Asian Market Update: China trade disappoints amid the largest drop in exports in nearly 7 years; Japan Q4 GDP confirmed back in contraction
***Economic Data***
- (CN) CHINA FEB TRADE BALANCE (CNY TERMS): 209.5B (10-month low) V 341BE; EXPORTS Y/Y: -20.6% V -11.3%E (biggest decline since May 2009); IMPORTS Y/Y: -8.0% V -11.7%E
- (JP) JAPAN Q4 FINAL GDP Q/Q: -0.3% V -0.4%E; ANNUALIZED GDP: -1.1% V -1.5%E
- (JP) JAPAN FEB CONSUMER CONFIDENCE: 40.1 V 42.2E
- (JP) JAPAN JAN CURRENT ACCOUNT BALANCE: ¥521B V ¥716BE; ADJUSTED CURRENT ACCOUNT: ¥1.49T V ¥1.65TE; TRADE BALANCE: -¥411B V -¥530BE
- (JP) JAPAN FEB BANK LENDING (INCL TRUSTS) Y/Y: 2.2% V 2.3% PRIOR; BANK LENDING (EX- TRUSTS) Y/Y: 2.2% V 2.4%E
- (AU) AUSTRALIA JAN NAB BUSINESS CONFIDENCE: 3 V 3 PRIOR; CONDITIONS: 8 V 5 PRIOR
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 114.8 v 111.3 prior
- (NZ) NEW ZEALAND Q4 MANUFACTURING ACTIVITY Q/Q: -1.9% V +4.2% PRIOR; VOLUME Q/Q: 1.3% V 3.5% PRIOR
- (NZ) New Zealand Feb ANZ Truckometer Heavy M/M: +1.6% v -4.3% prior
- (TW) TAIWAN FEB CPI Y/Y: 2.4% (3-year high) V 0.8%E; WPI Y/Y: -4.8% V -4.5%E
- (UK) FEB BRC LFL SALES Y/Y: 0.1% V 0.5%E
***Index Snapshot (as of 05:00 GMT)***
- Nikkei225 -0.7%, S&P/ASX -0.5%, Kospi -0.8%, Shanghai Composite -1.7%, Hang Seng -0.8%, Mar S&P500 -0.3% at 1,994
***Commodities/Fixed Income***
- Apr gold +0.2% at $1,267/oz, Apr crude oil -1.1% at $37.47/brl, May copper -1.5% at $2.24/lb
- JGB: (JP) Japan's MOF sells ¥726B in 0.8% 30-year bonds; Avg yield: 0.765% v 1.068% prior; Bid to cover: 4.21x (highest since May 2014) v 3.04x prior
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.5041 V 6.5113 PRIOR (strongest setting since Jan 4th, 4th consecutive stronger setting)
- (CN) PBOC to inject CNY30B in 7-day reverse repos
- (AU) Australia sells A$100M in 1% 2018 Indexed notes; avg yield 0.4051%
- (NZ) Fonterra cuts FY15/16 forecast milk price to NZ$3.90/kg from NZ$4.15/kg; sees cash payout NZ$4.25-4.30/kgMS
***Market Focal Points/FX***
- Asia markets are down across the board, led by Shanghai Composite which fell after 5 straight days of gains. Soft China trade numbers exacerbated the decline but sentiment turned to risk-off from the start of the session as investors took profits across asset classes. Both copper and oil are down over 1%, gold is up slightly, and USD/JPY fell as much as 70pips below 112.80 before a slight bounce late in the day. In other USD majors, AUD/USD was also hard-hit by China data with a 50pip slide to 0.7420 while NZD/USD came in 40pips to 0.6760, adding to the decline in late US session after Fonterra cut its forecast payout for the 2nd time this year.
