TGIF Global Markets 3/8/2019
Risk-Off Markets The markets are in a top-down risk off mode due to Chinese trade below expectations. Both exports and imports slumped during February (All figures in macro section). Even accounting for the Lunar New Year, it is poor results. This underscores global growth concerns and impact of the trade battle. Perhaps a silver lining…
Risk-Off Markets
The markets are in a top-down risk off mode due to Chinese trade below expectations. Both exports and imports slumped during February (All figures in macro section). Even accounting for the Lunar New Year, it is poor results. This underscores global growth concerns and impact of the trade battle. Perhaps a silver lining is this will encourage China to be even more willing to reach a deal with the U.S.
This is probably no surprise and certainly no help to today’s sentiment, the Brookings Institute published a paper claiming China has overstated its GDP its data for years.
Adding to macro slowdown woes, German Factory orders unexpectedly declined during January. One supportive data point is Q4 Japanese GDP above expectations.
Asian Markets
All the major indices suffered major declines with the China markets leading the way lower. It didn’t help that Citic Secs. made a sell call on PICC Group A shs -10.0%following its 400% increase since the November Shanghai Listing. Hong Kong had the Hang Seng rebalance on today’s close. All major sectors ended the day in the red. Miners and financials gave ground by c. 3%. They were followed by losses of 2% or more include industrials, consumer discretionary, real estate and energy.
European Markets
After the initial dip, Europe attempted a brief rally about an hour into the session but then moved to the lows. Adding to the overall sell sentiment in Finland, PM Sipila and his government will step down. The best that can be said is the markets are slightly of their lows.
Most sectors are to the downside. Basic resources and autos have been the worst group all morning and are currently off more than 2%. Travel/leisure, banks, industrials, insurance and energy are off at least 1%. REITs and developers have been a strong pocket of strength. Quite a few are among the leaders in the Euro Stoxx 600. Defensives are relative outperformers with telecoms better by 0.5% and utilities flat.
Important Corporate Snippets
- China Gas +2.7% was a standout despite a placing in the shares today.
- Great Wall Motor’s -5.3% Feb. sales rose 18.3% y/y but fell 38.0% m/m.
- After the close, it was announced Omron will replace Pioneer in the Nikkei 225.
- Investors are not pleased to see EssilorLuxottica -6.0% has delayed its investor day. The company has stuck to its 3.5% to 5.0% growth target for the year and 5 year merger synergies. However, the company is pushing back its presentation to provide further detail regarding the merger of the eyecare companies.
- Bodycote’s +7.5% FY18 revenues are a touch better and EPS beat: 55.9 vs. 53.3p. The company has declared a special dividend and made upbeat comments regarding to the start to FY19.
- Sources allege Deutsche Bk -1.1% and Commerzbank -0.6% conducting further merger talks. The report notes this is due to pressure from the government coupled with continued struggles for each enity.
On Our Side of the Pond
- Costco is trading up pre-market following a solid EPS beat and improved margins.
- Big Lots also beat and announced a sizeable share buyback.
- The payroll data will be the focus on the macro front.
Markets and Macro
| Event | Survey | Actual | Prior | Revised | ||
| SK | BoP Current Account Balance | Jan | — | $2772.3m | $4819.3m | — |
| SK | BoP Goods Balance | Jan | — | $5609.5m | $6529.4m | — |
| JN | Household Spending YoY | Jan | -0.50% | 2.00% | 0.10% | — |
| JN | GDP SA QoQ | 4Q F | 0.40% | 0.50% | 0.30% | — |
| JN | GDP Annualized SA QoQ | 4Q F | 1.70% | 1.90% | 1.40% | — |
