US Market Open: European bourses mixed & US Futures lower, DXY dips & GBP firmer post Retail Sales; US PCE due

Published Fri, 22 Dec 2023 10:55:00 GMT

European bourses are mixed whilst US futures are entirely in the red; Nike (-12.2%) shares slump in the pre-market

Dollar remains sub-102, GBP firmer post Retail Sales and Antipodeans softer

Fixed benchmarks are around unchanged and Gilts are muted as Retail Sales strength is offset by GDP revisions

Crude and Spot Gold benefit from broader weakness in the Dollar whilst Base Metals are mixed

Looking ahead, US Personal Income, Core PCE, US Durable Goods, UoM Inflation Expectations (Final), and Canadian GDP

EUROPEAN TRADE

EQUITIES

European equities, Stoxx600 (+0.1%), remain afloat despite significant losses in Prosus (-17.2%), with Retail also subdued post Nike earnings.

European sectors are mixed with a slight positive bias; Basic Resources and Energy benefit from broader commodity action, whilst Tech lags, hampered by Prosus.

Chinese regulator issues drafts for online game management, according to Reuters; requires online games to set spending limits, ban daily login rewards. Requires online game approvals to be processed by regulators within 60 days. Pressuring gaming names in APAC trade and in the European session; Tencent (-12.5%), Ubisoft (-5.1%).

US equity futures are softer across the board, NQ (-0.2%); Nike (NKE) is down 12.2% in pre-market after cutting guidance.

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FX

Dollar is stuck sub-102 following yesterday's data induced/month-end selling; trade has been contained between a tight range of 101.89-61.

EUR and JPY are slightly firmer having spent the majority of the session flat; price action may pick up ahead of the NY cut where there are large clips due to roll off.

GBP outperforms post-UK Retail Sales, though with gains capped after lower GDP revisions.

Antipodeans underperform, giving back some of the prior day's advances; AUD/NZD cross holds slightly above 1.08.

PBoC set USD/CNY mid-point at 7.0953 vs exp. 7.1306 (prev. 7.1012)

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FIXED INCOME

USTs are marginally firmer but remain well within yesterday's ranges between 112.18+ and 113.04+; markets will await impetus from November's PCE.

Gilts slightly higher, with strong Retail Sales offset by downward revisions to UK GDP.

Bunds hold steady with trade ultimately unreactive to German Import Prices.

US sells USD 20bln of 5yr TIPS (reopening) at 1.71%; High Yield: 1.71% (prev. 2.44%). Tail: 0bps (prev. 2bps, six-auction avg. -1.6bps). Bid-to-Cover: 2.55x (prev. 2.36x, six-auction avg. 2.61x). Dealers: 6.14% (prev. 9.2%, six-auction avg. 10.8%). Directs: 18.2% (prev. 17.6%, six-auction avg. 11.6%). Indirects: 75.66% (prev. 73.2%, six-auction avg. 77.6%)

COMMODITIES

Crude benchmarks, WTI (+0.9%) continue to climb as Red Sea tensions and the rerouting of ships continue.

Spot Gold inches higher as the Dollar continues to slip whilst Base Metals are mixed with overall specifics light.

Baker Hughes Rig Count: Oil -3 to 498, Nat Gas +1 to 120, total -3 to 620.

China's MPI Research Institute said China's 2023 steel demand to fall 3.3% Y/Y and 2024 steel demand to fall 1.7% Y/Y.

Nike Inc (NKE) Q2 2024 (USD): EPS 1.03 (exp. 0.85), Revenue 13.39bln (exp. 13.43bln). Guides Q3 revenue slightly negative Y/Y; cuts FY24 revenue growth estimate to +1% (prev. mid-single digit growth), confirms gross margin increase of 140-160bps, via conference call; sees 400bps headwinds from supply chain disruptions. Nike Executive said "We are seeing indications of more cautious consumer behavior around the world in an uneven macro environment." Shares fell 11.7% after-market.

GEOPOLITICS

US Commerce Secretary Raimondo said she doesn't see any change in tone from China regarding Taiwan, via CNBC interview.

