Weekly Comment
Investors opened the week bidding up risk assets on news that the Trump administration had at least for now, put on hold $150B in tariffs aimed at Chinese goods. The positive vibes were short lived though. Wednesday the administration revealed they were studying a plan for new tariffs on imported vehicles, based on national security grounds that could run as high as 25%. Then the next day Trump disclosed he had notified North Korean officials that the June summit was off for now, sparking speculation that China hawks would use the setback as ammunition to take a harder line in ongoing trade negotiations. Wednesday’s FOMC minutes were viewed in a more dovish light than many had expected and that along with the consternation surrounding geopolitics resulted in a significant decline in US Treasury yields sending the 10-year back below 3%. By Thursday risk off flows had gained momentum as uneasiness surrounding the incoming populist government in Italy continued to send Italian bond yields higher. By Friday the contagion had spread to Spain as questions around PM Rojoy’s government sent spreads to German government bond yields to some the widest levels seen since the European debt crisis early this decade. The Euro dropped below 1.17 for the first time since Dec. Crude prices were slammed late in the week, falling 4% on Friday alone, as oil producers all but confirmed they were likely to allow production rates to rise next month when they meet in order to keep markets balanced. For the week the S&P rose 0.3%, the Dow added 0.2% and the NASDAQ was up more than 1%.
In corporate news this week, Wabtec rose on plans to merge with GE’s Transportation unit, in a deal valued at $11B. Comcast shares fell after confirming it was readying a bid to rival Disney's for Fox assets. Micron surged towards all-time highs on a buyback announcement and a guidance raise. In the retail space, Tiffany beat consensus and reported 9% America comp sales growth; Best Buy shares were hurt by lackluster guidance; L Brands fell on a disappointing outlook; and Gap missed on its bottom line. Deutsche Bank said it planned to cut back its US and CEMEA equities groups, with overall job reductions that could reach 10,000 positions. Foreign automakers were weighed down by reports that the White House was looking into new tariffs on imported vehicles. And Fiat Chrysler dropped on Friday after announcing a 4.8M vehicle recall in the US due to malfunctions with its cruise-control software.
Macro :
- Italy May Be Cut by Moody’s on Concerns Over New Government
- Scholz Said To Rule Out Greek Loan Extension Beyond 3 Years: SZ
- Saudi Govt Is Said to Halt Orders from German Companies: Spiegel
- Germany Plans to Invest EU6 Billion in 1.5 Million New Homes
Keep an eye on :
- AF FP : Air France-KLM Must Remain United, Dutch Minister Tells Le Monde
- ATUS US : Altice’s U.S. Spinoff Looks Like a Winning Bet - http://bit.ly/2saEptD & attached pdf
- AAPL US : Apple Is Said to Develop Chip to Open Doors: The Information
- ASC LN : Asos Is Said to Seek New Chairman as McBride to Step Down: Sky
- BG AW : Bawag’s Suedwestbank to Cut 290 Jobs: Stuttgarter Zeitung
- BT/ LN : BT rejects offers for Openreach
- DAI GY : Daimler Faces Scrutiny on 120,000 Diesel Cars, Vans: Bild
- DTE GY : T-Mobile Says It Hired Lobbying Firm Tied to Lewandowski: WSJ
- DPW GY : Deutsche Post Plans to Increase Letter Prices by 10 Cents: Bild
- DIS US : Disney’s ’Solo’ at $83.3M for 3-Day Portion of Weekend: Comscore
- EDPR PL : EDP Renovaveis Calls Meeting to Vote on Board Appointments
- ERA FP : Eramet CEO Bories Says Company Looking Into Acquisitions
- FDR FP : Fonciere Des Regions Board Approves Merger W/ Beni Stabili
- GETIB SS : Getinge: Balloom Pump Pilot Study Showed Positive Trends
- INTO BB : Intervest O&W JV Buys Genk Site for EU150m Logistics Project
- ISS DC : ISS A/S Says Mondrian’s Direct Holding Increased to 5.25%
- MELE BB : Melexis to Gain BEL20 Index Entry at Quarterly Review: L’Echo
- OCDO LN : Barron`s : Amazon-Killer Ocado Needs to Execute - http://bit.ly/2J9cDY9 & attached pdf
- PSON LN : Pearson Exploring Options for Properties Including FT Building
- RR/ LN : Boeing Said to Embed Ex-737 Max Boss at Rolls to Fix Engine Woes
- SDIPB SS : Sdiptech AB Signs Pact to Acquire KSS Klimat- & Styrsystem AB
- SRG IM : Baker Hughes, Snam to Develop Plants to Liquefy Gas in Italy: FT
- SMIN LN : Smiths Is Said to Be in Early Talks on Healthcare Unit Deal: Sky
- SNH GY : S. African Fund Manager Wants Wiese Out of Shoprite: Sun. Times
- STOB LN : Stobart Says Director Tinkler to Oppose Chairman’s Re-Election
- TDSQ PL : Teixeira Duarte Signs Agreement to Sell Lagoas Park
- FP FP : Total’s Saft to Invest Over EU200m in Battery Project: Reuters
- VM/ LN : CYBG Set to Sweeten Virgin Money Offer, Sunday Times Says
- VNA GY : Vonovia CEO Says Germany’s Housing Plans ‘Too Ambitious’: WiWo
- VOW3 GY : Volkswagen Wants to Reinstate Lobbyist Steg Back at Post: Bild
- VOW3 GY : VW to Halt Some Diesel Output on Software Glitch: Automobilwoche
- WPP LN : WPP Chairman Contacts Top Holders to Secure Re-Election: Times