- China trade balance hit a 10-month low in CNY terms at 209.5B V 341BE and an 11-month low in USD terms which were also well below consensus at $32.6B v $51.0Be. CNY exports marked their biggest y/y decline since May 2009 at -20.6% V -11.3%E, while the closely watched imports component was down a less onerous -8.0% V -11.7%E. In USD terms, both missed consensus as exports fell for 8th straight month by -17.8% v -14.5%e and imports for the 16th month by -16.7% v -12.0%e. Shipments to US, EU, and Japan were all down about 20% y/y, also bigger declines than high-single - low-double digit declines seen last month. Today's trade numbers speak volumes to why Premier Li decided to skip 2016 projections for the trade component of the economy after already disappointing 2015. Comments from HSBC after the trade numbers suggested that recent hopes for a global rebound need to be tempered, as exports "got pummeled again in February, highlighting the downturn in global demand."
- Japan economy is confirmed to have contracted for the 2nd time in 3 quarters. GDP declines in the final prints were revised to be smaller with mixed component trends, as Capex was stronger than expected at 1.5% v 1.2%e and v 1.4% prelim, while Consumption was slightly weaker at -0.9% v -0.8%e v -0.8% prelim. Trade numbers were unrevised with a -0.9% drop in exports and -1.4% decline in imports q/q. Speaking after the release, Econ Min Ishihara maintained that there is no change to the view of Japan fundamentals as solid, noting weakness in consumption but also pointing to recovery in corporate profits and incomes. with Japan datapoints hardly showing any substantial improvement, there was some chatter that the cabinet will consider pushing back the timing of 2nd round of sales tax increase even further from the current Apr 2017 target, with cabinet officials expected to hold an economic meeting on Mar 16th. Also of note, PM Abe's cabinet has finally ratified TPP, sending its to Parliament for the anticipated start of negotiations early next month.
- Down under, Australia NAB business confidence was slightly lower from prior month. Resident NAB economist said all but two sectors of the economy - mining and wholesale - were positive. RBA Dep Gov Lowe helped to talk down AUD early in the session, stating it would be helpful to have slightly lower currency as global economy has lost momentum and data has been mixed. Ahead of Mar 10th RBNZ rate decision, one survey saw a vast majority of analysts anticipate a hold even with a slight majority calling for another 25bp cut before the end of Q2.
***Equities***
US equities / ADRs:
- URBN: Reports Q4 $0.61 v $0.56e, R$1.01B v $1.02Be; +12.3% afterhours
- THO: Reports prelim Q2 $0.86 adj v $0.85e, R$0.98B v $1.02Be; +5.0% afterhours
- PIR: Reports prelim Q4 $0.18-0.22 v $0.20e, Rev -1.3% y/y (implies R$537M v $523Me); SSS -0.7% (prior -2% to -4%); +1.7% afterhours
- SHAK: Reports Q4 $0.08 v $0.07e, R$51.1M v $50.6Me; -8.8% afterhours
Notable movers by sector:
- Consumer discretionary: Le Saunda Holdings 738.HK -1.8% (Q4 result); Phoenix Satellite Television Holdings 2008.HK +1.3% (guidance); Skyworth Digital 751.HK -2.0% (Feb result)
- Financials: Agile Property Holdings 3383.HK -1.0% (Feb result)
- Industrials: Geely Automobile Holdings 175.HK -3.8% (Feb result); Daewoo Shipbuilding & Marine 042660.KR -9.8% (Q4 result); Broadspectrum BRS.AU -3.3% (guidance)
- Technology: MediaTek Inc 2454.TW -0.4% (Feb result)
- Materials: Fortescue Metals Group FMG.AU -9.4% (MOU with VALE)
- Energy: China Environmental Investment Holdings 260.HK -2.4% (guidance)
After Hours Summary: XNCR +18.8%, AMID +13.8%, URBN +11.3%, ACRX -9.0%, SHAK -7.7% following earnings/guidanceAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: XNCR +18.8%, AMID +13.8%, URBN +11.3%, THO +4.5%, NEFF +3.3%, TEDU +3.2%
Companies trading higher in after hours in reaction to news: EYEG +7.9% (to acquire Jade Therapeutics; EYEG will pay Jade's liabilities and issued 765,728 shares of EYEG shares),
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: ACRX -9.0%, SHAK -7.7%
Companies trading lower in after hours in reaction to news: MTDR -3.1% (commenced public offering of 5 mln shares of its common stock), BAS -2.5% (reported selected operating data for the month of Feb 2016; co's well servicing rig count remained unchanged at 421), ILMN -1.6% (Chairman and CEO Jay Flatley will assume the role of Executive Chairman of the Board role on July 5), RVNC -1.5% (filed $300 mln mixed securities shelf offering, entered into an ATM Sales Agreement with Cowen to offer and sell shares of its common stock having aggregate gross proceeds of up to $75 mln).