China's top military officer, on Taiwan, said Chinese armed forces will resolutely defend state sovereignty and territorial integrity, according to the Defence Ministry.

The Chinese Central Military Commission's top military officer had a video call with his US counterpart; China said the US should respect China's sovereignty in the South China Sea, according to Reuters.

CRYPTO

Bitcoin (-0.4%) back beneath USD 44k whilst Ethereum (+2.6%) continues to climb.

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APAC TRADE

APAC stocks initially traded with a modest positive bias following the gains on Wall Street but with gains capped ahead of the US PCE and the Christmas break, whilst losses in Hong Kong tilted sentiment into the red after China announced online gaming restrictions.

ASX 200 was flat in tight ranges above 7,500, whilst the breadth of the sectors was also narrow. Energy and IT were the relative outperformers.

Nikkei 225 saw support from its Banking Sector, but Autos and Retail once again underperformed.

Hang Seng and Shanghai Comp were choppy and initially held a mild positive bias, whilst Hang Seng was later hit hard after Chinese regulators issued drafts for online game management, with shares of Tencent and NetEase slumping on the announcement and extending losses on return from the lunch break, with Tencent -16% and NetEase -28% at one point.

NOTABLE HEADLINES

Bank of Communications (601328 CH), Construction Bank (601939 CH), China's Agricultural Bank (601288 CH), Bank of China (601988 CH), and China's ICBC (601398 CH) cuts interest rates on some deposits from Dec 22.

PBoC injected CNY 40bln through 7-day reverse repos at 1.80% and CNY 291bln via 14-day reverse repos at 1.95%; both rates maintained.

Samsung Electronics (005930 KS) and other smartphone manufacturers are planning to increase production in 2024, according to Nikkei, "In a sign the industry is finally pulling out of its yearlong slump".

China regulator issues drafts for online game management, according to Reuters; requires online games to set spending limits, and ban daily login rewards.

BoJ Oct meeting minutes (two meetings ago): Members agreed on the need to patiently maintain the current easy policy; Several members said must sustain YCC to continue supporting wage growth.

Tencent (0700 HK) VP says the new draft regulation does not bring about any fundamental changes regarding the business model and operational speed

DATA RECAP

Japanese CPI, Core Nationwide YY (Nov) 2.5% vs. Exp. 2.5% (Prev. 2.9%); Overall Nationwide 2.8% (Prev. 3.3%)

Australian Private Sector Credit (Nov) 0.4% (Prev. 0.3%)

Australian Housing Credit (Nov) 0.4% (Prev. 0.4%)

LATAM

Brazil Congressional Budget Committee approves main part of 2024 budget, according to Reuters.

NOTABLE EUROPEAN HEADLINES

DATA RECAP

UK GDP QQ (Q3) -0.1% vs Exp. 0.0% (prev. 0.0%); UK GDP is now estimated to shown no growth in Q2 2023 (prelim. 0.2%); click here for more details and analysis

UK GDP YY (Q3) 0.3% vs. Exp. 0.6% (Prev. 0.6%)

UK Retail Sales MM (Nov) 1.3% vs. Exp. 0.4% (Prev. -0.3%); UK Retail Sales YY (Nov) 0.1% vs. Exp. -1.3% (Prev. -2.7%, Rev. -2.5%);

UK Retail Sales Ex-Fuel MM (Nov) 1.3% vs. Exp. 0.4% (Prev. -0.1%, Rev. 0.2%); UK Retail Sales Ex-Fuel YY 0.3% vs. Exp. -1.5% (Prev. -2.4%, Rev. -2.1%)

German Import Prices MM (Nov) -0.1% (Prev. 0.3%); German Import Prices YY -9.0% (Prev. -13.0%)

UK Business invest YY (Q3) 2.3% (Prev. 2.8%, Rev. 8.0%); UK Business Invest QQ -3.2% (Prev. -4.2%, Rev. 1.4%)

French Producer Prices MM (Nov) 2.4% (Rev. -0.1%); French Consumer Confidence (Dec) 89.0 vs. Exp. 88.0 (Prev. 87.0, Rev. 88)

