills have expanded beyond first island chain, aim is to stop foreign forces from interfering in attack on Taiwan
(EU) EU said to be looking at all possibilities to intervene in energy market, including energy price caps, windfall profit taxes and electricity demand reduction tools - press
*(IT) ITALY AUG MANUFACTURING PMI: 48.0 V 48.1E (2nd straight contraction and lowest reading since June 2020)
*(EU) EURO ZONE JULY UNEMPLOYMENT RATE: 6.6% V 6.6%E
(DK) Denmark Aug PMI Survey: 48.0 v 38.1 prior
(HK) Macau reportedly plans to gradually reopen the city to foreign travelers - press
(CN) China urges ships to return to ports as Super Typhoon Hinnamnor (equivalent of a Category 5 hurricane) approaching mainland China - press
*(CN) CHINA PBOC CUTS RATE ON STANDING LENDING FACILITY (SLF) BY 10BPS, Effective Aug 15th (first cut since Jan 2022)
HRL Reports Q3 $0.40 v $0.41e, Rev $3.03B v $3.07Be; Cuts FY22 EPS, Raises Rev outlook; Expects elevated cost inflation to persist
*(US) Q2 FINAL NONFARM PRODUCTIVITY: -4.1% V -4.3%E; UNIT LABOR COSTS: 10.2% V 10.5%E
*(US) INITIAL JOBLESS CLAIMS: 232K V 248KE; CONTINUING CLAIMS: 1.438M V 1.44ME
*(US) AUG FINAL S&P/MARKIT MANUFACTURING PMI: 51.5 V 51.3E
(US) Atlanta Fed GDPNow: raises Q3 GDP to 2.6% from 1.6% prior
AVGO Reports Q3 $9.73 v $9.62e, Rev $8.46B v $8.41Be
(IR) US said to call Iran response to the Nuclear talks 'not constructive', cites the US State Dept; Senior Biden administration official said to note negotiation parties appear to be moving backwards [no further details disclosed] - Politico
FRI 9/2
(DE) More German press reports circulating that Germany leans towards extending lifespan of its nuclear plants
UN FAO July World Food Price Index: 138.0 v 140.9 prior (5th straight decline)
(EU) G-7 said to back plan to introduce price cap on Russian oil and announce it this afternoon; To become effective Dec 5th, same day as EU embargo - FT
*(US) AUG UNEMPLOYMENT RATE: 3.7% V 3.5%E; Labor Force Participation Rate: 62.4% v 62.2%e
*(US) AUG CHANGE IN NONFARM PAYROLLS: +315K V +298KE
(US) AUG AVERAGE HOURLY EARNINGS M/M: 0.3% V 0.4%E; Y/Y: 5.2% V 5.3%E
Transport of gas to the Nord Stream pipeline has been completely halted after oil leakage was detected during routine maintenance works; No timeframe for restart of gas supply through the pipeline - Gazprom statement

Sunday, August 28, 2022

Market optimism dented by tough talk from central bankers

TradeTheNews.com Weekly Market Update: Market optimism dented by tough talk from central bankers

8/26/2022 4:07:16 PM

Markets opened this week with stocks still under pressure after the S&P 500 failed to hold the 200-day moving average last week. Surging natural gas prices, a backup in bond yields, and a continued rally in the US dollar -- highlighted by the Euro’s move away from parity -- coincided with languishing equity enthusiasm. By mid-week, equity sentiment picked up, helped along by softer US economic readings which helped cap the rise in rates while providing optimism Chairman Powell could offer up something for the bulls in his much anticipated speech from Jackson Hole later in the week. Housing data in particular continued to show significant deceleration while July PCE saw the first m/m decline since April of 2020. Encouraging signals of out China helped turn around equity sentiment too. Chinese officials continued to talk up the idea of stimulating their economy while also providing marginal signs that their zero-Covid policy may be in the early stages of softening. Also US listed Chinese names surged late in the week after US and Chinese officials reached a long-awaited agreement on audit inspections, potentially allowing those securities to keep their dual listings.

Stocks rallied into the Fed Chair’s speech on Friday morning as investors largely looked past a chorus of Fed officials who continued to push back on the notion of a Fed pivot, and instead emphasizing that, if the data supports it, the Fed could pause once rates get into restrictive territory next year. Stocks swooned to new lows after Powell’s speech underscored the Fed is nowhere near done beating back inflation. He echoed his colleges in affirming rates still need to get into restrictive territory quickly and stay there for an extended period to bring inflation back in line, while importantly also acknowledging it will cause some pain for both businesses and households. Fed officials subsequently applauded his message, as well as perhaps tacitly embracing the stock market’s “painful” trading response. ECB hawks also came out in force on Friday to push more aggressive rate policy and QT for the euro zone. The long end of the US curve rallied while short rates ticked up and futures markets once again priced in better odds the Fed will raise by 75 bps at the September meeting. US indices closed out the week near the lows of the month and the US dollar was on the rise. For the week, the S&P lost 4%, the DJIA was off 4.2%, and the Nasdaq tumble 4.4%.

Retail and tech names were prominent in the corporate news this week. Macy’s shares rose after cutting forecasts as investors breathed a sigh of relief that results had not been worse. Gap stock climbed after posting an EPS beat amid improving sales trends, though elevated inventories remain a problem. After issuing an earnings warning two weeks ago, Nvidia posted both a top and bottom line miss as its decline in gaming revenue was larger than anticipated. Snowflake shares popped after reporting a big sales beat as its cloud services remained strong. Salesforce fell midweek despite announcing its “first ever” stock buyback program after trimming its FY outlook.

Twitter saw some weakness after a former security chief disclosed complaints of major security problems at the social media company. Intel signed an agreement with Brookfield to finance semiconductor factories in Arizona. Amazon was said to be among the bidders for healthcare platform Signify Health, amid other reports that the retail giant planned to shutter its own telehealth offerings. Deal talks between Seagen and Merck reportedly hit a snag amid disputes over pricing, following reports of a $200/shr offer back in early July.


