CAPIS Global Markets 8/14/2019
Markets Overview The bounce following yesterday positive tariff news is proving to be short lived. The major story of the day is yields. The Asian markets lost steam on a number of Chinese macroeconomic data points that were all below consensus. These raised slowdown concerns. Data out of Germany and Europe have underscored those worries. …
Markets Overview
The bounce following yesterday positive tariff news is proving to be short lived. The major story of the day is yields. The Asian markets lost steam on a number of Chinese macroeconomic data points that were all below consensus. These raised slowdown concerns. Data out of Germany and Europe have underscored those worries. (All data provided in Markets and Macro section.) The U.K. yield curve is inverted for the first time since 2007 with the U.S. 10 yr. yield is below the 2 yr. yield also for the first time since then.
The EU debts markets are seeing yields lower by c. 3 basis points. However, U.S yields are seeing some dramatic moves. The 2 yr. is lower by c. 7.5 basis points, , 10 yr. c. 11 bps & 30 yr. c. 13 bps.
While Asian equities were higher across the board, Europe is now firmly in the red due to the items highlighted above. All the major sectors are lower. Autos, banks, basic resources, technology, chemicals, energy off at least 2%. Many others are giving ground more than 1%. Defensives are outperforming.
The commodity markets are also showing the risk-off sentiment. Earlier gold was down small and trading below $1,500. However, as the yield story became a theme it moved into the green, regaining that level. Crude and copper are lower by more than 1%.
Corporate Headlines
- Hon Hai -0.4% initially traded well following the results released after yesterday’s close. By and large, they were regarded as reassuring despite the Huawei issues. However, they slowly trickled lower over the course of the session due to the Chinese data.
- After the close, Tencent reported results. Adj Net of CNY 23.5B & Op CNY 27.5B are both ahead of consensus. Revenues of CNY 88.2B is a miss with CNY 93.4B expected. The company is not proposing a dividend.
- Balfour Beatty’s +6.8% H1 PTP is better by 14% y/y. The company is making substantial increases to its net cash guidance and increasing its dividend by 31.0%!
- RWE +1.3% also reports strong H1 results thanks to improved trading performance. The company is raising its outlook which it had just increased at the end of July. It now sees FY adj. EBITDA between €1.4 0 €1.6b vs. the prior guidance of €1.2b to €1.4b. NI forecasts are also being increased.
- Admiral +2.9% is also bucking the overall trend this morning. Results are reassuring with both adj. PTP and overall PTP improving by 4% y/y.
On Our Side of the Pond
- Tillray’s loss is worse than anticipated despite revenues ahead of projections. Interest and operating expenses are higher than projected.
- Presidio accepts a bid from BC Partners at $16/share. That is a 21% premium to yesterday’s close.
- Facebook reportedly paid “hundreds” of consultants to review user audio.
- Cisco and Canopy Growth reporting after the close.
Markets & Macro
| Event | Survey | Actual | Prior | Revised | ||
| SK | Export Price Index MoM | Jul | — | -0.20% | -2.10% | -2.20% |
| SK | Export Price Index YoY | Jul | — | -5.30% | -2.50% | -2.70% |
| SK | Import Price Index YoY | Jul | — | -1.30% | -0.40% | -0.60% |
| SK | Import Price Index MoM | Jul | — | 0.60% | -3.50% | -3.70% |
