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Mar 14, 2019

FX | Currencies | Dollar edges up; sterling falls after UK lawmakers vote in favor of delaying Brexit departure date

3 minutes

RT: U.S. dollars cash 180816
The U.S. dollar gained on Thursday for the first time in a week as the pound stalled at lower levels after U.K. lawmakers voted in favor of seeking a delayed departure from the EU.
The pound was down 0.73 percent at $1.324 in afternoon trading, after members of parliament voted 412 to 202 to delay Brexit beyond the current March 29 deadline.
A day earlier, the British currency soared nearly 2 percent and reached nine-month highs after lawmakers voted against a potentially disorderly “no-deal” departure from the EU.
Analysts cautioned against putting large positions on sterling due to lingering uncertainty about Brexit.
“With the uncertainty around (Brexit), it’s not a time... to take sizeable positions. The risk/reward still favors waiting for some clarity,” said Charles Tomes, senior investment analyst, Manulife Asset Management.
The dollar index, a gauge of its strength against six other major currencies, was up 0.25 percent at 96.79. It shed 0.4 percent overnight, at one point brushing a nine-day trough of 96.385.
“In the foreign exchange market overall there’s not a lot of conviction” at the moment, said Tomes. “Volatility is low and people don’t want to put on sizeable positions either way.”
The Australian dollar fell after reports that China and the United States had delayed a meeting to end their trade war. The meeting between President Donald Trump and President Xi Jinping will not occur this month and is more likely to happen in April at the earliest, Bloomberg reported.
The Australian dollar reacted the most to the report, last at $0.7064, down 0.41 percent on the day.
Investors are worried that any escalation in the trade conflict will pummel export-oriented economies like Australia, whose biggest trading partner is China. The yuan was relatively stable in the offshore market, up 0.22 percent at 6.7209.
The number of Americans filing for unemployment benefits increased more than expected last week, suggesting the labor market was slowing, but probably not to the extent implied by a near-stall in job growth in February.
Other U.S. data showed import prices in February rose by the most in nine months. Still, the inflation trend remained weak as import prices dropped on a year-on-year basis for a third straight month. The data remained supportive of the Federal Reserve’s pledge to be “patient” before raising interest rates.

Source: CNBC

Bond Yields Report | Treasury yields move higher despite weak US, China data

Thomas Franck

Government debt yields were higher on Thursday despite data showing anemic wholesale inflation in the U.S. and mixed economic figures from China.
At around 3:30 p.m. ET, the yield on the benchmark 10-year Treasury note which moves inversely to price, was higher at around 2.628 percent, while the yield on the 30-year Treasury bond was also higher at 3.045 percent.

U.S. Markets Overview: Treasurys chart

US 3-MOU.S. 3 Month Treasury2.4520.000.00
US 1-YRU.S. 1 Year Treasury2.5240.0050.00
US 2-YRU.S. 2 Year Treasury2.4630.010.00
US 5-YRU.S. 5 Year Treasury2.430.0160.00
US 10-YRU.S. 10 Year Treasury2.630.020.00
US 30-YRU.S. 30 Year Treasury3.0440.0340.00
On Wednesday, yields rose despite the Labor Department indicating that wholesale prices barely increased in February after falling for three straight months. Overnight, data showed China’s industrial output expanded at its slowest rate in 17 years.
Investors also grappled with ongoing trade negotiations between China and the U.S. CNBC learned through multiple sources that China wants to link a formal state visit to the U.S. to a trade-deal announcement. The sources said Beijing wants a deal to be fully ironed out before Chinese President Xi Jinping sat down with President Donald Trump. They also said, however, Trump prefers to close the deal himself with Xi in person.
Bloomberg News reported earlier in the day that China and the U.S. are trying to push back a meeting between the countries’ two leaders from late March to April at the earliest. This comes after Trump said he was in no rush to form an agreement. Bloomberg’s report comes after China’s industrial output expanded at its slowest rate in 17 years.
Stateside, investors are likely to closely monitor another fresh round of economic data Thursday.
New home sales fell 6.9 percent in January — which was more than expected and a sign the U.S. government shutdown could have kept buyers on the sidelines.
— CNBC’s Fred Imbert contributed reporting.

