Thursday April 16, 2020
By Devin Zugic
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Morning Briefing - Subdued in front of initial claims report
The S&P 500 futures trade five points, or 0.2%, above fair value ahead of the release of the weekly jobless claims report at 8:30 a.m. ET. The benchmark index is roughly unchanged for the week.
5.0 million more Americans are projected to have filed for unemployment insurance for the week ending April 11, according to the Briefing.com consensus. Approximately 16.5 million claims were filed over the prior three weeks, including 6.6 million last week, as the economy remained in shutdown mode. On a related note, the White House is expected to release guidelines to relax social distancing measures today.
Alongside the jobless claims report, investors will receive Housing Starts (Briefing.com consensus 1.30 million) and Building Permits (Briefing.com consensus 1.297 million) for March and the Philadelphia Fed Index for April (Briefing.com consensus -25.0).
On the earnings front, Taiwan Semiconductor (TSM 51.92, +2.26, +4.5%) reported better-than-expected quarterly results and issued in-line guidance, which was encouraging since many companies have refrained from providing guidance. Taiwan Semi is the world's largest semiconductor foundry.
U.S. Treasuries currently trade mixed. The 2-yr yield is up one basis point to 0.21%, while the 10-yr yield is down three basis points to 0.61%. The U.S. Dollar Index is up 0.4% to 99.84. WTI crude is up 0.8%, or $0.17, to $20.02/bbl.
In U.S. Corporate news:
Taiwan Semi (TSM 51.92, +2.26): +4.5% after beating top and bottom-line estimates and issuing in-line guidance.
Abbott Labs (ABT 91.64, +0.70): +0.8% after beating top and bottom-line estimates.
BlackRock (BLK 450.00, +6.93): +1.6% after beating earnings estimates.
Morgan Stanley (MS 38.10, -0.30): -0.8% after missing top and bottom-line estimates.
BNY Mellon (BNY 36.50, +1.87): +5.4% after beating profit expectations.
Reviewing overnight developments:
Equity indices in the Asia-Pacific region ended Thursday on a mixed note. Japan's Nikkei: -1.3%, Hong Kong's Hang Seng: -0.6%, China's Shanghai Composite: +0.3%, India's Sensex: +0.7%, South Korea's Kospi: UNCH, Australia's ASX All Ordinaries: -1.0%.
In economic data:
China's March House Prices 5.3% yr/yr (last 5.8%)
Japan's April Reuters Tankan Index -30 (last -20)
South Korea's March trade surplus $4.59 bln (last surplus of $5.04 bln). March Imports 0.3% yr/yr (last -0.3%) and Exports -0.7% yr/yr (last -0.2%)
Australia's March Employment Change 5,900 (expected -40,000; last 26,700) and Full Employment Change -400 (last 6,700). March Participation Rate 66.0% (expected 65.9%; last 66.0%) and Unemployment Rate 5.2% (expected 5.5%; last 5.1%). April MI Inflation Expectations 4.6% (last 4.0%)
South Korea's ruling party strengthened its position in yesterday's election.
Hong Kong's Cathay Pacific reported a 90% yr/yr drop in passenger traffic in March.
South Korean officials have proposed a second extra budget of KRW7.60 trln, which will not require bond issuance.
Nikkei reported that Japan's economic assessment for April will describe the situation as "worsening sharply."
The IMF cautioned that the Bank of Japan will have a limited effect in stimulating the economy if it cuts rates deeper into negative territory.
Reserve Bank of New Zealand Governor, Adrian Orr, said that the RBNZ has not ruled negative interest rates, adding that the shadow official cash rate is "significantly negative."
Major European indices trade mostly higher while Spain's IBEX (-0.2%) lags amid relative weakness in bank stocks. STOXX Europe 600: +1.0%, Germany's DAX: +1.0%, U.K.'s FTSE 100: +0.4%, France's CAC 40: +0.6%, Italy's FTSE MIB: +1.5%, Spain's IBEX 35: -0.2%.
In economic data:
Eurozone's February Industrial Production -0.1% m/m (expected -0.2%; last 2.3%); -1.9% yr/yr (expected -2.0%; last -1.7%)
Germany's March CPI 0.1% m/m, as expected (last 0.4%); 1.4% yr/yr, as expected (last 1.7%)
Swiss March PPI -0.3% m/m (last -0.9%); -2.7% yr/yr (last -2.1%)
German commercial credit insurers will receive a EUR30 bln backstop from the government.
French Finance Minister, Bruno Le Maire, said that the European Stability Mechanism could be tapped for non-health spending.
European Central Bank President, Christine Lagarde, said that the central bank may expand euro swap lines.
France sold 3- and 5-yr debt at negative rates while Spain auctioned 3-, 5-, and 15-yr debt. The U.K. sold 30-yr gilts.
U.S. equity futures:
S&P 500 Futures +5 @ 2780
DJIA Futures +17 @ 23408
Nasdaq Futures +51@ 8645
Europe: DAX +1.0%, FTSE +0.4%, CAC +0.6%
Asia: Nikkei -1.3%, Hang Seng -0.6%, Shanghai +0.3%
Crude Oil +0.27 @ 20.14
Nat Gas +0.002 @ 1.600
Gold +20.40 @ 1760.60
Silver +0.315 @ 15.820
Copper +0.007 @ 2.303
Earnings/Guidance (Full Earnings Calendar):
Abbott Labs (ABT) beats by $0.04, beats on revs
American Fincl (AFG) sees Q1 core earnings below consensus; lowers 2020 expectations
Ashland (ASH) sees Q2 EPS above consensus; sees revs slightly below
Barrick (GOLD) reported preliminary first quarter sales of 1.22 million ounces of gold and 110 million pounds of copper as well as preliminary first quarter production of 1.25 million ounces of gold and 115 million pounds of copper
Bed Bath & Beyond (BBBY) beats by $0.18, reports revs in-line; comps -5.6%; does not provide guidance
BlackRock (BLK) beats by $0.06, reports revs in-line
Bloomin' Brands (BLMN) reports US comps for 13 weeks ended March 29 of -10.4%
BNY Mellon (BK) beats by $0.14, misses on revs
Globant (GLOB) reaffirms EPS outlook for Q1, raises Q1 revenue outlook, withdraws 2020 guidance
GoPro (GPRO) sees Q1 below consensus; withdraws FY20 guidance
HEICO (HEI) withdraws 2020 guidance, provides update on outlook
Jack In The Box (JACK) withdraws 2020 guidance, says Q2 comps were -4.2%, announces other steps due to virus
KeyCorp (KEY) reports Q1 (Mar) results, misses