Wall Street Breakfast: What Moved Markets This Week
A Goldilocks jobs report and the tariff exemptions issued by President Trump helped to calm the markets. For the week, the Dow rose 3.3%, the S&P 500 climbed 3.5% and the Nasdaq jumped 4.2% to a record closing high, with all three benchmark indexes posting their best weekly performance in three weeks. U.S. Treasury prices fell in reaction to the jobs report, pushing the benchmark 10-year yield 2 bps higher to 2.89% and the two-year yield up by 3 bps to 2.27%.
Economy
Monday:
China's National People's Congress has officially kicked off with over 3,000 lawmakers descending on Beijing, where the country's rubber-stamp parliament is expected to eliminate the two-term limit for the presidency. Continuing a campaign to reduce risks in China's financial system, Premier Li Keqiang also set a target for economic growth for 2018 at "about 6.5%," a slight recalibration from last year's objective of "around 6.5% or higher if possible."
Tuesday:
"To complete NAFTA 2.0, we will need agreement on roughly 30 chapters. After seven months, we have completed just six," U.S. Trade Representative Robert Lighthizer said as the seventh round of NAFTA talks wrapped up in Mexico City. "I fear that the longer we proceed, the more political headwinds we will feel," such as the upcoming presidential elections in Mexico, U.S. mid-term elections, and provincial elections in Ontario and Quebec.
Wednesday:
Widely viewed as a voice for Wall Street in the White House, Gary Cohn has announced his resignation as the top economic adviser to President Trump, fanning fears of protectionist tariffs and a full-blown trade war. Trump tweeted he "will be making a decision soon" on replacing Cohn, who oversaw a major revamp of the U.S. tax code and pushed for a significant rewrite of financial rules.
Thursday:
President Trump has agreed to an invitation from North Korean leader Kim Jong-un to meet to discuss denuclearization. Kim made the invitation for Trump to come to North Korea in a letter hand delivered by South Korea's national-security adviser Chung Eui-yong, and Trump said he would meet by May, though the White House is now saying the time and place of the meeting is yet to be determined. Kim says that he's prepared to suspend nuclear and missile tests in the meantime.
Friday:
February's 313K job gain easily topped estimates for 200K. Revisions to December and January added another 54K jobs. That 313K figure is the most monthly job adds since the middle of 2016. The unemployment rate held steady at 4.1% vs. expectations for a decline to 4%, but that was thanks to a big jump in the participation rate (to 63% from 62.7%). The average workweek grew 0.1 hour to 34.5 hours. A modest disappointment, average hourly earnings gained just $0.04 to $26.75, bringing the Y/Y advance to 2.6%. Expectations had been for about an $0.08 monthly rise.
Stocks
Monday:
The U.S. Committee on Foreign Investment has ordered Qualcomm (QCOM) to delay tomorrow's upcoming shareholder meeting by a month as it investigates whether a proposed buyout by Singapore-based Broadcom (AVGO) would put national security at risk. The intervention comes as Qualcomm shareholders were set to vote on whether to replace six of its directors with candidates put forward by Broadcom, which is seeking to force a $142B takeover.
Tuesday:
Add two more areas where Amazon (AMZN) can deliver Whole Foods groceries in under two hours - Atlanta and San Francisco. Amazon first announced the Prime service last month and kicked it off in four markets: Austin, Cincinnati, Dallas and Virginia Beach. More perks? The company recently announced that shoppers who pay with their Amazon Prime Visa card would start getting 5% back at Whole Foods.
Wednesday:
Coca-Cola is on the brink of a new chapter. The company plans to launch its first alcoholic drink in Japan's growing market for "Chu-Hi" alcopops, which contain shochu alcohol mixed with flavored carbonated water. "It's an example of how we continue to explore opportunities outside our core areas," said Coca-Cola's (KO) Japan President Jorge Gardunu.
Thursday:
Cigna has agreed to acquire Express Scripts (ESRX) in a cash and stock transaction valued at $67B. In 2015, Cigna (CI) agreed to combine with Anthem (ANTM), in a deal that was scuttled by regulators, while late last year Anthem said it would launch its own PBM, dealing a blow to Express Scripts, which is a partner of the health insurer.
Friday:
Boeing CEO Dennis Muilenburg said the company has enough financial muscle to invest organically, return money to shareholders and take on targeted acquisitions like the proposed Embraer deal. "Acquisitions of the scale of Embraer are not only very doable for us, they are also things we can selectively do, aligned with our (cash deployment) strategy," said Muilenburg. Talks between Boeing (BA) and Embraer on a merger are still progressing.
This article was written by
