TradeTheNews.com Weekly Market Update: Hurricane Distorted Jobs Data Cap Turbulent Week
Fri, 06 Oct 2017 16:03 PM EST
Equity markets ran up yet again this week to fresh highs before Friday’s September employment report induced some minimal profit taking. Outside of Friday's jobs numbers the economic data remained unambiguously strong; headlined by the highest ISM non-manufacturing composite since 2005. The September jobs report did suggest wage inflation may be taking hold as unemployment rates continue to dwindle. The figures came on the heels of a plethora of Fed speak which seemed to indicate Fed officials were gaining confidence in their ability pull the trigger and raise rates in December. Rates moved up and Treasury curves steepened while the US Dollar regained some upside momentum. The Pound came under pressure as Brexit concerns, and in particular, the fate of PM May weighed on traders psyche. Spanish stocks weighed on Europe as uncertainty surrounding Catalonia resulted IBEX weakness and a modest widening of peripheral yield spreads. WTI crude futures stumbled, dipping back below $50 and under the 50-day moving average even as another tropical storm, Nate, approached the Gulf of Mexico. Copper prices broke back above the 50-day moving average to the highest levels in more than a month, helped by a dearth of headlines out of China as markets were closed for Golden Week. In Washington DC, Republicans continued to press the case for tax cuts while speculation swirled surrounding the fate of Sec of State Tillerson. Democrats called for renewed gun regulation in the wake of Las Vegas suffering the worst mass shooting in US history. The VIX drifted lower yet again nearing the 9.00 mark midweek and overall stock volumes remained notably soft. For the week the DJIA gained 1.6%, the S&P500 was up 1.2%, and the Nasdaq added 1.5%.
In corporate news this week, September auto sales topped expectations, helped by hurricane replacement purchasing and consumer demand for trucks. Tesla reported its all-time best quarter for its Models S and X deliveries, but Model 3 production numbers disappointed due to bottlenecks, though the company maintains there are no fundamental issues with the supply chain. Costco reported a Q4 beat on top and bottom line, but Wall Street was concerned about gross margins and membership numbers. Kellogg announced it would acquire the maker of RXBAR protein bars for $600M in a move to appeal to more organic-oriented consumers. Netflix raised prices on its two most popular plans in the US, changing the standard package to $10.99/mo and the premium service to $13.99/mo.
SUN 10/1
(HK) Macau Sept Gaming Rev MOP21.4B, +16.1% y/y v 14.5%e
(ES) Catalonia Referendum Update: On Sunday, police entered various polling stations to try to seize materials related to the voting; While some Catalans were blocked from voting, others were able to cast ballots – financial press
(KR) Sec State Tillerson has been encouraged to not talk with North Korea by President Trump
(CN) PBOC Q3 meeting of monetary policy committee: To cut reserve requirement ratio (RRR) for some banks that meet certain requirements for lending to small business and agricultural sector, effective in 2018 (1st cut since Feb 2016); affirms prudent and neutral monetary policy
(JP) JAPAN Q3 TANKAN LARGE MANUFACTURING INDEX: 22 V 18E (highest since Sept 2007); MANUFACTURERS OUTLOOK: 19 V 16E; ALL-INDUSTRY CAPEX: 7.7% V 8.4%E
MON 10/2
MGM Police look into reports of a shooter at Mandalay Bay; shots fired at Country Music concerts, multiple casualties - press
(EU) EURO ZONE AUG UNEMPLOYMENT RATE: 9.1%V 9.0%E
(US) SEPT ISM MANUFACTURING: 60.8 V 58.1E; PRICES PAID: 71.5 V 63E (highest headline reading since June 2004, prices highest since May 2011)
(US) Atlanta Fed raises Q3 GDP to 2.7% from 2.3% on 9/29
GOOGL Waymo division reportedly readying commercial ride-sharing service using autonomous vehicles with no safety drivers as soon as this fall - The Information
TSLA Reports Q3 deliveries 26.2K vehicles, +17.7% q/q, +4.5% y/y (all time best quarter for Model S and X deliveries); says no fundamental issues with the Model 3 production or supply chain
