Market Overview (11.15.2017)

Contents 

Market Today  

 

•  Indices

• Currency

• Commodities  

Econ & Policy 

• Economic Indicators

• Policy

Business News 

• Energy

• Industrials 

• Health Care

• Financials

• Information Tech

• Telecommunication

Calendar  

• Economic Calendar

Market Today

Indices

S&P 500 (-0.2% at 2,579) Dow Jones (-0.1% at 23,409) NASDAQ (-0.3% at 6,738) Major stock indexes suffered modest losses Tuesday, but it was a constructive session as indexes closed near session highs.

Crude oil settles -2% as IEA report forecasts U.S. production boom: Oil and gas groups lagged amid a 2% drop in benchmark crude oil. Prices were weak after the International Energy Agency cut its demand forecast for this year and next, citing warmer temperatures as well as rising production outside of OPEC. U.S. shale output, for example, has risen for 11 straight monthsForex

US Dollar Index (DXY): The dollar continued to hover at three-week lows against other major currencies on Tuesday, still pressured by a stronger euro and as investors were eyeing an upcoming U.S. inflation report due later in the day. Uncertainty over the fate of a major U.S. tax overhaul continued to weigh on the greenback despite the previous session's upbeat data. (DXY: -0.20% at 93.53)

EUR/USD: The EUR/USD is trading above 1.1800 for the first time in three weeks as investors continue to pump money into European equities and a drop in U.S. bond yields which is making the U.S. Dollar a less-attractive investment. Later today, investors will get the opportunity to react to U.S. consumer inflation data in October. It is expected to show a marginal increase in consumer prices. (EUR/USD: 0.25% at 1.1827)

British Pound: The pound spiked to the day’s highs on Tuesday before turning lower after UK jobs data showing that the unemployment rate remained steady at 42-year low but the squeeze on wages continued. The unemployment rate in the three months to the end of September was unchanged at 4.3%, in line with economists’ expectations. The number of people in employment fell for the first time in almost a year. There were 32.06 million people in work in the three months to September, a 14,000 drop on the previous quarter. (GBP/USD: -0.02% at 1.3162)

Japan Yen: The ranges and changes show the USDJPY and most JPY crosses near low levels as North American traders enter.  There are good trading ranges in most JPY pairs as well with the high to low trading ranges near/at/above their 22-day averages (about a month of trading). (USD/JPY: -0.35% at 112.75)

Commodities

Gold is moderately higher in early U.S. trading Wednesday. A batch of important U.S. economic reports just released has provided a slight lift to precious metals prices. (Gold Prices: +0.33% at $1,285.77)

Oil futures fell another 1% early Wednesday, deepening losses that followed data showing a surprising buildup in U.S. inventories of both crude oil and gasoline. (Brent Crude Futures: -1.09% at $61.53 a barrel. WTI Futures: -1.06% at $55.11 a barrel)

Steel: Shanghai nickel and zinc tumbled alongside steel on Wednesday, extending losses from the previous session, in the wake of slowing industrial production growth in China.

 (Shanghai Steel Rebar Futures: -2.5% at 3,705 yuan per tonne. Iron Ore Contract: +1.6% at 411.77 yuan tonne.)

Econ & Policy

Economy

Americas

Empire State Index Slows But Remains Solid in November. Business activity in New York State slowed sharply in November but remained solid after rising to a multi-year high in the previous month, according to a report released on Wednesday. The New York Federal Reserve reported that its Empire State manufacturing index fell eleven points to 19.4 in November, compared to analysts forecast for a reading of 26.00. The index had hit a three-year high of 30.2 in October.

U.S. Retail Sales Rise 0.2% in October; Core Sales Up 0.1%.  U.S. retail sales unexpectedly rose in October as an increase in purchases of motor vehicles and a range of other goods offset a decline in demand for building materials, suggesting consumer spending remained fairly strong early in the fourth quarter.

Americans' debt level rose during the third quarter, driven by an increase in mortgage loans. Total U.S. household debt was $12.96 trillion in the three months to September, up $116 billion from the prior three months. Debt levels were $605 billion higher than during the third quarter of 2016.

Services boost U.S. producer prices; underlying inflation firming. U.S. producer prices rose more than expected in October, driven by a surge in the cost of services, leading to the biggest annual increase in wholesale inflation in more than 5-1/2 years. The producer price index for final demand increased 0.4 percent last month after a similar gain in September. That lifted the year-on-year increase in the PPI to 2.8 percent, the largest rise since February 2012, from 2.6 percent in September.

Europe

UK Unemployment Rate Holds Steady, Wage Growth Still Sluggish. The UK unemployment rate remained steady at a 42-year low September, while wage growth remained sluggish, according to official data released on Wednesday. The unemployment rate in the three months to the end of September was unchanged at 4.3%, in line with economists’ expectations. The number of people in employment fell for the first time in almost a year. There were 32.06 million people in work in the three months to September, a 14,000 drop on the previous quarter.

Asia and Pacific

Japan's GDP grows for seven straight quarters, outlook remains solid. Japan's economy grew faster than expected in the third quarter due to strong exports, posting the longest period of uninterrupted growth in more than a decade. The economy expanded at a 1.4 percent annualized rate in July-September, slightly above the median estimate for annualized growth of 1.3 percent, Cabinet Office data showed on Wednesday.

Policy

Americas

Canada promises to fight U.S. over lumber tariffs: Canada intends to escalate its legal fight against the U.S. Commerce Department's decision to impose a roughly 20% or more tariff on Canadian lumber imports. The country has filed a notice to set up a dispute resolution panel under the terms available through NAFTA, a settlement system the Trump administration wants to largely repeal during renegotiation talks.

