Debt ceiling truce gives markets some relief, though energy crunch and supply chain problems still loom

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Weekly Market Update: Debt ceiling truce gives markets some relief, though energy crunch and supply chain problems still loom

2021-10-08T16:16:51.193

Stock volatility remained elevated coming into this week as a surge in global energy prices compounded inflationary concerns that could stall the economy's post-pandemic recovery. The Atlanta Fed cut is Q3 GDP forecast to a paltry 1.3%. With oil prices trading at the highest levels in seven years, thanks in part to price spikes in coal and natural gas, benchmark government bond yields moved higher in response to the anticipated inflationary effects of the growing energy crunch. In the UK, where the nation's power grid relies heavily on natural gas imports, prices surged by 37% on Wednesday alone to a fresh record high of more than $40 per British Thermal Units, a level that is around eight times higher than spot prices in the United States. Inflation and supply chain concerns were further aggravated by Beijing stepping up rhetorical threats toward Taiwan alone with its now daily military incursions into Taiwanese airspace.

Worries over whether the US Treasury would be able to raise money to pay its bills also weighed heavily on investors this week. By Thursday though, Democrats and Republicans reached a truce that would extend the debt ceiling into December. That news along with a roll over in natural gas prices, and other key input costs measures like freight benchmarks convinced investors to get more aggressive ahead of the September employment report. Friday’s payroll number was the second disappointing reading in a row, though still robust enough to keep expectations on track for the Fed to launch its QE tapering plan in November. With relief rallies in the latter part of the week, the S&P gained 0.8%, the DJIA rose 1.2%, and the Nasdaq edged up 0.1%.

In corporate news this week, ongoing global distribution hitches continued to weigh on outlooks. Home construction firm Hovnanian cuts its full year outlook amid supply chain delays. Marvell’s CEO forecast that the semiconductor shortage could extend through 2022. Defense manufacturer Oshkosh cut its outlook following significant materials and logistics disruptions. For the airline sector, Delta’s CEO affirmed its Q3 earnings guidance and noted that bookings bottomed out in September and have been improving. Kellogg workers announced they would go on strike at all US cereal facilities, though later in the week the company countered it was readying to restart plant operations with salaried employees and third-party workers. Sweden paused its Moderna COVID-19 vaccine rollout for people under 30, citing rare side effects from the injection. Shares in pharma company ChemoCentryx ripped almost 90% higher after the FDA approved the first drug in a decade to treat the autoimmune disease vasculitis. Twitter agreed to sell its MoPub monetization solution for app publishers to AppLovin for $1.1B in cash.

SUN 10/3
TSLA Reports Q3 deliveries 241.3K v 221Ke v 201.3K q/q
DAL CEO Bastian: Affirms Q3 earnings to be within guidance; bookings bottomed out in Sept and have been improving
(HK) Hong Kong Govt adviser David Hui: Reopening border with China will take 4-5 months of talks - SCMP
(UK) Brexit Min Frost said to be planning to issue a threat that the UK was prepared to trigger Article 16 unless the EU agreed to replace the Northern Ireland Protocol; Talk of early NOV deadline - UK press
(TW) China sent 77 warplanes into Taiwan defense zone over the past 2 days - Taiwan press citing Govt
(HK) Macau halts border resumption plan with China Zhuhai city (Guangdong Province)
6666.HK Hopson Development to acquire 51% stake in Evergrande's Property management unit Evergrande Real Estate for HK$40B (~$5.0B) - Chinese press

MON 10/4
BNTX CEO: a new COVID-19 vaccine version is likely to be needed by mid-2022 to protect against potential virus mutations - FT interview
(TR) Turkey Sept CPI M/M: 1.3% v 1.3%e; Y/Y: 19.6% v 19.7%e
(ES) ECB's De Guindos (Spain): Forward looking indicators shows that expansion has lost some momentum due to supply constraints, higher energy costs and bottlenecks
(UK) Brexit Min Frost: Northern Ireland protocol is not working and needs to change; cannot wait forever; Triggering Article 16 may be only way to protect UK (in line with speculation)
MRVL CEO: Chip shortage could extend through 2022 - press interview
DVAX Collaborates with US DoD to develop an adjuvanted plague vaccine using CpG 1018 adjuvant; Anticipates Phase 2 trial will commence in 2022
KRT Raises Q3 sales $102-103M (prior $100-102M) v $101Me, initial FY21 sales $365-368M v $368Me; Cites strong SEP demand
Reportedly OPEC+ ministers agree to maintain existing policy of increasing production by 400K bpd in Nov, in line with the JMMC recommendation – press
(CN) China Foreign Min: China will take all necessary measures to resolutely crush any Taiwan independence plots
1777.HK Misses $206M principal payment on 2021 notes due Oct 4th; shares halted until further notice
(US) Fed's Bullard (non-voter, hawk): Inflation is higher than the US has seen for a decade; Concerned about inflation risks are to the upside
(TW) China again sent 56 warplanes into Taiwan air defense zone Monday, Taiwan called on China to stop "irresponsible provocative actions"

TUES 10/5
(JP) Japan Fin Min Suzuki: PM has instructed me to be flexible on policy; will seek a new type of capitalism and peruse fiscal health and growth at the same time
(FR) FRANCE SEPT FINAL PMI SERVICES: 56.2 V 56.0E (confirms 5th straight expansion but lowest reading since Apr 2021)
(DE) GERMANY SEPT FINAL PMI SERVICES: 56.2 V 56.0E (confirms 5th month of expansion but lowest reading since May 2021)
(UK) SEPT FINAL PMI SERVICES: 55.4 V 54.6E (confirms 7th month of expansion)
(US) SEPT ISM SERVICES INDEX: 61.9 V 59.9E
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +0.0% v +1.0% prior
(US) Atlanta Fed GDPNow: Cuts Q3 GDP forecast to 1.3% from 2.3%
K Workers go on strike at All US cereal facilities - press
(US) SEC Chair Gensler: US will not follow China in banning crypto tokens; Does not answer whether the SEC is examining Federal Reserve members' stock trading - press
HOV Cuts FY21 outlook amid supply chain delays; Cuts Q4 Rev $780-830M v $683M y/y, adj EBITDA $85-100M v $84.5M y/y (prior: Rev $830-880M, adj EBITDA $100-115M)
(UK) PM Johnson reportedly plans to announce a 'significant' boost to minimum wage within next few weeks - UK's Times
*(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) RAISES OFFICIAL CASH RATE (OCR) 25BPS TO 0.50%; AS EXPECTED
(TW) Taiwan Ministry of National Defense (MND): China is unsure if an attack on Taiwan would succeed, could be ready for full scale invasion of Taiwan by 2025 – Taiwanese

WED 10/6
(FR) France govt to present retaliatory measure on UK fishing soon
DOW Outlines investment plan: Targets underlying EBITDA >$3.0B, ROIC >13%, adj debt/EBITDA 2.0-2.5x over investment cycle - PR ahead of investor day
RPM Reports Q1 $1.04 v $1.00e, Rev $1.65B v $1.66Be; Cuts Q2 adj EBIT outlook; Expects raw material, freight and wage inflation to persist in Q2
MRNA Reportedly Sweden pauses Moderna's COVID-19 vaccine rollout for people born in 1991 and later citing rare side effects - press
(RU) Russia Pres Putin: Country is a reliable gas supplier to Europe and Asia; Russia is increasing its gas supplies to Europe; Have increased transit via Ukraine
(US) SEPT ADP EMPLOYMENT CHANGE: +568K V +430KE; Current bottlenecks in hiring should fade as the health conditions tied to the COVID-19 variant continue to improve
(PL) POLAND CENTRAL BANK (NBP) RAISES BASE RATE BY 40BPS TO 0.50%; NOT EXPECTED (1st hike since May 2012)
SAFM Increased pay rates for hourly employees to $16.70/hr; Effective Sept 26th
(US) DOE CRUDE: +2.3M V 0ME; GASOLINE: +3.3M V 0ME; DISTILLATE: -0.4M V -1ME
(US) Fed's Barkin (FOMC voter, hawk): Demand very strong, consumers spending and profits high
GM Announces Ultra Cruise, enabling true hands-free driving across 95% of driving scenarios
NIH's Fauci: Confirms US FDA examining data on mixing and matching boosters (as announced on 10/1)
(US) GOP Sen Leader McConnell reportedly just told a closed meeting of Senate Republicans that he would offer a short-term debt ceiling extension today (Defined & fixed Dollar amount) - press
(EU) ECB reportedly studying new bond buying plan for when PEPP ends, plan to prevent widening of spreads - press
(US) Energy Sec Granholm: Release of crude oil from Strategic Petroleum Reserve is a 'tool that's under consideration' to tame fuel price rises; Does not rule out a ban on crude oil exports - FT interview
K Spokesperson: Company is preparing to begin plant operations again amid strike; To use salaried employees and third-party workers to restart facilities
COST Reports Sep total SSS +9.4% (ex-gas and FX) vs 5.6% in 2019
TWTR Enters into definitive agreement to sell MoPub to AppLovin for $1.05B cash

