Notes/Observations

Asia:

  • US Trump administration said to be considering placing Hikvision to the blacklist along with 4 other companies, the final decision could be made in the coming weeks (largest provider of video surveillance equipment with internet enabled)
  • China Ambassador to US Tiankai: China remains ready to hold trade talks with US; China is ready to address trade imbalance with US, buy more US products and services
  • US State Department and White House National Security reportedly support imposing China sanctions under Magnitsky Act

Europe/Mideast:

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  • UK PM May leadership in the balance after an offer of a second referendum to push through a Brexit deal backfired. The 1922 committee of Conservative Back Benchers are are said try push through a confidence vote putting pressure on PM May to resign.
  • UK Inflation for April comes in slightly softer then expected while remaining slightly above the BoE’s 2% target, with an increase in Energy prices offset by declines in food prices.

Americas

  • US Federal Judge Lucy Koh rules against Qualcomm in Federal Antitrust Case on the basis of tactics on patent licensing, Chip Sales unlawfully suppressed competition

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx600 -0.07% at 379.20, FTSE +0.38% at 7,357.10, DAX +0.03% at 12,149.60, CAC-40 -0.19% at 5,375.12, IBEX-35 +0.14% at 9,252.02, FTSE MIB -0.17% at 20,663.50, SMI +0.02% at 9,625.80, S&P 500 Futures -0.21%]

Market Focal Points/Key Themes:

Equities

  • European Indices trade mixed across the board with FTSE 100 slightly outperforming amid cable testing new multi-months lows and Brexit talks falling apart. U.S. futures trade in negative territory after strong session yesterday.
  • On the corporate front, Oriflame Cosmetics in Sweden trades 33% higher on acquisition offer made by Jochnick family. Casino Guichard-Perrachon trades little changed on French press reports that European Commission agents visited Casino’s Paris HQ yesterday.
  • On the earnings front, U.K. retail giant Marks & Spencer trades sharply lower after earnings and confirmation of rights issue to fund Ocado JV. Royal Mail rises 9% on smaller than expected dividend cut and earnings release also beating expectations. Industrial firm Babcock and utilities company SSE both fall on earnings and trading updates while IG Group, SimCorp and Pets at Home among notable risers.
  • In other news, Dialog Semiconductor fell 3.5% on analyst note.
  • Looking ahead, notable earners include Target Corp., Lowe’s Corporation, Analog Devices and VF Corp.
  • Consumer discretionary: Marks & Spencer [MKS.UK] -4% (earnings; confirms rights issue), Oriflame Cosmetics [ORI.SE] +35% (acquisition), Royal Mail [RMG.UK] +9% (earnings; dividend cut), Casino Guichard-Perrachon [CO.FR] n/c (European Commission agents visited Casino’s Paris HQ yesterday), Pets at Home [PETS.UK] +10.5% (earnings)
  • Industrials: Babcock [BAB.UK] -4% (earnings), Daimler [DAI.DE] -1% (annual meeting), MAN [MAN.DE] +1% (Volkswagen affirms outlook)
  • Technology: Dialog Semiconductor [DLG.DE] -3.5% (analyst action), SimCorp [SIM.DK] +7.5% (earnings)
  • Financials: IG Group [IGG.UK] +10.5% (trading update)
  • Utilities: SSE [SSE.UK] -2.5% (earnings; post earnings comments)
  • Consumer staples: Salmar [SALM.NO] -7% (earnings)

Speakers

  • (CN) China Foreign Min Spokesman Lu Kang: China opposes U.S. using national powers to smear Chinese companies
  • (UK) Environment Min Gove: will publish Brexit deal bill later today, May 22; he will NOT wote for second Brexit referendum
  • (IT) Italy Dep PM Salvini: The Government will not collapse after EU vote even if his league party does well; – Only 15% tax rate can bring back the boom of the 1950s and 60s
  • (EU) ECB’s Draghi: monetary transmission impaired by bank fragmentation
  • (IT) Italy Business Lobby Confindustria head Boccia: Rome needs to craft a €32B budget for next year to comply with EU rules, this could have a recessive impact
  • (PL) Poland Central Bank’s Sura: does not see need to change interest rates in 2019, a rise in 2020 is not ruled out
  • (RU) Kremlin Spokesperson: On report that the US told Ankara to cancel S-400 Missile deal with Russia or face consequences, such ultimatums are unacceptable
  • (CN) China President Xi: we should defeat various domestic, foreign risks and challenges

Currencies/ Fixed Income

  • The dollar index continued to rise yesterday while negotiations between Trump and Xi have stopped. We also have FOMC meetings minutes today that could send the dollar flying if Powell continues his downplay of a rate cut.
  • EUR/USD The Euro continues its sideways trend as the week has been quite for comments and figures until we get to the Flash PMI figures due out Thursday which if weaker could see us test the yearly low of 1.11 area.
  • GBP/USD With the comments from May yesterday sending the Cable trading above the 1.28 handle, only to turn right back around and now make a new low below 1.27. Also, CPI was out today and came in slightly lower than expected with a quite muted move. Now we wait to see the progression of Brexit talks and retail sales due out this Firday.**Economic Data**

Economic Data

  • (UK) APR CPI M/M: 0.6% V 0.7%E; Y/Y: 2.1% V 2.2%E; CPI Core Y/Y: 1.8% v 1.9%e
  • (UK) APR PPI INPUT M/M: 1.1% V 1.3%E; Y/Y: 3.8% V 4.5%E
  • (UK) APR PUBLIC FINANCES (PSNCR): -£7.1B V +£8.9B PRIOR; PUBLIC SECTOR NET BORROWING: £5.0B V £5.1BE
  • (UK) Mar ONS House Price Index Y/Y: 1.4% v 1.0%e
  • (IS) Iceland Central Bank (Sedlabanki) cuts 7-Day Term Deposit Rate by 50bps to 4.00%
  • (SE) Sweden FSA Financial Stability Report
  • (SE) Sweden Q1 Industry Capacity: 90.9% v 90.4% prior
  • (PL) Poland Apr PPI M/M: 0.4% v 0.3%e; Y/Y: 2.6% v 2.4%e
  • (PL) Poland Apr Sold Industrial Output M/M: -3.6% v -4.0%e; Y/Y: 9.2% v 9.0%e
  • (IS) Iceland Apr Wage Index M/M: 1.5% v 0.2% prior; Y/Y: 6.8% v 5.5% prior

Fixed Income Issuance

  • (SE) Sweden sells total SEK1.5B vs .SEK1.5B indicated in 2023 and 2032 bonds
  • (DK) Denmark sells DKK2.64B combined 2022 and 2029 DGB Bonds

Looking Ahead

  • 06:00 (IL) Israel Mar Manufacturing Production M/M: No est v 3.2% prior
  • 06:00 (IE) Ireland Apr PPI M/M: No est v 1.4% prior; Y/Y: No est v -6.8% prior
  • 07:00 (US) MBA Mortgage Applications w/e May 17th: No est v % prior
  • 08:00 (RO) Romania Central Bank (NBR) May Minutes
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:30 (CA) Canada Mar Retail Sales M/M: No est v 0.8% prior; Retail Sales (Ex-auto) M/M: No est v 0.6% prior
  • 09:00 (MX) Mexico Mar Retail Sales M/M: No est v 1.2% prior; Y/Y: No est v 1.8% prior
  • 10:30 (US) Weekly DOE Crude Oil Inventories
  • 14:00 (US) FOMC May Minutes
  • 15:00 (AR) Argentina May Economic Activity Index (Monthly GDP) M/M: No est v 0.2% prior; Y/Y: No est v -4.8% prior
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