US Session Highlights
(US) Goldman Economist Chain Store Sales w/e May 13th w/w: -1.1%; Y/Y: +1.0%
(US) APR HOUSING STARTS: 1.17M V 1.26ME; BUILDING PERMITS: 1.23M V 1.27ME; single family permits drop
Reportedly Iran will support a 9-month extension of the oil production cut agreement if there is a consensus among participants – press
(US) APR INDUSTRIAL PRODUCTION M/M: 1.0% V 0.4%E; CAPACITY UTILIZATION: 76.7% V 76.3%E (largest total industrial production gain since Feb 2014)
Stocks rose to new highs in the first half of today’s session, with the S&P reaching a new all-time top at 2,405.8. Eventually, investors appetite for risk took a more subdued tone and indices closed mostly flat on the day. Markets are now concerned about the leaks from Trump’s meeting with Russian officials and the political turmoil it is creating. Techs continued to hold positive ground; NASDAQ closed up 20 points on the day, and the S&P Tech sector gained 0.4%.
US markets on close: Dow flat, S&P500 -0.1%, Nasdaq +0.3%
Best Sector in S&P500: Technology
Worst Sector in S&P500: Utilities
Biggest gainers: FTR +4.7%; QRVO +4.6%; YHOO +2.2%
Biggest losers: TGNA -6.4%; HRB -6.0%; DVA -6.0%
At the close: VIX 10.6 (+0.2pts); Treasuries: 2-yr 1.28% (-2bps), 10-yr 2.33% (-1bps), 30-yr 2.99% (-2bps)
US movers afterhours
RRGB Reports Q1 $0.89 v $0.58e, R$418.6M v $417Me; Guides slightly higher FY17 EPS $2.80-3.10 v $2.73e ; +16.3% afterhours
JACK Reports Q2 $0.98 v $0.90e, R$369.4M v $369Me; hires advisers to consider potential alternatives for Qdoba unit; +11.2% afterhours
GNC Interim CEO Moran bought 300K shares at $6.69/shr- Moran now holds 953.3K shares ; +3.9% afterhours
URBN Reports Q1 $0.13 v $0.16e, R$761M v $772Me; +1.7% afterhours
BZUN Reports Q1 $0.08 v $0.08e (1 est), R$116.9M v $103.6M y/y; -12.4% afterhours
AMZN: Said to seek entry into pharmacy market; to hire a GM to oversee the effort – financial press
CL: CEO said to have indicated company may be open to sale at $100/shr (vs $71.58 last close) – NY Post
Key economic data
(JP) JAPAN MAR MACHINE ORDERS M/M: 1.4% V 2.5%E; Y/Y: -0.7% V 1.2%E
(AU) AUSTRALIA MAY WESTPAC CONSUMER CONFIDENCE INDEX: 98.0 V 99.0 PRIOR, M/M: -1.1% V -0.7% PRIOR
(AU) AUSTRALIA Q1 WAGE PRICE INDEX Q/Q: 0.5% V 0.5%E; Y/Y: 1.9% V 1.9%E
(NZ) NEW ZEALAND Q1 PPI INPUT Q/Q: 0.8% V 1.0% PRIOR; PPI OUTPUT Q/Q: 1.4% V 1.5% PRIOR (4th consecutive quarter of gains, first time in 6-yrs)
(NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: +3.2% v +3.6% prior; 5th straight increase
Asia Session Notable Observations, Speakers and Press
Asia session is in clear risk-off mode despite the mixed-flattish Wall Street trade as political risk surrounding the White House administration appears to be getting worse. In late US after-market, NY Times reported that Pres Trump asked former FBI Director Comey to shut down investigations of former NSA Flynn. Investors are concerned that the latest gaffe may translate into obstruction investigation by Congress, with leaders of both parties already hinting about a subpoena for the Comey documents. S&P e-minis fell over 0.5% or 15 handles, USD/JPY slid some 70pips below 112.40, US Treasury yield was down 2.5% on safehaven US debt demand, and Gold rose 0.5% above 1,240. EUR/USD also broke above the 1.11 handle – its best level since the US elections that first triggered the now-stalled greenback surge.
