Market Overview (11.14.2017)

Contents 

Market Today  

 

•  Indices

• Currency

• Commodities  

Econ & Policy 

• Economic Indicators

• Policy

Business News 

• Energy

• Industrials 

• Consumers

• Health Care

• Financials

• Telecommunication

Calendar  

• Economic Calendar

Market Today

Indices

S&P 500 (+0.1% at 2,585) Dow Jones (+0.1% at 23,430) NASDAQ (+0.1% at 6,758) The Dow had finished Friday, Nov. 11, lower in its first weekly decline after eight straight weeks of gains. Stocks had pulled back on concerns the path to tax cuts could be bumpier than initially expected. Doubts were raised late last week after details of the Senate's tax plans conflicted with the House GOP's proposed legislation.

Forex

US Dollar Index (DXY): The dollar shrugged off data showing that U.S. producer prices rose more than expected in October, surprising economists who had expected a slight decline. The Commerce Department reported that the producer price index increased 0.4% last month and by 2.8% from a year earlier. Economists had forecast an increase of 0.1% last month and a rise of 2.4% from a year ago. (DXY: -0.46% at 93.97)

EUR/USD: The euro rose more than half a cent against the dollar on Tuesday, putting it on track for its largest one-day gain in a month bolstered by expectations that the euro area economy will remain strong. EUR/USD was up 0.77% at 1.1756 by 08:40 AM ET (01:40 PM GMT) after data showing that the euro area economy grew by an annualized 2.5% in the third quarter, outstripping growth in the U.S. economy. Another report showed that Germany’s economy grew a larger-than-expected 0.8% in the third quarter, thanks to strong trade and investment figures. (EUR/USD: 0.77% at 1.1757)

British Pound: Sterling remained on the back foot after UK inflation data for October came in slightly lower than expected. The data sparked concerns that the Bank of England may have acted too soon. U.S. producer prices increase more than expected in October when it raised interest rates for the first time in almost a decade earlier this month. Sterling was also pressured by concerns over Theresa May’s ability to remain on as British prime minister at a critical juncture in Brexit talks. (GBP/USD: -0.08% at 1.3106)

Japan Yen: a modest pull-back in the European equity markets, pointing to cautious sentiment provided an additional boost to the Japanese Yen's safe-haven appeal and further collaborated to the pair's retracement back to the 113.60 region. (USD/JPY: -0.13% at 113.47)

Commodities

Gold prices, under pressure from a stronger U.S. dollar, saw little reaction as producer inflation pressures picked up in the U.S. October. (Gold Prices: -0.35% at $1,272.80)

Oil prices slipped Tuesday after the Internatio 40 35378 40 14397 0 0 7462 0 0:00:04 0:00:01 0:00:03 7459nal Energy Agency cut its global oil-demand forecasts, in contrast to a more bullish outlook from OPEC released a day earlier. (Brent Crude Futures: -0.60% at $62.78 a barrel. WTI Futures: -0.56% at $56.44 a barrel)

Steel: China’s iron ore futures edged up on Tuesday along with prices for steel rebar, buoyed as some steel mills ramped up production a day before winter output cuts take full effect. (Shanghai Steel Rebar Futures: +0.2% at 3,790 yuan per tonne. Iron Ore Contract: +0.9% at 464.5 yuan tonne.)

Econ & Policy

Economy

Americas

U.S. Producer Prices Rise More than Expected in October. the Commerce Department said that producer prices increased 0.4% last month, topping the forecast for a 0.1% gain and matching September’s increase. Year-over-year, the producer price index (PPI) rose 2.8% in October, compared to expectations for a gain of 2.4% and higher than the 2.6% increase in the preceding month. The core producer price index, that excludes food and energy, also rose 0.4% in October, beating forecasts for a gain of 0.2% while matching the prior month’s advance. Core producer prices increased at an annualized rate of 2.4% last month, above forecasts for a 2.3% increase and the gain of 2.2% in September.

U.S. runs $63 billion budget deficit in October. The government boosted outlays in October to $299 billion, up $31 billion from the same month of last year. Revenues grew to $235 billion, up $14 billion from a year earlier. The deficit was in line with expectations of analysts polled by Reuters. Accounting for calendar differences, the deficit widened in October to $116 billion from $86 billion in the same month of 2016.

Europe

Euro zone annual growth exceeds U.S., backs ECB QE taper. The euro zone growth rate also exceeded that of Britain, which will leave the European Union in March 2019. Its economy expanded 0.4 percent quarter-on-quarter and 1.5 percent year-on-year.