Source: CNBC

Wall Street Closing Report | S&P 500 and Nasdaq snap 3-day winning streak, Facebook shares slide

Fred Imbert

The S&P 500 and Nasdaq Composite closed lower for the first time in four sessions on Thursday after the release of weak U.S. home sales data while Wall Street digested the latest news on the U.S.-China trade front.
Declines in the communications services group, led by Facebook, pushed the S&P 500 down 0.1 percent to 2,808.48. Facebook shares also weighed on the Nasdaq, which closed down 0.2 percent at 7,630.91. The Dow Jones Industrial Average, meanwhile, eked out a 7.05-point gain to close at 25,709.94.
Facebook shares slid 1.9 percent after a worldwide outage of its core app, Instagram and WhatsApp. The social media company's stock was also under pressure after The New York Times reported federal prosecutors are conducting a criminal investigation into data deals the company made with other tech giants.
New home sales fell 6.9 percent in January — which was more than expected and a sign the U.S. government shutdown could have kept buyers on the sidelines.
Investors also grappled with ongoing trade negotiations between China and the U.S. CNBC learned through three sources briefed on the matter that China wants to link a formal state visit to the U.S. to a trade-deal announcement. The sources said China wants a deal to be fully ironed out before Chinese President Xi Jinping sat down with President Donald Trump. They also said, however, Trump prefers to close the deal himself with Xi in person.
Bloomberg News reported earlier in the day that China and the U.S. are trying to push back a meeting between the countries' two leaders from late March to April at the earliest. This comes after Trump said he was in no rush to form an agreement. Bloomberg's report comes after China's industrial output expanded at its slowest rate in 17 years.
Investors expected the two leaders to meet at Mar-a-Lago later this month as both sides claimed progress was being made on trade negotiations.
Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange on January 17, 2018 in New York.
Bryan R. Smith | AFP | Getty Images
The two countries are still expected to reach a deal, but optimism around U.S.-China trade negotiations is "fading," said Jason Pride, chief investment officer of private wealth at Glenmede. "The prospect for an imminent deal, which the market appeared to have priced in, has waned in the short-run."
Apple shares rose more than 1 percent after Cowen initiated coverage of the company with an outperform rating and a $220 price target. Cowen cited potential long-term upside from Apple's services business.
Snap, meanwhile, rallied more than 12 percent after BTIG analyst Richard Greenfield — a longtime skeptic of the social media company — upgraded the stock to buy for the first time. "Performance advertisers are laser focused on return on investment and spend (and spend more) where they see a compelling return," he said, noting the stock could rise 50 percent in the next 12 months.
The S&P 500 tech sector has been on fire this week, rallying more than 3 percent through Thursday's close. It is also the best-performing sector year to date.
"This is a move to the upside after such dramatic move to the downside in late December," said Jeff Zipper, managing director of investments at U.S. Bank Private Wealth Management. "Valuations are to the point where they're not extended, so technology is an area we still like."
Elsewhere, General Electric seesawed after the industrial giant issued weaker-than-expected earnings guidance for 2019. The stock initially fell around 4 percent in the premarket before turning around to close 2.8 percent higher.
—CNBC's Sam Meredith and Michael Sheetz contributed to this report.

Source: CNBC

Crude Oil Price Report | US oil settles 0.6% higher at $58.61 a barrel, hits 4-month high

