Wednesday 3 May 2017

May 3, 2017 - Market Update

Short recap

Asia mostly in green with some hesitation about Fed looking at June hike
Europe opening lower


Trump a bit “disruptive” in international field
Open to government shutdown, pushing for faster voting on bills
US pushing China to agree on additional North Korea sanctions

Brexit – GE-FR agreed on tougher stance towards UK’s post-Brexit obligations (EUR 100 bln) Full article

UK announced that they will not pay this amount, want to discuss in details what are the rights and obligations
I love this one too…what discussions, all is written on the paper and signed by them


Equities

Akzo Nobel meeting today to discuss offer PPG Industries (USD 29 bln)
Peugeot to test self-driving cars in Singapore in a partnership with nuTonomy
US auto sales losing the steam, the cycle likely comes to an end
Valeant should be able to repay USD 5 bln by Feb 2018
Apollo, Blackstone, Centerbridge interested in Brookfield Asset Management (CA)
Fairfax Financial looking to buy Home Capital
Active fund managers are underweighted Apple versus indices despite high level of share price
VIX at 10.59 level – time to buy put options?


Earnings season

Apple’s iPhone sales/revenue down (customers waiting for a new device), feeling the replacement cycle

Facebook – expecting higher revenue on mobile-ads, market to focus on hiring and planned investments

AIG – markets is awaiting a CEO succession plan

Tesla – investors are very curious about the company results as the company deliveries in Q1 jumped by 69% to record 25k

Home Capital Group (CA) – closely watched as there are few bids in the wake of financial difficulties following mortgage fraud accusation in the bubbling Canadian housing market

Others reporting: Prudential Financial, MetLife, Yum Brands, Kraft Heinz Foods, Time Warners

Bonds

ECB bought much more FR (EUR 11.3 bln and IT (EUR 9.8 bln) bonds last month, while GE bonds purchases were in line
Amount that is in breach of the usual allocation key
ECB did so ahead of FR elections and due to issues IT is coping with

10-yr Trys yield at 2.29% - trading a bit stronger ahead of FOMC
10-yr Bund yield at 0.32%
10-yr Greek yield declined substantially to 6.16%


Gold – waiting for a catalyst: FOMC, US NFPs
Support 1249 (50% Fibo) and 1250 (50/200 DMA)

Data

EZ: Q1 GDP flash estimate – no change to 0.5%
US: ADP Employment report – expecting lower growth in April
US: ISM Non-Manufacturing – expected slightly higher

Obamacare vote expected today/tomorrow

FOMC statement to be released (no press conference)
Likely to discuss balance sheet (USD 4.5 tln, pace of rate hikes, no policy change expected)
Just to refresh:
March PCE came at 1.6% as expected
Market pricing June hike at 70%

Upcoming

Friday – US NFPs
Focus on earnings while headline may not be stellar due to Easter holiday

May 7 – French presidential elections 2nd round (Macron/Le Pen – 60/40)

May 25 – OPEC/Non-OPEC meeting

Jun 11/18 – French Legislative (Parliamentary) elections (a big question mark for Macron to gain majority)


Should you have any questions feel free to contact me anytime.

Good luck Champs!

Mr Hawk



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