| SK | Unemployment rate SA | Jul | 4.00% | 4.00% | 4.00% | — |
| JN | Core Machine Orders MoM | Jun | -1.00% | 13.90% | -7.80% | — |
| JN | Core Machine Orders YoY | Jun | -1.10% | 12.50% | -3.70% | — |
| AU | Westpac Consumer Conf Index | Aug | — | 100 | 96.5 | — |
| AU | Westpac Consumer Conf SA MoM | Aug | — | 3.60% | -4.10% | — |
| AU | Wage Price Index QoQ | 2Q | 0.50% | 0.60% | 0.50% | — |
| AU | Wage Price Index YoY | 2Q | 2.30% | 2.30% | 2.30% | — |
| CH | Fixed Assets Ex Rural YTD YoY | Jul | 5.80% | 5.70% | 5.80% | — |
| CH | Industrial Production YoY | Jul | 6.00% | 4.80% | 6.30% | — |
| CH | Industrial Production YTD YoY | Jul | 6.00% | 5.80% | 6.00% | — |
| CH | Retail Sales YoY | Jul | 8.60% | 7.60% | 9.80% | — |
| CH | Retail Sales YTD YoY | Jul | 8.40% | 8.30% | 8.40% | — |
| CH | Surveyed Jobless Rate | Jul | — | 5.30% | 5.10% | — |
| CH | Property Investment YTD YoY | Jul | — | 10.60% | 10.90% | — |
| FR | ILO Unemployment Rate | 2Q | 8.60% | 8.50% | 8.70% | — |
| FR | Mainland Unemp. Change 000s | 2Q | — | -66k | -19k | -28k |
| FR | ILO Mainland Unemployment Rate | 2Q | 8.30% | 8.20% | 8.40% | — |
| GE | GDP SA QoQ | 2Q P | -0.10% | -0.10% | 0.40% | — |
| GE | GDP NSA YoY | 2Q P | -0.30% | 0.00% | 0.60% | 0.80% |
| GE | GDP WDA YoY | 2Q P | 0.10% | 0.40% | 0.70% | 0.90% |
| IN | Wholesale Prices YoY | Jul | 1.80% | 1.08% | 2.02% | — |
| FR | CPI EU Harmonized MoM | Jul F | -0.20% | -0.20% | -0.20% | — |
| FR | CPI EU Harmonized YoY | Jul F | 1.30% | 1.30% | 1.30% | — |
| FR | CPI MoM | Jul F | -0.20% | -0.20% | -0.20% | — |
| FR | CPI YoY | Jul F | 1.10% | 1.10% | 1.10% | — |
| FR | CPI Ex-Tobacco Index | Jul | 103.91 | 103.91 | 104.12 | — |
| UK | CPIH YoY | Jul | 1.80% | 2.00% | 1.90% | — |
| UK | CPI MoM | Jul | -0.10% | 0.00% | 0.00% | — |
| UK | CPI YoY | Jul | 1.90% | 2.10% | 2.00% | — |
| UK | CPI Core YoY | Jul | 1.80% | 1.90% | 1.80% | — |
| UK | Retail Price Index | Jul | 289.6 | 289.5 | 289.6 | 289.6 |
| UK | RPI MoM | Jul | 0.00% | 0.00% | 0.10% | — |
| UK | RPI YoY | Jul | 2.80% | 2.80% | 2.90% | 2.90% |
| UK | RPI Ex Mort Int.Payments (YoY) | Jul | 2.70% | 2.70% | 2.80% | — |
| UK | PPI Input NSA MoM | Jul | 0.60% | 0.90% | -1.40% | -0.80% |
| UK | PPI Input NSA YoY | Jul | 0.30% | 1.30% | -0.30% | 0.30% |
| UK | PPI Output NSA MoM | Jul | 0.10% | 0.30% | -0.10% | — |
| UK | PPI Output NSA YoY | Jul | 1.70% | 1.80% | 1.60% | — |
| UK | PPI Output Core NSA MoM | Jul | 0.10% | 0.40% | 0.10% | — |
| UK | PPI Output Core NSA YoY | Jul | 1.70% | 2.00% | 1.70% | — |
| UK | House Price Index YoY | Jun | 1.00% | 0.90% | 1.20% | 0.90% |
| IT | General Government Debt | Jun | — | 2386.2b | 2364.7b | — |
| EC | Industrial Production SA MoM | Jun | -1.50% | -1.60% | 0.90% | 0.80% |
| EC | Industrial Production WDA YoY | Jun | -1.50% | -2.60% | -0.50% | -0.80% |
| EC | Employment QoQ | 2Q P | — | 0.20% | 0.30% | 0.40% |
| EC | Employment YoY | 2Q P | — | 1.10% | 1.30% | — |
| EC | GDP SA QoQ | 2Q P | 0.20% | 0.20% | 0.20% | — |
| EC | GDP SA YoY | 2Q P | 1.10% | 1.10% | 1.10% | — |
| US | MBA Mortgage Applications | 9-Aug | — | 21.70% | 5.30% | — |
| US | Import Price Index MoM | Jul | -0.10% | — | -0.90% | — |
| US | Import Price Index ex Petroleum MoM | Jul | -0.10% | — | -0.40% | — |
| US | Import Price Index YoY | Jul | -2.00% | — | -2.00% | — |
| US | Export Price Index MoM | Jul | -0.10% | — | -0.70% | — |
| US | Export Price Index YoY | Jul | — | — | -1.60% | — |