Traders Market Weekly: Fear, Greed, War and Volatility

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    April 13, 2024 FEAR NOT Brave Investors Where have we been and where are we going? Join our weekly market thread on Traders Community… Image: Thermodo
    [See the full post at: Traders Market Weekly: Fear, Greed, War and Volatility]


    Equity indices in the Asia-Pacific region began the week on a mostly lower note.

    Japan’s Nikkei: -0.7%,
    Hong Kong’s Hang Seng: -0.7%,
    China’s Shanghai Composite: +1.3%,
    India’s Sensex: -1.1%,
    South Korea’s Kospi: -0.4%,
    Australia’s ASX All Ordinaries: -0.5%.

    February Core Machinery Orders 7.7% m/m (expected 0.8%; last -1.7%); -1.8% yr/yr (last -10.9%)
    The Japanese yen remained pressured against the dollar, falling to a fresh 34-year low.
    Nippon Steel’s acquisition of U.S. Steel has been approved by shareholders.

    South Korea
    March trade surplus $4.29 bln (last surplus of $4.28 bln).
    March Imports -12.3% yr/yr (last -12.3%) and Exports 3.1% yr/yr (last 3.1%)
    South Korea’s fuel tax cut will be extended for two months.

    March trade deficit $15.60 bln (expected deficit of $18.78 bln; last deficit of $18.71 bln).
    March WPI Inflation 0.53% yr/yr (expected 0.51%; last 0.20%)

    New Zealand
    February Visitor Arrivals 0.9% m/m (last 7.6%)

    The People’s Bank of China will reportedly start trading bonds to improve liquidity.
    China will report its growth figures for Q1 overnight.


    Major European indices trade in the green.

    STOXX Europe 600: +0.4%,
    Germany’s DAX: +1.1%,
    U.K.’s FTSE 100: -0.2%,
    France’s CAC 40: +0.9%,
    Italy’s FTSE MIB: +1.1%,
    Spain’s IBEX 35: +0.3%.
    The U.K.’s FTSE (-0.2%) underperforms with consumer and energy names lagging.

    February Industrial Production 0.8% m/m, as expected (last -3.0%); -6.4% yr/yr (last -6.6%)
    European Central Bank policymaker Villeroy de Galhau said that the confidence in the fight against inflation is growing and that the central bank should announce a rate cut at its next meeting while policymaker Simkus said that a June cut should be followed with another one in July.

    March PPI 0.1% m/m (expected 0.2%; last 0.1%); -2.1% yr/yr (last -2.0%)


    Cisco (CSCO 49.50, +1.01, +2.1%): upgraded to Buy from Neutral at Bank of America
    Logitech (LOGI 94.92, -1.92, -2.2%): downgraded to Underweight from Equal Weight at Morgan Stanley
    Salesforce (CRM 286.31, -8.01, -2.7%): in discussions to purchase Informatica (INFA), according to WSJ


    M&A Monday

    1. Salesforce $CRM $286.31 -8.01 -2.7% talks to buy Informatica $INFA 38.02 -0.46 -1.20%
    2. Akamai $AKAM $103.99 +0.52 +0.50% Noname Security near to sell itself to AKAM for $500m
    3. Encore Wire $WIRE 283.00, +22.02, +8.4% acquired for $290/share in cash by Prysmian

    • This reply was modified 2 months, 1 week ago by Truman.

    Banks Earnings Pre-Market:

    Goldman Sachs EPS beats by $2.85, beats on revs
    $GS 402.50, +13.01, +3.3%
    M&T Bank EPS beats by $0.01
    $MTB 136.50, +1.94, +1.4%
    Schwab EPS beats by $0.01, beats on revs
    $SCHW $69.10 -0.93 -1.33%


    Tesla (TSLA 168.85, -2.20, -1.3%)

    Says “You can now subscribe to FSD (Supervised) for $99/month in the US” in an X post
    Scouting out locations for first India showroom, according to Reuters
    To eliminate more than 10% of global workforce, according to Electrek


    Total retail sales in March increased 0.7% month-over-month (consensus 0.4%) following an upwardly revised 0.9% (from 0.6%) in February. Excluding autos, retail sales surged 1.1% month-over-month (consensus 0.5%) following an upwardly revised 0.6% increase (from 0.3%) in February.