UK Annual Inflation Holds at 5-year High in October, Missing Expectations. the rate of consumer price inflation rose from the year before by a seasonally adjusted 3.0% last month matching September’s reading. That was below forecasts for a 3.1% increase but remained at its highest level since March 2012. Month-over-month, consumer price inflation rose 0.1% in October, also below consensus expectations for a 0.2% advance and compared to the 0.3% gain registered in the previous month.

Asia and Pacific

China's economy cools as government curbs hit factories, property and retailers. Industrial output rose 6.2 percent year-on-year in October, missing analysts' estimates of a 6.3 percent gain and lagging a 6.6 percent increase in September. Fixed-asset investment growth also slowed to 7.3 percent in the January-October period, from 7.5 percent in the first nine months.  Analysts had expected an increase of 7.4 percent.

India's trade deficit widens to near 3-year high in October. The trade deficit has widened by more $31 billion in the first seven months of the current financial year to $86.15 billion, which could put pressure on the current account deficit of Asia's third largest economy. Merchandise exports for October fell 1.12 percent from a year earlier to $23.1 billion, dropping for the first time since August 2016, dragged down by fall in gems, jewelry and textile exports.

Japanese wages will rise by 2.0 percent to 2.5 percent at next spring's annual negotiations, falling short of Prime Minister Shinzo Abe's goal of 3 percent. Abe's government is considering tax incentives and other means to encourage companies to raise wages by 3 percent, hoping consumers will spend more and accelerate Japan's stubbornly low inflation.

Policy

Americas

Central banker panel on communication: Janet Yellen, Mario Draghi, Mark Carney and Haruhiko Kuroda walk into a bar... well, it's actually a conference without drinks, but it's happening today. The quartet has taken the stage together in Frankfurt for an ECB hosted panel on "Communications challenges for policy effectiveness." During her time at the podium, Janet Yellen admitted the Fed could be confusing the public with its many voices and said "this really is one of the challenges of our system."

No negotiations on corporate tax rate: President Trump wouldn't support tax legislation with a corporate tax rate of more than 20% as part of any future compromise between the House and the Senate, Steven Mnuchin told the Wall Street Journal CEO Council. He also said the Treasury Department believes the plan, which congressional analysts estimate would cost $1.4T over a decade, would ultimately make up the lost revenue through stronger economic growth.

S&P declares Venezuela in default: S&P has downgraded Venezuela's foreign currency sovereign credit rating to "selective default" after it failed to make $200M in payments on its global bonds. The decision capped off a day in which the government promised to keep paying its debts, but offered no firm proposals, at a conference in Caracas. State oil producer PDVSA has already been said to be in default by Fitch Ratings and Moody's Investors Service.

Europe

Greece announces €1.4B in welfare handouts: Greece will distribute €1.4B as a social dividend to pensioners and others hit hard by the nation's austerity programs, Prime Minister Alexis Tsipras announced late Monday. The cash is available because the country has beaten its 2017 bailout target for a primary surplus - which excludes debt servicing costs - of 1.75% of gross economic output.

On the line: EU access for UK banks: British-based banks looking to keep their access to the EU markets need to "move quickly," regardless of the "final outcome" of Brexit negotiations, according to ECB Supervisor Daniele Nouy. She added that larger banks are making good progress but some smaller lenders appeared to be delaying their decision on whether to relocate to the EU.

German economy accelerates in Q3: The German economy picked up pace in Q3, underpinned by global demand and higher corporate investment. GDP grew at an annualized rate of 3.3%, compared with 2.6% in the second quarter, providing the latest evidence of an acceleration in the eurozone's biggest economy. The figures sent the euro up overnight, rising 0.5% to $1.1724.

Middle East and Africa

Qatar-style blockade to hit Lebanon? Many believe Saudi Arabia intends to do to Lebanon what it did to Qatar - corral Arab allies into enforcing an economic blockade, but others are less worried about sanctions. Lebanon's central bank Governor Riad Salameh said the country's financial system will be able to withstand the latest political crisis with no special measures, adding that the level of outflows so far had "surprised positively."

Business News 

Energy

U.S. on the cusp of history's biggest oil and gas boom, IEA forecasts: The U.S. will become the world's "undisputed" leader in oil production, with growth in its output through 2025 to be the strongest seen by any country in the history of crude oil markets, the IEA predicted in its annual World Energy Outlook. Sparked by technological advances from its shale fields, U.S. production will see growth of 8M bpd during 2010-25, accounting for 80% of the increase in global supply over the period.

