CAPIS TGIF Global Markets 2/15/2019
Asian Markets Following yesterday’s disappointing U.S. sales data, the region traded lower. However, there are other reasons the markets saw selling pressure. Rumors indicate both parties still have significant hurdles to overcome to reach a Sino-U.S. trade accord. (More on this later.) Macro concerns also raised their head again. Both Chinese CPI and PPI fell…
Asian Markets
Following yesterday’s disappointing U.S. sales data, the region traded lower. However, there are other reasons the markets saw selling pressure. Rumors indicate both parties still have significant hurdles to overcome to reach a Sino-U.S. trade accord. (More on this later.) Macro concerns also raised their head again. Both Chinese CPI and PPI fell short of consensus. The PPI slowed for the 5th consecutive month during January.
The selling was widespread and all the major sectors ended the day to the downside. Losses of 1% or more were experienced in real estate, financials, telcos, real estate and materials. Macau gaming stocks were out of favor. Chinese actions to reign in shadow banking activity especially pertaining to foreign currency transactions are a major concern.
Other Important Headlines
- Coca Cola Bottling Japan -8.9% suffered an even worse drubbing than its parent following results.
- Kubota’s -7.0% FY results for OP and NI are light of its own projections by 7.2% and 4.4%, respectively
- Dai-Ichi Life -4.7% increased it FY sales outlook but they remained a touch below consensus.
- Lotte Shopping’s -1.8% Q4 OP is KRW 90.28b, missing the lowest analysts estimate.
- BAIC Motor -3.2% sees FY 2018 NP higher 95% y/y citing growth of at Beijing Benz.
- After the close, Bridgestone released results and announced a buyback while Hon Hai published Jan. sales figures.
European Markets
Europe had a mixed, flattish start. For one, investors were awaiting the press conference of Spanish PM Sanchez which occurred one hour into the day. He is calling for elections following the failure to reach a budget deal. They are scheduled for April 28th. The markets moved higher after his announcement. But what is providing the biggest impetus are comments from Chinese Pres. Xi. Following the trade talks he stated further talks which will be held next week. The U.S. has essentially provided the same message about 7:30 AM Eastern.
The news has had a dramatic effect on sectors. Almost all are now trading to the upside. Currently, miners, autos, industrials, media, chemicals, construction, et. al. are better by at least 1%. The auto sector reversed early losses which we will address below. Utilities are down small and been so throughout the day.
Snippets from the Region
- The auto sector had valid reasons to lag earlier in the day. EU new car sales are lower by 4.6% during January. That is bad enough but it is also the 5th consecutive month sales have fallen y/y. The icing on the cake is a negative report on the sector by Morgan Stanley. The broker discusses the potential tariff impact.
- EDF -5.6% is the primary reason utilities are weaker. The company’s FY ’19 EBITDA forecast range is below consensus of €16b.
- Vivendi +6.2% had solid results especially at Universal Music Group. That bodes well for the partial spin-off which it is preceding with.
- Merger news includes DSV +2.3% upping its offer for Panalpina +3.8% and Scout23 +12.5% accepting a private equity bid.
- MUFG has placed its entire 6% stake in Standard Life -6.0% today.
On Our Side of the Pond
- The White House has scheduled a press conference for Pres. Trump at 10 Am Eastern to discuss the budget/border issue and he is expected to declare a national emergency.
- Berkshire Hathaway disclosed its latest holdings. Of note, it no longer holds Oracle, reduced its Apple exposure while increasing its stake in JP Morgan.
- Facebook is facing a major FTC fine.
- Earnings include Deere and Pepsico.
Have a wonderful weekend!
