China FDI falls for the first time in over 2 years
Asia Mid-Session Market Update: China FDI falls for the first time in over 2 years; Australia employment data mixed
US Session Highlights
(US) FEB EMPIRE MANUFACTURING: 18.7 V 7.0E (highest since Sept 2014)
(US) JAN ADVANCE RETAIL SALES M/M: 0.4% V 0.1%E; RETAIL SALES EX AUTO M/M: 0.8% V 0.4%E; prior revised higher
(US) JAN CPI M/M: 0.6% V 0.3%E; CPI EX FOOD AND ENERGY M/M: 0.3% V 0.2%E; CPI INDEX NSA: 242.839 V 242.479E
(US) JAN INDUSTRIAL PRODUCTION M/M: -0.3% V 0.0%E; CAPACITY UTILIZATION: 75.3% V 75.4%E
(US) Fed Chair Yellen: there is no unique level of how high interest rates must be before Fed begins cutting balance sheet – House panel Q&A
(US) President Trump: we will simplify the tax code ‘greatly’; expects to announce tax reform in not too distant future – comments at meeting with business leaders
US markets on close: Dow +0.5%, S&P500 +0.5%, Nasdaq +0.6%
Best Sector in S&P500: Healthcare
Worst Sector in S&P500: Utilities
Biggest gainers: FLIR +8.1%, ENDP +7.9%, ADI +4.8%, WYN +4.8%, NRG +4.2%
Biggest losers: AIG -9.0%, CF -5.0%, DVN -3.7%, FCX -3.3%, HP -2.7%
At the close: VIX 12.0 (+1.2pts); Treasuries: 2-yr 1.25% (+1bps), 10-yr 2.50% (+3bps), 30-yr 3.09% (+3bps)
US movers afterhours
TIVO Reports Q4 $0.08 (unclear if comp) v $0.54e, R$252.3M v $222Me; increases stock buyback to $150M (6.7% market cap); Initiates $0.18 dividend (implied yield 3.8%); +13.6% afterhours
SNPS Reports Q1 $0.94 v $0.78e, R$652.9M v $638Me- Guides Q2 $0.85-0.88 v $0.76e, R$655-680M v $638Me; +7.6% afterhours
NTES: Reports Q4 $4.30 v $3.63e, R$1.74B v $1.62Be; +6.9% afterhours
VRX: FDA approves Siliq (brodalumab) to treat adults with moderate-to-severe plaque psoriasis; +4.9% afterhours
NTAP Reports Q3 $0.82 v $0.74e, R$1.4B v $1.39Be; Guides Q4 $0.79-0.84 v $0.76e, R$1.37-1.52B v $1.40Be; +3.7% afterhours
CSCO: Reports Q2 $0.57 v $0.56e, R$11.6B v $11.6Be; Increases dividend 11.5% to $0.29/shr (implied yield 3.5%); +2.1% afterhours
ABX: Reports Q4 $0.22 v $0.21e, R$2.32B v $2.20Be; +2.0% afterhours
KHC: Reports Q4 $0.91 v $0.87e, R$6.86B v $6.77Be; -2.4% afterhours
CF: Reports Q4 -$0.39 v -$0.06e, R$867M v $906Me; -3.6% afterhours
GDDY Reports Q4 -$0.02 v $0.08e, R$486M v $485M; Guides Q1 R$485-490M v $494Me; -4.4% afterhours
SPWR: Reports Q4 -$0.64 v -$0.48e, R$1.09B v $1.08Be; -5.2% afterhours
TRIP: Reports Q4 $0.16 v $0.30e, R$316M v $326Me; -5.6% afterhours
CAR: Reports Q4 $0.15 v $0.16e, R$1.88B v $1.96Be; To repurchase $300M (8.4% of market cap); -6.5% afterhours
MOH Reports Q4 -$1.54 adj v $0.75e (unclear if comp), R$4.46B v $4.52Be; Guides initial FY17 $2.09 v $3.73e, R$19.5B v $19.0Be; -14.0% afterhours
Politics
(US) Senate Judiciary Committee chairman Grassley (IA-R) requesting a briefing and documents on circumstances that led to resignation of NSA head Flynn – press
(US) Andrew Puzder officially withdraws his nomination for Labor Secretary – US press
Asia Key economic data:
(CN) China Jan Foreign Direct Investment (FDI): CNY80.1B v CNY81.4B prior, Y/Y: -9.2% (First decline in 27 months) v +1.4%e
(AU) AUSTRALIA JAN EMPLOYMENT CHANGE: +13.5K V +10.0KE; UNEMPLOYMENT RATE: 5.7% V 5.8%E
(AU) AUSTRALIA FEB CONSUMER INFLATION EXPECTATION: 4.1% V 4.3% PRIOR
(NZ) NEW ZEALAND FEB ANZ CONSUMER CONFIDENCE INDEX: 127.4 V 128.7 PRIOR; M/M: -1.0% V +3.4% PRIOR
Asia Session Notable Observations, Speakers and Press
Second round of somewhat more hawkish Fed chair Yellen testimony, along with hotter CPI data out of the US, continued to pressure US Treasury yields higher even as indices maintained their upward trajectory; US indices set new record highs for the fifth straight session, despite the rise in the VIX; Yield on the US benchmark was also up another 3bps to reach 2.5% for the first time in 2 weeks. Fed funds futures have also seen a more dramatic change toward anticipated rate hikes – March probabilities rose above 30% and May is now above 50%.
