Feb 23, 2017 - Market Update

Short recap

Asian stocks took a breather

Europe opened mixed

FOMC Minutes showing cautiousness (not to forget that the meeting took place right after Trump inauguration that was accompanied with huge uncertainty)

But lots has happened since then

May rate hike priced at 50%

10-yr US Trys yield at 2.40% after FOMC

FR elections: Bayrou pulling out and expressing support for Macron

GE-FR spreads down by 10 bps as a reaction

Demand for Bunds (politically driven vs strong momentum in stocks from good macro data)…something fishy here

EURUSD – experienced short squeeze on the news but jump was more about hitting strong support around psychological 1.0500 level

AUDUSD – not sure about the direction

Reflation and commodity story to push higher

Rate spreads to weight on the cross

Nissan Motors – Carlos Ghosn to step down as CEO after 15 yrs with the company

Airbus looking at easing penalties from EU govs for delay in military aircraft contract

Tesla to start Model 3 production in Sep, reporting smaller loss

Bayer expecting agri products (pesticides) business flat this year

Focussing on Monsanto takeover completion (USD 66 bln)

More HFs warning about Trump stock rally being overdone

While EU political risks not priced in

UK Brexit – Australia and Israel to expand trade and investments

US Trs Sec Mnuchin making vague comments about effects of strong USD

UK and Canadian regulators to assist FinTech

Goldman Sachs expecting crude oil stocks to keep falling

OPEC is tightening but US shale production is rising on better effectiveness and cheap funding

Don’t really see the signs of improved demand

Commodities need more real demand & lower inventories to rally further

Most vulnerable are copper and longs in oil

Data

GE: Gfk Consumer Climate Index – out slightly higher

UK: CBI Distributive Trades Index as a leading indicator for retail spending should point slightly higher

US: Initial/Continuing weekly unemployment claims – expected marginally higher

US: Chicago Fed National Activity Index – expected slightly higher

US: FHFA House Price Index

US: Kansas City Fed Manufacturing Index

ECB Praet speaking (0855)

Atlanta Fed Lockhart speaking (1335) – likely to provide a recap of his 10 yrs at Fed as he retires soon

Dallas Fed Kaplan (voter) speaking (1800)

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

  

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Feb 15, 2017 - Market Update

Short recap

Asian markets up on Wall Street and Yellen

EU markets opening higher

SoftBank Group to buy Fortress Investment Group (USD 3.3 bln) as it is preparing to enter the private equity space

GM’s decision to put Opel/Vauxhall on sale is a turning point for the company as the company will exit the production in Europe

If talks with Peugeot-Citroen succeed the global auto map will be redesigned completely

CEOs of US retailers to discuss the border tax with Trump today

Studying Trump actions becoming a norm for professional investors (apart from fundamentals…etc.)

FinTech is venturing into M&A business of Goldman Sachs now after eliminating tons of trading jobs before

Momentum in financials seems to be firmly in place with Goldman Sachs reaching historic highs

But we may be getting a bit overstretched despite momentum

Trump’s New world is turning into New NATO and many European countries need to live up their 2% of GDP obligation

Thus seeing new opportunities on long side in: BAE, Leonardo, Lockheed, General Dynamics, Raytheon and Northrop

EZ peripheral yields falling down despite the ongoing clash between EZ and IMF over Greece

Greece not open to any further spending cuts; the situation may turn up badly at some point

Some US banks licensed to issue Panda bonds in China (inland)

USDJPY – levels 115.00 and 116.00 (cloud top)

EURUSD – 1.0566-1.0576/78

Yellen

Fed likely hiking on Mar 15 but need to watch job market and inflation expectations (probability at 34%)

3 hikes still in place for 2017 (prised at 50/50 for Dec); market is pricing 2 hikes

Waiting too long would be unwise

Trump policies are a big unknown/risk

Eventually, Fed can do pre-talk in March and hike on May meeting (despite no press conference)

Fed has an authority and responsibility to talk with global regulators

Data

UK: Labour Market Report – claimant count expected higher

US: Consumer Price Index – headline CPI to rise the most since 2012 while Core CPI expected slightly lower

US: Consumer Price Index – expected to slow down

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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Oct 18, 2016 - Q3 Earnings - Week 2

Q3 Earnings - Week 2

Would you happen to have the feeling that the academics at Fed will not raise the rates in Dec and then the markets will lose any confidence it still may have, the investors and economy will get it the same way and everything will go down the hole ending up with a new full blown recession...?

…or is it just me?