THRS 10/7
NG.UK Reportedly sees UK has enough gas supply capacity to meet demand, but warns of tight electricity supplies this winter - financial press
SON Implementing 5th price increase of 2021 of $60/Ton for uncoated recycled paperboard; Cites continued inflationary pressures
CAG Reports Q1 $0.50 v $0.48e, Rev $2.65B v $2.55Be
UAL Reportedly plans >3.5K domestic flights in Dec (largest domestic schedule since the pandemic star and 91% of 2019 rate) - press
(US) INITIAL JOBLESS CLAIMS: 326K V 348KE; CONTINUING CLAIMS: 2.71M V 2.76ME
(US) Sen Maj Leader Schumer: Deal has been reached with GOP Leader McConnell on short-term debt ceiling raise until early Dec
(US) Energy Dept spokesperson: We are not planning to tap the Strategic Petroleum Reserve or to pursue a ban on crude exports - press
(US) AUG CONSUMER CREDIT: $14.4B V $17.5BE
TSLA CEO Musk: hopeful chip shortage will resolve soon; To volume produce Tesla Semi trucks and Roadster in 2023; No stock split expected any time soon - Annual Meeting
005930.KR Reports prelim Q3 (KRW) Op 15.8T v 12.4T y/y (16.1Te), Rev 73.0T v 67.0T y/y (73.5Te)
(US) Senate votes 50-48 to increase debt ceiling until early Dec 2021; the measure will now move to the US House; White House has said that President Biden would sign the bill

FRI 10/8
(HU) Hungary Fin Min Varga: Govt has accepted OECD global minimum tax agreement (**Note: move follows Ireland recently)
OSK Cuts outlook following significant supply chain and logistics disruptions; Guides Q4 $0.90-0.95 v $1.77e; Cuts Q4 Rev ~$2.05B v $2.15Be (prior ~$2.10B); Approves FY change
(CN) Global Times' Editorial article: We must resolutely define the US troops deployment in Taiwan as an invasion; The mainland has the right to carry out military strikes against them at any time
(US) SEPT UNEMPLOYMENT RATE: 4.8% V 5.1%E
(US) SEPT AVERAGE HOURLY EARNINGS M/M: 0.6% V 0.4%E; Y/Y: 4.6% V 4.6%E
(US) White House reportedly considering wide-ranging effort on oversight of crypto assets - press

Markets grow more skittish amid inflation pressures

TradeTheNews.com 

Weekly Market Update: Markets grow more skittish amid inflation pressures

2021-10-01T17:51:13.653

The third quarter drew to a close with many cautionary factors weighing on the investor outlook after a rally in stock markets for much of the year. In recent weeks, the US Federal Reserve and other global central banks have tilted toward reining in pandemic-era stimulus measures. A recent surge in natural gas prices in Europe and Asia raised concerns that the current bout of inflation pressures will last longer than many market participants and central bankers had expected. Rising energy costs could also be expected to take a toll on growth in the world economy with the Northern Hemisphere head towards winter. Corporate updates remained mired in commentary about supply chain constraints that are not only not improving, but in some areas getting worse. That cocktail of pessimism, along with potential technical factors related to month and quarter end resulted in a significant three day sell off for US equity markets. The major indices finally fell 5% from the recent highs and US Treasury yields moved up to levels not seen since June, with the 10-year yield spending much of the week above 1.50%. The NASDAQ saw lingering relative weakness in part due the persistent upward pressure on rates. WTI crude prices neared levels not seen since 2008 and Brent topped $80 a barrel with host of analysts calling for $100+ oil this winter. For the week, the S&P fell 2.2%, the DJIA lost 1.4%, and the Nasdaq was down 3.2%.

Price pressures and supply chain bottlenecks continued to dominate corporate news this week. Bed, Bath and Beyond shares slid almost 20% after cutting guidance as traffic slowed significantly in August while supply chain and inflation challenges also weighed on the name. Micron Q1 earnings outlook disappointed the Street while analysts worried about a decline in memory pricing. Meanwhile AMD executives said demand for chips has not cooled down, and supply is expected to remain tight into the first half of next year. Automaker BMW boosted its FY guidance, saying it expects that the continuing positive pricing effects for vehicles will overcompensate the negative sales volume effects it has seen in the industry. Merck announced data for a promising new Covid treatment on Friday sending its shares higher while vaccine makers saw their stocks tumble. Merck also entered a deal to acquire Acceleron this week in order to bolster its rare disease drug portfolio.


SUN 9/26
(DE) German Social Democrats (SPD) leads Merkel's CDU/CSU coalition by 2 points in federal elections - ZDF exit polls
(US) Speaker Pelosi sets Thursday (Sept 30th) to vote on $1.0T infrastructure bill (v prior vote was scheduled for Monday, Sept 27th)
BP.UK Updates on shortage of deliver drivers in UK: 30% of UK fuel stations have nearly no gas to supply, 1.2K locations are running out of the 2 main fuel types
(DE) Germany Election Final Results: Social Democrats (SPD) Scholz 25.7%; CDU/CSU Laschet 24.1%; Greens Baerbock 14.8% (Greens best results in national election) - Federal Returning Officer

MON 9/27
(CN) Guangdong, China has asked people to turn off lights they don't need and use their air conditioning less as energy crisis spreads from the factories to homes - press
(CN) Reportedly some Apple and Tesla suppliers halted production at certain Chinese plants to comply with new tighter energy consumption rules - Nikkei
ENOB Successfully completes FDA Pre-IND for a Potential Cure for Hepatitis B virus infection; Company encouraged by clear path following review of FDA’s CBER written comments
(US) Fed's Rosengren (non-voter) said to retire on Sept 30th - press
*(US) SEPT DALLAS FED MANUFACTURING ACTIVITY INDEX: 4.6 V 11.0E
(US) Atlanta Fed GDPNow: Cuts Q3 GDP forecast to 3.2% from 3.7%
(US) Dallas Fed's Kaplan to retire on Oct 8th
HUN Activist Starboard reportedly builds over 8% stake - press
AMD President and CEO: H1 2022 will still likely see tight supply; demand for chips has not 'cooled down'; Sees chip shortage 'less severe' in H2 2022 - US financial press interview
F Announces Electric Vehicles Mega Campus in Tennessee and Twin Battery Plants in Kentucky; $11.4B Investment to Create 11,000 Jobs and Power New Lineup of Advanced EVs

TUES 9/28
Jefferies Cuts U.S. Real Estate to Market Weight from Overweight
*(DE) GERMANY OCT GFK CONSUMER CONFIDENCE: +0.3 V -1.5E (1st positive reading in 19 months)
THO Reports Q4 $4.12 v $2.91e, Rev $3.59B v $3.33Be; Says demand for our RV products remains very robust, continuing to exceed production output; Affirms positive long-term outlook for the RV industry
PFE Confirms submission of initial data from Phase 2/3 to US FDA from pivotal trial of COVID-19 vaccine in children 5 to <12 years of age; The 10 µg dose was carefully selected as preferred dose for safety, tolerability and immunogenicity in children 5 to <12 years of age; Expect Topline immunogenicity and safety readouts for children 2 to <5 years of age and children 6 months to <2 years of age by Q4
TTE.FR To increase energy production by 30% from now to 2030; Cuts higher-end Capex target to $13-15B/yr (prior $13-16B/yr); To buy back $1.5B in shares in Q4 - investor meeting
*(US) AUG PRELIMINARY WHOLESALE INVENTORIES M/M: 1.2% V 0.8%E
*(US) SEPT RICHMOND FED MANUFACTURING INDEX: -3 V 10E; New Orders -19
*(US) SEPT CONSUMER CONFIDENCE: 109.3 V 115.0E
BYTEDANCE.IPO Confirms introduction of Tiktok shopping, a suite of solutions, features and advertising tools
(US) Senate GOP officially blocks vote to suspend debt ceiling - press
PFE Pfizer and BioNTech reportedly may not complete Emergency Use Authorization for COVID-19 vaccine for children until mid-Oct; Authorization may not come until Nov (previously anticipated by end of October) - press
MU Reports Q4 $2.42 v $2.33e, Rev $8.27B v $8.11Be; Guides Q1 below consensus; Confirms initiates a quarterly dividend (announced in August)
SHW Cuts outlook for second time this month: Q3 $1.80-1.90 v $2.42e, Net sales flat to down slightly y/y; Cites escalating raw material availability challenges and inflation headwinds
MU Exec: Shortages are causing adjustments in memory orders; Our outlook is similar to how we viewed Q4. - earnings call and slides
2066.HK Evergrande disposes of 1.75B shares in company for CNY10B (~$1.55B) to Shenyang Shengjing Finance Investment Group [subsidiary of the State-owned Assets Supervision and Administration Commission of Shenyang People’s Government (“Shenyang SASAC”)]
MRNA Reportedly FDA is leaning towards an authorization of coronavirus booster shot at half dose (50-micrograms) - US financial press
005935.KR Said to be near picking Williamson County in Texas a site for US Chip Plant worth ~$17B - Press

