07.18.2019 14 new posts under Morning Note (9), International Summary (4), Compliance Docs. (1)

International Summary

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International Summary

"Pre-Thanksgiving Global Markets 11/21/2018"

posted by Matthew Kiselica on 11/21/2018 at 10:55 am

by Matthew Kiselica

11/21/2018 at 10:55 am

Asian Markets

A mix across the region as the risk-off sentiment abated, for now.  Greater China outperformed as local press reports indicate the PBoC will refrain from following Federal Reserve rate hikes higher.  Also, the PBoC refrained from OMO’s for the 19th consecutive session.  some took this as a positive the central bank feels their is ample liquidity for funding neds.  Most of the rest of the markets traded to the downside.  Both Malaysia and Indonesia underperformed playing “catch down.”

Energy was the worst performing sector following yesterday’s plunge in crude prices off c. 1.5%.  Industrials, materials and IT fell by less than 0.5%.  To the upside, real estate gained more than 0.5%.  Moody’s made some positive comments regarding the Chinese real estate sector.

Important Headlines

  • Nissan +0.4% and Mitsubishi Motors -1.0% continue to take steps to remove Carlos Ghosn from management.  Teaser Alert:  However, there appears to be a rift growing with the French arm of the auto alliance.  See the European Markets section.
  • In another blow to “Japan Inc.”, Mitsubishi Elec. -2.6% has reportedly shipped some products without them being inspected.  The company came out publicly to deny the report.
  • Locals had their first chance to react to yesterday’s news CK Infrastructure +0.5% will sell some European assets into a U.K. listing.  But that wasn’t the only news.  Australia officially nixed the consortium bid for APA Group -1.4% assets.  The members of the group are CK Asset -1.9%, CK Hutchison -1.0% and Power Asset -0.6%.
  •  S. Korean consumer stocks especially cosmetic companies saw demand following a 28.6% y/y surge in S. Korean duty free sales.  It also helped that Softbank +0.7% will invest $2b in Coupang, a S. Korean e-commerce company.
  • Takeda Pharmacuetical -3.5% has now cleared all national, regulatory hurdles to acquire Shire %.  It is now up to the shareholders.
  • While noting Q1 had a “challenging start”, Woolworths +1.2% is seeing a pick up in activity as the “festive season” approaches.
  • After the close, A New York Times article says MUFG received U.S. subpoenas in 2017 for sanction infractions.

European Markets

Europe has had a solid session.  The region got off to a good start with news from Italy providing impetus.  The Italian press indicated the government had some latitude regarding its budget.  This was later denied but that only created a temporary lull to the day’s buying.  For its part, the European Commission’s review of budgets in the region was highly critical of Italy’s plan.  That comes as no surprise to anyone.  Following the U.S. macro data and higher U.S. open, the markets steadily advanced to close near their respective highs of the day.

All the major sectors ended the day green.  Autos finished the day c. 2% to the upside with many more higher by at least 1%.  Those included banks, IT, travel/leisure, media, retail, chemicals, energy, telecoms, yada, yada, yada.  Health care was the day’s main laggard. Less than 80 shares in the Euro Stoxx

On the Brexit front, U.K. PM May meets with E.C. President Juncker this evening European Central Time.  Reports indicate she will seek some further concessions from the EU to appease both the Irish DUP and her party members.  The EU’s stance thus far is there is little to no room for further negotiation.

Snippets from the Region

  • There has been a reversal in stance from Renault +1.1% regarding Mr. Ghosn.  Prior comments indicated the company would seek his ouster. Now company and French officials are essentially saying they remain open minded.  He will retain his title although he currently is in “no condition” to currently fulfill his responsibilities.  COO Bollore will assume the role on an interim basis.  Both company and government pledge their commitment to Nissan/Mitsubishi alliance.
  • Following its profit warning earlier this month, Thyssenkrupp +2.5% has provided some assurance to the market.  The company expects the decline in earnings to trough this year and pick up during FY ’19.  It will update investors on its restructuring next February.
  • Unicredit +1.8% is mulling splitting the bank into separate units: Italian and Non-Italian.  Also, a member of Italy’s Council of Minister, Giancarlo Giorgetti is calling for a ban on short selling of Italian banks.
  • DIY store Kingfisher’s -3.0% Q3 LFL sales lag consensus: -1.3% vs. -.07% expected.  Performance for its Castorama unit were especially dismal: -7.3% vs. estimates of -3.0%.
  • Orange +1.3% CEO Richard sees the competition within the French mobile market leading to consolidation talks during H1 of ’19.