Okay, let’s focus on earnings and try to figure out what will pretty high valuations and steadily declining earnings over the last few quarters will do to stock market in the above mentioned scenario.

This Week

Goldman Sachs Group Inc – a nice jump in bond trading helped to surprise the market

Wednesday

Genuine Parts Co – estimated EPS 1.28, +3.5% Y/Y; Revenue 4 022 mln

Halliburton Co – estimated EPS -0.07, -121.9% Y/Y; Revenue 3 901 mln

American Express Co – estimated EPS 0.96, -22.5% Y/Y; Revenue 7 697 mln

China Life Insurance Co Ltd (CN) – estimated EPS 0.05, -44.1% Y/Y; Revenue … mln

Morgan Stanley – estimated EPS 0.63, +84.6% Y/Y; Revenue 8 149 mln

US Bancorp – estimated EPS 0.83, +4.3% Y/Y; Revenue 5 347 mln

Abbott Laboratories – estimated EPS 0.58, +8.0% Y/Y; Revenue 5 287 mln

Valeant Pharmaceuticals Int – estimated EPS 1.77, -35.5% Y/Y; Revenue 2 519 mln

eBay Inc – estimated EPS 0.44, +2.3% Y/Y; Revenue 2 186 mln

Thursday

Walgreens Boots Aliance Inc – estimated EPS 0.99, +12.5% Y/Y; Revenue 29 084 mln

Schlumberger Ltd – estimated EPS 0.22, -71.4% Y/Y; Revenue 7 105 mln

Bank of New York Mellon – estimated EPS 0.81, +9.3% Y/Y; Revenue 3 862 mln

China Construction Bank Corp – estimated EPS 0.23, -4.2% Y/Y; Revenue … mln

E*TRADE Financial Corp – estimated EPS 0.39, +17.6% Y/Y; Revenue 472 mln

Travelers Cos – estimated EPS 2.33, -20.6% Y/Y; Revenue 6 870 mln

American Airlines Group – estimated EPS 1.69, -39.0% Y/Y; Revenue 10 534 mln

Union Pacific Corp – estimated EPS 1.40, -6.5% Y/Y; Revenue 5 163 mln

Vinci SA (FR) – estimated EPS 2.41, +5.3% Y/Y; Revenue 20 184 mln

Microsoft Inc – estimated EPS 0.68, +1.8% Y/Y; Revenue 21 698 mln

China Mobile Ltd (CN) – estimated EPS 1.48, …% Y/Y; Revenue 189 366 mln

Rogers Communications Inc (CA) – estimated EPS 0.87, -4.1% Y/Y; Revenue 3 448 mln

Verizon Communications Inc – estimated EPS 0.99, -5.1% Y/Y; Revenue 31 128 mln

Friday

Daimler AG (GE) – estimated EPS 2.23, +3.1% Y/Y; Revenue 38 372 mln

Kia Motors Corp (KR) – estimated EPS 1 566.06, +15.4% Y/Y; Revenue 12 643 981 mln

McDonald's Corp – estimated EPS .49, +6.1% Y/Y; Revenue 6 285 mln

Whirlpool Corp – estimated EPS 3.88, +12.4% Y/Y; Revenue 5 340 mln

General Electric Co – estimated EPS 0.30, +4.1% Y/Y; Revenue 29 645 mln

Honeywell International Inc – estimated EPS 1.62, +1.4% Y/Y; Revenue 9 840 mln

SAP SE (GE) – estimated EPS 0.95, -2.7% Y/Y; Revenue 5 301 mln

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmail.com

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Sep 4, 2016 - Weekly Macro - 36W

Previous Week Summary

Last week was all about waiting and positioning ahead of Friday’s US NFPs. Stocks ended the week more or less flat, most FX crosses traded within the ranges and despite the EURUSD 30 pip spike higher after NFPs release, which was corrected below 1.1200 later during US session, markets didn’t do much. One and only exception was crude oil, which fell down 7% pushed lower as the markets are oversupplied and the risk of no agreement outcome at Sep 26-28 OPEC is high. The tensions among OPEC members are being felt in the market, despite Russian President Putin calling for agreement on production freeze.

Monday – JP – Jobless rate reaching multi-decade low levels at 3% but is it really helping the BoJ’s hunt for inflation? US Personal income and spending for July rose and were in line with expectations, while Core PCE was higher too and in line on monthly basis. The yearly one saw a slight uptick higher versus expectations.

Tuesday – EZ – Business climate was worse and Consume confidence dived (in line with expectations) in Aug while in US it hit the highest level over the last year.