WEDS 9/29
ASML.NL Targets FY25 Rev €24-30B, gross margin 54-56%; Says significant opportunities are beyond - Investor day
*(JP) JAPAN LDP ELECTION 1ST ROUND RESULTS: TO HEAD INTO RUNOFF BETWEEN KISHIDA AND KONO (as expected)
*(JP) JAPAN ELECTION RESULTS: KISHIDA TO BECOME NEXT JAPAN PM AFTER VOTE RUNOFF
*(ES) SPAIN SEPT PRELIMINARY CPI M/M: 0.8% V 0.4%E; Y/Y: 4.0% V 3.5%E (highest annual pace since Sept 2008)
(DE) German Greens Co-leader Baerbock: Aiming for swift coalition talks, should not have a repeat of 2017 lengthy coalition negotiations
*(US) AUG PENDING HOME SALES M/M: 8.1% V 1.3%E; Y/Y: -6.3% V -13.8%E
*(US) DOE CRUDE: +4.6M V -2.5ME; GASOLINE: +0.2M V +1ME; DISTILLATE: +0.4M V -1.5ME
*(CN) CHINA SEPT MANUFACTURING PMI (GOVT OFFICIAL): 49.6 V 50.0E (1st contraction in 18 months)

THURS 9/30
(US) Sen Maj Leader Schumer (D-NY) says he has agreement with Republicans for stopgap funding bill vote on Thursday
(UK) Britain’s biggest retailers said to warn shoppers to expect a “nightmare” Christmas with limited stock on the shelves and higher prices amid labor shortages and shipping problems - financial press
*(UK) Q2 FINAL GDP Q/Q: 5.5% V 4.8%E; Y/Y: 23.6% V 22.2%E
DGE.UK Issues Q1 Trading Update: strong start to FY22, organic net sales momentum across all regions
*(FR) FRANCE SEPT PRELIMINARY CPI M/M: -0.2% V -0.1%E; Y/Y: 2.1% V 2.2%E
*(DE) GERMANY SEPT NET UNEMPLOYMENT CHANGE: -30.0K V -37.0KE; UNEMPLOYMENT CLAIMS RATE: 5.5% V 5.5%E
*(EU) EURO ZONE AUG UNEMPLOYMENT RATE: 7.5% V 7.5%E
*(IT) ITALY SEPT PRELIMINARY CPI M/M: -0.1% V -0.3%E; Y/Y: 2.6% V 2.4%E
MKC Reports Q3 $0.80 v $0.73e, Rev $1.55B v $1.56Be; Cuts FY21 guidance citing primarily reflects higher inflation and industry-wide logistics challenges
XLRN To be acquired by Merck for $180/shr in $11.5B cash deal
BBBY Reports Q2 $0.04 v $0.53e, Rev $1.99B v $2.06Be; Guides Q3 weak and cuts FY21 outlook citing Aug traffic slowed significantly
*(DE) GERMANY SEPT PRELIMINARY CPI M/M: 0.0% V 0.1%E; Y/Y: 4.1% V 4.2%E
*(US) INITIAL JOBLESS CLAIMS: 362K V 330KE; CONTINUING CLAIMS: 2.80M V 2.79ME
*(CZ) CZECH CENTRAL BANK (CNB) RAISES 2-WEEK REPURCHASE RATE BY 75BPS TO 1.50%; MORE-THAN-EXPECTED
*(US) Q2 FINAL GDP ANNUALIZED Q/Q: 6.7% V 6.6%E; PERSONAL CONSUMPTION: 12.0% V 11.9%E
(US) Nevada reports Aug casino gaming Rev $1.17B, +57% y/y; Las Vegas strip Rev $625.7M, +97.2% y/y
*(US) SEPT CHICAGO PURCHASE MANAGERS INDEX (PMI): 64.7 V 65.0E
(US) Fed Chair Powell: Fed finds itself in difficult situation in regards to tension between inflation and employment; Inflation is well above target but we are still far away from full employment - House testimony
(DK) Denmark Central Bank (Nationalbanken) cuts certificate of deposit rate due to sale of foreign currency; Cuts Certificate of Deposit rate 10bps to -0.60% from -0.50%, Cuts lending rate to -0.45% from -0.35%; Keeps all other rates unchanged
(US) NY Fed takes $1.61T in RRP program (record high) at 0.05%; 92 participating and accepted counterparties

FRI 10/1
(EU) EURO ZONE SEPT ADVANCE CPI ESTIMATE Y/Y: 3.4% V 3.3%E; CPI CORE Y/Y: 1.9% V 1.9%E (3rd month above target and (highest annual pace since 2008)
Merck and Ridgeback’s Investigational Oral (Pill) Antiviral Molnupiravir reduced risk of hospitalization or death by ~50% compared to placebo for patients with mild or moderate COVID-19 in positive interim analysis of Phase 3 study; Expects to produce 10M courses of treatment by end of 2021, with more doses expected to be produced in 2022 and expects to seek EUA as soon as possible
(US) SEPT ISM MANUFACTURING: 61.1 V 59.5E; PRICES PAID: 81.2 V 78.5E
GM Reports Q3 deliveries 447.0K, -32.8% y/y v -31.5%e; Affirms FY21 outlook: Semiconductor supply disruptions that impacted Q3 wholesale and customer deliveries are improving
(US) Atlanta Fed GDPNow: Cuts Q3 GDP forecast to 2.3% from 3.2%
(US) Fed's Mester (non-voter, hawk): Current supply-demand situation is pandemic linked, Expects interest rate lift off in 2022
(US) FDA to hold Oct 14-15th advisory committee meetings to discuss EUA for booster doses; Oct 26th meeting scheduled vaccines for younger children - press

Evergrande worries roil markets, while Fed confident tapering can start soon

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Weekly Market Update: Evergrande worries roil markets, while Fed confident tapering can start soon

2021-09-24T16:05:17.003

Trading commenced this week with a thud, as worries about contagion from a potential debt default by China’s Evergrande caused a flight from risk assets, notably stocks. At one point on Monday the Dow lost nearly 1,000 points and US equity markets saw a roughly 5% drawdown from the recent highs intraday. Adding to the consternation, conservative Democratic Senator Machin noted he thought Congress should take a “strategic pause” until 2022 before taking up President Biden’s $3.5T social spending package, casting doubts on the fate of the infrastructure bill that is being moved in parallel. Simultaneously, time was running out for a deal to raise the debt ceiling leaving a potential US government shutdown looming. Stocks rebounded somewhat late in Monday’s session and steadied as investors turned their attention the mid-week FOMC meeting.

On Wednesday, the US Federal Reserve signaled it could start reversing its pandemic stimulus programs in November and affirmed market expectations that the central bank could also begin raising interest rates next year. Chairman Powell’s tone was somewhat more hawkish than previous as he seemed to downplay emphasizing the transitory nature of rising inflation while noting it was his view that the taper test had been “all but met”. The next day the BOE statement acknowledged some recent developments have strengthened the case for modest tightening. Global treasury yields started to track significantly higher and stock markets roared back. News that the FDA formally authorized a booster dose of Pfizer-BioNTech COVID-19 vaccine for expanded populations may have aided the sharp rebound in sentiment. Before the opening bell on Friday US indices were up on the week and US Treasury yields had broken above key levels that had served as resistance throughout the summer. Commodity prices had come back from Monday’s weakness and the US dollar held at firmer levels. Crypto markets experienced modest downside pressure, hurt in part by concerned concerns about Chinese regulation. For the week, the S&P gained 0.5% and the DJIA added 0.6%, while the Nasdaq was flat.

In corporate news this week, Nike’s Q1 results weighed on the Dow after management indicated they expect to continue to struggle with supply chain constraints through the holiday season. Shares of FedEx also dropped as higher wages hit its Q1 earnings, and the shipping giant said it planned to further increase US prices. Carnival Cruises said it would likely be able to restart over 50% of its fleet capacity by Oct and that its cumulative bookings for H2’22 were ahead of its 2019 pace. Uber upgraded its outlook, saying it will hit positive adj EBITDA in July and August and was tracking positive for Q3, ahead of its prior guidance. Pfizer released encouraging topline results from the trial of its COVID-19 vaccine in children 5 to 11 years, and expects data from 2-5 year old and 6 months-to-2 year old cohorts as soon as Q4’21.


SUN 9/19
3333.HK Next interest payments due Thursday, Sept 23rd, to be closely watched for possible default and spillover
(US) US investigating 30M vehicles over possible Takata airbag defects - press

MON 9/20
(US) Reportedly Senator Manchin (D-WV) believes Congress should take a "strategic pause" until 2022 before voting on Pres Biden’s $3.5T social-spending package - Axios
(UK) UK meat industry said to have warned about carbon dioxide (CO2) shortage; some meat firms have 5 days of available CO2 supply - press
PFE Announces positive topline results from pivotal trial of COVID-19 vaccine in children 5 to 11 Years; Data from children 2-5 years of age and children 6 months to 2 years of age expected as soon as Q4-2021
DHI Cuts Q4 Rev $7.7-7.9B v $8.23Be (prior $7.9-8.4B), homes closed 21.3-21.7K (prior 23-24.5K), raises home sales gross margin 26.5-26.8% (prior 26.0-26.3%)
*(US) SEPT NAHB HOUSING MARKET INDEX: 76 V 74E
(US) White House Covid adviser Zients: Confirms U.S to reopen travel to fully vaccinated foreign nationals, CDC to determine what will be deemed fully vaccinated
APD Announces N.A. price increase for liquid and bulk industrial gas products for merchant customers, effective Oct 1
FDX Shipping rates to increase on average by 5.9% for US domestic, US export, US import services; Effective Jan 3 ,2022
LEN Reports Q3 $3.27 v $3.24e, Rev $6.94B v $7.27Be; Q4 guidance implies FY21 deliveries 60K (guided 62-64K)
RDSA.UK Signs agreement to sell Permian interest for $9.5B to ConocoPhillips
(US) Senators Durbin and Cantwell sent letters to DOJ and FAA urging them to take tougher action on dangerous airline passengers
(CA) Canada PM Trudeau projected to win 3rd term; Liberal party to form Govt (minority) - CTV