    The key takeaway from the report is that the U.S. consumer, fortified by a strong job market, continued to spend freely in March in an act that will continue to support the soft landing/no landing outlook for the U.S. economy.

    The New York Fed’s Empire State Manufacturing Survey for April checked in at -14.3 (consensus -6.0) versus -20.9 in March. A number below 0.0 denotes a contraction in activity. Notably, the Prices Paid Index increased to 33.7 from 28.7.

    Treasury yields moved higher in response.

    The 10-yr note yield is up 11 basis points to 4.61% and the 2-yr note yield is up nine basis points to 4.97%.


    Macatawa Bank Corporation (MCBC) and Wintrust Financial Corporation (WTFC) enter into definitive merger agreement for Wintrust to acquire Macatawa in all-stock transaction for approximately $14.85/share…

    MCBC up 38.8%;
    WTFC down 2.0%


    Extra Space Storage (EXR) files mixed shelf securities offering…
    EXR down 5.2%

    Gildan Activewear (GIL) projects Q1 revs ahead of consensus; reiterates FY24 guidance; provides medium-term targets…
    GIL up 2.5%

    Mitek Systems (MITK) misses by $0.04, misses on revs; reaffirms FY24 revs guidance…
    MITK down 6.6%


    Fair Value for Tuesday, April 16:

    S&P 500: 5,104
    Nasdaq 100: 17,868
    DJIA: 37,983


    Dow -248.13 at 37735.11
    Nasdaq -290.08 at 15885.02
    S&P -61.59 at 5061.82

    Initial buyer enthusiasm started to fade, however, shortly after the market opened. There was no specific news catalyst coinciding with the early deterioration that was likely driven by continued consolidation efforts.

    Selling picked up steam, though, in the afternoon trade following reports that Israel’s Chief of Staff said “there will be a response” to Iran’s attack on Israel.

    The major indices ultimately settled at or near their worst levels of the session. The S&P 500, which dropped below 5,100 and its 50-day moving average (5,114), declined 1.2% today.

    Geopolitical worries were not the only factor fueling the afternoon selling. Defense-related stocks didn’t react much to the afternoon reports related to the Middle East. Lockheed Martin (LMT 453.08, +2.68, +0.6%), RTX (RTX 100.02, -0.08, -0.1%), and others were outperforming before the new developments. RTX slid below its prior close late in the session, settling near its low of the day.

    Treasury yields remain elevated, indicating that there wasn’t a strong safe-haven trade in the Treasury market. The jump in market rates itself acted as a contributing factor to the afternoon pullback. The 2-yr note yield settled six basis points higher at 4.94% and the 10-yr note yield jumped 13 basis points to 4.63%.

    The outsized impact of weakness in mega cap stocks and chipmakers also contributed to the index level deterioration. The Vanguard Mega Cap Growth ETF (MGK) fell 1.9% and the PHLX Semiconductor Index (SOX) logged a 1.4% loss.

    All 11 S&P 500 sectors registered decline, reflecting a broad retreat. The financials sector logged a 0.5% decline despite sizable earnings-related gains in Goldman Sachs (GS 400.88, +11.39, +2.9%), M&T Bank (MTB 140.94, +6.38, +4.7%), and Charles Schwab (SCHW 71.23, +1.20, +1.7%).