Spanish GDP Final QQ (Q3) 0.3% vs. Exp. 0.3% (Prev. 0.3%); Spanish GDP YY (Q3) 1.8% vs. Exp. 1.8% (Prev. 1.8%)

Italian Consumer Confidence (Dec) 106.7 vs. Exp. 103.8 (Prev. 103.6); Italian Manufacturing Business Confidence (Dec) 95.4 (Prev. 96.6)

NOTABLE US HEADLINES

Apple (AAPL) reportedly pulled watches from online stores to meet the US-ordered ban, according to Bloomberg. Apple Watch Series 9 and Ultra 2 are unavailable to buy on the website. A ban on Apple watches has been ordered in a patent technology fight.

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US Briefing - Friday 22.12

HEADLINES

Fed Rate Cuts To Remain In View For 2024, Even As Rate-Setters Shift

US Inflation Expected To Have Eased Again In November

UK Economy Shrinks In Third Quarter, Raising Recession Risk

British Retail Sales Beat Forecasts Ahead Of Key Christmas Period

BoE’s Haskel: No Prospect UK Rates Will Be Cut Soon

ECB Still Has ‘Some Way to Go’ on Inflation, Schnabel Tells SZ

Spain's Q3 GDP Expanded 0.3% From Previous Quarter

Japan Plans 10% Reduction In Debt Sales Next Fiscal Year10-Year Treasury Yield Falls Slightly On Shorter Trading Day

Dollar Slumps Ahead of US PCE, Sends Franc to Highest Since 2015Oil Set For Weekly Gain As Red Sea Attacks Disrupt Global Flows

Stock Futures Fall As Wall Street Aims For Eighth-Straight Winning Week

Record Cash Inflows Show Investors Missed Out on Stock Rally

Nike Shares Sink After Announcing $2Bln Cost Savings Plan Amid Softer Demand

Bristol Myers To Buy Karuna Therapeutics For $14 Billion

China Issues Rules To Curb Gaming Spend; Tencent, Netease Plunge

COMMENTARY

UK Retailers Gifted Pre-Christmas Boost Amid Rising Recession Fears

Heavy discounting by retailers appeared to encourage spending in the run-up to Christmas despite revised figures that showed the UK’s economic output underperforming over previous quarters.

Headline retail sales increased 1.3% in the month to November, an outsized gain compared with the 0.4% estimate, and well above the upwardly revised flat print in October. Annually, sales also positively surprised, growing 0.1% versus the 1.3% predicted slide and the previous month’s adjusted 2.5% fall.    

Excluding fuel, sales grew at a monthly rate of 1.3% compared with an expected increase of 0.3% and October’s revised 0.2% gain. On the year, sales rose 0.3% which easily bettered the forecast 1.4% decline and 2.1% decline of the prior month.  

(Continue Reading - LS)

Fed Rate Cuts To Remain In View For 2024, Even As Rate-Setters Shift

The annual rotation on the U.S. Federal Reserve’s interest-rate-setting committee means its 2024 voting members lean slightly more hawkish than the outgoing group from 2023 – but that won’t budge the outlook for a pivot to interest-rate cuts next year.

In fact, plenty of analysts make the opposite argument: if inflation continues to fall more quickly than expected, Fed policymakers will want to reduce rates even more than the three-quarters-of-a-percentage point implied in fresh projections published last week.

(Continue Reading - MS)

Record Cash Inflows Show Investors Missed Out On Stock Rally

Investors poured record amounts into cash this year, according to Bank of America Corp. strategists, highlighting how a lot of market participants missed out on the best stock rally since 2019.

Cash funds attracted $1.3 trillion of inflows, dwarfing the $152 billion that flowed into global stocks, a BofA team led by Michael Hartnett said, citing EPFR Global data. Investors also staked more on US Treasuries than ever before, at $177 billion.

(Continue Reading - Bloomberg)

Japan Cuts Spending For First Time In 12 Years In 2024/25 Budget

Japan announced a cut in overall spending for the first time in 12 years in its fiscal 2024/25 budget, amid speculation the central bank may soon shift away from more than two decades of ultra-easy monetary policy.