TUES 9/21
(CN) Due to concerns on Evergrande debt repayment, Ashmore, BlackRock and Pacific Investment Management said to be selling property sector holdings in China - US financial press
(CZ) Czech Central Bank's Holub (chief economist): likely to support a 50bps hike at Sept 30's meeting
UBER Narrows Q3 gross bookings $22.8-23.2B (prior $22-24B); Says achieved positive adj EBITDA in July and Aug and tracking positive for Q3 (ahead of prior guidance)
ENT.UK Confirms cash and stock proposal from DraftKings
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +1.0% v +4.0% prior
(US) SEC Chair Gensler: Securities rules give the SEC great authority over crypto assets; Do NOT see much long-term viability for cryptocurrencies - WSJ
(US) TREASURY $24B 20-YEAR BOND REOPENING DRAWS 1.795%, BID-TO-COVER 2.36 v 2.33 PRIOR
COIN CEO: Confirms plans to submit proposals to regulators by next month - Techcrunch conf comments
(US) House of representatives agrees on bill to suspend debt ceiling through 2022 via date method only, funds Govt through Dec 3rd; the final vote was 217 to 207

WEDS 9/22
HUN Implements €125/t Natural Gas Surcharge on MDI Sales in Europe, effective Oct 1st
(CN) Morgan Stanley analysts see China to potentially initiate a managed debt restructuring of Evergrande next week
PFE PFE-BNTX expands collaboration with US to provide 500M additional COVID-19 vaccine doses, for a total of 1.0B doses, at not-for-profit price for donation to poorest countries
*(US) AUG EXISTING HOME SALES: 5.88M V 5.89ME
*(US) DOE CRUDE: -3.5M V -2.5ME; GASOLINE: +3.5M V -1ME; DISTILLATE: -2.6M V -1ME
*(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25% (AS EXPECTED); POLICYMAKERS EXPECT FIRST RATE HIKE IN 2022; BOND TAPER MAY SOON BE WARRANTED
(US) Fed Chief Powell: We discussed pace of tapering and generally agreed that if economy plays out as expected we could finish tapering by middle of next year - post rate decision press conference
(US) Fed Chief Powell: We could reach conclusion that both tests have been met for tapering as soon as the next meeting; Taper test is 'all but met'- rate decision Q&A
PFE FDA Authorizes Booster Dose of Pfizer-BioNTech COVID-19 Vaccine for Certain Populations

THURS 9/23
EO.FR Cuts FY21 Rev €15.5B (prior >€16.5B) cites major cut by IHS Markit of global auto production forecast for H2 2021
MRNA CEO: COVID-19 pandemic could be over in a year with increased vaccine production ensures global supplies - Swiss press interview
*(FR) FRANCE SEPT PRELIMINARY MANUFACTURING PMI: 55.2 V 57.0E (10th month of expansion but lowest reading since Jan 2021)
*(DE) GERMANY SEPT PRELIMINARY MANUFACTURING PMI: 58.5 V 61.4E (15th month of expansion but lowest reading since Jan 2021)
*(CH) SWISS NATIONAL BANK (SNB) LEAVES KEY RATES UNCHANGED AT -0.75%; AS EXPECTED
*(EU) EURO ZONE SEPT PRELIMINARY MANUFACTURING PMI: 58.7 V 60.3E (15th month of expansion but lowest reading since Feb 2021)
*(NO) NORWAY CENTRAL BANK (NORGES) RAISES DEPOSIT RATES BY 25BPS TO 0.25%; AS EXPECTED; Most likely to raise Deposit Rate further in Dec; First G10 to hike post-pandemic
*(UK) SEPT PRELIMINARY MANUFACTURING PMI: 56.3 V 59.0E (16th straight expansion but lowest reading since Feb 2021)
3333.HK China's financial regulators said to have given instructions to Evergrande in order to avoid near-term dollar bond default - press
3333.HK (CN) China authorities said to have asked local governments to prepare for potential fall of Evergrande Group - US financial press
(EU) ECB members reportedly see risk of inflation exceeding projections; Some said to be open to increasing APP buying (conventional QE) temporarily to avoid cliff effect - press
3333.HK (CN) Evergrande dollar bondholders said to still have not received interest payment on 5-year bond due Thursday, Sept 23rd - press
*(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.10%; AS EXPECTED
*(TR) TURKEY CENTRAL BANK (CBRT) CUTS ONE-WEEK REPO RATE BY 100BPS TO 18.00%; NOT EXPECTED
*(UK) BOE SEPT MINUTES: VOTED 9-0 TO LEAVE INTEREST RATES UNCHANGED AT 0.10%
AAPL Reportedly iPhones may need to be redesigned following push from the EU on a common USB-C charger - press
CRM Raises again FY22 Rev $26.3-26.4B (prior $26.2-26.3B) - PR ahead of investor day
*(US) INITIAL JOBLESS CLAIMS: 351K V 320KE; CONTINUING CLAIMS: 2.85M V 2.60ME
CCL Reports on pace to restart over 50% of fleet capacity by Oct; Plans for additional ship restarts to reach overall goal to return 65% of capacity by Dec 31st
*(US) SEPT PRELIMINARY MARKIT MANUFACTURING PMI: 60.5 V 61.0E
(US) NY Fed takes $1.35T in RRP program (record high) at 0.05%; 77 participating and accepted counterparties
PFE (US) CDC Advisory Committee on Immunization Practices (ACIP) votes unanimously (15 votes yes; 0 votes No; 0 votes to Abstain) unanimously, in favor of a single PFE-BNTX COVID-19 vaccine booster dose being recommended for persons aged >= 65 years, and LTCF* residents, at least 6 months after the primary series under the FDA's Emergency Use Authorization (EUA)
NKE Reports Q1 $1.16 v $1.12e, Rev $12.2B v $12.5Be\
COST Reports Q4 $3.76 v $3.55e, Rev $62.7B v $62.8Be
NKE CFO: Expects Q2 Rev growth to be flat to down low single digits as factory closures impact production and delivery for the holiday and spring seasons; Expect all geographies to be affected by supply chain issues - earnings call comments
3333.HK *USD BONDHOLDERS SAY HAVE NOT YET RECEIVED INTEREST PAYMENTS [in line with report that circulated during the NY morning on Thurs]

FRI 9/24
*(DE) GERMANY SEPT IFO BUSINESS CLIMATE SURVEY: 98.8 V 99.0E
(CN) China State Planner NDRC: Declares all crypto related activities and transactions illegal; To strictly prohibit financial support for new cryptocurrency mining projects
(US) Fed's Mester (non-voter, hawk): Supports QE tapering in Nov and concluding over H1 2022; See conditions for rate liftoff met by end of 2022
CCL Reports cumulative advanced bookings for H2'22 are ahead of a very strong 2019
(US) AUG NEW HOME SALES: 740K V 715KE

Inflation, supply chain, and Delta continue to trouble markets, but some hopeful signs emerge

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 Weekly Market Update: Inflation, supply chain, and Delta continue to trouble markets, but some hopeful signs emerge

2021-09-17T16:06:54.073

Markets see-sawed this week and treasury yields backed up as investors grappled with mixed US and China economic data as well as the continued spread of the Delta variant. US August CPI data offered some of the first signs that inflation may be easing as Fed Chairman Powell has remained steadfast in forecasting. An unexpectedly strong rebound in August retail sales, alongside robust September manufacturing readings, offset decelerating economic readings out of China. Friday saw the PBOC undertake a significant liquidity add in an attempt to sooth market nerves frayed by quarter-end funding needs and China Evergrande Group’s mounting debt crisis.

Concerns about global stagnation lingered, amplified by a surge in energy prices in Europe. Natural gas and power prices spiked and EU government officials took notice as winter fast approaches. Rising prices in Europe forced US natural gas prices to the highest level since 2018. On the other hand iron ore prices dropped nearly 20%, the worst week since the financial crisis in 2008. Interest rates rose, highlighted by the highest US 10-year Treasury and Bund yields seen since early July. The greenback firmed up resulting in a 2-month low print for the Euro. By Friday, the S&P 500 was near testing its 50-day moving average, which has served as significant support on multiple occasions through 2021. For the week, the S&P fell 0.6%, the DJIA slipped 0.1%, and the Nasdaq gave up 0.5%.

In corporate news, Oracle’s Q1 earnings report disappointed investors as revenue growth was not as impressive as some hoped. Trading in Pfizer and Moderna was volatile as the companies shared more data and an FDA advisory panel debated the merits of Pfizer’s Covid booster shot for the general population. Automobile producers announced more plants would be temporarily idled amid the ongoing global shortage of semiconductor chips. Steel Dynamics and Nucor both raised guidance driven by higher selling prices and robust order books for steel. In M&A, Intuit announced it would acquire marketing platform Mailchimp for about $12B in cash and shares. Major pigment manufacturer Tronox reportedly received a $4.3B takeover approach from Apollo Global.