    S&P 500:+6.1% YTD
    Nasdaq Composite: +5.8% YTD
    S&P Midcap 400: +3.1% YTD
    Dow Jones Industrial Average: +0.1% YTD
    Russell 2000: -2.5% YTD


    Equity indices in the Asia-Pacific region ended Tuesday on a lower note with technology stocks showing relative weakness.
    Japan’s Nikkei: -1.9%,
    Hong Kong’s Hang Seng: -2.1%,
    China’s Shanghai Composite: -1.7%,
    India’s Sensex: -0.6%,
    South Korea’s Kospi: -2.3%,
    Australia’s ASX All Ordinaries: -1.8%.

    Central banks in China, India, and Indonesia reportedly intervened in the foreign exchange market to support their currencies.

    China’s growth beat headline expectations for Q1, but industrial production growth and retail sales growth underwhelmed.
    Q1 GDP 1.6% qtr/qtr (last 1.2%); 5.3% yr/yr (expected 4.8%; last 5.2%).
    March Fixed Asset Investment 4.5% yr/yr (expected 4.0%; last 4.2%),
    March Industrial Production 4.5% yr/yr (expected 6.0%; last 7.0%,
    March Retail Sales 3.1% yr/yr (expected 5.1%; last 5.5%).
    March Unemployment Rate 5.2%, as expected (last 5.2%)

    South Korea
    March Import Price Index -0.7% yr/yr (last -0.4%) and Export Price Index 2.6% yr/yr (last 4.5%)

    Bank of Japan Governor Ueda will travel to Washington, D.C. between April 16 and 21 for meetings of the G-20 and the International Monetary Fund.


    Major European indices trade in the red.
    STOXX Europe 600: -1.4%,
    Germany’s DAX: -1.0%,
    U.K.’s FTSE 100: -1.3%,
    France’s CAC 40: -1.1%,
    Italy’s FTSE MIB: -1.4%,
    Spain’s IBEX 35: -1.1%.

    European Central Bank policymakers Rehn and Makhlouf spoke about the possibility of a rate cut in June.
    April ZEW Economic Sentiment 43.9 (expected 37.2; last 33.5).
    February trade surplus EUR23.6 bln (last surplus of EUR11.6 bln)

    Lufthansa adjusted its full-year outlook to account for the impact of labor strikes.
    Economists from Germany’s ZEW Institute noted that the global recovery is boosting growth expectations for Germany.
    April ZEW Economic Sentiment 42.9 (expected 35.9; last 31.7) and ZEW Current Conditions -79.2 (last -80.5).
    March WPI 0.2% m/m (expected 0.1%; last 0.2%); -3.0% yr/yr (last -3.0%)

    The U.K. reported weak jobs numbers, including a larger than expected increase in unemployment for February, which boosted rate cut expectations.
    February three-month employment change -156,000 (last -21,000),
    February Unemployment Rate 4.2% (expected 4.0%; last 3.9%), February Average Earnings Index + Bonus 5.6% yr/yr (expected 5.5%; last 5.6%).
    March Claimant Count change 10,900 (expected 17,200; last 4,100)

    March CPI 0.0% m/m (expected 0.1%; last 0.1%); 1.2% yr/yr (expected 1.3%; last 0.8%).
    February trade surplus EUR6.034 bln (expected surplus of EUR3.440 bln; last surplus of EUR2.495 bln)


    UnitedHealth (UNH 478.38, +32.75, +7.4%): beats by $0.30, reports revs in-line; guides FY24 EPS in-line
    Bank of America (BAC 35.92, -0.03, -0.1%): beats by $0.07, beats on revs
    Johnson & Johnson (JNJ 146.85, -0.74, -0.5%): beats by $0.07, reports revs in-line; guides FY24 EPS in-line, revs in-line; raises quarterly dividend by 4.2%
    PNC (PNC 148.50, -1.06, -0.7%): beats by $0.09, reports revs in-line; guides Q2 revs below consensus; guides FY24 revs in-line
    Morgan Stanley (MS 88.98, +2.01, +2.3%): beats by $0.35, beats on revs

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