Day Traders Diary

8/13/19

The S&P 500 futures trade six points, or 0.2%, above fair value with the benchmark index already up 1.8% this week. Investors will keep an eye overseas where the British Parliament is going to carry out a vote around 3:00 p.m. ET on a no-deal Brexit.

The no-deal Brexit vote comes after Prime Minister May's deal was defeated once again on Tuesday. A vote against a no-deal Brexit would be followed by a Thursday vote for an extension of the divorce date (March 29), but the possibility of a no-deal Brexit would remain if Parliament is unable to agree on a length of an extension or if the extension is rejected by the EU.

On the data front, investors will receive the Producer Price Index for February (Briefing.com consensus 0.2%) and Durable Orders for January (Briefing.com consensus -0.6%) at 8:30 a.m. ET. The Construction Spending report for January (Briefing.com consensus 0.3%) will be released at 10:00 a.m. ET.

Earlier, the weekly MBA Mortgage Applications Index showed an increase of 2.3% following a decline of 2.5% in the prior week.

In corporate news, Boeing (BA) remains under the microscope due to safety concerns surrounding its 737 MAX plane.  The FAA said earlier, though, that the 737 MAX shows no performance issues and provides no basis for grounding the aircraft.

U.S. Treasuries have edged lower this morning, pushing yields higher across the curve. The 2-yr yield is up three basis points to 2.47%, and the 10-yr yield is up one basis point to 2.62%. The U.S. Dollar Index is down 0.1% to 96.88. WTI crude is up 0.9% to $57.39/bbl ahead of some inventory data from the Energy Information Administration.

In U.S. Corporate news:

• Boeing (BA 372.00, -3.41): -1.1% after already losing 11.5% in the last two sessions regarding issues pertaining to the safety of its 737 Max.
• Carnival Cruise Line (CCL 56.25, +0.99): +1.8% after the stock was upgraded to 'Neutral' from 'Underweight' at Goldman Sachs with an increased price target of $65.
• Amphastar Pharmaceuticals (AMPH 22.95, -1.22): -5.1% after the stock was downgraded at both Needham and Piper Jaffray. 
• Aurora Cannabis (ACB 9.00, +1.04): +13.1% after naming Nelson Peltz a strategic advisor.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note. Japan's Nikkei -1.0%, Hong Kong's Hang Seng -0.4%, China's Shanghai Composite -1.1%, India's Sensex +0.6%, South Korea's Kospi -0.4%, Australia's ASX All Ordinaries -0.2%.
  • In economic data:
    • Japan's January Core Machinery Orders -5.4% month-over-month (expected -1.5%; last -0.1%); -2.9% year-over-year (expected -2.3%; last 0.9%). January Tertiary Industry Activity Index +0.4% month-over-month (expected -0.3%; last -0.5%). February PPI +0.2% month-over-month (expected 0.1%; last -0.6%); +0.8% year-over-year (expected 0.7%; last 0.6%)
    • Australia's March Westpac Consumer Sentiment -4.8% (last 4.3%)
    • South Korea's February Unemployment Rate 3.7% (expected 3.9%; last 4.4%)
  • In news:
    • The IMF maintained its growth forecast for South Korea at 2.6%, but noted that risks to the economy are tilted to the downside.
    • U.S. Trade Representative Robert Lighthizer said during yesterday's Senate Finance Committee hearing that he hopes negotiations are in the final weeks, but cautioned that deal won't be secured if key issues remain unresolved.
    • Toyota employees in Japan will receive a base pay increase of JPY10,700, which falls short of the amount requested by the employee union.

• Major European indices trade near their flat lines. STOXX Europe 600 +0.2%, Germany's DAX -0.1%, UK's FTSE 100 UNCH, France's CAC 40 +0.3%, Italy's FTSE MIB +0.4%, Spain's IBEX 35 +0.4%.
  • In economic data:
    • Eurozone January Industrial Production +1.4% month-over-month (expected 1.0%; last -0.9%); -1.1% year-over-year (expected -2.1%; last -4.2%)
    • Italy's Q4 Unemployment Rate 10.6% (expected 10.5%; last 10.3%)
    • Spain's February CPI +0.2% month-over-month, as expected (last -1.3%); +1.1% year-over-year, as expected (last 1.0%)
  • In news:
    • The British parliament will hold a vote on a no-deal Brexit after Prime Minister May's deal was defeated once again during yesterday's vote.
    • A vote against a no-deal Brexit would be followed by a Thursday vote for an extension, but the possibility of a no-deal Brexit would remain if MPs are unable to agree on a length of an extension or if the extension is rejected by the EU.
    • Der Spiegel reported that conservative members of the CDU/CSU coalition are lobbying for Chancellor Angela Merkel's resignation due to worries that the grand coalition with SPD could collapse.
  • Headlines provided by Briefing.com