SUN 9/12
6688.HK Said that China is seeking to break up Alipay from company - FT

MON 9/13
OPEC Monthly Oil Report: Raises 2022 global oil demand growth
(US) Aug NY Fed Survey of Consumer Expectations: Survey shows improvement in expectations; Average reservation wage increases y/y
TROX Apollo reportedly makes $27/shr offer to acquire Tronox in $4.3B all-cash deal - press
(US) SEC Chair Gensler: SEC staff are examining 5 market structure projects
(US) AUG MONTHLY BUDGET STATEMENT: -$170.6B V -$177.5BE
- Receipts: $268B, +20% y/y
ORCL Reports Q1 $1.03 v $0.97e, Rev $9.73B v $9.77Be
INTU Confirms to acquire marketing platform for growing small and mid-market businesses Mailchimp for ~$12B in cash and shares
(CN) New delta variant COVID cases in Fujian province in China 59 v 22 yesterday, total now 102 since outbreak first started; Xiamen halts outbound bus services after outbreak

TUES 9/14
(DE) German 2022 baseload power price rises 2.1% to €101.1/MWh v €91.4/MWh w/w (highest ever)
BA Slightly raises 20-year jet deliveries expectations to 43.6K jets (prior 43.1K); full International recovery not till 2024 (US) AUG AUG CPI M/M: 0.3% V 0.4%E; Y/Y: 5.3% V 5.3%E (lowest annual pace since May 2021's print); CPI (ex-food/energy) M/M: 0.1% v 0.3%e; Y/Y: 4.0% v 4.2%e
(US) Three House Democrats announce they do not plan to support Biden drug pricing proposal - press

WEDS 9/15
Evergrande China said to have told banks that company will not pay interest [related to bank loans] that is Due on Mon, Sept 20th
(UK) AUG CPI M/M: 0.7% V 0.5%E; Y/Y: 3.2% V 2.9%E (moves back above target; highest level since Apr 2012, biggest jump in annual pace since 1997)
(UK) Reportedly fire hit key electricity converter station in UK shutting down a major 2,000 MW IFA cable linking UK to France – press
F Ford, Argo AI, and Walmart partner to launch Autonomous Vehicle delivery service in three US cities
STLD Guides Q3 adj $4.88-4.92 v $4.29e; Order entry continues to be robust
(US) SEPT EMPIRE MANUFACTURING: 34.3 V 17.9E; New Orders surge back to prior highs
Colonial Pipeline: Lines 1 and 2 are restored to normal operations after storm
(US) DOE CRUDE: -6.4M V -2.5ME; GASOLINE: -1.9M V -2.5ME; DISTILLATE: -1.7M V -1.5ME (Crude stocks fall to lowest since Sept 2019)
MRNA Highlights new clinical data on its COVID-19 vaccine; Believes data support benefit of an mRNA-1273 booster dose; mRNA-1273 remains highly effective against COVID-19 in real-world effectiveness study during surge in Delta cases
3333.HK All onshore bonds to suspend trading on the session; Unit Hengda Real Estate adjusts trading mechanism of bonds

THURS 9/16
(US) SEPT PHILADELPHIA FED BUSINESS OUTLOOK: 30.7 V 19.0E
(US) AUG ADVANCE RETAIL SALES M/M: +0.7% V -0.7%E; RETAIL SALES (EX-AUTO) M/M: 1.8% V 0.0%E
*(US) INITIAL JOBLESS CLAIMS: 332K V 322KE; CONTINUING CLAIMS: 2.67M V 2.74ME
(EU) An unpublished ECB inflation estimate said to raise the chance of a interest rate rise in just over 2-years; Expects to hit 2% inflation target by 2025 - Financial Times
NUE Guides Q3 $7.30-7.40 v $6.52e (Record earnings)
IVZ.UK Invesco reportedly in discussions to merge with State Street's asset management division - press

FRI 9/17
(EU) EURO ZONE AUG FINAL CPI Y/Y: 3.0% V 3.0%E; CPI CORE Y/Y: 1.6% V 1.6%E (confirms highest annual pace since 2011)
(US) Treasury said to be planning sanction to target ransomware crypto payments - press
GM Reportedly set to idle some of its North American plants for longer amid chip shortage - press
(US) SEPT PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 71.0 V 72.0E
STLA Jefferson North Assembly plant in Detroit to be idled week of Sept 20th due to the global chip shortage – press
PFE US FDA Advisory Committee votes against (2 votes Yes; 16 votes No; 0 vote to Abstain) of support of approval of a COMIRNATY booster dose

Pandemic pressures put markets off balance

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Weekly Market Update: Pandemic pressures put markets off balance

2021-09-10T16:05:54.947

Equity markets took a breather this week, digesting recent gains and absorbing fresh commentary about the effects of the Delta Covid wave from various corporate and government leaders. Meanwhile inflation data came in slightly hotter than expected with the August PPI one tenth higher than expected at 8.3% y/y. President Biden announce more big initiatives including expanding vaccine mandates and a goal for vastly increasing solar electricity production over 30 years. China continued its campaign to tighten the screws on domestic companies that operate or trade globally, but a bilateral teleconference between Biden and Xi injected some hope that Sino-American relations can get on a more constructive track. Gulf of Mexico oil operations continue to slowly get back online, though about two-thirds of oil production in the Gulf remained shut as of Friday. Crude oil prices remained in a tight range for the week, holding within striking distance of $70/bbl, while Friday’s WASDE crop report showed higher corn and soybean stocks than expected, creating some marked volatility in soft commodities. As expected, the ECB announced a modest slowdown in its bond purchase program, but ECB chief Lagarde insisted that the move was a recalibration of stimulus and not tapering. The US dollar was modestly higher on the week and gold was more than 2% lower. For the week, the S&P fell 1.7%, the DJIA lost 2.2%, and the Nasdaq slipped 1.6%.

In a series of financial conferences and disclosures this week, executives across many industries noted continued inflationary pressures from pandemic related supply chain shortages and costs linked to Covid mitigation efforts. Notably, Tyson Foods said it plans to boost beef prices amid high demand and labor shortages. Major airlines warned that the Delta variant would temper the industry’s near-term outlook, as travel bookings decelerate and cancellations rise. The news wasn’t much sunnier on the automakers’ side: Daimler estimated that the semiconductor shortage could last throughout next year and into 2023, while Toyota again cut its FY21 production guidance and GM extended the shutdown of one Michigan plant following a Chevy Bolt recall announcement. PPG guided production lower for Q3 due to increasing disruptions in commodity supplies. Apple shares dropped on Friday afternoon after a judge struck down some of its in-app payment rules as part of the ruling in its dispute with Epic Games.


SUN 9/5
(CN) China regulators to tighten supervision on financial services industry and electric vehicles - press

MON 9/6
DAI.DE Exec: Chip shortage could last throughout next year and into 2023 - Munich show comments

TUES 9/7
DTE.DE Tele2 and Deutsche Telekom divest T-Mobile Netherlands to the Apax funds and Warburg Pincus for €5.1B
7203.JP Exec: Sees investment related to development of battery supply system and R&D to be ~¥1.5T by 2030; plans to use solid-state batteries in hybrid EVs
*(DE) GERMANY SEPT ZEW CURRENT SITUATION SURVEY: 31.9 V 34.0E; EXPECTATIONS SURVEY: 26.5 V 30.5E
*(EU) EURO ZONE Q2 FINAL GDP Q/Q: 2.2% V 2.0%E; Y/Y: 14.3% V 13.6%E
MAERSKB.DK CEO: Consumer demand must ease to end supply chain crisis - FT interview
FAST Reports Aug net sales $531.1M +14.2% y/y
PPG Expects Q3 sales volume lower by $225-275M versus expectations, withdraws guidance; Sales volumes impacted by the increasing disruptions in commodity supplies
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +4.0% v +0.3% prior
INTC CEO: planning to make European chip plant investment valued as high as €80B - Munich Car Forum comments
COIN CEO tweets: SEC wants to sue company over lending practices; Served with Wells Notice on Sept 1st

WEDS 9/8
(EU) ECB's Holzmann (Austria; hawk): sees potential significant upside inflation risks; could be able to normalize policy sooner than previously thought
(US) Pres Biden to announce plan to shift nation's electricity production to 45% solar (from 4% currently) by 2050 - NYT
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS EXPECTED, maintains QE bond buying at $2.0B/week
*(US) TREASURY'S $38B 10-YEAR NOTE REOPENING DRAWS 1.338%; BID-TO-COVER RATIO: 2.59 V 2.39 PRIOR AND 2.41 OVER THE LAST 8 REOPENINGS
*(US) JULY CONSUMER CREDIT: $17.0B V $25.0BE
CVX Chevron and Caterpillar enter collaboration agreement on hydrogen
LULU Reports Q2 $1.65 v $1.21e, Rev $1.45B v $1.33Be; Raises guidance
TSN To increase beef prices; Rejects conclusions drawn by Whitehouse