Tom DiChristopher

Reusable CNBC: oil drilling rig West Texas 150825-Brennan
Brent and West Texas Intermediate crude oil futures reached four-months highs on Thursday, as a production curb agreement by OPEC and its partners along with U.S. sanctions on Iran and Venezuela tightened global supplies.
An unexpected dip in U.S. crude oil inventories and production also supported prices, traders said.
Brent crude oil futures hit a 2019-peak of $68.14 per barrel on Thursday before easing to $67.19.
U.S. West Texas Intermediate (WTI) crude futures were at $58.56 per barrel, up 30 cents, or 0.51 percent, from their last settlement.
“With OPEC’s cuts in full-swing ... persistent supply issues and a deteriorating picture on Venezuela, oil is looking well supported,” said Jasper Lawler, head of research at futures brokerage London Capital Group.
The Organization of the Petroleum Exporting Countries (OPEC) and some non-aligned producers including Russia have been withholding oil supply since the start of the year to tighten global markets and prop up crude prices.
In Venezuela, oil production and exports have been disrupted by a political and economic crisis that has caused massive blackouts and supply shortages, while Washington has barred U.S. companies from doing business with the Venezuelan government, including state-owned oil firm PDVSA.
Adding to the turmoil, two storage tanks exploded at a heavy-crude upgrading project in eastern Venezuela on Wednesday, according to an oil industry source and a legislator.
In the Middle East, the United States aims to cut Iran’s crude exports by about 20 percent to below 1 million barrels per day (bpd) from May by requiring importing countries to reduce purchases to avoid U.S. sanctions, two sources familiar with the matter told Reuters.
Meanwhile, a weekly report by the U.S. Energy Information Administration (EIA) said U.S. commercial crude oil inventories fell last week as refineries hiked output.
U.S. crude oil production also dipped, falling by 100,000 barrels per day (bpd) to 12 million bpd.
In China, official statistics showed refinery crude oil use hit a record.
Still, oil prices could also come under downward pressure from an economic slowdown.
Growth in China’s industrial output fell to a 17-year low of 5.3 percent in the first two months of the year, official data showed on Thursday, pointing to further weakness in the world’s second-biggest economy and top crude importer.

Source: CNBC

Metals | Spot Prices as of Close of Trading in New York.

Spot Prices as of close of trading in New York
Thursday, March 14, 2019

Source: CMI

Metals Price Report | Gold dips 1 pct as no-deal Brexit fears fade, dollar rises

Stephanie Landsman

Reusable Gold bullion american eagle
Gold will continue to shine amid a weak dollar, says author and gold pro Jim Rickards.
Simon Dawson | Bloomberg | Getty Images
Gold fell more than a percent on Thursday, slipping below $1,300 for a second time this month, as fears of a no-deal Brexit faded and the dollar gained versus the pound ahead of a vote to extend the deadline for Britain’s exit from the European Union.
Spot gold was down 1 percent at $1,295.88 per ounce, retreating from $1,311.07 hit on Wednesday, its highest since March 1.
U.S. gold futures also dipped 1.03 percent, to $1,295.80.
“The possibility of a no-deal Brexit being passed had increased the likelihood of widespread buying in gold, and now that it has been rejected, I think some of that safe haven buying in gold is likely to fade,” said Suki Cooper, precious metals analyst at Standard Chartered Bank.
The dollar index drew strength from a subdued pound ahead of a parliamentary vote, expected to call for a short delay to Brexit, later in the day.
Also impeding demand for gold, global equities rode a surge in European stocks as risks of a British no-deal divorce from the EU faded.
“Gold and silver are also experiencing a corrective pullback after prices hit two-week highs on Wednesday,” Jim Wyckoff, senior analyst at Kitco Metals said in a note.
The U.S. currency also found support from fresh concerns surrounding trade relations between the world’s two biggest economies.
U.S. President Donald Trump emphasized he was in “no rush” to secure a deal with China, while reports emerged that leaders of the two countries have postponed their next meeting to at least April.
The dollar has been the preferred refuge for investors concerned by the heightening trade tensions since last year, in turn denting appeal for gold.
“We have seen that play out again now,” Cooper added.
However, analysts said the metal may soon have a turn of fortune on expectations that the U.S. Federal Reserve would refrain from raising interest rates after their policy meeting next week.
“We expect the Fed to remain on hold, and other major central banks to hike less and/or later. Moreover, we expect the 10 year U.S. Treasury yield and 10-year real yields to decline slightly. This should support gold prices,” analysts at ABN Amro said in a note.
Palladium was up 1.18 percent at $1,558.35 per ounce, while platinum dipped 1.38 percent to $825.95.
Silver slipped for the first time in five sessions and was down nearly 1.75 percent at $15.18 per ounce.