Wednesday – CN – PMI data were back to expansionary territory again. EZ unemployment and CPI not boding well for ECB. US – ADP data showed a nice rise to 177k vs 175k expected and Chicago PMI was worse. Meanwhile, Pending Home sales rose in Aug. Brazil – President Rousseff was sent back home but on the other side as expected, the BCB kept the rate unchanged at 14.25%.

Thursday – a bit of surprise for the market was PMI Manufacturing figure from UK that jumped back to expansionary territory (to 53.3 vs 49.0 exp.). Very likely manufacturers got pleased my weaker GBP. The Final US – Nonfarm productivity felt in line with expectations while ISM Manufacturing PMI was the lowest over the last 3 months.

 

Friday – well, a big day in terms of expectations but not reflected in the market…US NFPs rose 151k vs 180k exp., Unemployment rate was slightly up to 4.9% vs 4.8% exp. as more people entered the job market but Average hourly and weekly earnings slightly dropped. Maybe a summer kind of vacation fever effect?

Despite seasonality, the increase of 150k + revisions after two months of very huge gains are a good case for Fed to raise the rate in Sep. More on nearing full time employment and its effect on  link . Lacker (a Fed hawk but non-voter) was out later after NFPs saying that the Fed funds rate should be considerably higher. Bill Gross of Janus as well as Goldman Sachs see the hike likely in Sep while Pimco and Mohamed El-Erian from Allianz SE are not that much open to such a move in Sep.

From corporate world – speculations about SolarCity and its ability to avoid bankruptcy were circulating in the market. The EUR 13 bln back tax request for Apple that was imposed by European Commission after it started to look closer at Irish tax system is here and irritating Apple, Ireland and US. Are we just ping-ponging the ball after the BNP USD 9 bln payout over US Sanction list or US government just gave an idea to European Commission some time ago when they started to complain about US multinationals trying to avoid paying taxes by moving operations abroad?

Upcoming Week Outlook:

We have this week 3 rate decisions (Australia, Euro Area and Canada) and the key event is the ECB meeting. We also expect diary price index from New Zealand as the indicator of one of the key sectors of the economy and GDP from Australia and Japan. We will end the week with inflation figures from China and employment data from Canada. Here are the details:

Monday (AUD, JPY, GBP):

We will start the week with the quarterly rate of change in operating profits from Australian companies, which was declining in the recent months. Traders will look for signs of recovery especially ahead of the rate decision scheduled for Tuesday. Kuroda will speak in the middle of the Asian session and the speech will be watched in respect to expected helicopter money and possible hints regarding cooperation with government on the fiscal stimulus side. At the beginning of the European session the UK Service sector PMI, which could bring better than expected results due to a positive surprise in Manufacturing PMI last week, will be watched. On Monday, we have bank holiday in US & CA, so expect subdued liquidity.

Tuesday (AUD, USD, CHF, NZD):

The first major central bank meeting of the month will take place on Tuesday. Watch the RBA statement for insights how the policy makers see the Australian economy after the August rate hike. At the beginning of the US session, the ISM Services PMI will show whether the mood in the sector is following the manufacturers. The Polish National Bank will meet also and there is an increasing probability of a rate cut in the biggest V4 country. SNB’s governor Jordan can bring some volatility to CHF crosses too but also kiwi traders should follow the diary price index.

​Wednesday (AUD, CHF, GBP, CAD, USD, JPY):

Despite plenty of news ahead on Wednesday, don’t forget that traders will be waiting for the ECB on Thursday, hence the liquidity will be dried up. We are starting the day with Aussie GDP, which posted a surprise jump in growth, but the Q2 GDP growth is usually much weaker than the previous figure. At the beginning of European session change in UK home prices and manufacturing production will be released, and both declined last months, while further decline is expected mostly due to the Brexit vote. At the G20 meeting on Sunday, Theresa May had to face quite serious Brexit warnings from US and Japan. The Canadian rate decision is scheduled at the beginning of the US Session. The country’s GDP declined last Q and the trade balance is in falling trend. The dependence on oil with the depressed crude prices and the inflated housing market are the key problems the nation’s facing. There is no change expected in the overnight rate but the statement can cause some volatility. The same time US job openings will be released with lower figures expected due to the job market close to maximum employment. At the beginning of the Asian session Japanese final GDP and Current account may give a boost to volatility. In case of GDP decline the possibility of “helicopter money” topic will get back in focus.