SUN 8/21
World Health Organisation (WHO): New COVID cases have jumped by 15% and deaths by 35% globally in the last few weeks; More variants with such intense circulation will be seen in the coming days and doctors are noting increasing numbers of people who have been infected with BA.2 becoming infected again after four weeks by other variants
SGFY Amazon said to be among the bidders for Signify Health; UnitedHealth said to bid >$30/share for the co. [closing price at $21.20/share] - US financial press
(RU) UN permanent representative of Russia Gatilov: Russia believes that it will not work to end the war through negotiations and preparing for a protracted conflict - FT
*(CN) CHINA PBOC MONTHLY LOAN PRIME RATE (LPR) SETTING: CUTS BOTH 1-YEAR AND 5-YEAR RATES (amounts different than expected)
USD/CNY (CN) China PBOC sets Yuan reference rate: 6.8198 v 6.8065 prior (weakest since Sept 2020)
MON 8/22
(DE) German Econ Min Habeck: Must expect Russia to further tighten gas supplies this winter, have a good chance to get through the winter without drastic energy measures
F Georgia jury delivers $1.7B verdict against Ford over wrongful death stemming from 2014 rollover crash involving the 2002 Ford Super Duty F-250 pickup - press
(EU) Reportedly senior EU officials see there will likely be a “crunch point” in Ukraine support in the fall or early winter, but EU is unlikely to step back from its commitment to Ukraine - Politico
(TW) Taiwan July Export Orders Y/Y: -1.9% v +6.2%e; M/M: -7.8%; Sees Aug export orders -3.7% to -0.9% Y/Y
EUR/USD Tests parity against US dollar for the first time since July 13th
ENI.IT Announces a significant gas discovery offshore Cyprus; Preliminary estimates indicate about 2.5TCF (trillion cubic feet) of gas in place
(EE) Estonia Foreign Ministry: The 8th package of EU sanctions should include a comprehensive embargo on the supply of energy resources from Russia, as well as finally separate all Russian banks from the SWIFT system
(CN) China reportedly plans CNY200B ($29.3B) in special loans to troubled developers - financial press
*(SA) SAUDI ENERGY MIN: OPEC+ MAY NEED TO TIGHTEN OUTPUT TO STABILIZE THE MARKET; THE OIL FUTURES 'DISCONNECT' MAY FORCE OPEC+ ACTION
PANW Reports Q4 $2.39 v $2.28e, Rev $1.55B v $1.54Be; Announces 3-for-1 stock split
USD/CNY (CN) China PBOC sets Yuan reference rate: 6.8523 v 6.8198 prior (weakest setting since late Aug 2020)
TUES 8/23
*(FR) FRANCE AUG PRELIMINARY MANUFACTURING PMI: 49.0 V 49.0E (2nd straight contraction and(lowest print since May 2020)
UNG *US NATURAL GAS FUTURES HIT $10 (1ST TIME SINCE 2008)
*(EU) EURO ZONE AUG PRELIMINARY MANUFACTURING PMI: 49.7 V 49.0E (2nd straight contraction)
*(UK) AUG PRELIMINARY MANUFACTURING: 46.0 V 51.0E (1st contraction in 27 months and lowest since May 2020)
M Reports Q2 $1.00 v $0.85e, Rev $5.60B v $5.48Be; Cuts outlook to incorporate risks related to increased macroeconomic pressures
DKS Reports Q2 $3.68 v $3.52e, Rev $3.11B v $3.07Be; Raises mid-points FY22 outlook
INTC Signs agreement with Brookfield to jointly invest up to $30B in leading-edge chip factories in Arizona; Expected to be accretive to Intel’s EPS during the construction and ramp phase
*(US) AUG PRELIMINARY S&P/MARKIT MANUFACTURING PMI: 51.3 V 51.8E (Lowest since July 2020)
*(US) AUG RICHMOND FED MANUFACTURING INDEX: -8 V -4E
OPEC+ reportedly could lean towards cutting oil output when and if Iran oil production returns to the market, according to OPEC+ sources - press
(US) Freeport LNG spokesperson: Restart is progressing in the right direction; Anticipated that initial production can commence in early to mid-November; To be capable of 100% of capacity by March 2023
INTU Reports Q4 $1.10 v $0.98e, Rev $2.41B v $2.35Be; Approves $2B buyback (2% of market cap); Raises dividend to $0.78/shr (indicated yield 0.69%)
JWN Reports Q2 $0.81 v $0.80e, Rev $3.99B v $3.97Be; Cuts FY22 outlook
(CN) China banks are lowering their mortgage rates [follows the cuts in the 1-year and 5-year loan prime rates on Aug 22nd] - Chinese press
USD/CNY (CN) China PBOC sets Yuan reference rate: 6.8388 v 6.8523 prior
(SY) US: US military conducted precision airstrikes in Syria, targeted facilities used by affiliates of Iran Islamic Revolutionary Guard Corps (IRGC)
WEDS 8/24
(UK) UK household energy bill cap to be proposed at £2,000/yr; Rescue plan to protect households from rising bills will need funding of more than £100B over two years - FT
(JP) Japan PM Kishida: Reverses course - Now discussing nuclear plant extensions, plans to look at the construction of new plants; Govt will compile specific green transformation strategy by year end
AVV.UK Schneider reportedly considers a bid for remaining shares of $8B software firm Aveva - press
(CN) China govt said to allow construction of more infrastructure projects (aka 'stimulus')
(CN) China FX regulators reportedly have informally warned some banks against shorting the Yuan - press
*(US) JULY PENDING HOME SALES M/M: -1.0% V -2.6%E; Y/Y: -22.5% V -21.4%E
(US) Association of American Railroads weekly rail traffic report for week ending Aug 20th: 502K total units, +0.1% y/y
CLF Increasing current spot market base prices for all carbon steel hot rolled, cold rolled and coated steel products by a minimum of $75 per ton, effective immediately with new orders in North America
ADSK Reports Q2 $1.65 v $1.56e, Rev $1.24B v $1.22Be
CRM Reports Q2 $1.19 v $1.02e, Rev $7.72B v $7.69Be; Guides Q3 lower; Approves 1st ever $10B share buyback
USD/CNY (CN) China PBOC sets Yuan reference rate: 6.8536 v 6.8388 prior (Weakest since Aug 2020)
7267.JP Plant in Chongqing remains closed due to indefinite power cut extensions
THURS 8/25
(RU) Russia Pres Putin hopes to gain control of all of Donbas before winter sets in; Before it, he said not to be ready for peace talks - Russian non-state media
*(DE) GERMANY AUG IFO BUSINESS CLIMATE SURVEY: 88.5 V 86.8E
(US) Fed's Bostic (non-voter, hawk): More strong data could tip Fed toward 75bps rate hike in Sept but personally has not yet chosen between 50bps and 75bps; Too soon to say the inflation surge has peaked
(DE) Rhine river water level forecasted to fall again to ~70cm by Aug 29th v 148cm w/w and ~150cm needed to carry fully loaded vessels - press
(CN) China customs official: No longer required cross-border travellers to report certain COVID-related information, such as tests and previous infections, when clearing customs
*(US) Q2 PRELIMINARY GDP ANNUALIZED (2ND READING) Q/Q: -0.6% V -0.7%E; PERSONAL CONSUMPTION: 1.5% V 1.5%E
*(US) INITIAL JOBLESS CLAIMS: 243K V 252KE; CONTINUING CLAIMS: 1.415M V 1.44ME
*(US) Q2 PRELIMINARY GDP PRICE INDEX: +8.9% V 8.7%E; CORE PCE Q/Q: 4.4% V 4.4%E
(CN) US and China reportedly close to deal for inspections of US-listed Chinese company audit records in Hong Kong; China regulators would allow audit papers to be transferred to Hong Kong where they would be inspected by US officials - press
(US) Fed’s Bullard (voter): 3.75-4.00% is my target for Fed Funds rate this year; I prefer frontloading rates, it shows we are serious about fighting inflation - CNBC
WDAY Reports Q2 $0.83 v $0.79e, Rev $1.54B v $1.52Be
ULTA Reports Q2 $5.70 v $4.96e, Rev $2.3B v $2.21Be; Raises FY22 adj EPS, Rev, and SSS outlook
BX Single-family landlord Home Partners of America subsidiary to pause purchases of new homes in 38 cities - press
SGEN Talks with Merck said to hit 'snag', cites acquisition price - US financial press
FRI 8/26
(IN) India said to likely restrict some rice exports as its domestic rice stocks decline amid no rains - press
MRNA Sues Pfizer and BioNTech for infringing patents central to Moderna's innovative mRNA technology platform
(CN) China Securities Regulatory Commission (CSRC) confirms US PCAOB and China have reached agreement on audit inspections (as speculated)
*(US) JULY PERSONAL INCOME: 0.2% V 0.6%E; PERSONAL SPENDING: 0.1% V 0.5%E
*(US) JULY PCE DEFLATOR M/M: -0.1% V 0.0%E; Y/Y: 6.3% V 6.4%E (first negative M/M print since Apr 2020)
*(US) AUG FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 58.2 V 55.4E
*(US) FED CHAIR POWELL: SEPT RATE ACTION WILL DEPEND ON TOTALITY OF INCOMING DATA; FED WILL KEEP AT IT UNTIL CONFIDENT INFLATION UNDER CONTROL- JACKSON HOLE REMARKS
(US) Atlanta Fed GDPNow: raises Q3 GDP to 1.6% from 1.4% prior
(US) Jul Dallas Fed Trimmed Mean PCE +3.4% v +6.9% m/m