Markets and Macro
| Event | Survey | Actual | Prior | Revised | ||
| SK | BoP Current Account Balance | Dec | — | $4819.3m | $5063.4m | $5223.6m |
| SK | BoP Goods Balance | Dec | — | $6529m | $7974m | $7486m |
| JN | Japan Buying Foreign Bonds | 8-Feb | — | ¥992.4b | ¥915.3b | ¥915.6b |
| JN | Japan Buying Foreign Stocks | 8-Feb | — | -¥114.3b | -¥395.1b | — |
| JN | Foreign Buying Japan Bonds | 8-Feb | — | ¥906.1b | ¥638.3b | — |
| JN | Foreign Buying Japan Stocks | 8-Feb | — | -¥102.0b | -¥123.8b | -¥124.0b |
| CH | CPI YoY | Jan | 1.90% | 1.70% | 1.90% | — |
| CH | PPI YoY | Jan | 0.30% | 0.10% | 0.90% | — |
| SK | Bank Lending To Household Total | Jan | — | KR828.7t | KR827.6t | — |
| JN | Industrial Production MoM | Dec F | — | -0.10% | -0.10% | — |
| JN | Capacity Utilization MoM | Dec | — | -1.90% | 1.00% | — |
| JN | Industrial Production YoY | Dec F | — | -1.90% | -1.90% | — |
| CH | Aggregate Financing CNY | Jan | 3307.0b | 4640.0b | 1589.8b | — |
| CH | New Yuan Loans CNY | Jan | 3000.0b | 3230.0b | 1080.0b | — |
| EC | EU27 New Car Registrations | Jan | — | -4.60% | -8.40% | — |
| CH | Money Supply M2 YoY | Jan | 8.20% | 8.40% | 8.10% | — |
| CH | Money Supply M1 YoY | Jan | 1.90% | 0.40% | 1.50% | — |
| CH | Money Supply M0 YoY | Jan | 10.00% | 17.20% | 3.60% | — |
| SP | CPI Core MoM | Jan | — | -1.50% | 0.00% | — |
| SP | CPI Core YoY | Jan | 1.00% | 0.80% | 0.90% | — |
| SP | CPI MoM | Jan F | -1.30% | -1.30% | -1.30% | — |
| SP | CPI YoY | Jan F | 1.00% | 1.00% | 1.00% | — |
| SP | CPI EU Harmonised MoM | Jan F | -1.70% | -1.70% | -1.70% | — |
| SP | CPI EU Harmonised YoY | Jan F | 1.00% | 1.00% | 1.00% | — |
| IT | Trade Balance Total | Dec | — | 3658m | 3843m | 3847m |
| IT | Trade Balance EU | Dec | — | -613m | 513m | 516m |
| IT | General Government Debt | Dec | — | 2316.7b | 2345.3b | 2345.4b |
| UK | Retail Sales Ex Auto Fuel MoM | Jan | 0.20% | 1.20% | -1.30% | -1.00% |
| UK | Retail Sales Ex Auto Fuel YoY | Jan | 3.20% | 4.10% | 2.60% | 2.90% |
| UK | Retail Sales Inc Auto Fuel MoM | Jan | 0.20% | 1.00% | -0.90% | -0.70% |
| UK | Retail Sales Inc Auto Fuel YoY | Jan | 3.40% | 4.20% | 3.00% | 3.10% |
| EC | Trade Balance SA | Dec | 15.7b | 15.6b | 15.1b | 15.8b |
| EC | Trade Balance NSA | Dec | — | 17.0b | 19.0b | — |
| IN | Imports YoY | Jan | — | 0.00% | -2.40% | — |
| IN | Trade Balance | Jan | -$13550.0m | -$14725.6m | -$13077.3m | — |
| IN | Exports YoY | Jan | — | 3.70% | 0.30% | — |
| CA | Int’l Securities Transactions | Dec | — | — | 9.45b | — |
| US | Empire Manufacturing | Feb | 7 | — | 3.9 | — |
| US | Import Price Index MoM | Jan | -0.20% | — | -1.00% | — |
| US | Import Price Index ex Petroleum MoM | Jan | -0.10% | — | 0.30% | — |
| US | Import Price Index YoY | Jan | -1.60% | — | -0.60% | — |
| US | Export Price Index MoM | Jan | -0.10% | — | -0.60% | — |
| US | Export Price Index YoY | Jan | — | — | 1.10% | — |
| CA | Existing Home Sales MoM | Jan | -0.60% | — | -2.50% | — |
| US | Industrial Production MoM | Jan | 0.10% | — | 0.30% | — |
| US | Capacity Utilization | Jan | 78.70% | — | 78.70% | — |
| US | Manufacturing (SIC) Production | Jan | 0.00% | — | 1.10% | — |
| US | Mortgage Delinquencies | 4Q | — | — | 4.47% | — |
| US | MBA Mortgage Foreclosures | 4Q | — | — | 0.99% | — |
| US | U. of Mich. Sentiment | Feb P | 93.7 | — | 91.2 | — |
| US | U. of Mich. Current Conditions | Feb P | 111.6 | — | 108.8 | — |
| US | U. of Mich. Expectations | Feb P | 85.5 | — | 79.9 | — |
| US | U. of Mich. 1 Yr Inflation | Feb P | — | — | 2.70% | — |
| US | U. of Mich. 5-10 Yr Inflation | Feb P | — | — | 2.60% | — |
| US | Net Long-term TIC Flows | Dec | — | — | $37.6b | — |
| US | Total Net TIC Flows | Dec | — | — | $31.0b | — |