Thursday (CNY, EUR, USD, CAD):

The Chinese Trade Balance (rising since May) can create some volatility in the early trading but all eyes will be on the ECB rate decision and press conference later that day. The analysts are divided whether the ECB will act now or will stay on hold as the PMI figures are close to pre-Brexit vote levels. The same time with the press conference the Canadian housing market data will be released and also Crude oil inventories can move the CAD crosses. 
Providing the ECB will act, the following options could be considered:

Extension of asset purchase (currently EUR 80 bln monthly until spring 2017

Change in the rules which corporate bonds could ECB purchase

Rate cut, the least likely option for the policy makers

Friday (CNY, GBP, USD, CAD):

Chinese inflation will start the data flow where both CPI and PPI will be released by the National Bureau of Statistics . The consumer inflation is slowing down for the 4^th consecutive month and another decline is expected. On the other hand producers prices are falling and even the pace of decline is slowing, analysts expect another negative number. The deficit of the UK Goods Trade Balance is expected to come out a little narrower. Midday FOMC voting member Rosenberg speaks at South Shore Chamber breakfast in Boston about the economic outlook that could cause some moves in USD crosses. The Canadian Employment figures are out later and as the last month’s data were not encouraging (both the Employment change and the Unemployment rate came out worse than expected) the key is, if this was a temporary weakness or a beginning of a negative trend for the nation.

Please check below the Event Risk Calendar for better overview and times. We prepared also a Central bank meeting schedule for september.

Don't forget to watch your risk and be consistent in trading.

Good luck Champs!

Mr Hawk & Mr Tech Man

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice.

All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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Stocks - Q2 Earnings Note

Q2 Earnings

Last Week

BlackRock – worse than expected but kept capital inflows positive despite political/macro uncertainty, extremely low yields and market volatility. All of that made clients to deposit money with banks/cash instruments and fixed income.

Brexit vote impact – institutional investors rebalancing/redesigning portfolios while retail is pulling money out. Worried about yields going lower but good Q2 earnings can justify highs of stock market. Prefers Deutsche Borse/LSE headquarters to be based in continental Europe over UK.

JPMorgan Chase Inc – reported better than expected across all apart from AUM decline, higher provisions and non-performing loans. Consumer, corporate, commercial and investment banking better (both fixed income/equity trading higher). Overall strong in retail, credit cards, loans (especially mortgages & commercial real estate) what is a good sign for US economy. Looking at increasing buyback program.

Brexit - negative impact on UK economy now and in the future, also effecting US & global economy but to small extent. Too early to speculate about reshuffling of UK’s operations and moving them to continental Europe.

Citigroup Inc – reported EPS higher/revenue lower than expected, other mixed. Able to generate earnings despite volatile/uncertain global environment, continues in focusing on core (almost all profits from core), reducing non-core, improving efficiency, return on assets. Globalization and its effects not fading away, will stay despite isolationist policies.

Brexit - was positioned for Brexit vote volatility, developing story but no financial crisis resulting from it. Sees lower rates longer.

Wells Fargo & Co – results mixed to worse than expected, Tier 1 common equity ratio under Basel III. Continues in improving efficiency, non-performing assets lower, and provisions higher, solid growth in loans, deposits and customers. Credit loan losses heavily due to energy and gas book.

Brexit – lower impact as more US focussed while US improving but impacting rates decisions.

Upcoming Week

Monday

Bank of America - estimated EPS 0.33, -24.9% Y/Y; Revenue 20 371 mln

The similar questions as for Citigroup, JPMorgan Chase and Wells Fargo would need BofA answer.

Charles Schwab Corp – estimated EPS 0.30, +24.8% Y/Y; Revenue 1 798 mln

Increased trading activity from Brexit, asset reallocation due to low yields and higher market volatility may boost its numbers. The retail and institutional figures will be reviewed by investors closely.

IBM – estimated EPS 2.89, -24.8% Y/Y; Revenue 20 084 mln

Yahoo! Inc – estimated EPS 0.09, -41.9% Y/Y; Revenue 840 mln

Tuesday

Philip Morris International Inc – estimated EPS 1.19, -1.8% Y/Y; Revenue 6 773 mln

Goldman Sachs Group Inc – estimated EPS 3.08, -31.6% Y/Y; Revenue 7 547 mln

Q2 results should are expected to be boosted by higher trading activity over Brexit period and as the legal costs from last year are off the table.