Sunday, August 21, 2022

Recent market speculation gets a reality check

TradeTheNews.com Weekly Market Update: Recent market speculation gets a reality check

8/19/2022 4:01:52 PM

Markets came into the week riding a wave of momentum spurred by a revival of animal spirits as evident by a gathering, resurgence in both ‘Meme’ stocks and cryptocurrency markets. Treasury yields remained subdued, capped in part by growth worries emanating out of China as well as an ongoing belief that after some recent constructive inflation data the Fed could ultimately be successful in orchestrating a “softish” landing without needing to raise rates as aggressively as once universally thought. By mid-week the S&P tested its key 200-day moving on several occasions, albeit in a very thin late summertime trading environment.

Wednesday saw the S&P 500 top out at 4325 in the moments following the release of what were generally viewed as dovish FOMC minutes, at least relative to expectations. From there the bears gained the upper hand. Valuation began to come under closer scrutiny because many acknowledged there was little to no room for error for an S&P 500 trading at 18x a likely over-generous 2023 earnings forecasts. Also quarterly retail earnings reports were offering a familiar refrain, namely corporate financial outlooks and margins that were coming under pressure due to macro headwinds faced by consumers and rising promotional activity by industry competitors. Persistent inflationary readings coming out of the EU and UK and surging natural gas prices resulted in growing consternation. Those invigorated inflation worries were married with Fed officials whose comments continued to tamp down expectations of any looming Fed pivot.

By Friday, the party in the Meme stocks left a nasty hangover for investors in Bed Bath and Beyond as shares plunged after RC Ventures’ Ryan Cohen confirmed he liquidated his entire 11% position just days after igniting a feeding frenzy through an updated 13D holdings filing at the SEC. As stocks lost favor, Treasury yields moved noticeably higher and by Friday the benchmark US 10-yield was pushing back towards 3% for the first time nearly a month. For the week, the S&P 500 lost 1.2%, the DJIA was off 0.2%, and the Nasdaq dropped 2.6%.

Corporate earnings season wound down early this week with a few last highlights. Kohl’s beat expectations but saw negative same store sales and slashed its guidance as it reported high inflation was dampening consumer spending. Walmart’s earnings report was more impressive, beating top and bottom line estimates as it strove to improve supply chain costs, work down inventories, and noted a solid start to the back-to-school season. Home Depot share built some momentum as it put together record Q2 results reflecting continued strength in demand for home improvement projects. GM heartened investors by reinstating its dividend with a 1% implied yield as well as boosting its buyback program as it affirmed plans to invest over $35B in growth through 2025. Occidental shares flowed higher on Friday as the FERC revealed that Berkshire Hathaway was granted approval to accumulate as much as 50% of the oil major (from its current 18.72% stake).