In economic data, Australia Westpac Consumer Index fell for the 2nd straight month to 98.0 from 99.0. Westpac economist noted that confidence in housing and the outlook for house prices deteriorated sharply while the assessment of the Budget around the outlook for family finances was decidedly weaker. Also of note in Australia, S&P became the last major rating agency to affirm Australia AAA following its recent FY budget, but also warned it may cut rating if its confidence in surplus outlook dissipates.
China
(CN) China National Energy Administration (NEA): Apr power consumption +4.8% y/y to 342B Kwh
(CN) China hopes for improvement in its relationship with South Korea – financial press
(CN) China to create CNY150B venture capital fund for central SOEs – Chinese Press
Japan
(JP) BOJ Gov Kuroda: No particular requests from PM Abe on monetary policy; Discussed global economy – press
(JP) Financial press looks ahead to Japan GDP data, expecting to see a 5th consecutive quarter of growth, which would be its longest run of growth in 10-yrs
(JP) Nikkei looks at recent selling pressure on the Nikkei225, attributing part of it to profit-taking by pension funds
Australia/New Zealand
(AU) S&P AFFIRMS AUSTRALIA SOVEREIGN AAA RATING; OUTLOOK REMAINS NEGATIVE
(AU) Australia wage growth of 1.9% in Q1 is below the period rise in cost of living of 2.1% – SMH
(NZ) ASB economist: Latest dairy auction suggests milk prices are fairly well balanced; Maintaining FY18 forecast of NZ$6.75/kg – NZ press
Asian Equity Indices/Futures (00:30ET)
Nikkei -0.6%, Hang Seng -0.3%, Shanghai Composite -0.1%, ASX200 -0.9%, Kospi -0.4%
Equity Futures: S&P500 -0.5%; Nasdaq -0.5%, Dax -0.4%, FTSE100 -0.2%
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.1080-1.1115; JPY 112.35-113.10; AUD 0.7410-0.7430; NZD 0.6880-0.6905
June Gold +0.5% at 1,243/oz; June Crude Oil -0.9% at $48.21/brl; July Copper flat at $2.55/lb
(US) Weekly API Oil Inventories: Crude: +0.9M v -5.8M prior; first build in 3 weeks
iShares Silver Trust ETF daily holdings rise to 10,650 tonnes from 10,605 tonnes prior (3rd straight increase)
(CN) PBOC SETS YUAN MID POINT AT 6.8635 V 6.8790 PRIOR; Strongest Yuan setting since Feb 7th
(CN) PBOC to inject combined CNY140B v CNY190B prior in 7-day and 14-day reverse repos
(AU) Australia MoF (AOFM) sells A$500M in 4.5% 2033 Bonds; avg yield: 2.934% v 3.0205% prior; bid-to-cover: 2.67x v 3.07x prior
(KR) Bank of Korea (BOK) sells KRW1.2T in 2-yr monetary stabilization bonds; avg yield 1.61%
Asia equities notable movers
Australia
Wesfarmers (WES) -1.3%; Review of Officeworks finds now is not the right time for an IPO given market conditions
Paladin (PDN) -26.7%; Reports 9-month
BHP (BHP) +0.5%; Reportedly to meet with Elliott to discuss oil business – press
Fortescue (FMG) +3.7%; Morgans Financial Ltd Raised FMG.AU to Add from Hold
Japan
Sumitomo Chem (4005) +3.0%; Reports FY16/17
Toshiba (6502) +0.5%; Japan Securities Finance restricts short sale of Toshiba shares beginning May 17th – Nikkei
Takeda (4502) +2.1%; Takeda-Teva joint venture reportedly plans to boost overseas manufacturing of generic medications – Nikkei
Rakuten (4755) +0.7%; to issue ¥100B in 3, 5, 7 and 10-year straight bonds in order to cut debt and redeem maturing bonds – Nikkei
Hong Kong
Vtech (303) +5.1%; Reports FY16/17
Meitu (1357) -6.3%; Not being added to MSCI CHina index as speculated
Alibaba Health (241) +8.3%; Reports FY17
Car Inc (699) -3.2%; Reports Q1
Future Bright (703) -5.3%; Reports Q1