THURS 9/9
(US) Reportedly ~80% of US oil and gas production in the Gulf of Mexico still remains offline because of Hurricane Ida impact - US financial press
F Confirms Ford India to cease manufacturing vehicles for sale in India immediately; Sees pretax charge of ~$2.0B in following years; Plans to expand its Business Solutions team in India significantly
UAL Cuts Q3 Rev -33% v Q3'19, Capacity -28% v Q3'19 (prior -26%) citing deceleration in customer bookings for travel in last few weeks - filing
LUV Cuts again Q3 outlook citing softness in bookings and elevated trip cancellations, especially close-in; Aug and Sept trends make it difficult for company to be profitable in Q3 - filing
(JP) Japan PM Suga reportedly will be running in upcoming general election as a member of Parliament - Japan press
*(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED
ASO Reports Q2 $1.99 v $2.25 y/y, Rev $1.79B v $1.74Be; Raises guidance
*(US) INITIAL JOBLESS CLAIMS: 310K V 335KE (post pandemic low); CONTINUING CLAIMS: 2.78M V 2.73ME
(EU) ECB chief Lagarde: Today's decision was unanimous; shift in PEPP is recalibrating stimulus and not tapering - Q&A
GM Reportedly extending shut down of Michigan facility follow Bolt recall announcement - press
NESN.CH Exec: Likely that input cost inflation will be higher next year than this year - Barc conf comments
*(US) DOE CRUDE: -1.5M V -2.5ME; GASOLINE: -7.2M V -3ME; DISTILLATE: -3.1M V -2.5ME
(US) Fed's Evans (dove, voter): Not out of the woods yet but in a better place than a year ago
(US) Fed's Kaplan (non-voter; hawkish): Supply and demand imbalance may last longer
*(US) TREASURY $24B 30-YEAR BOND REOPENING DRAWS 1.910%; BID TO COVER 2.49 V 2.19 PRIOR
MSFT Said that Microsoft will indefinitely delay return to office for workers - Press
(US) White House issues readout of call between President Biden and China President Xi from Sept 9th; US not seeking specific outcomes or agreements from the call [first call between the 2 leaders since Feb]

FRI 9/10
7203.JP Cuts again FY21 Production guidance 3.2% to 9.0M units (prior 9.3M) citing coronavirus impact in Southeast Asia and parts shortages in Sept and Oct; Cuts Sep and Oct production
GAZP.RU CEO: fully completes Nord Stream 2 construction
(UA) Ukraine President Zelensky: there is a possibility of a war with Russia; Interested in a substantive meeting with Russian Pres Putin
(US) Aug PPI Final Demand M/M: 0.7% v 0.6%e; Y/Y: 8.3% v 8.2%e
(US) FDA spokesperson: FDA will follow the science on vaccinations for young children; Hope to be able to have pediatric vaccines available in the coming months
(CN) Biden administration reportedly considering a China trade probe in an effort to pressure Beijing govt – press
US Judge issues ruling in EPIC Games antitrust lawsuit against Apple; Grants EPIC an injunction

Markets unperturbed by stagflation signals

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Weekly Market Update: Markets unperturbed by stagflation signals

Fri, 03 Sep 04:21 PM EST/09:21 PM GMT

US equity indices continued to ride into uncharted territory for much of this week. Despite lingering concerns related to the pandemic and potential Fed tapering, equity markets remained attractive relative to the paltry yields offered by government bonds in many investors’ minds. PMI readings and economic data in general continued to moderate from the recent highs, culminating in a softer than expected August US employment report on Friday. Monthly payroll numbers came in well short of expectations, suggesting the Delta variant has resulted in headwinds for the jobs recovery, causing some to argue that the softer report gave the Fed further cover to remain patient. On the other hand, wages jumped notably and the unemployment rate dipped, causing others to infer that steepening seen along the US treasury yield curve after the jobs data release suggested bond traders were betting that the Fed is in a bind because its policies have opened the door to a stagflation environment. Rates move up globally after the report, the US dollar remained weak, and gold neared the best levels in more than a month. Bitcoin topped 50K and Etherium tested 4K following a week of more eye popping NFT sales. WTI crude prices firmed back towards the $70 level after OPEC+ producers announced they will follow through with plans to bring an additional 400K bpd of supply back onto the market next month. For the week, the S&P rose 0.6%, the DJIA dipped 0.2%, and the Nasdaq rose 1.6%.

In corporate news this week, The Department of Justice was said to be preparing a second antitrust lawsuit against Google, targeting its ad technology business. Daimer’s CEO said Q3 vehicle sales would be below Q2 levels due to the ongoing semiconductor chip shortage. Apple announced as a concession to Japanese regulators that it would now allow developers of ‘reader apps’ to link to their own websites for payment, and the news sent Spotify higher. US regulators threw a wrench into Canadian National’s plans to acquire Kansas City Southern, ruling that CNI cannot complete a deal using a voting trust that had been key to the potential acquisition. Some reports late in the week indicated the KSU board would reopen talks with rival bidder Canadian Pacific and would deem the CP deal as likely to lead to a superior offer. Zoom shares fell after reporting results despite an outlook raise as investors fretted over a deceleration of growth and some signs the videoconference software may be losing ground to Microsoft. Alaska Airlines disclosed that its bookings trends have deteriorated moderately as the COVID Delta variant continues to affect air travel.


SUN 8/29
The C.1.2 variant, first detected in South Africa, is more mutated compared to original virus than any other known variant; Poses concerns it could be more infectious and evade vaccines - The Jerusalem Post
PFE New Zealand reports first death of a woman related to getting her COVID vaccine - press

MON 8/30
*(DE) GERMANY AUG CPI NORTH RHINE WESTPHALIA M/M: 0.1% V 0.8% PRIOR; Y/Y: 4.2% V 4.1% PRIOR
FUL Implements 11% surcharge to recover significant cost increases in raw materials and related services, effective immediately
*(DE) GERMANY AUG PRELIMINARY CPI M/M: 0.0% V 0.1%E; Y/Y: 3.9% V 3.9%E (highest annual pace since 1993)
*(US) JULY PENDING HOME SALES M/M: -1.8% V 0.3%E; Y/Y: -9.5% V -8.8%E
*(US) AUG DALLAS FED MANUFACTURING ACTIVITY INDEX: 9.0 V 23.0E
ZM Reports Q2 $1.36 v $1.16e, Rev $1.02B v $982Me; Raises guidance
*(CN) CHINA AUG MANUFACTURING PMI (GOVT OFFICIAL): 50.1 V 50.2E (17th month of expansion and lowest since Feb 2020)

TUES 8/31
(TW) Said that DRAM Spot prices are falling 'rapidly' in August, could set contract prices for Q4 on downward pressure - Digitimes
*(FR) FRANCE AUG PRELIMINARY CPI M/M: 0.6% V 0.4%E; Y/Y: 1.9% V 1.7%E
*(DE) GERMANY AUG NET UNEMPLOYMENT CHANGE: -53.0K V -40.0KE; UNEMPLOYMENT CLAIMS RATE: 5.5% V 5.6%E (17 month low)
*(DE) GERMANY AUG NET UNEMPLOYMENT CHANGE: -53.0K V -40.0KE; UNEMPLOYMENT CLAIMS RATE: 5.5% V 5.6%E (17 month low)
*(EU) EURO ZONE AUG ADVANCE CPI ESTIMATE Y/Y: 3.0% V 2.7%E; CPI CORE Y/Y: 1.6% V 1.5%E (highest annual pace since 2011)
(KR) South Korean Parliament passes revision of telecom business act aiming to curb Google and Apple's in-app billing policy; Requires alternatives - press
(EU) ECB's Holzmann (Austria; hawk): ECB in position to think about reducing pandemic aid - conference comments
(US) Colonial Pipeline restarts main gasoline and distillate lines post-Hurricane Ida - press
*(US) AUG CHICAGO PURCHASE MANAGERS INDEX (PMI): 66.8 V 68.0E
*(US) AUG CONSUMER CONFIDENCE: 113.8 V 123.0E (lowest since Feb)
GOOGL Postpones voluntary return to office for workers until Jan 10th vs September prior - press
KSU Canada National proposal for a voting trust has been denied by Surface Transportation Board; STB delays ruling on CN Railway trust as part of KSU deal - press
AMBA Reports Q2 $0.35 v $0.25e, Rev $79.3M v $75.5Me; Guides Q2 strong
PVH Reports Q2 $2.72 v $1.19e, Rev $2.31B v $2.14Be; Raises guidance for 3rd time
Spot prices for DRAM recently decline, cites forecast of weaker demand; notes data from DRAMeXchange - Yonhap

WEDS 9/1
(HK) Macau Aug Casino Rev (MOP): 4.44B v 8.4B prior; Y/Y: 234% v 176%e
*(EU) EURO ZONE JULY UNEMPLOYMENT RATE: 7.6% V 7.6%E
(EU) European Securities and Markets Authority (ESMA): With current high valuations, markets face possibly significant corrections - financial press
(CN) China President Xi: China facing significantly more risks and challenges
CPB Reports Q4 $0.55 v $0.47e, Rev $1.87B v $1.82Be; Guides init FY22 organic sales ~ flat, EBIT down -8% to -4%
BF.B Reports Q1 $0.40 v $0.40e, Rev $906M v $852Me; Cuts FY22 margins outlook citing higher input costs related to agave, transportation costs, and commodity prices
*(US) AUG ADP EMPLOYMENT CHANGE: +374K V +638KE
(DE) Germany Health Min Spahn: calls on China to cooperate with resolving the Covid pandemic
*(US) AUG FINAL MARKIT MANUFACTURING PMI: 61.1 V 61.2E (confirms 14th consecutive month of expansion)
*(US) AUG ISM MANUFACTURING: 59.9 V 58.5E; PRICES PAID: 79.4 V 84E
*(US) DOE CRUDE: -7.2M V -3ME; GASOLINE: +1.3M V -1.5ME; DISTILLATE: -1.7M V 0ME (Crude stocks fall to lowest since Sept 2019)
OPEC+ producers confirm agree to keep production road map of 400K bpd capacity increase in Oct
COST Reports Aug total SSS +9.1% (ex-gas and FX)
GOOGL DOJ reportedly preparing antitrust lawsuit over ad technology business; Would be a second separate antitrust suit against Google - press
AAPL To make update to App Store that will close investigation by the Japan Fair Trade Commission