SUN 8/14
ARAMCO.SA Reports Q2 (SAR) Net 181.6B v 95.5B y/y, Rev 562.1B v 312.4B y/y; To pay $18.8B in dividends during Q3
(CN) Shanghai to reopen all schools including kindergartens, primary and middle schools on Sept 1st - press
(CN) China PLA Eastern Theater Command likely to conduct strong & powerful military operations in the waters & airspaces around the island of Taiwan as countermeasures to latest US lawmakers' visit to the island - Global Times
*(CN) CHINA PBOC CUTS 7-DAY REVERSE REPO RATE TO 2.00% FROM 2.10% [1st cut since Jan]
*(CN) CHINA JULY RETAIL SALES Y/Y: 2.7% V 4.9%E; YTD Y/Y: -0.2% V +0.1%E
MON 8/15
(IR) Iran Foreign Ministry: Nuclear talks progress does not fully meet our expectation, but some of our expectations have been met; Basis exists for signing JCPOA nuclear deal in very near future
(DE) Rhine river level at key German point Kaug (between Frankfurt and Dusseldorf) drops to 30cm v 40cm last week and ~150cm needed to carry fully loaded vessels
*(US) AUG EMPIRE MANUFACTURING: -31.3 V +5.0E (3rd negative reading in 4 months and lowest since May 2020)
*(US) AUG NAHB HOUSING MARKET INDEX: 49 V 55E
CAH Elliott reportedly has taken a 'large position' in Cardinal and nominated five directors to the board in early Aug - press
TUES 8/16
3690.HK Tencent said to plan sell all or bulk of its 17% stake in Meituan as early as this year; The stake said to be valued at ~$24B - press
NYR.BE Said to shut down major Buden zinc smelter in Nethelands amid energy costs from Sept 1st; To place Buden zinc smelter on care and maintenance - press
HD Reports Q2 $5.05 v $4.95e, Rev $43.8B v $43.3Be
(US) US military conducted a 'routine test' of unarmed Minuteman III intercontinental ballistic missile; Test showed readiness of US nuclear forces - Pentagon statement
WMT Reports Q2 $1.77 v $1.60e, Rev $152.9B v $151.4Be; Notes work is ongoing to improve costs in its supply chain
Redfin report: ~63K US home-purchase agreements fell through in July (16.1% of homes that went under contract that month, highest rate in more than two years)
*(US) JULY HOUSING STARTS: 1.446M V 1.527ME; BUILDING PERMITS: 1.674M V 1.640ME
*(CA) CANADA JULY CPI M/M: 0.1% V 0.1%E; Y/Y: 7.6% V 7.6%E (moves off recent cycle highs)
*(US) JULY INDUSTRIAL PRODUCTION M/M: 0.6% V 0.3%E; CAPACITY UTILIZATION: 80.3% V 80.2%E
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -2.9% v -5.0% prior
(US) US govt announces 2023 water cuts to states that rely on Colorado River; Lake Mead expected to be projected to shrink to 'dangerously low levels' - press
A Reports Q3 $1.34 v $1.20e, Rev $1.72B v $1.64Be; Raises FY outlook
WEDS 8/17
NHY.NO Slovalco will stop primary aluminium production
*(UK) JULY CPI M/M: 0.6% V 0.4%E; Y/Y: 10.1% V 9.8%E (12th month above target and highest annual pace since Feb 1982)
700.HK Reports Q2 (CNY) adj Net 28.1B v 34.0B y/y, Rev 134.0B v 138.3B y/y (first quarterly revenue drop since 2004 listing)
(EU) Daily 3-month Euribor Fixing: 0.351% v 0.333% prior (highest since 2012)
OPEC Sec Gen al-Ghais: Open for dialogue with US; Spare capacity about 2-3Mbpd is running on thin ice
ADI Reports Q3 $2.52 v $2.43e, Rev $3.11B v $3.06Be; Notes economic uncertainty beginning to impact bookings, demand continues to outpace supply
*(US) JULY ADVANCE RETAIL SALES M/M: 0.0% V 0.1%E; RETAIL SALES (EX-AUTO) M/M: +0.4% V -0.1%E
(US) Association of American Railroads weekly rail traffic report for week ending Aug 13th: 503K total units, -0.3% y/y
(US) Atlanta Fed GDPNow: Cuts Q3 GDP to 1.6% from 1.8% prior
(US) TREASURY $15B 20-YEAR BOND AUCTION DRAWS 3.380% v 3.290% prior, BID-TO-COVER 2.30 v 2.50 PRIOR AND 2.40 OVER LAST 4 AUCTIONS
(US) CDC Director Rochelle Walensky announces major modifications to CDC’s structure, including staffing changes and efforts to improve public messaging; CDC currently has a $12B annual budget
*(US) FOMC JULY MEETING MINUTES: OFFICIALS SAW ONGOING RATE HIKES AS APPROPRIATE; SAW RISK IF PUBLIC QUESTIONS FED'S INFLATION RESOLVE; 'at some point' it would be appropriate to slow pace of increases
*(AU) AUSTRALIA JULY EMPLOYMENT CHANGE: -40.9K V +25.0KE (First decrease since Oct 2021); UNEMPLOYMENT RATE: 3.4% V 3.5%E (Lowest since Aug 1974)
THURS 8/18
(DE) ECB's Schnabel (Germany): Favor another large interest rate increase in Sept even as recession risks harden; Inflation is going to increase further, outlook hasn't improved
(CN) China's banking regulator CBIRC said to be probing property sector loan portfolios of some local and foreign lenders to assess systemic risks - financial press
*(PH) PHILIPPINES CENTRAL BANK (BSP) RAISES OVERNIGHT BORROWING RATE BY 50BPS TO 3.75%; AS EXPECTED
(DE) Rhine river open one way after barge blocking it after engine failute has been towed away - press
(CN) China Ministry of Commerce (MOFCOM) official: Reiterates stance to take forceful measures to safeguard its legitimate rights when necessary - speaking on US CHIPS act
(UR) Russia reportedly changed its position on potential meeting between Pres Putin and Ukraine Pres Zelenskiy; Putin and Zelenskiy may meet before the negotiators finish a roadmap towards the potential peace deal - CNN Turk
(UK) Bank of England (BOE) sets out final operational details ahead of the start of programme of sales of corporate bonds held in the Asset Purchase Facility in the week beginning Sept 19th
(DE) German Chancellor Scholz: To temporarily cut VAT on gas from 19% to 7%; effective Oct 1st until end of March 2024
TPR Reports Q4 $0.78 v $0.78e, Rev $1.62B v $1.64Be; Raises Quarterly dividend 20% to $0.30 from $0.25 (indicated yield 2.69%)
KSS Reports Q2 $1.11 v $1.08e, Rev $4.09B v $4.07Be; Cuts sharply FY22 outlook, taking actions to reduce inventory; $500M accelerated share buyback and remains firmly committed to current dividend
*(US) INITIAL JOBLESS CLAIMS: 250K V 264KE; CONTINUING CLAIMS: 1.437M V 1.45ME
*(US) AUG PHILADELPHIA FED BUSINESS OUTLOOK: +6.2 V -5.0E (1st positive reading in 3 months)
*(US) JULY EXISTING HOME SALES: 4.81M V 4.87ME
*(US) JULY LEADING INDEX: -0.4% V -0.5%E
OPEC Sec Gen al-Ghais: Policymakers and lawmakers are to blame for high energy prices
(US) Fed’s Bullard (voter, hawk): Leaning towards supporting 75bps hike in Sept; Front-loading rate hikes this year gives Fed options in 2023; Fed can get inflation down over a roughly 18-month period
AMAT Reports Q3 $1.94 v $1.78e, Rev $6.52B v $6.26Be
BBBY RC Ventures (Ryan Cohen) confirms liquidated stake - 13D filing
(UK) Aug GfK Consumer Confidence: -44 v -42e (Record Low)
USD/CNY (CN) China PBOC sets Yuan reference rate: 6.8065 v 6.7802 prior (weakest fix since Sept 2020)
FRI 8/19
(UK) JULY RETAIL SALES (EX-AUTO/FUEL) M/M: +0.4% V -0.3%E; Y/Y: -3.0% V -3.1%E
(DE) Germany July PPI M/M: 5.3% v 0.7%e; Y/Y: 37.2% v 31.8%e (highest annual pace in 70-years and biggest monthly increase on record)
(DE) Rhine river water level forecast to hit 148cm at Kaub point on Aug 23rd v 40cm w/w and ~150cm needed to carry fully loaded vessels – press
DE Reports Q3 $6.16 v $6.62e, Rev (Equipment Ops) $13.0B v $12.9Be
(CN) China launches measures to secure house delivery as fund pressure remains; To support construction and delivery of unfinished residential projects through special loans schemes from policy banks - Chinese press
GM Reinstates quarterly dividend at $0.09/shr, 1% implied yield (suspended $0.38/shr in Apr 2020); Increases buybacks by $1.7B to $5.0B (8.8% of market cap); Affirms to invest more than $35B through 2025 to advance its growth plan
OXY FERC document shows Berkshire requested and was approved to accumulate up to 50% stake in OXY (from current 18.72% stake)

Saturday, August 13, 2022

Constructive inflation data bolsters soft-landing scenario

TradeTheNews.com Weekly Market Update: Constructive inflation data bolsters soft-landing scenario

8/12/2022 4:03:07 PM

Stock markets continued to rally this week as investors took comfort in US inflation readings that supported the ‘peak inflation’ narrative. US Treasury yields remained largely in check and the curve finally saw some steepening, pulling the 2-10 spread away from its most inverted levels of this cycle. Small cap stocks surged early in the week, while the NASDAQ reached a 20% rebound and the S&P tested its 50% Fibonacci retracement level, both from the June lows. Nevertheless the debate carried on, with skeptics contending this was still nothing more than a bear market rally, the likes of which was seen on multiple occasions coming out of the early 2000 tech boom and the great financial crisis which later resulted in fresh lows as part of a multi-year bottoming process. Bulls on the other hand, drew solace from the fact that a soft landing very well could be in the cards as the turn in inflation could ultimately allow the Fed to back off, while corporate earnings reports have held up surprisingly well, suggesting earnings estimates may not have to come down as much as many have feared. Investors’ increased wiliness to take on risk was on full display. Crypto assets rebounded sharply, and traditional meme stocks saw a notable resurgence with traders bidding up shares amid no discernable news or catalysts. Also several extremely disappointing individual earnings reports and slashed guidance were met with heavy buying, resulting in eye popping reversals in beaten down shares. For the week, the S&P gained 3.3%, the DJIA rose 2.9%, and the Nasdaq lifted 3.1%.

Wednesday’s US July CPI data finally offered some tangible signals that inflation has started heading in the right direction. Headline CPI was 0% m/m for the first time since May of 2020 while the y/y print came in below all analyst estimates for the first time in 17 months. The deceleration was largely driven by the recent pullback in commodity prices, as well as other volatile pandemic-affected categories. But encouragingly, rent of shelter and owners equivalent rent categories slowed too. The Atlanta Fed’s annualized sticky-CPI reading saw an even more dramatic pullback to 5.4% from 8.1% m/m. Thursday’s producer price data also came in well below expectations with the first m/m decline in two years, suggesting further improvement to come. Futures markets basically flip-flopped on the September FOMC meeting and now see better odds of a 50 bps hike, rather than 75 bps. But with more than a month until the next Fed conclave -- and another CPI print, as well as the Jackson Hole Fed meeting in between -- those projections are likely to remain fluid. To that end Fed officials once again were quick to push back against dovish pivot hopes, reiterating they will need to see more evidence inflation is slowing and that forecasts for 2023 rate cuts are premature. Also, Friday’s final passage of the Inflation Reduction Act will be another variable that officials will have to factor into the forecasts.

