17.04.15 Friday Morning

Europe
A very quiet start to the week led the Greek-debt saga to dominate proceedings as rumours persisted that Greece is getting ready to default. This ensured that the region spent most of the week at a loss; the positivity on Wednesday prompted by, among other things, a bullish conference from ECB President Mario Draghi couldn’t be sustained.

Thursday then turned into the region’s biggest day of losses after a report from the Financial Times suggested that Greece had made an ‘informal approach’ to the IMF with the intention of delaying its repayment instalments. The report claimed that IMF swiftly dismissed the idea, as expected, whilst Greek finance minister Varoufakis vociferously denied that this exchange ever happened. However, the damage was done, and with IMF chief Lagarde capping the day off by effectively ruling out allowing Greece to delay its loan repayments, the region continued to struggle.

Sadly for the Eurozone, things don’t look like they will be any different. Next Friday will bring with it the latest Eurogroup meeting, and potentially Greece’s last chance to secure a fresh bailout before its coffers finally run dry. The region will be counting on next week’s economic data to distract from the Greek situation, with ZEW economic sentiments on Tuesday, consumer confidence on Wednesday, a flurry of manufacturing and services PMIs on Thursday and German Ifo business climate data on Friday.

UK
The FTSE started its week embroiled in what turned out to be unfounded worries over the UK’s inflation falling below zero. Whilst the UK didn’t see negative inflation, there was an ominous slip in core inflation cannot be explained away by cheap oil and food. From then on the FTSE went on a bit of a tear, with growth in its oil and mining stocks pushing it beyond 7100 to fresh records high.

However, Thursday saw somewhat of a downward turn, as the IMF outlined less-than-rosy forecasts for the UK’s next 5 years. The Washington-based institution is unconvinced by Osborne’s deficit reduction plan, or any party’s for that matter, claiming that the Chancellor’s £7 billion surplus at the end of the next parliament would instead by a deficit of the same amount due to the likelihood of lower tax receipts and the worry that the current election uncertainty is only going to increase after May 7th. This, alongside the Greek woes wafting over from the continent, took the edge off what had been a stellar week for the UK index.

Looking ahead, with the election campaigns rumbling on, the FTSE will have to deal with the ongoing uncertainty combined with a relatively quiet week of economic news, a potent mix that can often lead to losses. The only figures of note come on Thursday, with retail sales and public sector net borrowing to look forward to.

US
It was a busy week for US data, with industrial production, Empire State manufacturing index, retail sales and PPI data seeing big misses, alongside slips for building permits and housing starts. However, the most significant piece of data was the fact that unemployment claims is slowly creeping towards 300,000 a week, with the latest figure coming in on Thursday at 294k. Despite this mixed set of data the US markets managed to mainly post gains as the week went on; the more interesting movements were on the forex market.

The dollar has spent parts of each day trouncing the pound and the euro, yet since Monday has ended the day at a loss against both of the European currencies. This despite the election uncertainty in the UK and the Grexit fears in the Eurozone. The Fed’s Lockhart captured the situation best, claiming that the ‘murky economic picture’ is affecting the timing of any potential rate hike, and in the process taking away the dollar’s gains. Next week’s unemployment claims, alongside the USA’s durable goods orders and flash manufacturing PMI will likely play into the ongoing debate that is raging inside the Fed.

Commodities
With Saudi Arabia telling OPEC it pumped 659k barrels per day more crude oil in March, Brent Crude saw a wobble in the middle of the week. However, the fact that US crude oil inventories came in at 1.3 million barrels, its lowest number since last December, helped the commodity and saw it increase to nearly $64 per barrel by Thursday evening.

Copper had a potentially tough week on its hands, with a slowdown in Chinese GDP and a big miss in Chinese industrial production ready to put a downer on the metal’s week; however, copper managed to deal with this soft data admirably, pushing on to $2.78 per pound, its highest price since April 6th’s intraday spike. Gold, on the other hand, saw much milder gains, with the dollar’s woes this week allowing the previous metal to hover around the psychologically significant $1200 per pound line.

Stock of the week: Netflix Inc
Netflix soared after its first quarter results, with an immediate 11% rise to $530.90 after robust expansion in terms of both its domestic and international subscribers impressed investors, as the company beat its own forecasts by nearly 1 million new subscriptions. This more than made up for a rather big miss in earnings per share, which came in at $0.38 compared to the $0.69 expected, with Netflix blaming foreign exchange losses for the slip. The stock is currently trading at $566.17, a breath away from its all-time high, reached intraday on Thursday.

(Source: IT-Finance.com 10/04/2015)

Economic Diary, 20^th to 24^th April 2015

 

Monday 20^th April

Tentative – EUR German Buba Monthly Report

7.00am – EUR German PPI m/m

 

Tuesday 21^th April

10.00am – EUR German ZEW Economic Sentiment

10.00am – EUR ZEW Economic Sentiment

 

Wednesday 22^th April

9.30am – GBP MPC Official Bank Rate Votes

9.30am – GBP MPC Asset Purchase Facility Votes

10.00am – EUR Italian Retail Sales m/m

2.00pm – USD HPI m/m

3.00pm – EUR Consumer Confidence

3.00pm – USD Existing Home Sales

3.30pm – USD Crude Oil Inventories

 

Thursday 23^rd April

8.00am – EUR French Flash Manufacturing PMI

8.00am – EUR French Flash Services PMI

8.00am – EUR Spanish Unemployment Rate

8.30am – EUR German Flash Manufacturing PMI

8.30am – EUR German Flash Services PMI

9.00am – EUR Flash Manufacturing PMI

9.00am – EUR Flash Services PMI

9.30am – GBP Retail Sales m/m

9.30am – GBP Public Sector Net Borrowing

1.30pm – USD Unemployment Claims

2.45pm – USD Flash Manufacturing PMI

3.00pm – USD New Home Sales

 

Friday 24^th April

All Day – EUR Eurogroup Meetings

9.00am – EUR German Ifo Business Climate

1.30pm – USD Core Durable Goods Orders m/m

1.30pm – USD Durable Goods Orders m/m

 

Earnings releases, 20^th to 24^th April 2015

 

Monday 20^th April

Hasbro Inc – Q1 2015 Earnings Release

Halliburton Co – Q1 2015 Earnings Release

Morgan Stanley – Q1 2015 Earnings Release

 

Tuesday 21^th April

Verizon Communications – Q1 2015 Earnings Release

Harley-Davidson Inc – Q1 2015 Earnings Release

Chipotle Mexican Grill Inc – Q1 2015 Earnings Release

Yahoo Inc – Q1 2015 Earnings Release

SKY PLC – Q3 2014/15 Earnings Release

 

Wednesday 22^th April

Ladbrookes PLC - – Q1 2015 Interim Management Statement Release

AutoNation Inc – Q1 2015 Earnings Release

Boeing Co – Q1 2015 Earnings Release

The Coca-Cola Co – Q1 2015 Earnings Release

McDonald’s Corp – Q1 2015 Earnings Release

Facebook Inc – Q1 2015 Earnings Release

eBay Inc – Q1 2015 Earnings Release

 

Thursday 23^rd April

Acacia Mining PLC – Q1 2015 Earnings Release

Dr Pepper Snapple Group Inc – Q1 2015 Earnings Release

Google Inc – Q1 2015 Earnings Release

Procter & Gamble Co – Q1 2015 Earnings Release

 

Friday 24^th April

AstraZeneca PLC – Q1 2015 Earnings Release

American Airlines Group Inc – Q1 2015 Earnings Release