TWC/CHTR NYC franchise review had almost unanimous support. Bronx and Brooklyn Franchise review will be held over to 4/11 2:30 pm et hearing. Hold over was planned by committee but they did not issue a notice regarding the change.
https://mspwvw-dcscpfvp.nyc.gov/CROLPublicFacingWeb/RequestDetail/20160128101 ( original hearing notice)
DISCLAIMER
This information represents neither an offer to buy or sell any security nor, because it does not take into account the differing needs of individual clients, investment advice. Those seeking investment advice specific to their financial profiles and goals should contact their Oscar Gruss & Son Incorporated sales representative. Oscar Gruss & Son Incorporated believes this information to be reliable, but no representation is made as to accuracy or completeness. This information does not analyze every material fact concerning a company, industry, or security. Oscar Gruss & Son Incorporated assumes that this information will be read in conjunction with other publicly available data. Matters discussed here are subject to change without notice. There can be no assurance that reliance on the information contained here will produce profitable results. A security denominated in a foreign currency is subject to fluctuations in currency exchange rates, which may have an adverse effect on the value of the security upon the conversion into local currency of dividends, interest, or sales proceeds. The value of securities and depositary receipts of foreign issuers that are denominated in United States dollars are also influenced by fluctuations in currency exchange rates.
© 2016 Oscar Gruss & Son Incorporated. All rights reserved.
Closing Market Summary: Oil Rallies to Begin WeekThe major averages began their week on a flat note as an oil rally was unable to bolster the broader market through the closing bell. Contributing factors to today's trade included a consolidation from the recent three-week winning streak, the underperformance of the heavyweight technology (-0.7%) and consumer discretionary (-0.5%) spaces, and anxiety regarding upcoming central bank policy meetings. The Nasdaq Composite (-0.2%) ended its day behind S&P 500 (+0.1) and the Dow Jones Industrial Average (+0.4%).
The benchmark index was unable to maintain the bulk of its advance despite a sustained rally in energy (+2.4%) and crude oil. The energy component surged 5.5% to $37.90/bbl, continuing its recent winning streak. On that note, WTI crude has jumped 45.5% from its 52-week low of $26.05/bbl on February 11.
The materials sector (+1.2%) was a distant second while countercyclical health care (+0.8%), telecom services (+0.7%), and utilities (+0.6%) followed. Conversely, heavily-weighted technology (-0.7%) and consumer discretionary (-0.5%) rounded out the leaderboard.
Commodity-sensitive materials received a boost from an overnight surge in iron ore, but also outperformed thanks to large cap DuPont (DD 64.71, +1.53). The company climbed 2.4% on news that BASF (BASFY 69.95, +0.66) is considering a counter bid for DuPont during its pending merger with Dow Chemical (DOW 49.76, -0.53).
In the technology sector, large-cap components underperformed with Facebook (FB 105.73, -2.66) and Alphabet (GOOGL 712.80, -17.42) diving 2.4% apiece. Meanwhile, the PHLX Semiconductor Index demonstrated relative strength as it ticked higher by 0.3%. The relative strength came despite noticeable weakness from constituents Micron Technology (MU 11.58, -0.30) and Broadcom (AVGO 143.51, -2.55) which surrendered 2.5% and 1.8%, respectively.
Meanwhile, large names also suffered in the consumer discretionary space (-0.5%). To that point, Amazon (AMZN 562.80, -12.34) and Nike (NKE 59.25, -2.01) plunged a respective 2.2% and 3.3%. Separately, influential Netflix (NFLX 95.49, -6.09) plunged 6.0% after ITG Research cast doubt on the company's domestic streaming estimates.