In corporate news, chipmakers got off to a rough start at the beginning of the week. Nvidia warned that a 44% decline in gaming revenue would negatively affect its Q2 results. Micron cut its outlook again on macro/supply chain factors, forecasting a challenging market environment in Q4 and Q1’23. Apple is said to have told its manufacturing partners that it plans to produce 90M new iPhones, in line with 2021 levels.

Disney earnings impressed investors, as the entertainment giant noted hearty profit growth and strong theme park revenue, despite cutting its long-term forecasts for Disney+ subscriber numbers. AppLovin submitted a non-binding proposal to acquire video game software developer Unity at $58.85/shr in an all-stock $20B deal, which would put a damper on Unity’s plan to acquire app monetization company IronSource.


SUN 8/7
BRK.A Reports Q2 EPS (Class B) -$19.84* v $12.33 y/y, Rev $76.2B v $69B y/y
*(CN) CHINA JULY TRADE BALANCE: $101.3B V $88.1BE (record surplus)
(CN) Chinese military will from now on conduct regular drills on the eastern side of the median line of the Taiwan Strait - Chinese TV
(US) Fed's Bowman (voter): 75bps rate hikes should be on the table until inflation declines meaningfully; Have seen few, if any, concrete indications that inflation had peaked earlier in the year
(US) US Senate passes ~$430B Climate Change, Tax, and Drug bill; the final vote was 51 to 50; Vice President Harris placed the tiebreaking vote
(JP) Japan June BoP Current Account: -¥132.4B v -¥706.2Be; Adj Current Account: +¥838.3B v -¥27.6Be
MON 8/8
AAPL Reportedly informed its suppliers that it raised expectations to produce and ship 95M units of new iPhone 14 rather than 90M prior - Taiwanese press
NVDA Reports prelim Q2 Rev $6.70B v $8.12Be; Shortfall versus outlook primarily driven by weaker Gaming revenue
*(US) Former Pres Trump says FBI agents have made an 'unannounced raid' on his Mar-A-Lago compound in Florida - press
(CN) China prelim July Retail Passenger Vehicle Sales 1.84M, +20.1% y/y - PCA
TUES 8/9
(UK) BOE Ramsden: Believe it's more likely than not that MPC will have to raise Bank Rate further. But I haven't reached a firm decision on that
MU Announces $40B investment by 2030 in memory manufacturing in the US using anticipated grants and credits made possible by the CHIPS and Science Act; To create up to 40K new US jobs
(US) Reportedly US solar industry grapples with import ban on China's Xinjiang region; Shipments from Chinese suppliers either detained or sent back - US financial press
(RU) Russian press reports Ukrainian oil firm Ukrtransnafta stops pumping oil via Southern leg of Druzhba ('Friendship') oil pipeline to Hungary, Czech Republic and Slovakia (**Note: Druzhba accounts for up to 8% of EU’s total crude imports from Russia)
AVYA Reports prelim Q3 -$0.24 v $0.53 y/y, Rev $577M v $716 y/y
(US) Bank of America July total payments +7% y/y; Median rent payments +7.4% y/y; Notes many reasons to remain positive about the steady resilience of US consumers
(US) US House Speaker Pelosi: China Pres Xi is in fragile place and acting like a scared bully; Still support the One China policy
Redfin report: July share of US homes listed for 30 days or longer without going under contract +12.5% y/y (1st Y/Y increase in housing supply since the beginning of the pandemic)
*(US) Q2 PRELIMINARY NONFARM PRODUCTIVITY: -4.6% V -4.7%E V -7.3% PRIOR (**largest ever decline on annual basis); UNIT LABOR COSTS: 10.8% v 9.5%E
U AppLovin submits non-binding proposal to acquire Unity at $58.85/shr in all-stock $20B deal
(UK) UK govt reportedly plans for possible power cuts to industry and homes in Jan under worst-case scenario - press
992.HK Reports Q1 Net $516M v $466M y/y, Rev $17.0B v $16.9B y/y
(JP) Japan July PPI (CGPI) M/M: 0.4% v 0.4%e; Y/Y: 8.6% v 8.4%e
(TW) China reiterates not ruling out the use of force for Taiwan and the use of One country-Two systems for Taiwan; Withdraws promise not to send troops to Taiwan after unification - China State TV
WEDS 8/10
TSM Reports July (NT$) Rev 186.8B +49.9% y/y, +6.2% m/m
AD.NL Reports Q2 €0.59 v €0.54e, Rev €21.5B v €20.8Be; Raises Net profits and FCF outlook; Notes positive momentum going into H2 2022
7267.JP Reports Q1 Net ¥149.2B v ¥222.5B y/y, Op ¥222.2B v ¥243.2B y/y, Rev ¥3.83T v ¥3.58T y/y; To buy back up to ¥100B in shares (1.9% of market cap); Raises outlook for Op profit and Revenues
6502.JP Reports Q1 Net ¥25.9B v ¥18.0B y/y, Op -¥4.81B v +¥14.5B y/y, Rev ¥740.7B v ¥727.9B y/y
2317.TW Reports Q2 (NT$) Net 33.3B v 30.8Be, Op 44.3B v 36.8Be, Rev 1.51T v 1.45Te; Guides FY22 Rev higher y/y
(EU) German Rhine River is said to become effectively impassable at Kaub (key point between Frankfurt and Dusseldorf) on Friday, Aug 12th - press
*(TH) THAILAND CENTRAL BANK (BOT) RAISES BENCHMARK INTEREST RATE BY 25BPS TO 0.75%; AS EXPECTED; Voted 6-1
7203.JP Guides Sept-Nov average volume at 900K units/month (prior guided Aug-Oct at 850K/month); Affirms FY22 global volume at 9.7M units; To suspend production at 3 lines on some days in Sept amid part shortage and COVID restrictions
*(CN) CHINA MILITARY OFFICIAL: HAVE COMPLETED VARIOUS TASKS IN DRILLS AROUND TAIWAN; MILITARY EXERCISES FINISHED - PRESS
BABA Softbank stake in Alibaba to fall to 14.6% from 23.7% end-June via early physical settlement; Softbank sees ¥4.6T gain (~$34B) on Alibaba transactions
*(US) JULY CPI M/M: 0.0% V 0.2%E; Y/Y: 8.5% V 8.7%E (annual pace matches lower end of all analysts' estimates)
(US) Freeport LNG reportedly removes its force majeure declaration following the June explosion - press
(US) Atlanta Fed July Sticky-CPI annualized 5.4% v 8.1% m/m, core 5.2% v 7.9% m/m
(US) Association of American Railroads weekly rail traffic report for week ending Aug 6th: 496.5K total units, -2.6% y/y
(US) Atlanta Fed GDPNow: Raises Q3 GDP to 2.5% from 1.4% prior
(US) Fed's Kashkari (dove, non-voter): Happier to see inflation surprise to the downside; Today's CPI data does not change my rate hike path; Idea of rate-cutting early next year is not realistic
DIS Reports Q3 $1.09 v $0.94e, Rev $21.5B v $21.1Be; Surpasses Netflix in number of subscribers
DIS Cuts forecast for 215-245M Disney+ subs by 2024 (prior: 230-260M by 2024) - earnings call comments
(CN) White House has reportedly for now set aside any plans to scrap certain China tariffs or to look into adding more; Biden yet to make any final decision - press
*(SG) SINGAPORE Q2 FINAL GDP Q/Q: -0.2% V +0.2%E; Y/Y: 4.4% V 4.8%E
THURS 8/11
SIE.DE Reports Q3 -€1.85 v -€0.63e, Industrial Business EBITA €2.88B v €2.90Be, Rev €17.9B v €17.5Be
IEA Monthly Oil Report (OMR); European heatwaves boosting demand for oil; Declines in Russian oil supply less than previously expected
CAH Reports Q4 $1.05 v $1.17e, Rev $47.1B v $44.6Be; Introduces medical improvement plan targeting $650M in profit by 2025; Guides initial FY23
BLK Reportedly offering to big institutional clients its first-ever investment product directly in Bitcoin, new private Bitcoin trust - press
*(US) INITIAL JOBLESS CLAIMS: 262K V 265KE; CONTINUING CLAIMS: 1.428M V 1.42ME
*(US) JULY PPI FINAL DEMAND M/M: -0.5% V +0.2%E; Y/Y: 9.8% V 10.4%E (1st negative M/M print since June 2020)
(US) Certain Freeport customers reportedly dispute retraction of force majeure declaration and seek its reinstatement - press
SHEL Shuts Mars, Ursa, and Olympus deep water crude oil platforms in US Gulf due to flange leak at Port Fourchon facility booster station - press
AAPL Reportedly manufacturing partners said to assemble 90M new iPhones, on par with 2021 [**Note: earlier Taiwan press reported Apple plans to produce 95M units of new iPhone 14] - press
FRI 8/12
981.HK CEO: Rising geopolitical tension, high inflation and a cyclical downturn in chip demand have triggered some panic in the chip industry; Notes extreme quick freeze reaction in some parts of the supply chain over threat of conflict - FT
300750.CN Said to plan investing up to €7.3B in Hungarian plant; Will build a power battery system production line in Hungary with an annual capacity of 100GWh - press
PTR PetroChina and Sinopec to voluntarily delist from NYSE
(CN) Reportedly brokers in China looking into Germany as a banking base due to tensions with the US - press
*(US) AUG PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 55.1 V 52.5E; 1 year inflation expectations 5.0% v 5.1%e; 5-10 year inflation expectations 3.0% v 2.8%e
(CN) Preparations said to be under way for President Xi to travel to Southeast Asia to meet with President Biden in November - press
(US) USDA WASDE Crop Report: End 2022/2023 US Stocks (M bu): Soybeans: 245 v 227e; Wheat: 610 v 651e