The budget for the coming fiscal year that starts in April is estimated at 112.07 trillion yen ($787 billion), down 2% from the current year's initial amount of 114.4 trillion yen.

>>20114370

The "Circle OF Subsidized Life", laundered into campaign donations.

What's not to love?

And the pilots for them?

Netherlands to deliver 18 F-16 fighter jets to Ukraine

Dec 22nd, 07:21:46

AMSTERDAM (PiQSuite.Com) - The Netherlands will deliver 18 F-16 fighter jets to Ukraine to help its battle against Russia's invasion, the Dutch government said on Friday.

"Today I informed President Zelenskiy of our government's decision to prepare an initial 18 F-16 fighter aircraft for delivery to Ukraine," caretaker Prime Minister Mark Rutte said in a post on social media platform X.

"The delivery of F-16s is one of the most important elements of the agreements made on military support for Ukraine."

https://PiQSuite.com/reuters/netherlands-to-deliver-18-f-16-fighter-jets-to-ukraine

>>20114313

Op/Ed? Who wrote it, and what's their very interesting grind angle? (NewsWeak a very well known FusionGPS designed publication- Klown Skool Funnies)

>>20114441

The first use of AI as press "Scoop" vs DJT.

If they had these in 2020, they would've used them then.

>>20114452

Every tool in the box is a hammer. Yes, I know this. Do you?

Wall Street Silver

@WallStreetSilv

🔊 … Tucker Carlson

"It's not a democracy; it's an oligarchy run by the richest people"

"When they eliminated Kennedy, which they did, they could pretend everything was fine"

"But after this election, there's no pretending everything is fine"

“The veil is off, they can’t pretend anymore.”

https://twitter.com/WallStreetSilv/status/1738011011070730602

>>20114469

Conflating the traditional communist vs socialist warz as otherwise ain't a new sales pitch. Try agin.

Benchmark:

Block Club Chicago

@BlockClubCHI

Former Ald. Ed Burke was found guilty of racketeering in federal corruption trial.

Burke was accused of pressuring developers to hire his private law firm and leveraging his political clout to secure jobs and favors for allies.

https://blockclubchicago.org/2023/12/21/ed-burke-guilty-of-racketeering-in-federal-corruption-trial/

https://twitter.com/BlockClubCHI/status/1738198671320059960

>>20114506

>>20114529

Missed out on Fascism in Skool, Klownie?

>>20114534

New subsidized skim, announced, by you know who…

US unveils clean hydrogen plan, nuclear power role uncertain

By Timothy Gardner

WASHINGTON (PiQSuite.Com) - The U.S. proposed rules on Friday for how energy companies can access billions of dollars in tax credits for producing low-carbon hydrogen using new clean energy sources but left thorny issues, such as how nuclear power could benefit, uncertain.

The credit will be based on the lifecycle greenhouse gas emissions from the power source used in hydrogen production, and ranges from 60 cents to $3 per kilogram, the Treasury Department said in the 128-page proposal.

"The 45V clean energy hydrogen production tax credit is an important part of our strategy to unlock private investment across sectors to build a clean energy economy and tackle the climate crisis," John Podesta, a White House climate adviser, told reporters in a call.

https://PiQSuite.com/reuters/us-unveils-clean-hydrogen-plan-nuclear-power-role-uncertain

Because it was a SPECIFIC, DELINEATED requirement for the invocation of the Insurrection Act of 1807.

@amuse

@amuse

Why did the FBI order Twitter to delete this video moments after it was posted?

https://twitter.com/amuse/status/1738219067926814977

>>20114888

You happily say that because you assume EVERYTHING to fit your eyebrow window view of the world and you're too fucking lazy to eben look past yer spacebar, weedqueen.

>>20114904

Jango, Deezer, to name a few.

>>20114910

>>20114913

>> ^^^^^^^^^^^^^^^^ <<

Red Sea requires Coral Reef building exercise by local Navy.

zerohedge

@zerohedge

Iranian Spy Ship Is Assisting Houthi Attacks On Red Sea Shipping: Intel Officials

https://twitter.com/zerohedge/status/1738218377905082697