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50%; AS EXPECTED (14th consecutive hold in current easing cycle)
TUES 10/3
(HK) Macau Golden Week visitors from China on Oct 2nd +8.6% y/y
*(IN) INDIA SEPT MANUFACTURING PMI: 51.2 V 51.2 PRIOR (2nd month of expansion)
LEN Reports Q3 $1.06 v $1.01e, Rev $3.26B v $3.22Be
Warren Buffett: realizing losses in some positions by holding off on stock sales in anticipation of potential tax code changes - cnbc
GM Reports Sept US vehicle sales +11.9% y/y, at 279.4K units v 268.3Ke (best Sept U.S. retail performance since 2007)
(US) House Transportation Committee Chair Shuster (R-PA): Trump may release infrastructure plan next week
(ES) Spain King Felipe VI: Spanish democracy is in a serious moment; referendum plans by Catalan leaders were illegal
(US) House GOP tax plan reportedly likely to include fourth tax bracket on high earners; not likely to exceed 39.6% - CNBC
Ford Affirms FY17 outlook; provides strategic update to investors; sees 100% of new US vehicles build with connectivity by FY19; cutting internal combustion engine capex by a third
(ES) Catalan govt President Puigdemont confirms planning to declare independence within days - press
UBER.IPO Board said to approve $1.0-1.25B investment from Softbank (implied valuation $69B) and corporate governance reforms; said to set 2019 deadline for IPO - US financial press
MYL U.S. FDA approves first generic for Copaxone 40 mg/mL 3-times-a-week; may be eligible for 180 days of generic drug exclusivity
(US) US President Trump: Puerto Rico's debt will have to be 'wiped out' - US media interview
(HK) Hong Kong Sept Home Sales (HK$) 45.3B v 56.0B y/y
WEDS 10/4
TSCO.UK Reports H1 adj PBT £504 v £352M y/y, Op £759M v £703Me, Rev (ex Fuel) £25.2B v £24.4B y/y
(UK) SEPT SERVICES PMI: 53.6 V 53.2E (14th month of expansion)
*(IN) INDIA CENTRAL BANK (RBI) LEAVES REPURCHASE RATE UNCHANGED AT 6.00%; AS EXPECTED
(PL) POLAND CENTRAL BANK (NBP) LEAVES BASE RATE UNCHANGED AT 1.50%; AS EXPECTED
(US) SEPT ADP EMPLOYMENT CHANGE: +135K V +135KE
(US) White House Budget Dir Mulvaney: Pres Trump's comments about 'wiping out' Puerto Rico debt shouldn't be taken word for word; we aren't going to bail out Puerto Rico - TV interview
(US) SEP FINAL MARKIT SERVICES PMI: 55.3 V 55.1E
(US) SEP ISM NON-MANUFACTURING COMPOSITE: 59.8 V 55.5E (highest since Aug 2005)
(US) Association of American Railroads weekly rail traffic report for week ending Sep 30th: 559.6K carloads and intermodal units, +1.9% y/y
(UK) Reportedly some UK members of parliament are prepared to call for PM May to resign; could be out of office before end of year - UK press
THURS 10/5
(CH) SWISS SEPT CPI M/M: 0.2% V 0.2%E; Y/Y: 0.7% V 0.6%E
(US) AUG TRADE BALANCE: -$42.4B V -$42.7BE
(ES) Catalan leaders reportedly are slowing push for independence due to divisions within leadership - press
(US) AUG FINAL DURABLE GOODS ORDERS: 2.0% V 1.7%E; DURABLES EX TRANSPORTATION: 0.5% V 0.2%E
(US) Senate confirms Randal Quarles for Federal Reserve Board in 65-32 vote, as expected - press
(US) Atlanta Fed raises Q3 GDP to 2.8% from 2.7% on 10/2
(US) National Rifle Association: expresses some support for additional gun regulations; gun bump stocks should be subject to regulation
(US) President Trump to announce he will decertify Iran nuclear agreement and let Congress deal with the issue; would keep door open to modifying the agreement - Wash Post
COST Reports Q4 $2.08 v $2.02e, Rev $42.3B v $41.7Be; E-commerce surging
FRI 10/6
(DE) GERMANY AUG FACTORY ORDERS M/M: 3.6% V 0.7%E; Y/Y: 7.8% V 4.7%E
(US) SEPT AVERAGE HOURLY EARNINGS M/M: 0.5% V 0.3%E; Y/Y: 2.9% V 2.5%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
(US) SEPT CHANGE IN NONFARM PAYROLLS: -33K V +80KE (1st negative reading since Oct 2010)
(CA) CANADA SEPT NET CHANGE IN EMPLOYMENT: +10K V +12.0KE; UNEMPLOYMENT RATE: 6.2% V 6.2%E
(US) SEPT UNEMPLOYMENT RATE: 4.2% V 4.4%E (lowest since May 2001)
(NK) Russian official suggests North Korea may be preparing another long range missile test - Russian press