Sunday, July 24, 2022

Market reversals bolster risk appetite; Monetary policy continues to tighten as inflation and recession risks persist

TradeTheNews.com Weekly Market Update: Market reversals bolster risk appetite; Monetary policy continues to tighten as inflation and recession risks persist

7/22/2022 4:09:44 PM

US stock markets ended the week solidly in positive territory, indicating investors’ willingness to seek bargains, perhaps feeling that the extremely bearish environment could ultimately be a contrarian buy signal. Though few seem willing to call a bottom to a selloff that has dragged the S&P 500 down 16% this year, the index did see its best weekly performance in nearly a month. Persistently high inflation, the possibility of a recession, and the war in Ukraine remained at the forefront of most investors' minds. Global interest rates moved lower despite a larger than expected rate hike from the ECB which certainly provided some cover for those looking to wade into stocks. Earnings season widened out providing a look into a number of industries outside of the banks. Some reports ushered in relief rallies by providing investors with increased confidence to scoop up beaten-down technology stocks, while other sectors like homebuilders, enterprise storage and telecoms reinforced an environment of clearly rising costs and slowing growth.

Softening economic data assumed the role of the North Star for markets this week, as global interest rates came in significantly despite central banks continued willingness to tighten. US housing data, weekly unemployment claims, and manufacturing surveys all showed decided deterioration before Friday’s European manufacturing PMIs fell into contraction territory, fanning recession fears only a day after the ECB surprised markets with a 50 bps hike and formally introduced its Transition Protection Instrument (TPI). On Friday global treasury yields dropped to the lowest levels in more than a month amid an ongoing slide in market based inflation expectation measures. The US 10-year yield tested 2.75% while the German Bund neared 1% amid resurgent talk about recession, particularly for Europe. Entering the week, futures markets were pricing in a greater likelihood the Fed would raise rates by 100 bps next week, but by Friday market expectations coalesced around a 75 bps hike and further out projected the Fed might begin cutting rates in 2023. On top of all this, the White House announced that President Biden had been infected with Covid, and though he showed only mild symptoms after treatment, it reinvigorated concerns about the health of the nearly 80-year old President. For the week, the S&P gained 2.6%, the DJIA was up 2%, and the Nasdaq added 3.3%.

The cadence of earnings reports picked up this week, starting with more mixed results from the banking sector. Goldman Sachs beat expectations, largely based on strong year on year improvement in FICC, while Bank of America lagged estimates, even though its “consumer clients remained resilient” and credit card delinquencies are near multi-year lows. Shares of AT&T and Verizon tumbled as the telecoms acknowledge cost pressures and cut guidance. Social media platforms Twitter and Snap missed analyst expectations and Snap said it would slow hiring, echoing a trend seen at a number of other firms in the communications services sector. Snap blamed fierce competition for an ad market pie that is growing slower, while Twitter said it is entirely focused on forcing Elon Musk to close the merger deal. Meanwhile Tesla shares zoomed higher after the automaker posted strong production numbers despite China shutdowns and supply issues and said the company could achieve record production in the second half of 2022. Tesla did cause a stir in the cryptocurrency community after noting it had converted 75% of its Bitcoin holdings into fiat currency during the quarter.


SAT 7/16
(HK) Macau govt extends shutdown of non-essential business from July 18th to July 22nd due to Covid outbreak
(SA) Saudi Foreign Min Farhan: We listen to our partners and friends from all over the world especially consumer countries; But at the end of the day, OPEC+ follows the market situation and will supply energy as needed

SUN 7/17
(US) White House Energy advisor Hochstein: Expects gas prices to come down further towards $4/gallon; Confident there will be a few more steps in coming weeks from OPEC in terms of oil supplies
(US) WSJ piece suggests Fed officials signaled they are likely to raise interest rates by 75bps at July 26-27th meeting; Left the door open to a larger 100bps hike at upcoming meeting, but leaning against it
(IR) Iran Senior Adviser to Supreme Leader: Iran is technically capable of producing nuclear bomb – press
BA Cuts 20-year industry-wide outlook for jets deliveries to 41,170 units (prior 43,610)