THURS 9/2
AAPL Said to be in talks with Japan and South Korea suppliers for new Apple Car; Could start mass production of Apple Cars in partnership with Kia Motors by 2024 - press
DAI.DE CEO: Q3 vehicle sales to be below Q2 level due to semi-conductor chip shortage
(CN) China said to strengthen review of game content, following play time limits last week - press
*(US) Q2 FINAL NONFARM PRODUCTIVITY: 2.1% V 2.5%E; UNIT LABOR COSTS: 1.3% V 0.9%E
(US) Atlanta Fed GDPNow: Cuts Q3 GDP forecast to 3.7% from 5.3%
(US) Sen Manchin (D-WV): Senate should hit 'pause' on the $3.5T spending plan - comments in WV
DOCU Reports Q2 $0.47 v $0.39e, Rev $511.8M v $482Me; Raises FY22 outlook
AVGO Reports Q3 $6.96 v $6.88e, Rev $6.78B v $6.76Be
ALK Discloses bookings trends have deteriorated moderately; Cuts Q3 load factor 79-81% (prior 82-85%) - filing
(JP) Japan PM Suga said to not stand for re-election in leadership election and has indicated intent to resign - financial press

FRI 9/3
(JP) Japan PM Suga confirms will not run for LDP Leadership
(DE) Germany Health Min Spahn: must make sure the health system is not overloaded
(TR) Turkey Aug CPI M/M: 1.1% v 0.7%e; Y/Y: 19.3% v 18.8%e
*(FR) FRANCE AUG FINAL PMI SERVICES: 56.3 V 56.4E (confirms 5th straight expansion)
*(DE) GERMANY AUG FINAL PMI SERVICES: 60.8 V 61.5E (confirms 4th month of expansion)
*(UK) AUG FINAL PMI SERVICES: 55.0 V 55.5E (confirms 6th month of expansion)
*(EU) EURO ZONE JULY RETAIL SALES M/M: -2.3% V 0.0%E; Y/Y: 3.1% V 4.5%E
*(US) AUG UNEMPLOYMENT RATE: 5.2% V 5.2%E
*(US) AUG CHANGE IN NONFARM PAYROLLS: +235K V +725KE (below lower-end of analyst expectations)
*(US) AUG AVERAGE HOURLY EARNINGS M/M: 0.6% V 0.3%E; Y/Y: 4.3% V 3.9%E
(US) AUG ISM SERVICES INDEX: 61.7 V 61.7E

Powell keeps markets calm ahead of impending QE taper

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Weekly Market Update: Powell keeps markets calm ahead of impending QE taper

2021-08-27T16:14:56.68

Stocks got off to a good start this week, boosted in part by confirmation the FDA removed the emergency use label from the Pfizer Covid vaccine. Concerns about surging Delta variant transmissions and rising hospitalizations in some regions receded as the news offered some hope vaccination rates will rise. The S&P and NASDAQ hit new all-time highs early in the week with the Composite topping 15K for the first time. Also, equity strength was repeatedly pinned, at least partially, on growing doubts Chairman Powell would formally signal the start of tapering Fed asset purchases later in the week. That narrative received further support from the release of the softest August Richmond Fed reading since early last summer. Nevertheless, Fed hawks were out in force calling for the Fed to begin tapering asset purchase this fall in hopes that it will be completed by next spring. Key inflation readings remained elevated here while overseas the Bank of Korea unexpectedly raised rates for the first time since 2018. US Treasury yields drifted steadily higher ahead of Powell’s speech on Friday.

On Thursday, US markets saw a brief bout of equity weakness following initial reports of a suicide bomber attack at the gate of Kabul airport resulting in mass casualties including 13 US servicemen killed. By Friday, much of the focus was back on the Fed. As the market has become accustomed to, Powell’s remarks were significantly more measured then what we have heard from the hawks. He emphasized that, though the threshold of ‘substantial further progress’ has been met on inflation, there is still a ways to go on employment. He added he has yet to see any real signs of rampant wage inflation, while also highlighting some inflation indicators have begun to turn down, notably used car prices. He acknowledged tapering assets purchase could be appropriate this year, but failed to solidify a likely announcement next month as some hawks may have liked. The dollar slipped, stocks added to gains and rates held modestly lower in the wake of his comments. For the week, the S&P rose 1.5%, the DJIA gained 1%, and the Nasdaq surged 2.8%.

In corporate news, Best Buy reported strong Q2 results as US same store sales growth remained north of 20% while also raising its outlook for the year. Reports surfaced that Taiwan Semi is set to raise prices for its most advanced chips by roughly 10% and less advanced chips by 20%. That news sparked speculation that Apple, one of TSMC’s largest customers, iPhone 13 launch coming next month will include significantly higher price tags as management looks to pass along those rising component costs. Homebuilder Toll Brothers reported another quarter of robust results and singled it just put through another nationwide price hike this week. Western Digital was reported to be in late stage merger talks with Japan's Kioxia that could valued at $20B or more. Corporate leaders were emboldened by the FDA’s full approval of the Pfizer vaccine, leading many companies to announce stricter vaccination requirements, including Delta Airlines which will impose $200 monthly increase on health insurance premiums for workers who are not vaccinated.


SUN 8/22
PFE Pfizer-Biontech Covid-19 vaccine granted full US FDA approval in individuals 16 years of age and older; EUA remains for individuals 12 through 15 years of age and for administration of third dose in certain immunocompromised individuals
(DE) ECB's Schnabel (Germany): Reiterates stance that expect inflation to keep rising until the end of 2021 especially in Germany, but then see CPI falling "significantly" in 2022 - German press

MON 8/23
(EU) EURO ZONE AUG PRELIMINARY MANUFACTURING PMI: 61.5 V 62.0E (14th month of expansion but lowest reading since Feb 2021)
(DE) GERMANY AUG PRELIMINARY MANUFACTURING PMI: 62.7 V 65.0E (14th month of expansion but lowest reading since Feb 2021)
(UK) AUG PRELIMINARY MANUFACTURING PMI: 60.1 V 59.5E (15th straight expansion but lowest reading since Mar 2021)
(US) JULY EXISTING HOME SALES: 5.99M V 5.83ME

TUES 8/24
(US) AUG RICHMOND FED MANUFACTURING INDEX: 9 V 24E (lowest reading since June 2020)
(US) JULY NEW HOME SALES: 708K V 697KE
(US) House passes rule adopting $3.5T budget resolution and advancing $1.2T infrastructure package and John Lewis voting rights bill
Taiwan Semi: Increasing prices for advanced and mature process technologies by up to 20% [includes ~10% price increase for sub-16nm process manufacturing], effective starting in 2022 - Digitimes
BMY Reports Q2 $2.98 v $1.91e, Rev $11.8B v $11.6Be; raises outlook

WEDS 8/25
(DE) GERMANY AUG IFO BUSINESS CLIMATE SURVEY: 99.4 V 100.4E
(KR) BANK OF KOREA (BOK) RAISES 7-DAY REPO RATE BY 25BPS TO 0.75%; NOT EXPECTED (1st hike since Nov 2018)
DAL Notifies employees that they will face $200 monthly increases on their health insurance premiums starting Nov. 1 if they aren’t vaccinated against Covid-19 - CNBC
CRM Reports Q2 $1.48 v $0.91e, Rev $6.34B v $6.23Be; raises outlook

THURS 8/26
(US) Q2 PRELIMINARY GDP ANNUALIZED Q/Q: 6.6% V 6.7%E; PERSONAL CONSUMPTION : 11.9% V 12.2%E
Large explosion reported outside of Kabul Airport; Casualties include 13 US servicemen

FRI 8/27
(CN) China said to consider proposing rules in Q4 that bans certain foreign company listings if they have large amounts of sensitive consumer data - financial press
(US) JULY PCE DEFLATOR M/M: 0.4% V 0.4%E; Y/Y: 4.2% V 4.1%E
(US) Tropical Storm Ida strengthens, passes through Cayman Islands - NHC
(US) Fed Chair Powell: Cannot take for granted transitory inflation will fade; Still considerable remaining ground to achieve full employment - Jackson Hole speech
(US) National Hurricane Center (NHC): Tropical Storm Ida is now a hurricane, could reach category 3 before making landfall
(US) Atlanta Fed GDPNow: Cuts Q3 GDP forecast to 5.1% from 5.7%

Delta Variant and Growth Signals Spur Some Uneasiness

TradeTheNews.com 

Weekly Market Update: Delta Variant and Growth Signals Spur Some Uneasiness

2021-08-20T16:03:29.59

Stock markets were roiled for much of this week by concerns that the sustained uptick in Covid-19 infections globally and a slowdown in China's growth could impede the economic recovery. Questions surrounding the lasting efficacy of current Covid vaccines against the newest variants, alongside new lockdowns in Asia, led to more hand-wringing that the pandemic will put further pressure on global supply chains and potentially sustain the rise seen in prices. Those inflation worries and the Federal Reserve's signaling that it will scale back some of its easy money policies remained an impediment to investor sentiment overall. Also, the US’s clumsy troop withdrawal from Afghanistan, underscored by the easy toppling of Kabul by the Taliban, sparked concerns that the growing criticism of the Biden Administration could reduce the amount of fiscal measures the Democrats will ultimately be successful in pushing through Congress.