(US) Atlanta Fed cuts Q3 GDP to 2.5% from 2.8% on 10/5
Fri, 06 Oct 2017 16:03 PM EST
Equity markets ran up yet again this week to fresh highs before Friday’s September employment report induced some minimal profit taking. Outside of Friday's jobs numbers the economic data remained unambiguously strong; headlined by the highest ISM non-manufacturing composite since 2005. The September jobs report did suggest wage inflation may be taking hold as unemployment rates continue to dwindle. The figures came on the heels of a plethora of Fed speak which seemed to indicate Fed officials were gaining confidence in their ability pull the trigger and raise rates in December. Rates moved up and Treasury curves steepened while the US Dollar regained some upside momentum. The Pound came under pressure as Brexit concerns, and in particular, the fate of PM May weighed on traders psyche. Spanish stocks weighed on Europe as uncertainty surrounding Catalonia resulted IBEX weakness and a modest widening of peripheral yield spreads. WTI crude futures stumbled, dipping back below $50 and under the 50-day moving average even as another tropical storm, Nate, approached the Gulf of Mexico. Copper prices broke back above the 50-day moving average to the highest levels in more than a month, helped by a dearth of headlines out of China as markets were closed for Golden Week. In Washington DC, Republicans continued to press the case for tax cuts while speculation swirled surrounding the fate of Sec of State Tillerson. Democrats called for renewed gun regulation in the wake of Las Vegas suffering the worst mass shooting in US history. The VIX drifted lower yet again nearing the 9.00 mark midweek and overall stock volumes remained notably soft. For the week the DJIA gained 1.6%, the S&P500 was up 1.2%, and the Nasdaq added 1.5%.
In corporate news this week, September auto sales topped expectations, helped by hurricane replacement purchasing and consumer demand for trucks. Tesla reported its all-time best quarter for its Models S and X deliveries, but Model 3 production numbers disappointed due to bottlenecks, though the company maintains there are no fundamental issues with the supply chain. Costco reported a Q4 beat on top and bottom line, but Wall Street was concerned about gross margins and membership numbers. Kellogg announced it would acquire the maker of RXBAR protein bars for $600M in a move to appeal to more organic-oriented consumers. Netflix raised prices on its two most popular plans in the US, changing the standard package to $10.99/mo and the premium service to $13.99/mo.
SUN 10/1
(HK) Macau Sept Gaming Rev MOP21.4B, +16.1% y/y v 14.5%e
(ES) Catalonia Referendum Update: On Sunday, police entered various polling stations to try to seize materials related to the voting; While some Catalans were blocked from voting, others were able to cast ballots – financial press
(KR) Sec State Tillerson has been encouraged to not talk with North Korea by President Trump
(CN) PBOC Q3 meeting of monetary policy committee: To cut reserve requirement ratio (RRR) for some banks that meet certain requirements for lending to small business and agricultural sector, effective in 2018 (1st cut since Feb 2016); affirms prudent and neutral monetary policy
(JP) JAPAN Q3 TANKAN LARGE MANUFACTURING INDEX: 22 V 18E (highest since Sept 2007); MANUFACTURERS OUTLOOK: 19 V 16E; ALL-INDUSTRY CAPEX: 7.7% V 8.4%E
MON 10/2
MGM Police look into reports of a shooter at Mandalay Bay; shots fired at Country Music concerts, multiple casualties - press
(EU) EURO ZONE AUG UNEMPLOYMENT RATE: 9.1%V 9.0%E
(US) SEPT ISM MANUFACTURING: 60.8 V 58.1E; PRICES PAID: 71.5 V 63E (highest headline reading since June 2004, prices highest since May 2011)
(US) Atlanta Fed raises Q3 GDP to 2.7% from 2.3% on 9/29
GOOGL Waymo division reportedly readying commercial ride-sharing service using autonomous vehicles with no safety drivers as soon as this fall - The Information
TSLA Reports Q3 deliveries 26.2K vehicles, +17.7% q/q, +4.5% y/y (all time best quarter for Model S and X deliveries); says no fundamental issues with the Model 3 production or supply chain