MON 7/18
(CH) SNB said to be planning to raise rates by 50bps at its Sept meeting with 75bps hike also possible on hot inflation data - financial press
(RU) Canada said to have sent Nord Stream 1 turbine to Germany; Expected to arrive only on July 24th with 3-4 additional days required for commissioning; Gas compressor unit should be ready to pump gas in early August - Russian press
(RU) According to informal discussions with Kremlin insiders, in the end of May Russian officials became confident that they would win the war with Ukraine in the long term; Putin said to now have a clear plan which would end up with building a new world order - NYT
(CN) China said to consider mortgage grace period for unfinished home projects - press
GAZP.RU Exec: Gazprom has not booked gas transit capacity for August for exports via Yamal-Europe pipeline; Does not book extra Ukraine gas transit space
(US) Reportedly several US semiconductor firms are deliberating whether to oppose CHIPS act package if the final language of subsidies legislation disproportionately benefits manufacturers like Intel - financial press
BAC Reports Q2 $0.73 v $0.77e, Rev $22.7B v $23.0Be
GS Reports Q2 $7.73 v $6.99e, Rev $11.9B v $11.0Be
PLD Reports FFO Q2 $1.11 v $1.12e, Rev $1.25B v $1.10Be
GAZP.RU *Gazprom's Export arm said to have sent notice to at least one European customer declaring force majeure on gas deliveries linked to Nord Stream 1 - press
BAC CEO: Guides Q3 NII to rise $900M-$1B q/q and increasing further in Q4; Organic growth engine is back, seen in Q2 - conf call comments
SCHW Reports Q2 $0.97 v $0.91e, Rev $5.09B v $5.04Be
*(US) JULY NAHB HOUSING MARKET INDEX: 55 V 65E (lowest since May 2020)
AAPL Reportedly plans to decelerate hiring and spending for certain teams in 2023; Will not backfill positions or add new staff in some divisions - press
BHP.AU Reports Q4 Waio Iron Ore Production: 71.7Mt v 72.8Mt y/y, Attributable Iron Ore Production: 64.2Mt v 65.2Mt y/y
(US) Reportedly Pres Biden is considering calling a national climate emergency as soon as this week - WaPo
(TW) US House Speaker Pelosi said to plan a visit to Taiwan during Aug - FT

TUES 7/19
NOVN.CH Reports Q2 Core EPS $1.56 v $1.51e, Rev $12.8B v $13.0Be
ALO.FR Reports Q1 Rev €4.00B v €3.70B y/y
*(UK) MAY ILO UNEMPLOYMENT RATE: 3.8% V 3.8%E
EDF.FR French Govt offers to pay €12/shr and €15.64/oceane-bond in EDF re-nationalization plan for total €9.7B
*(EU) ECB SAID TO DISCUSS BOTH 25BPS AND 50BPS HIKE AT THURSDAY'S MEETING - PRESS
7203.JP Expects Aug global production at 700K units; Guides Aug-Oct average volume at 850K units/month (prior guided July-Sept at 850K/month); Affirms FY22 global volume at 9.7M units
(IR) National Iranian Oil Company (NIOC) and Gazprom sign strategic cooperation MoU covering projects valued at $40B in total - press
*(EU) EURO ZONE JUN FINAL CPI Y/Y: 8.6% V 8.6%E; CPI CORE Y/Y: 3.7% V 3.7%E
(EU) EU Commission Official Hahn: Do not expect gas supplies to Europe from Russia through the Nord Stream 1 pipeline to restart when scheduled maintenance ends this week
DIDIY China regulator said to fine Didi over $1B for data security breaches - US financial press
FER.ES Reportedly Heathrow refuellers to go on strike later in the week after refusing latest pay offer
JNJ Reports Q2 $2.59 v $2.57e, Rev $24.0B v $23.9Be; Strengthening US dollar impacting estimate for reported results*
LMT Reports Q2 $6.32 v $6.39e, Rev $15.4B v $16.1Be; Cuts FY22 Rev outlook; Provides F-35 update
*(US) JUN HOUSING STARTS: 1.559M V 1.580ME; BUILDING PERMITS: 1.685M V 1.650ME
(EU) Nord Stream 1 reportedly has restarted gas flows on time after annual maintenance but at a lower level of throughput - press
(US) Atlanta Fed GDPNow: cuts Q2 GDP forecast from -1.5% to -1.6%
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -5.0% v -4.1% prior
TWTR Delaware court judge rules against Musk, allows Twitter to expedite lawsuit
NVAX US CDC Advisory Panel voted unanimously to recommend NVX-CoV2373, COVID-19 vaccine, Adjuvanted in individuals 18 years of age and older
(EU) EU considering a 15% voluntary reduction in natural gas usage for Aug-Mar due to Russia supply issues - press
(RU) Russia Pres Putin: Gazprom planning to fulfill its obligations, Another gas turbine will have to go for maintenance on July 26th; Attempts to cap Russian oil prices will lead to prices skyrocketing
(AU) Reserve Bank of Australia (RBA) Gov Lowe: Board had extended discussion on neutral real interest rate; Neutral Nominal rate is 'at least' 2.5%, higher than this if mid term inflation expectations shift higher
*(CN) CHINA PBOC MONTHLY LOAN PRIME RATE (LPR) SETTING: MAINTAINS BOTH 1-YEAR AND 5-YEAR RATES (as expected)
NVAX (US) CDC Director Rochelle Walensky endorses ACIP recommendation of use of NVX-CoV2373, COVID-19 vaccine, in individuals 18 years of age and older
(CN) China mortgage boycotts spread to 301 projects in 91 cities - press

WED 7/20
ASML.NL Reports Q2 Net €3.54 v €3.51e, Rev €5.43B v €5.27Be; Cuts FY22 Rev outlook; Notes still sees strong demand for its systems; Moves to quarterly dividend policy
*(UK) JUN CPI M/M: 0.8% V 0.7%E; Y/Y: 9.4% V 9.3%E (11th month above target and highest annual pace since Nov 1981)
(HK) Macau to reopen casinos on Saturday if virus conditions favorable; to resume business activities, including casinos, to certain level on July 23-29th; To continue shutting cinemas, bars and dining-in services - press
(CN) China Premier Li: China will not introduce super-large stimulus policies or print excessive money at the expense of sustainable development in the future for exorbitant growth targets
(IT) Italy PM Draghi: A PM who did not stand for election needs as big a parliamentary majority as possible; Governing coalition can be rebuilt - Senate address
(TW) Taiwan Jun Export Orders Y/Y: 9.5% v 6.4%e
CON.DE Reports prelim Q2 Rev €9.4B v €9.2Be
(CN) China June smartphone shipments at 27.5M +9.1% y/y v -9.1% prior - CAICT
(EU) Daily 3-month Euribor Fixing: 0.125% v 0.042% prior (highest level since 2015)
(CN) Shanghai reportedly asks citizens to take COVID test at least once a week until Aug 31st - press
GAZP.RU Exec: Daily gas exports to China are now above contracted volumes; Not received documents from Siemens on Nord Stream 1 turbine
ELV Reports Q2 $8.04 v $7.73e, Rev $38.5B v $38.1Be; Raises FY22 EPS outlook
(RU) Russia Foreign Min Lavrov: If West delivers long-range weapons to Kyiv, geographical objectives of special military operation in Ukraine will be advanced even further to Kherson, Zaporizhia and a number of other territories
BIIB Reports Q2 $5.25 v $4.10e, Rev $2.59B v $2.47Be; Raises outlook
ABT Reports Q2 $1.43 adj v $1.07e, Rev $11.3B v $10.4Be; Raises FY22 EPS and Rev outlook
*(CA) CANADA JUN CPI M/M: 0.7% V 0.9%E; Y/Y: 8.1% V 8.4%E (highest annual pace since Jan 1983)
*(US) JUN EXISTING HOME SALES: 5.12M V 5.36ME
*(UK) FIFTH ROUND OF CONSERVATIVE LEADERSHIP BALLOT: SUNAK 137, TRUSS 113, MORDAUNT 105 (ELIMINATED); SUNAK AND TRUSS GO TO FINAL BALLOT
AAPL EU antitrust regulators said to reinforce App Store investigation with new evidence but will not bring new charges - press
(US) Association of American Railroads weekly rail traffic report for week ending July 16th: 499K total units, -2.8% y/y
*(US) TREASURY $14B 20-YEAR BOND REOPENING DRAWS 3.420% V 3.488% PRIOR, BID-TO-COVER 2.65 V 2.60 PRIOR AND 2.50 OVER LAST 8 REOPENINGS
(US) Pres Biden: 'That’s why I and so damn many other people I grew up with have cancer' - speech on the environment
CSX Reports Q2 $0.54 v $0.47e, Rev $3.82B v $3.64Be; Automotive Rev +24% y/y
TSLA Reports Q2 $2.27 v $1.82e, Rev $16.9B v $17.1Be; Notes it focused on record-breaking H2 2022; Have converted 75% of Bitcoin holdings into fiat currency
LVS Reports Q2 -$0.34 v -$0.23e, Rev $1.05B v $955Me
AA Reports Q2 $2.67 v $2.60e, Rev $3.64B v $3.49Be; Boosts share buyback program
STLD Reports Q2 $6.73 adj v $3.35 y/y, Rev $6.21B v $4.47B y/y; Customer order entry activity continues to be healthy across All of our businesses; Invests $500M for 2 addl plant lines