Source: CNBC

European Markets Closing Report | European markets rally amid Brexit confusion; Lufthansa shares fall 6%

Sam Meredith, Holly Ellyatt

European markets were higher Thursday morning, as investors monitored the latest flurry of corporate results and reacted to Brexit developments in the U.K.

European Markets: FTSE, GDAXI, FCHI, IBEX

The pan-European Stoxx 600 was up around 0.7 percent during afternoon deals, with most sectors and major bourses in positive territory.
Europe’s oil and gas stocks were some of the best performers. OMV, Royal Dutch Shell and Aker BP were all up more than 1 percent.
Looking at individual stocks, Germany’s Gea Group surged to the top of the European benchmark amid earnings news. The Dusseldorf-based group reported full-year revenue rose almost 5 percent in 2018, prompting shares to jump nearly 9 percent.
Sticking in Germany, Lufthansa tumbled to the bottom of the index during morning trade. The country’s biggest airline posted an 11 percent fall in fourth-quarter operating profits on Thursday, saying it would focus on “quality” growth over the coming months. Shares of the firm tumbled almost 6 percent on the news.
On Wall Street, stocks were little changed on Thursday following weaker-than-expected housing data.
Brexit chaos

Source: CNBC

Markets | Investors Embrace Riskier Sectors as Stocks Extend Rebound

The Wall Street Journal.
Markets Bear logo.
Welcome. Amrith Ramkumar with you setting up Thursday trading after the S&P 500 climbed to a four-month high yesterday.
Futures are edging down following the S&P's third consecutive advance. Investors are parsing recently released earnings from Dollar General, with Oracle and Broadcom on deck after the market closes this afternoon.
With the benchmark equity gauge now on track for its best quarter since September 2009, I look at which sectors are leading the way. 

Markets in a Minute

Markets Data

Overnight Developments

Riskier Sectors Power 2019 Stock Recovery

Tech companies and cyclical stocks continue to extend their rebound.
Stock sectors that tend to gain when investors are embracing risk or expecting faster growth have performed better as major indexes approach last year’s peaks, boosting some analysts’ confidence the rally will continue.
Fast-growing technology and internet stocks, along with sectors tied to economic cycles such as industrial and energy stocks, pushed the S&P 500 to a four-month high Wednesday, helping the benchmark equity gauge erase last week’s five-day losing streak.
Analysts are monitoring sector performance as the first quarter comes to an end because outflows from equity funds and major indexes’ recent wobbles around key technical levels have raised questions about the durability of this year’s rebound.
Sector returns so far this year show investors flocking back toward riskier corners of the market. Even during last week’s slide, safer sectors also fell and continued lagging behind, giving some analysts confidence that major indexes can hold steady even if the rally pauses again. 
“It’s been risk-seeking behavior on the upside and risk-seeking behavior on the downside,” said Liz Young, director of market strategy at BNY Mellon Investment Management.
Although slowing global growth and uncertainty about trade policy could push investors back toward safety, analysts say the Federal Reserve’s pause in raising interest rates has lifted confidence in growth and cyclical stocks. The S&P 500 is up 12% for the year. 
Meanwhile, health-care stocks—the market’s best-performing group last year—have risen 6.2% in 2019, hurt by fears of more stringent regulation. Other sectors that tend to gain when investors are nervous, the consumer-staples and utility groups, are up 8.4% and 9.6%, respectively.
However, some analysts are confident steady earnings will let those groups catch up to more volatile sectors moving forward.
After S&P 500 companies’ earnings grew 20% last year, profits are expected to fall from a year earlier in the first quarter of 2019. But the utility and health-care sectors are expected to pace the broader index with modest earnings increases from a year earlier.
Even within sectors, some analysts expect investors to prioritize companies with more consistent revenue increases as signs of a slowing economy mount.
“You’re going to start to see the separation between those who can drive growth and those who may not be able to or may be too expensive,” said Darrell Cronk, president of the Wells Fargo Investment Institute.