Interactive Brokers Group Inc – estimated EPS 0.35, -20.9% Y/Y; Revenue 377 mln

Similar comment as for Charles Schwab Corp…

TD Ameritrade Holding Corp – estimated EPS 0.38, +4.4% Y/Y; Revenue 829 mln

Similar comment as for Charles Schwab Corp…

Johnson & Johnson – estimated EPS 1.68, -1.8% Y/Y; Revenue 17 982 mln

Expecting better sales of drugs offsetting declines in other activities. Since the company generates substantial sales internationally, the rising USD may have negative effect.

Novartis AG (CH) – estimated EPS 1.19, -6.2% Y/Y; Revenue 12 160 mln

UnitedHealth Group – estimated EPS 1.89, +15% Y/Y; Revenue 45 038 mln

Lockheed Martin Corp – estimated EPS 2.93, -0.5% Y/Y; Revenue 12 582 mln

Microsoft Inc – estimated EPS 0.58, -6.1% Y/Y; Revenue 22 125 mln

Rising cloud business versus decline in PC sales…which one will win?

Wednesday

American Express Co – estimated EPS 1.96, +37.4% Y/Y; Revenue 8 481 mln

Morgan Stanley – estimated EPS 0.60, -23.8% Y/Y; Revenue 8 344 mln

Similar questions as for JPMorgan Chase, Goldman Sachs and other brokers…

Abbott Laboratories – estimated EPS 0.53, +2.7% Y/Y; Revenue 5 248 mln

eBay Inc – estimated EPS 0.42, -45.0% Y/Y; Revenue 2 172 mln

Intel Corp – estimated EPS 0.53, -8.7% Y/Y; Revenue 13 554 mln

QUALCOMM Inc – estimated EPS 0.97, -1.6% Y/Y; Revenue 5 588 mln

SAP SE (GE) – estimated EPS 0.87, +8.3% Y/Y; Revenue 5 223 mln

Thursday

Daimler AG (GE) – estimated EPS 2.01, -5.3% Y/Y; Revenue 38 910 mln

General Motors – estimated EPS 1.49, +15.4% Y/Y; Revenue 38 550 mln

Why are shares declining when company’s profits are on the rise? Market may be feeling that the cyclicals are losing steams what is also underlined by GM losing market share in its home market.

Johnson Controls Inc – estimated EPS 1.03, +13.3% Y/Y; Revenue 9 618 mln

Biogen Inc – estimated EPS 4.70, +11.3% Y/Y; Revenue 2 795 mln

At attractive levels with ROIC at 34% and revenue growing at 11% (last quarter) vs 17% past 5 years. The company has a strong business and is looking at positive momentum in its Alzheimer pipeline despite recent negative drug updates. Of note are also upcoming trials of Alzheimer drugs in H2, putting the company high risk/reward pool. From technical perspective, the stocks corrected 50% from peak in early 2015.

Roche Holding AG (CH) – estimated EPS 7.41, ---% Y/Y; Revenue 12 307 mln

Southwest Airlines Co – estimated EPS 1.21, +17.0% Y/Y; Revenue 5 403 mln

Union Pacific Corp – estimated EPS 1.16, -10.5% Y/Y; Revenue 4 789 mln

Starbucks Corp – estimated EPS 0.49, +16.0% Y/Y; Revenue 5 341 mln

Swatch Group AG (CH) – estimated EPS 7.58, -23.9% Y/Y; Revenue 3 906 mln

Unilever PLC (GB) – estimated EPS 0.92, +1.4% Y/Y; Revenue 26 594 mln

Schlumberger Ltd – estimated EPS 0.21,  -75.8% Y/Y; Revenue 7 136 mln

E*TRADE Financial Corp – estimated EPS 0.38, 36.7% Y/Y; Revenue 470 mln

Visa Inc – estimated EPS 0.67, -9.9% Y/Y; Revenue 3 639 mln

Not only profits will be reviewed but after Brexit situation in merger with its European activites will be too.

AT&T Inc – estimated EPS 0.72, +3.8% Y/Y; Revenue 40 626 mln

Friday

Whirlpool Corp – estimated EPS 3.37, +24.7% Y/Y; Revenue 5 132 mln

Valeant Corp – estimated EPS 1.57, -38.7% Y/Y; Revenue 2 478 mln

FDA in its preliminary review said that suicide risks from its psoriasis drug are hard to assess due to limited data.

General Electric Co – estimated EPS 0.46, +63.2% Y/Y; Revenue 31 354 mln

Honeywell International Inc – estimated EPS 1.64, +8.7% Y/Y; Revenue 10 128 mln

Syngenta AG (CH) – estimated EPS 13.83, -6.0% Y/Y; Revenue 7 133 mln

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmail.com

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