THRS 7/21
(RU) Nord Stream 1 pipeline showing gas flows from Russia into Germany of 29,284,591 kwh/h for 0600-0700 CET v 0 prior; flow to resume gradually
005380.KR Reports Q2 (KRW) Net 3.09T v 1.98T y/y; Op 2.98T v 1.89T y/y; Rev 36.0T v 30.3T y/y; Expects supply issues to ease
ABBN.CH Reports Q2 Net $406M v $709M y/y, Rev $7.3B v $7.4B y/y; Confirms to exit Russia market (1-2% of annual Rev) with winding down charge of $57M
NOKIA.FI Reports Q2 €0.10 v €0.10e, Op €714M v €682M, Rev €5.87B v €6.03Be
SAP.DE Reports Q2 €0.28 v €1.14e, Rev €7.52B v €7.61Be; Cuts FY22 Op profit outlook; To buyback up to €500M in shares (0.5% of market cap)
ROG.CH Reports Q2 (CHF) Core EPS 11.76 v 11.05e, Core Op 12.7B v 11.7B y/y, Rev 32.3B v 31B y/y
DIDIY China regulators confirm to fine Didi CNY8.03B (~$1.2B) after concluding probe
(IT) Italian Presidential Office: Confirm PM Draghi again tendered resignation
(HK) Macau to provide limited public services on July 23-29th - press
(UR) Russia said to plan annexation votes in Ukraine regions by Sept 15th - press
(EU) Daily 3-month Euribor Fixing: 0.145% v 0.125% prior (highest since Sept 2014)
(LY) Libya official: Oil production back above 700K bpd; To recover to 1.2M bpd in 7-10 days
DOW Reports Q2 $2.31 v $2.14e, Rev $15.7B v $15.7Be
T Reports Q2 $0.65 adj v $0.59e, Rev $29.6B v $29.3Be; Cuts FY FCF and capex outlook
T CEO: See higher bad debt, slower bill paying in this cycle; Overdue bills started to be a trend six weeks ago - earnings call comments
DHI Reports Q3 $4.67 v $4.51e, Rev $8.79B v $8.98Be; Cuts FY22 guidance amid signs of moderating demand
F Releases new battery capacity plan, On track to ramp to 600K run rate by 2023 and 2M+ by 2026; To invest over $50B in EVs through 2026; Expects compound annual growth rate for EVs to top 90% through 2026
UNP Reports Q2 $2.93 v $2.83e, Rev $6.27B v $6.13Be
(EU) EU formally publishes details on 7th (“maintenance and alignment”) sanctions package against Russia; Confirms to introduce a new prohibition to purchase, import, or transfer, directly or indirectly, gold, if it originates in Russia and it has been exported from Russia
*(US) INITIAL JOBLESS CLAIMS: 251K V 240KE (highest in eight months); CONTINUING CLAIMS: 1.384M V 1.34ME
*(US) JULY PHILADELPHIA FED BUSINESS OUTLOOK: -12.3 V +0.8E (lowest reading since May 2020 and second straight negative print); New Orders: -24.8 v -12.4 prior
ONEM Amazon agrees to acquire One Medical at $18/shr in all-cash deal for $3.9B
(EU) ECB chief Lagarde: Taken steps to make sure inflation moves to 2% target in medium term with larger 50bps hike - Prepared remarks
(EU) ECB publishes full details on its Transmission Protection Instrument (TPI); Focus on public sector securities with remaining maturity of 1-10 years, could also consider private sector securities
*(US) JUN LEADING INDEX: -0.8% V -0.6%E (4th consecutive decline); Conference Board now sees recession 'likely' around year end
*(US) PRES BIDEN TESTS POSITIVE FOR COVID-19, EXPERIENCING 'VERY MILD SYMPTOMS'
(DK) Denmark Central Bank (Nationalbanken) raises Certificate of Deposit Rate by 50bps from -0.60% to -0.10%, following ECB rate move
(US) California official: Port of Oakland's largest marine terminal has been 'essentially shut down' for second day amid trucker blockade; Three other terminals have some operations underway – press
FDX Ground Unit to scale back Sunday Delivery Services to 80% of the US population (prior ~95%) from Aug 15th - US financial press
(UK) July GfK Consumer Confidence: -41 v -42e (remains record low)

FRI 7/22
(TR) Turkey announces a deal has been reached to free Ukrainian grain exports blockaded by Russia in the Black Sea; Expected to be signed off today
(UK) JUN RETAIL SALES (EX-AUTO/FUEL) M/M: +0.4% V -0.4%E; Y/Y: -5.9% V -6.2%E
(FR) FRANCE JULY PRELIMINARY MANUFACTURING PMI: 49.6 V 51.0E (1st contraction in 20 months)
(DE) GERMANY JULY PRELIMINARY MANUFACTURING PMI: 49.2 V 50.7E (1st contraction in 25 months)
(EU) EURO ZONE JULY PRELIMINARY MANUFACTURING PMI: 49.6 V 51.0E (1st contraction in 25 months)
Honda said to cut Aug production by up to 30% in Japan citing persistent supply chain and logistical issues – press
(UK) JULY PRELIMINARY MANUFACTURING PMI: 52.2 V 52.0E (26th month of expansion but lowest since June 2020)
(EU) Daily 3-month Euribor Fixing: 0.200% v 0.145% prior (highest since 2014)
(EU) ECB's Kazimir (Slovakia, hawk): Sept rate hike may be 25bps or 50bps; ECB move is beginning of a series of 'similar' steps
(EU) EU starts 4 new separate infringement procedures against UK on Northern Ireland Protocol – press
(CN) China cabinet: China to ensure construction of property projects; Necessary housing demand should be insured
SLB Reports Q2 $0.50 v $0.40e, Rev $6.77B v $6.28Be; Raises FY22 Rev outlook
AXP Reports Q2 $2.57 v $2.37e, Rev $13.4B v $12.4Be; Raises FY22 Rev, Affirms EPS
VZ Reports Q2 $1.31 v $1.34e, Rev $33.8B v $33.7Be; Cuts FY22 outlook
TWTR Reports Q2 -$0.08 v +$0.15e, Rev $1.18B v $1.32Be; Will not provide financial guidance or host call today citing pending acquisition by an affiliate of Elon Musk
(UR) Ukraine, Turkey and the UN confirm to have signed an agreement on the export of grain
(US) JULY PRELIMINARY S&P/MARKIT MANUFACTURING PMI: 52.3 V 52.0E; PMI Services: 47.0 v 52.7e
(US) White House Spokesperson Kirby: Defense department making prelim explorations into feasibility of potentially providing fighter jets to Ukraine; Providing jets to Ukraine is not something that will be executed in the near-term