Growth worries were clearly fanned by deceleration in economic data. Monday investors pondered key Chinese economic readings that came in well below market expectations over the weekend. US Aug Empire Manufacturing was significantly below expectations, which was followed up by very disappointing July retail sales figures. Philly Fed and housing data also showed slowdowns. Many economists lowered Q3 GDP forecasts in unison. Federal Reserve speak suggested officials largely continue to believe that the “substantial” progress needed to commence tapering is nearing, while also emphasizing they are paying close attention to the Delta variant. US indices rebounded sharply on Friday into options expiration. WTI crude traded down for its seventh consecutive session (the longest streak since February 2020), hitting its lowest level since May. The Dollar index traded to a 9-month high above 93.50 while cryptocurrencies saw a significant rally intensify, pushing Bitcoin back towards $50K. For the week, the S&P dropped 0.6%, Dow fell 1.1%, and the NASDAQ lost 0.7%.

In corporate news this week, Home Depot profit beat estimates, though same store sales numbers disappointed and customer transactions were down year on year. Retailers Walmart and Target saw Q2 sales and earnings rise, driven by strong grocery sales and a confident start to back-to-school season. Japan’s largest automaker Toyota Motor said it would have to cut its production by 40% in September due to the ongoing semiconductor shortage. US regulators reportedly opened a formal probe of Tesla’s Autopilot feature, citing a swath of collisions with parked emergency vehicles. T-Mobile confirmed that data from over 10M customer accounts had been stolen, along with 40M records of former or prospective customers who had previously applied for credit. Online trading platform Robinhood reported its first results as a publicly traded company, sending shares lower after warning that it sees a deceleration in trading activity in coming quarters. The FTC filed an amended complaint against Facebook, accusing the social media giant of acquiring competitors and thwarting access to their platform. Endo International shares dropped sharply on reports it hired a financial restructuring adviser to evaluate its options amid a deluge of lawsuits alleging it contributed to the opioid crisis.

SUN 8/15
(US) UN Security Council to meet on Monday, Aug 16th at 10:00EST (14:00GMT) on Afghanistan; Kabul falls to Taliban as president flees - press
BHP.AU Confirms considering options for petroleum business, including deal with Woodside (as speculated in press); no deal yet

MON 8/16
(US) Fed officials reportedly weigh ending asset purchases by mid-2022 - US financial press
TSLA US said to open formal investigation of Tesla Autopilot citing collisions with parked emergency vehicles - press
*(US) AUG EMPIRE MANUFACTURING: 18.3 V 28.5E
H To acquire resort operator Apple Leisure Group from KKR and KSL Capital Partners for $2.7B in cash
OPEC+ sources: OPEC+ sees no need to release more oil into the market right now beyond what has already been planned amidst calls from the US to raise output - press
(US) Reportedly the US will advise coronavirus vaccine boosters to be taken 8 months after vaccination, could offer boosters to non immune compromised individuals in mid Sept - NYT

TUES 8/17
(NZ) New Zealand PM Ardern: Country to enter into 3 day lockdown and raises alert level 4 (highest level) as off Tuesday (Aug 17th) at midnight
*(EU) EURO ZONE Q2 PRELIMINARY GDP Q/Q: 2.0% V 2.0%E; Y/Y: 13.6% V 13.7%E
HD Reports Q2 $4.53 v $4.41e, Rev $41.1B v $40.7Be
WMT Reports Q2 $1.78 adj v $1.56e, Rev $141.1B v $136.0Be; Raises guidance
*(US) JULY ADVANCE RETAIL SALES M/M: -1.1% V -0.3%E; RETAIL SALES (EX-AUTO) M/M: -0.4% V +0.2%E
*(US) AUG NAHB HOUSING MARKET INDEX: 75 V 80E
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +0.3% v -1.0% prior
(US) Atlanta Fed GDPNow: Raises Q3 GDP forecast to 6.2% from 6.0%
A Reports Q3 $1.10 v $0.99e, Rev $1.59B v $1.53Be; Raises guidance - + momentum in all markets & regions
2799.HK (CN) Said to to receive ~$7.0B from China State Council for approved recapitalization from CITIC, existing shareholders to take losses on investments

WEDS 8/18
TMUS Confirms data ~8.65M Current customer accounts’ was stolen, containing personal information, including SSN#, driver’s license/ID, DOB info; More than 40M records of former or prospective customers also exposed whom previously applied for credit with TMUS
*(UK) JULY CPI M/M: 0.0% V 0.2%E; Y/Y: 2.0% V 2.3%E (moves back to target)
700.HK Reports Q2 (CNY) adj Net 34.0B v 32.8Be, Rev 138.3B v 138.2Be
*(EU) EURO ZONE JULY FINAL CPI Y/Y: 2.2% V 2.2%E; CPI CORE Y/Y: 0.7% V 0.7%E (Confirms that annual pace moves back above ECB's target)
TGT Reports Q2 $3.64 adj v $3.48e, Rev $25.2B v $25.1Be; Approves new $15B share buyback (12% of market cap)
PLCE Reports Q2 $1.71 v $0.19e, Rev $413.9M v $419Me; Says Q3 off to outstanding start
ZIM Reports Q2 $7.38 v $0.23 y/y, Rev $2.38B v $795M y/y; Doubles guidance outlook
TJX Reports Q2 $0.64 v $0.56e, Rev $12.1B v $11.2Be; Sales are very strong to start Q3 FY22, with overall open-only comp store sales up mid-teens over Q3 FY20; Raises FY22 share buyback by $250M to $1.50B
*(US) JULY HOUSING STARTS: 1.534M V 1.600ME; BUILDING PERMITS: 1.635M V 1.610ME
*(US) DOE CRUDE: -3.2M V -1.5ME; GASOLINE: +0.7M V -2ME; DISTILLATE: -2.7M V 0ME
(US) US health officials: Expect to make Covid vaccine booster shots widely available to Americans starting Sept 20th
(US) Atlanta Fed GDPNow: Cuts Q3 GDP forecast to 6.1% from 6.2%
(US) Fed’s Bullard (non-voter, hawk): Recent data has been slightly weaker but still expects 'very robust' growth up to 7% this year and 4% in 2022 - online event comments
HOOD Reports Q2 -$2.16 v +$0.09 y/y, Rev $565M v $244M y/y; Q2 is first quarter where a larger share of new customers placed their first trade in crypto rather than equities
CSCO Reports Q4 $0.84 v $0.83e, Rev $13.1B v $13.0Be
2799.HK Profit warning: Guides FY20 (CNY) Net loss 102.9B v +1.42B y/y; Confirms bailout from CITIC

THURS 8/19
(US) Goldman analyst cuts US 2021 GDP growth forecast from 8.5% to 5.5% (timing uncertain)
(UK) British public health study has found that protection from either of the two most commonly used COVID-19 vaccines against the now prevalent Delta variant of the coronavirus weakens within three months - financial press
7203.JP Said to be cutting global output by ~40% during Sept from prior plans due to chip shortages and coronavirus - Nikkei
M Reports Q2 $1.29 adj v $0.22e, Rev $5.65B v $5.12Be; Raises outlook 2nd time; Reinstates lower quarterly dividend at $0.15/shr (before $0.377/shr); Announces $500M share repurchase program
KSS Reports Q2 $2.48 v $1.30e, Rev $4.45B v $4.20Be; Raises guidance
*(US) INITIAL JOBLESS CLAIMS: 348K V 364KE (post pandemic low); CONTINUING CLAIMS: 2.82M V 2.80ME
*(US) AUG PHILADELPHIA FED BUSINESS OUTLOOK: 19.4 V 23.1E (lowest since Dec)
INTC CEO: Sees more M&A in chip production, I'm a willing buyer - press
FB FTC reportedly plans to refile monopoly lawsuit against Facebook later in federal court today - press
(CN) China Legislature passes the personal Information Protection Law (PIPL), effective from Nov 1st - Press

FRI 8/20
AZN.UK AZD7442 PROVENT Phase III prophylaxis (non-vaccine) trial met primary endpoint in preventing COVID-19; Reduced the risk of developing symptomatic COVID-19 by 77%
DE Reports Q3 $5.32 v $4.49e, Rev (Equipment Ops) $10.41B v $10.2Be; Raises guidance
(CN) China govt said to possibly ask US IPO-bound companies to hand over data - financial press
(US) US govt extends Mexico and Canada border closing for non-essential travel through Sept 21st
(CN) China Securities Regulatory Commission (CSRC) said to plan to create conditions for audit cooperation with US in order to stabilize growth of Hong Kong capital markets - press
(US) Fed's Kaplan (non-voter; hawkish): The big imponderable is the path of the Delta virus; If Delta is having more negative effect on GDP growth, it could cause me to adjust my views - Fox Business interview