Market Facts

  • The S&P 500 closed at its highest level since Nov. 7 and 4.1% below its September record Wednesday. The tech-heavy Nasdaq, meanwhile, finished at its highest level since mid-October, 5.7% off its August peak. The Nasdaq is up 15% for the year and on track for its best quarter since the first quarter of 2012.
  • All 11 S&P 500 sectors rose in a session for the eighth time this year on Wednesday, according to Dow Jones Market Data. A ninth such occurrence would mark the highest quarterly total since the second quarter of 2016, when it happened 11 times.
  • Options volumes on Boeing shares hit at least a two-year high Tuesday, with some traders looking at a 7% advance in its shares from that day’s closing price. Some of the most popular contracts on Monday and Tuesday were bullish calls that pay out if the shares jumped to $400 or $410, according to data provider Trade Alert. The stock closed up 0.5% Wednesday, and options activity remained elevated. 

Key Events

U.S. jobless claims are expected to rise to 224,000 from 223,000. The figures are scheduled for 8:30 a.m. ET.
U.S. import prices for February are expected to rise 0.4% from the prior month. They will also be out at 8:30 a.m.
U.S. new-home sales for January, slated for 10 a.m., are expected to inch up to an annual rate of 622,000 from 621,000 a month earlier.
Natural-gas inventories will be out at 10:30 a.m. Stockpiles are expected to have fallen 209 billion cubic feet last week, more than average for this time of year, according to the average target of 12 analysts and traders surveyed by the Journal. 
Treasury Secretary Steven Mnuchin appears before the House Ways and Means Committee at 9 a.m. and the Senate Finance Committee at 1:30 p.m. to discuss the latest White House budget proposal.

Must Reads

Chop Chop Bikes, a small bicycle manufacturer in Mexico City, borrowed about $50,000 last year from financial technology firm Credijusto after being denied loans from banks./PHOTO: GINNETTE RIQUELME FOR THE WALL STREET JOURNAL
Why is Goldman Sachs interested in a small bike shop in Mexico? Fintech investors are flocking to Mexico to try to fill a gap in the country’s credit market: loans to young businesses looking to expand.
The Wells Fargo CEO’s pay is up 5% from 2017. Chief Executive Timothy Sloan received $18.4 million in compensation for 2018, including a $2 million incentive award.
Tracking Brexit’s ripples. The U.K.’s decision to leave the European Union has shown up in lower stock valuations and higher borrowing costs for banks, insurers and riskier firms.
Shipping companies are banking on gas carriers as LNG demand grows. LNG business has been a small piece of the global tanker market for many years, but trade in natural gas is on a sharp upswing as energy producers look for cleaner sources of power to replace oil and coal.
Investors are still waiting for a gold-mining merger wave. The vast majority of the world’s gold miners have yet to join the wave of mergers reshaping the top of their sector, even as investors say more tie-ups are necessary amid poor returns and depreciating gold reserves.
Two GameStop investors are pushing for a board refresh. Two of the company’s shareholders are threatening a proxy fight, if the videogame retailer doesn’t overhaul its board of directors and take other steps to improve its performance after a sale process didn’t pan out.

What We've Heard on the Street

“Stock investors have punished Boeing after two deadly crashes involving its 737 MAX jet. But some of its clients in the airline industry look more vulnerable to the fallout.”
—Heard on the Street columnist Jon Sindreu

Stocks to Watch

Roku : The maker of streaming devices tumbled 14% Wednesday, its largest one-day drop since November, after Loop Capital downgraded the company to sell from hold. Shares are still up 98% this year. 
MongoDB: The software company said sales rose more than anticipated in its fourth quarter and posted a smaller-than-expected loss.
Cloudera: The software firm said its quarterly loss widened more than Wall Street expected.
Semtech: The supplier of analog and mixed-signal semiconductor products gave downbeat forecasts, projecting slowing demand in China and other challenges.
Tailored Brands: The parent company of Men’s Wearhouse and Jos. A. Bank said it expects same-store sales to fall for several of its brands this quarter.