Venezuela default ruling postponed: A committee of derivatives industry group ISDA has again postponed a decision on whether Venezuelan state oil company PDVSA generated a credit event through a late payment of its 2017N bond. The group is set to reconvene tomorrow. A "failure to pay" declaration would trigger insurance-like contracts on PDVSA's bonds, known as credit-default swaps.

U.S. unfreezes Yemeni assets: The Trump administration has unfrozen about $205M in Yemeni central bank funds, which were blocked under President Obama as part of an attempt to end the country's civil war. The move is being viewed as a sign of support to the country's Saudi-backed government, which has been fighting Iranian-allied Houthi rebels for the last two years

Middle East and Africa

Zimbabwe military seizes power, denies coup: Soldiers took over Zimbabwe's state television early Wednesday, saying they were working to restore stability in the country, as gunshots were heard near President Robert Mugabe's residence and explosions sounded in the capital. "We wish to make it abundantly clear that this is not a military takeover," Maj. Gen. Moyo declared. The Zimbabwean economy has halved in size since 2000 and the nation has no currency of its own, using mainly the dollar as legal tender.

Business News 

Energy

BP restarts share buybacks: Years of austerity have paid off... BP has officially begun a buyback program, making it the first European oil major to resume repurchases since the crude price slump, which began in 2014. The program had been authorized for between Nov. 15 and the date of its 2018 annual general meeting, with the maximum number of shares not exceeding 1.96B.

Industrials

Biggest Airbus deal in history: Airbus has scored the biggest deal in its history, negotiating to sell 430 A320neos - valued at nearly $50B - to investment fund Indigo Partners. The pact gives Airbus (OTCPK:EADSY) the upper hand at the Dubai Airshow, where it had been trailing Boeing (NYSE:BA) in terms of orders, and marks a crowning achievement for sales chief John Leahy, who is set to retire after a multi-decade career (...the battle continues below).

Order war at the Dubai Airshow: Fighting back against Airbus's (OTCPK:EADSY) lead at the Dubai Airshow, Boeing (BA) has snagged an order from flydubai for 175 of it 737 Max jets, as well as purchasing options for 50 more aircraft. The deal, whose total order is valued at $27B, represents the largest-ever single-aisle jet order - by number of airplanes and total value - from a Middle East carrier.

SpaceX delays secret mission launch: SpaceX's secret Zuma mission has been pushed off until tomorrow, with a launch window scheduled between 8 p.m. and 10 p.m. The Falcon 9 rocket, which will carry something provided by Northrop Grumman (NYSE:NOC), is also scheduled to return to earth for a signature SpaceX (Private:SPACE) landing. If all goes well, the booster touchdown will be the company's 20th overall success.

GE down another 5% as analysts pile on, say turnaround plan not enough: General Electric has lost its crown as the largest U.S. manufacturer by market cap, a title it held since 1980, following a 13% slide in its share price over the past two days. The new king? Boeing (BA), whose valuation totals about $156B. It's a major turn of events as GE was worth three times more than Boeing just a year ago.

Healthcare

FDA OKs AstraZeneca's asthma med benralizumab: AstraZeneca has achieved another milestone in rebuilding its drug portfolio with U.S. approval of a drug for severe asthma called Fasenra (benralizumab). The medicine will compete with GlaxoSmithKline's (NYSE:GSK) Nucala and Teva's (NYSE:TEVA) Cinqair - two other injectable antibody drugs for severe asthma - but AstraZeneca (NYSE:AZN) believes its product's potency and convenient dosing could give it an edge.

Financials

Berkshire adds to position in Apple, cuts back on IBM: Several stocks were on the move during after-hours trading on Tuesday as investment managers and funds disclosed their quarterly 13F filings. IBM slipped over 1% after Warren Buffett cut back his position, while Hewlett Packard (NYSE:HPQ) rose 1% after David Einhorn upped his stake. Snap (NYSE:SNAP) also sunk into the red despite Fidelity and tech-focused Coatue Management boosting their holdings.

Information Technology

Reuters: IBM writes to US lawmakers on foreign investment crackdown efforts: Urging them to use another strategy, IBM has sent a letter to Congressional sponsors of bills seeking to tighten foreign investment rules due to concerns about China's military and potential IP theft. "As drafted, the bill could turn CFIUS into a supra-export control agency, unilaterally limiting the ability of American firms to do business abroad."

Qualcomm invests in facial recognition startup: SenseTime has secured an investment from Qualcomm (NASDAQ:QCOM) in what could be the world's biggest ever fundraising by an AI startup. Located in Greater China, SenseTime is developing technology to quickly identify and analyze identities using cameras. It had planned to raise $500M in its latest round, valuing the startup at about $2B.

Telecommunication Services

White House role in AT&T-Time Warner deal? U.S. Attorney General Jeff Sessions would not say if White House officials contacted his department about their review of AT&T's (NYSE:T) proposed purchase of Time Warner (NYSE:TWX), which one analyst said the DOJ may sue to block as soon as today. "I am not able to comment on conversations or communications," he told a House of Representatives Judiciary Committee hearing. President Trump had vowed to block the $85.4B merger during his presidential campaign.

Calendar

Economic Calender

3:00 Fed's Evans: Monetary Policy
7:00 MBA Mortgage Applications
8:30 Consumer Price Index
8:30 Retail Sales
8:30 Empire State Mfg Survey
10:00 Business Inventories
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
4:00 PM Treasury International Capital
4:00 PM Fed's Rosengren: U.S. Economy

·END·

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