Industrials

GE selloff reaches -8% as 'new era' starts with investor pessimism: General Electric set forth a new agenda on Monday as it tried to claw its way back to stronger growth amid a reduced dividend and an aggressive corporate restructuring. The 125-year-old industrial conglomerate will also be cutting the number of seats on its board and will slice 25% of staff from its home office. GE shares sunk almost 8%, marking their worst day since April 2009.

Latest from the Dubai Airshow: Latest from the Dubai Airshow: Boeing (NYSE:BA) has signed off on a $1.3B deal to sell four cargo freighters to Ethiopian Airlines. Meanwhile, Bombardier (OTCQX:BDRAF) is in advanced talks with EgyptAir over a potential $1.1B order for CSeries jets after Airbus (OTCPK:EADSY) took a majority stake in the program. Defense news... The UAE is buying laser-guided missiles from Raytheon (NYSE:RTN) in a deal worth $684M.

Consumers

Amazon selling Chinese cloud business: Beijing Sinnet Technology is buying physical infrastructure assets of Amazon's (NASDAQ:AMZN) cloud business in China for up to 2B yuan ($301M), but the latter will still own intellectual property and isn't exiting the world's second-largest economy. A regulatory filing said the purchase, which is still pending, would help Amazon "comply with Chinese law that forbids non-Chinese companies from owning or operating certain technology for the provision of cloud services."

Amazon sheds light on pharmacy licenses: Separately, Amazon has told regulators it will not be using the pharmacy licenses it obtained from Tennessee and Indiana to sell prescriptions, but will instead use them to sell medical devices and supplies. That said, most industry experts aren't ruling out the possibility of Amazon (AMZN) entering the prescription drug market. However, they maintain that it's a matter of if, not when.

Wal-Mart partners with Lord & Taylor: Confirming earlier rumors, Lord & Taylor (OTCPK:HBAYF) will launch a "flagship store" on Walmart.com (NYSE:WMT) in spring 2018. Sign of the times? Walmart is making heavy investments in its online operation in order to stay competitive with Amazon (AMZN), while department stores are trying to shore up online sales amid flagging foot traffic.

Buffalo Wild Wings spikes on report of Roark Capital offer: Buffalo Wild Wings climbed 22% in after hours trading after WSJ reported a takeover bid valued at more than $2.3B from Roark Capital. Investment bankers at Barclays are working with Roark, while Goldman Sachs is advising Buffalo Wild Wings (NASDAQ:BWLD). The company was founded in 1982 and went public in 2003.

Healthcare

FDA approves first digital pill: The FDA has approved the first digital pill - made by Otsuka Pharmaceutical (OTCPK:OTSKY) and Proteus Digital Health (Private:PRDI) - that is embedded with a sensor and can tell doctors whether, and when, patients take their medicine. While a patient can block transmissions via a smartphone app, the technology is still likely to prompt questions about privacy.

Financials

Bitcoin futures launching in mid-December - CME's Duffy: Calling all bitcoin bears: You will be able to bet against the cryptocurrency in about a month. "When can you be able to short this product, I think sometime in the second week in December you'll see our contract out for listing," said CME Chairman and CEO Terry Duffy. "So you create a two-sided market, I think it's always much more efficient."

Senate reaches deal to ease bank oversight: A bipartisan group of U.S. senators has reached a tentative deal to cut the number of banks labeled systemically risky, in a major step forward for efforts to roll back Dodd-Frank. It would raise the threshold at which banks are subject to boosted regulation to $250B in assets from the current $50B, meaning the number of institutions subject to the Fed's annual stress test would be just 12, instead of 38.

Telecommunication Services

Vodafone +4% after boosting outlook: Vodafone +4.9% premarket after doubling its full-year growth forecasts, boosted by a strong rollout of IoT services and taking the knife to costs. The company now expects adjusted EBITDA to expand by around 10%, to between €14.74B-€14.95B. "It's the first time we have raised Vodafone's (NASDAQ:VOD) organic EBITDA guidance in recent history," said CEO Vittorio Colao.

Calendar

Economic Calender

 3:05 Fed's Evans: Monetary Policy

5:00 Janet Yellen speech
6:00 NFIB Small Business Optimism Index
8:15 Fed's Bullard: U.S. Monetary and Economic Policy
8:30 Producer Price Index
8:55 Redbook Chain Store Sales

·END·

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