On the central bank front, slightly diverging opinions between Fed Vice Chairman Stanley Fischer and Fed Governor Lael Brainard cast some light on next week's Federal Open Market Committee meeting. Mr. Fischer contended that inflation is showing signs of acceleration in the U.S. while Ms. Brainard cautioned patience for raising rates in light of tightening financial conditions and softer inflation expectations.
The U.S. Dollar Index (97.10, -0.24) fell today as the euro and the yen gained some steam against dollar. The euro/dollar pair trades higher by 0.1% at 1.1014 while the dollar/yen pair slipped 0.3% to 113.41, but ended off its high (113.73).
Trading volume fell roughly in-line with the recent average as more than 1.10 billion shares changed hands on the NYSE floor.
Treasuries hit their lows during the height of the rally in equities and ended their day near those levels. The yield on the 10-yr note ended higher by three basis points at 1.91%.
Today's economic data included the January Consumer Credit report:
- Total outstanding consumer credit increased by $10.5 billion in January. That was below the consensus estimate, which called for growth of $16.5 billion, but up from December when total outstanding consumer credit, which can be prone to sizable revisions, increased by a downwardly revised $6.4 billion (from $21.3 billion).
- Total outstanding consumer credit of $3.54 trillion increased at an annual rate of 3.6% in January.
- The growth in January was led by a pickup in nonrevolving credit, which increased by $11.6 billion. Revolving credit actually contracted by $1.1 billion.
- In the preceding 12-month period leading up to January, consumer credit had risen by an average of $18.0 billion.
There is no economic data of note on tap for tomorrow.
- Nasdaq Composite -6.0% YTD
- Russell 2000 -3.8% YTD
- S&P 500 -2.1% YTD
- Dow Jones -2.0% YTD
From: lanreder@oscargruss.com At: Mar 7 2016 15:44:34Subject: Fwd:POM/EXC Spoke to POM IR - all parties in loop and aware of today's filing with DC PSC
POM IR - There were ongoing discussions between the two companies and all the settling parties since the order at the end of the last week of February. All parties were in the loop and aware of today's filing. The alternative proposal is positioned to meet all of requirements that the merger be in the best interests of all parties.
POM is not going to pay a pro-rated dividend if merger closes; company would lose term fee if paid dividend in the interim (~$70M/quarter payout) and the POM Board would determine level of appropriate dividend payment if the merger is terminated.
The companies are in support of revised settlement terms and optional uses for the $25.6M set aside. Settling parties can file comments through March 16; the companies do not know the DC PSC's timing (regarding their request for an April 7 decision) and do not want the record to be reopened. If deal is terminated for regulatory reasons, EXC would owe the $180M term fee to POM.
DISCLAIMER
This information represents neither an offer to buy or sell any security nor, because it does not take into account the differing needs of individual clients, investment advice. Those seeking investment advice specific to their financial profiles and goals should contact their Oscar Gruss & Son Incorporated sales representative. Oscar Gruss & Son Incorporated believes this information to be reliable, but no representation is made as to accuracy or completeness. This information does not analyze every material fact concerning a company, industry, or security. Oscar Gruss & Son Incorporated assumes that this information will be read in conjunction with other publicly available data. Matters discussed here are subject to change without notice. There can be no assurance that reliance on the information contained here will produce profitable results. A security denominated in a foreign currency is subject to fluctuations in currency exchange rates, which may have an adverse effect on the value of the security upon the conversion into local currency of dividends, interest, or sales proceeds. The value of securities and depositary receipts of foreign issuers that are denominated in United States dollars are also influenced by fluctuations in currency exchange rates.
© 2016 Oscar Gruss & Son Incorporated. All rights reserved.
Fed Gov Brainard (FOMC voter, dove): core inflation has been stubbornly low over last 2 years; inflation is very important for Fed policy - CNBC interview
- very focused on inflation and would like to see pattern of higher data points, not just single data points; Jan inflation data was better but was only a single data point
- reiterates there is a risk of inflation slipping lower
- have been good signs in the US, including consumer spending; there are some headwinds, particularly from overseas