TGIF Global Markets 3/15/2018

Asian Markets Most of the region sees solid gains.  The Chinese markets were boosted by Chinese Prem. Liu stating the VAT will be reduced on April 1st.  There were also a number of positive Sino-U.S. trade negotiation comments from both parties despite any meeting between Pres. Trump and Pres. Xi being pushed back until April….

Asian Markets

Most of the region sees solid gains.  The Chinese markets were boosted by Chinese Prem. Liu stating the VAT will be reduced on April 1st.  There were also a number of positive Sino-U.S. trade negotiation comments from both parties despite any meeting between Pres. Trump and Pres. Xi being pushed back until April. Rounding out the day’s positives, the People’s National Congress approved relaxation of foreign investment rules.

We would be remiss to not mention a terrible attack on Mosques in Christchurch, New Zealand.  Our thoughts and prayers go out to all victims and families.  This caused Australia and New Zealand to lag the region.

All major sectors saw advances.  Consumer discretionary, industrials, IT and real estate improved by at least 1%.

The BoJ concluded its two day policy meeting with no change to rates or asset purchases.  To recap, those are: short term rate unchanged at -0.1%, JGB purchases with an annual pace of about ¥80t and ETF purchases at about ¥6t. This was as expected.  However, the central bank is lowering its economic outlook.  At his press conference, Gov. Kuroda defended the 2% inflation target.

 

Other Important Headlines

  • Chinese February m/m home price increases slowed just a touch below the prior reading. Y/y they rose faster than during January.  FDI during the month had a nice increase.  (All data in macro section.)
  • Macau is extending the gaming licenses of MGM China +5.0% and SJM Holdings +2.1% until 2022.  This will delay the need to submit new bids for gaming rights.
  • AIA Group’s -0.3% FY18 New Business of 23% is a touch ahead of consensus.  The company will pay both a dividend and special dividend.  The shares saw some mild profit taking given a better than 20% increase this year.
  • Toyota Motor +1.1% will increase U.S. investment by about 30% to almost $13b over a five year period to 2021.  This is an attempt to avoid auto and parts tariffs.
  • Coca-Cola Amatil +1.0% indicates it still has interest in Kirin Holdings’ +0.7% Lion Dairy and Drinks assets.

European Markets

Europe had been up small for the first few hours of the session.  The markets moved to highs on comments from German Government Spokesperson Siebert.  Following yesterday’s U.K. vote for a potential Brexit delay, he stated the EU would at least “discuss, if requested.”   This is a bit of a relief the matter would be considered.

All major sectors are trading to the upside.  Telecoms, technology, autos, chemicals and construction are better by at least 1%.  Defensives and media lag.

Today is quad witching along with a FTSE rebalance in S. Africa.  So mind your eye on volumes.

Other Important Snippets

  • Two hours into the session BMW +1.1% released its FY18 results.  Revenues are a touch better at €97.48b, EBIT is €9.12b with margin of 7.2%.  The dividend is light of consensus: €3.50 vs. €3.86.  The company sees a slight increase to 2019 deliveries.
  • Also in the auto sector, VW +0.6% lags following yesterday’s SEC lawsuit announcement.
  • Due to a French tax fine, UBS -1.5% is taking a legal provision of $2.83b

On Our Side of the Pond

  • Quite a few earnings to keep an eye on including Oracle, Broadcom, Adobe and Ulta.
  • Initial findings among the Boeing 737 Max 8 aircraft in Ethiopia indicate the the plane was configured to dive.
  • Canada will release Home Sales with U.S. Empire Manuf, Industrial Production and Michigan Sentiment due.

Have a wonderful weekend and beware the Ides of March!

Markets and Macro

Markets Snapshot

Event Survey Actual Prior Revised
SK Export Price Index MoM Feb 0.20% -1.00% -1.20%
SK Export Price Index YoY Feb -2.40% -1.40% -1.60%
SK Import Price Index YoY Feb 3.60% 2.50% 2.40%
SK Import Price Index MoM Feb 1.90% 0.10% 0.00%
CH New Home Prices MoM Feb 0.53% 0.61%
JN BOJ Policy Balance Rate 15-Mar -0.10% -0.10% -0.10%
JN BOJ 10-Yr Yield Target 15-Mar 0.00% 0.00% 0.00%
CH Foreign Direct Investment YoY CNY Feb 6.60% 4.80%
GE Wholesale Price Index YoY Feb 1.60% 1.10%
GE Wholesale Price Index MoM Feb 0.30% -0.70%
EC EU27 New Car Registrations Feb -1.00% -4.60%
IT Industrial Sales WDA YoY Jan 0.60% -7.30% -7.40%
IT Industrial Sales MoM Jan 3.10% -3.50% -3.60%
IT Industrial Orders NSA YoY Jan -1.20% -5.30% -4.70%
IT Industrial Orders MoM Jan 1.80% -1.80% -1.40%
IT General Government Debt Jan 2358.0b 2316.7b 2326.6b
EC CPI Core YoY Feb F 1.00% 1.00% 1.00%
EC CPI MoM Feb 0.30% 0.30% -1.00%
EC CPI YoY Feb F 1.50% 1.50% 1.50%
IT CPI FOI Index Ex Tobacco Feb 102.3 102.2
IT CPI EU Harmonized YoY Feb F 1.20% 1.10% 1.20%
CA Manufacturing Sales MoM Jan 0.40% -1.30%
US Empire Manufacturing Mar 10 8.8
CA Existing Home Sales MoM Feb -4.00% 3.60%
US Industrial Production MoM Feb 0.40% -0.60%
US Manufacturing (SIC) Production Feb 0.10% -0.90%
US Capacity Utilization Feb 78.50% 78.20%
US JOLTS Job Openings Jan 7225 7335
CA Bloomberg March Canada Economic Survey
US U. of Mich. Sentiment Mar P 95.6 93.8
US U. of Mich. Current Conditions Mar P 112 108.5
US U. of Mich. Expectations Mar P 88.1 84.4
US U. of Mich. 1 Yr Inflation Mar P 2.60%
US U. of Mich. 5-10 Yr Inflation Mar P 2.30%
US Net Long-term TIC Flows Jan -$48.3b
US Total Net TIC Flows Jan -$33.1b