On Our Side of the Pond

  • Pres. Trump reiterates his commitment to S. Arabia and has submitted answers to the Russian probe by Special Counsel Robert Mueller.
  • Facebook +3.4% Chairman Zuckerberg says he will not step down from his current position.
  • Deere’s +3.8% Q4 EPS are short of “the Street.” The company sees slowing sales growth citing the Sino-American trade spat.
  • Due to lower demand from Apple +0.85%, Hon Hai’s Foxconn unit is said to be preparing deep.

On the Markets’ Agenda for Tonight

  • Reaction to the MUFG, Foxconn stories flagged above.
  • Earnings due include Remy Cointreau, Glaxo India, Mitchells & Butler and Huabao Intl.
  • Macro due includes a S. African rate decision, Japanese CPI, EC Consumer Confidence.

Markets and Macro

Event Survey Actual Prior Revised
AU Westpac Leading Index MoM Oct 0.08% -0.06% -0.02%
AU Skilled Vacancies MoM Oct -0.50% -0.60% -0.20%
SK Imports 20 Days YoY Nov 12.80% 31.40%
SK Exports 20 Days YoY Nov 5.70% 26.00%
JN Bloomberg Nov. Japan Economic Survey (Table)
SK South Korea Household Credit 3Q KR1514.4t KR1493.2t KR1492.4t
JN All Industry Activity Index MoM Sep -0.90% -0.90% 0.50% 0.40%
JN Supermarket Sales YoY Oct -0.70% 1.90%
JN Nationwide Dept Sales YoY Oct 1.60% -3.00%
JN Tokyo Dept Store Sales YoY Oct 2.60% 0.30%
IT Istat Releases Economic Forecast for 2018 and 2019
UK PSNB ex Banking Groups Oct 6.1b 8.8b 4.1b 2.8b
UK Public Sector Net Borrowing Oct 5.6b 8.0b 3.3b 2.0b
UK Central Government NCR Oct -3.2b 14.7b 15.2b
UK Public Finances (PSNCR) Oct -3.3b 15.8b 18.3b
EC OECD Economic Forecasts
US MBA Mortgage Applications 16-Nov -0.10% -3.20%
CA Wholesale Trade Sales MoM Sep 0.30% -0.50% -0.10%
US Durable Goods Orders Oct P -2.60% -4.40% 0.70% -0.10%
US Durables Ex Transportation Oct P 0.40% 0.10% 0.00% -0.60%
US Cap Goods Orders Nondef Ex Air Oct P 0.20% 0.00% -0.10% -0.50%
US Cap Goods Ship Nondef Ex Air Oct P 0.30% 0.30% -0.10% -0.20%
US Initial Jobless Claims 17-Nov 215k 224k 216k 221k
US Continuing Claims 10-Nov 1653k 1668k 1676k 1670k
US Bloomberg Consumer Comfort 18-Nov 61.3 60.5
US Bloomberg Economic Expectations Nov 56 58.5
US Leading Index Oct 0.10% 0.10% 0.50% 0.60%
US Existing Home Sales Oct 5.20m 5.22m 5.15m
US Existing Home Sales MoM Oct 1.00% 1.40% -3.40%
US U. of Mich. Sentiment Nov F 98.3 97.5 98.3
US U. of Mich. Current Conditions Nov F 112.3 113.2
US U. of Mich. Expectations Nov F 88.1 88.7
US U. of Mich. 1 Yr Inflation Nov F 2.80% 2.80%
US U. of Mich. 5-10 Yr Inflation Nov F 2.60% 2.60%
JN Natl CPI YoY Oct 1.40% 1.20%
JN Natl CPI Ex Fresh Food YoY Oct 1.00% 1.00%
JN Natl CPI Ex Fresh Food, Energy YoY Oct 0.40% 0.40%
JN Japan Buying Foreign Bonds 16-Nov ¥1620.8b
JN Japan Buying Foreign Stocks 16-Nov -¥203.9b
JN Foreign Buying Japan Bonds 16-Nov ¥413.3b
JN Foreign Buying Japan Stocks 16-Nov ¥360.9b
SK Short-Term External Debt 3Q $125.1b
JN Machine Tool Orders YoY Oct F -1.10%
FR Business Confidence Nov 104 104
FR Manufacturing Confidence Nov 103 104
FR Production Outlook Indicator Nov 7
FR Own-Company Production Outlook Nov 10
EC Consumer Confidence Nov A -3 -2.7

About the Author

Matthew Kiselica headshot
MatthewKiselicaFVP,Manager of International Trading

Matthew Kiselica joined CAPIS in 2010 and has over twenty-five years of industry experience. Prior to CAPIS, he was vice president of Cazenove’s global sales trading desk in New York. Matthew is a board member for the National Psoriasis Foundation. He earned his bachelor’s degrees in fina...

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