Ongoing US political drama saw the formal withdrawal of Laber Sec-nominee Puzder; Separately, Republican head of the Senate Judiciary committee is pressing for a briefing and documents that led to yesterday’s resignation of NSA head Flynn, while another US press report alleges intelligence officials have been prone to withhold intel from POTUS due to security concerns.
US TIC data late in US session saw the first net decline in holdings in 3 months, although China holdings of US treasuries rose for the first time in 7 months to $1.06T; Recall last month saw Chinese sell the biggest amount of US debt since late 2011.
China FDI fell for the first time in over 2 years, though MOFCOM officials yet again attributed the decline to high base effects from the timing of Lunar New Year; PBoC official also noted that policy is appropriate after that large rise in lending released earlier this week.
Australia employment data were mixed – unemployment rate was lower than expected and employment change slightly higher. However, data internals showing employment increase dominated by part time workers (58.3K v 5.1K prior) while full-time change contracted (-44.8K v +11.3K prior). Labor participation rate also ticked lower to 64.6% v 64.7% prior; Australia short-term yields retreated, with 3-year down about 3bps in the wake of the release at 2.03%.
China:
(CN) PBOC Dep Gov Yi Gang: Credit data and policy are appropriate – Chinese press
(CN) China CSRC said to be considering new curbs on secondary share sales, which may mean available only one time a year
(CN) China PBoC’s Zhao Yang: China has a lot of room to open capital markets – Financial News
Japan:
(JP) Bank of Japan (BOJ) Gov Kuroda: Risk of another global financial crisis has fallen a lot, but cant deny a different kind of crisis could happen
(JP) Japan MOF official: Japan Fin Min Aso spoke with US Treasury Sec Mnuchin by phone today
(JP) Former BOJ member Shirai: QQE corrected the overvaluation of the yen; If yen depreciates below 125-130 may become a problem
Australia/New Zealand:
(AU) RBA’s Assistant Gov Ellis: Need to be aware of pockets of potential mortgage stress
(NZ) New Zealand Fin Min Joyce: Economic outlook is positive
Asian Equity Indices/Futures (00:00ET)
Nikkei -0.6%, Hang Seng +0.4%, Shanghai Composite +0.3%, ASX200 +0.1%, Kospi -0.2%
Equity Futures: S&P500 -0.1%; Nasdaq flat; Dax flat; FTSE100 -0.1%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.0590-1.0625; JPY 113.75-114.30; AUD 0.7705-0.7730; NZD 0.7210-0.7240
Apr Gold +0.2% at $1,236/oz; Mar Crude Oil -0.1% at $53.05/brl; Mar Copper +0.5% at $2.76/lb
SPDR Gold Trust ETF daily holdings rise 2.6 tonnes to 843.5 tonnes; 9th consecutive increase; Highest since Dec 14th
(CN) PBOC SETS YUAN MID POINT AT 6.8629 V 6.8632 PRIOR; Strongest Yuan setting since Feb 7th
(CN) PBOC to inject combined CNY250B v CNY120B prior in 7-day, 14-day and 28-day reverse repos
(NZ) New Zealand sells NZ$200M Apr 2025 bonds, avg yield 3.2252%, bid-to-cover: 2.76x
Asia equities/Notables/movers by sector
Consumer discretionary: TTS.AU Tatts Group Ltd -3.8% (H1 result); SYD.AU Sydney Airport -2.1% (FY16 result); SGH.AU Slater & Gordon Ltd -24.1% (trading update); 2502.JP Asahi Group Holdings +2.3% (FY16 result)
Financials: MFG.AU Magellan Financial Group -5.1% (H1 result)
Industrials: 753.HK Air China +0.5% (Jan result)
Technology: 6502.JP Toshiba Corporation -3.3% (demoted to lower tier of TSE, to delay chip stake sale); 6724.JP Seiko Epson Corp +1.6%
Materials: 1091.HK CITIC Dameng Holdings -5.5% (FY16 result); 486.HK RUSAL -0.7% (Q4 result); SGM.AU Sims Metal Management +4.0% (Macquarie raises rating); EVN.AU Evolution Mining +0.4% (H1 result); S32.AU South32 Limited -1.5% (H1 result)
Energy: 1381.HK Canvest Environment Protection Group +2.6% (guidance); ORG.AU Origin Energy -2.5% (H1 result)
Telecom: TLS.AU Telstra Corp -6.2% (H1 result)