| JN | GDP Nominal SA QoQ | 4Q F | 0.30% | 0.40% | 0.30% | — |
| JN | GDP Deflator YoY | 4Q F | -0.30% | -0.30% | -0.30% | — |
| JN | GDP Private Consumption QoQ | 4Q F | 0.60% | 0.40% | 0.60% | — |
| JN | GDP Business Spending QoQ | 4Q F | 2.70% | 2.70% | 2.40% | — |
| JN | BoP Current Account Balance | Jan | ¥161.0b | ¥600.4b | ¥452.8b | — |
| JN | Trade Balance BoP Basis | Jan P | -¥1133.1b | -¥964.8b | ¥216.2b | — |
| JN | BoP Current Account Adjusted | Jan P | ¥1385.3b | ¥1833.0b | ¥1562.3b | ¥1633.4b |
| JN | Bank Lending Incl Trusts YoY | Feb | — | 2.30% | 2.40% | — |
| JN | Bank Lending Ex-Trusts YoY | Feb | — | 2.40% | 2.40% | — |
| CH | Trade Balance CNY | Feb | 250.00b | 34.46b | 271.16b | — |
| CH | Exports YoY CNY | Feb | 6.60% | -16.60% | 13.90% | — |
| CH | Imports YoY CNY | Feb | 6.20% | -0.30% | 2.90% | — |
| CH | Trade Balance | Feb | $26.20b | $4.12b | $39.16b | — |
| CH | Exports YoY | Feb | -5.00% | -20.70% | 9.10% | — |
| CH | Imports YoY | Feb | -0.60% | -5.20% | -1.50% | — |
| JN | Bankruptcies YoY | Feb | — | -4.53% | 4.88% | — |
| JN | Eco Watchers Survey Current SA | Feb | 46.2 | 47.5 | 45.6 | — |
| JN | Eco Watchers Survey Outlook SA | Feb | 49.8 | 48.9 | 49.4 | — |
| IT | Bank of Italy Report on Balance-Sheet Aggregates | |||||
| GE | Factory Orders MoM | Jan | 0.50% | -2.60% | -1.60% | 0.90% |
| GE | Factory Orders WDA YoY | Jan | -3.20% | -3.90% | -7.00% | -4.50% |
| FR | Trade Balance | Jan | -4941m | -4195m | -4653m | -3570m |
| FR | Current Account Balance | Jan | — | 0.9b | -1.1b | -0.1b |
| FR | Industrial Production MoM | Jan | 0.10% | 1.30% | 0.80% | 0.00% |
| FR | Industrial Production YoY | Jan | 0.50% | 1.70% | -1.40% | -2.50% |
| FR | Manufacturing Production MoM | Jan | -0.20% | 1.00% | 1.00% | 0.40% |
| FR | Manufacturing Production YoY | Jan | -0.20% | 0.90% | -1.00% | -2.00% |
| SP | Industrial Output NSA YoY | Jan | — | 1.80% | -4.20% | — |
| SP | Industrial Output SA YoY | Jan | -1.60% | 2.40% | -6.20% | -5.90% |
| SP | Industrial Production MoM | Jan | 1.60% | 3.40% | -1.40% | -1.20% |
| SP | INE House Price Index QoQ | 4Q | — | 0.40% | 2.20% | — |
| SP | INE House Price Index YoY | 4Q | — | 6.60% | 7.20% | — |
| IT | Industrial Production MoM | Jan | 0.20% | 1.70% | -0.80% | -0.70% |
| IT | Industrial Production WDA YoY | Jan | -3.00% | -0.80% | -5.50% | — |
| IT | Industrial Production NSA YoY | Jan | — | -0.90% | -2.50% | — |
| IT | PPI MoM | Jan | — | 0.00% | -0.60% | — |
| IT | PPI YoY | Jan | — | 4.40% | 5.20% | — |
| CA | Housing Starts | Feb | 205.0k | — | 208.0k | 207.9k |
| CA | Net Change in Employment | Feb | 1.2k | — | 66.8k | — |
| US | Housing Starts | Jan | 1195k | — | 1078k | — |
| CA | Unemployment Rate | Feb | 5.80% | — | 5.80% | — |
| US | Housing Starts MoM | Jan | 10.90% | — | -11.20% | — |
| US | Building Permits | Jan | 1287k | — | 1326k | — |
| CA | Hourly Wage Rate Permanent Employees YoY | Feb | 1.70% | — | 1.80% | — |
| CA | Participation Rate | Feb | 65.6 | — | 65.6 | — |
| US | Building Permits MoM | Jan | -2.90% | — | 0.30% | — |
| US | Change in Nonfarm Payrolls | Feb | 180k | — | 304k | — |
| CA | Full Time Employment Change | Feb | 0.8 | — | 30.9 | — |
| CA | Part Time Employment Change | Feb | -5.7 | — | 36 | — |
| US | Two-Month Payroll Net Revision | Feb | — | — | — | — |
| US | Change in Private Payrolls | Feb | 170k | — | 296k | — |
| CA | Capacity Utilization Rate | 4Q | 82.00% | — | 82.60% | — |
| US | Change in Manufact. Payrolls | Feb | 12k | — | 13k | — |
| US | Unemployment Rate | Feb | 3.90% | — | 4.00% | — |
| US | Average Hourly Earnings MoM | Feb | 0.30% | — | 0.10% | — |
| US | Average Hourly Earnings YoY | Feb | 3.30% | — | 3.20% | — |
| US | Average Weekly Hours All Employees | Feb | 34.5 | — | 34.5 | — |
| US | Labor Force Participation Rate | Feb | 63.20% | — | 63.20% | — |
| US | Underemployment Rate | Feb | — | — | 8.10% | — |