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50%; AS EXPECTED (14th consecutive hold in current easing cycle)
TUES 10/3
(HK) Macau Golden Week visitors from China on Oct 2nd +8.6% y/y
*(IN) INDIA SEPT MANUFACTURING PMI: 51.2 V 51.2 PRIOR (2nd month of expansion)
LEN Reports Q3 $1.06 v $1.01e, Rev $3.26B v $3.22Be
Warren Buffett: realizing losses in some positions by holding off on stock sales in anticipation of potential tax code changes - cnbc
GM Reports Sept US vehicle sales +11.9% y/y, at 279.4K units v 268.3Ke (best Sept U.S. retail performance since 2007)
(US) House Transportation Committee Chair Shuster (R-PA): Trump may release infrastructure plan next week
(ES) Spain King Felipe VI: Spanish democracy is in a serious moment; referendum plans by Catalan leaders were illegal
(US) House GOP tax plan reportedly likely to include fourth tax bracket on high earners; not likely to exceed 39.6% - CNBC
Ford Affirms FY17 outlook; provides strategic update to investors; sees 100% of new US vehicles build with connectivity by FY19; cutting internal combustion engine capex by a third
(ES) Catalan govt President Puigdemont confirms planning to declare independence within days - press
UBER.IPO Board said to approve $1.0-1.25B investment from Softbank (implied valuation $69B) and corporate governance reforms; said to set 2019 deadline for IPO - US financial press
MYL U.S. FDA approves first generic for Copaxone 40 mg/mL 3-times-a-week; may be eligible for 180 days of generic drug exclusivity
(US) US President Trump: Puerto Rico's debt will have to be 'wiped out' - US media interview
(HK) Hong Kong Sept Home Sales (HK$) 45.3B v 56.0B y/y
WEDS 10/4
TSCO.UK Reports H1 adj PBT £504 v £352M y/y, Op £759M v £703Me, Rev (ex Fuel) £25.2B v £24.4B y/y
(UK) SEPT SERVICES PMI: 53.6 V 53.2E (14th month of expansion)
*(IN) INDIA CENTRAL BANK (RBI) LEAVES REPURCHASE RATE UNCHANGED AT 6.00%; AS EXPECTED
(PL) POLAND CENTRAL BANK (NBP) LEAVES BASE RATE UNCHANGED AT 1.50%; AS EXPECTED
(US) SEPT ADP EMPLOYMENT CHANGE: +135K V +135KE
(US) White House Budget Dir Mulvaney: Pres Trump's comments about 'wiping out' Puerto Rico debt shouldn't be taken word for word; we aren't going to bail out Puerto Rico - TV interview
(US) SEP FINAL MARKIT SERVICES PMI: 55.3 V 55.1E
(US) SEP ISM NON-MANUFACTURING COMPOSITE: 59.8 V 55.5E (highest since Aug 2005)
(US) Association of American Railroads weekly rail traffic report for week ending Sep 30th: 559.6K carloads and intermodal units, +1.9% y/y
(UK) Reportedly some UK members of parliament are prepared to call for PM May to resign; could be out of office before end of year - UK press
THURS 10/5
(CH) SWISS SEPT CPI M/M: 0.2% V 0.2%E; Y/Y: 0.7% V 0.6%E
(US) AUG TRADE BALANCE: -$42.4B V -$42.7BE
(ES) Catalan leaders reportedly are slowing push for independence due to divisions within leadership - press
(US) AUG FINAL DURABLE GOODS ORDERS: 2.0% V 1.7%E; DURABLES EX TRANSPORTATION: 0.5% V 0.2%E
(US) Senate confirms Randal Quarles for Federal Reserve Board in 65-32 vote, as expected - press
(US) Atlanta Fed raises Q3 GDP to 2.8% from 2.7% on 10/2
(US) National Rifle Association: expresses some support for additional gun regulations; gun bump stocks should be subject to regulation
(US) President Trump to announce he will decertify Iran nuclear agreement and let Congress deal with the issue; would keep door open to modifying the agreement - Wash Post
COST Reports Q4 $2.08 v $2.02e, Rev $42.3B v $41.7Be; E-commerce surging
FRI 10/6
(DE) GERMANY AUG FACTORY ORDERS M/M: 3.6% V 0.7%E; Y/Y: 7.8% V 4.7%E
(US) SEPT AVERAGE HOURLY EARNINGS M/M: 0.5% V 0.3%E; Y/Y: 2.9% V 2.5%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
(US) SEPT CHANGE IN NONFARM PAYROLLS: -33K V +80KE (1st negative reading since Oct 2010)
(CA) CANADA SEPT NET CHANGE IN EMPLOYMENT: +10K V +12.0KE; UNEMPLOYMENT RATE: 6.2% V 6.2%E
(US) SEPT UNEMPLOYMENT RATE: 4.2% V 4.4%E (lowest since May 2001)
(NK) Russian official suggests North Korea may be preparing another long range missile test - Russian press
(US) Atlanta Fed cuts Q3 GDP to 2.5% from 2.8% on 10/5