NOTABLE MOVES
As of Fri, Feb 15, Singapore Time zone UTC+8
USDJPY, -0.41%, $110.54
EURUSD, +0.25%, $1.1295
GBPUSD, -0.37%, $1.2799
USDCAD, +0.30%, $1.3295
AUDUSD, +0.21%, $0.7104
NZDUSD, +0.51%, $0.6832
S&P500, -0.27%, 2,745.73
Nasdaq, +0.09%, 7,426.96
Nikkei Futures, -0.86%, 20,977.5
CURRENCY MARKET WRAP
- U.S. Retail sales declined 1.2% (consensus +0.1%). That is the largest monthly decline since September 2009. The key takeaway from this disappointing report is that the weakness wasn’t isolated to gasoline station sales (-5.1%). It was pretty broad-based across discretionary spending categories like furniture and home furnishings (-1.3%), electronics and appliance stores (-0.1%), clothing and accessories (-0.7%), miscellaneous store retailers (-4.1%), nonstore retailers (-3.9%), and restaurants (-0.7%).
- U.S. Producer Price Index for final demand declined 0.1% in January (consensus +0.1%), pulled down by a 0.8% decline in the index for final demand goods. Excluding food and energy, the index for final demand increased 0.3% (consensus +0.2%). The key takeaway from the report is that it could portend margin pressures for producers if they don’t choose to pass along the higher costs to their customers.
- U.S. Treasuries saw increased buying interest following the release of the retail sales data, which drove yields lower across the curve. The 2-yr yield declined three basis points to 2.50%, and the 10-yr yield declined five basis points to 2.66%. The U.S. Dollar Index decreased -0.1% to 97.05. WTI crude increased 1.2% to $54.47/bb
- Chinese trade data showed a surplus of $39B vs. 33B eyed with exports dropping -2.4% while imports plunged -41.2% but analysts cautioned that trade flows could be distorted by the Lunar New Year.
STOCK MARKET WRAP
- S&P 500 declined as much as -0.8% on Thursday, as disappointing retail sales data for December played into the market’s concerns about a U.S. economic slowdown. The benchmark index, however, staged a late morning rebound back to its flat line, where it wavered for most of the afternoon. It almost finished flat, but a wave of selling activity in the final 20 minutes of trading left the S&P 500 down -0.27% to end the session.
- Trump was considering a 60-day extension for the March 1 trade deadline, according to Bloomberg, although follow-up reports indicated that both the U.S. and China remained far apart on structural reform demands. In addition, White House press secretary Sarah Sanders said that Trump is set on signing the spending bill and declaring a national emergency to build a border wall, which caused some minor gyrations in the market.
- The consumer staples sector (-1.2%) felt the brunt of the negative fallout in Dow component Coca-Cola (KO 45.59, -4.20, -8.4%) after it disappointed with its FY19 earnings guidance. The financial sector (-1.2%) for its part underperformed as a flattening yield curve, and worries about net interest margin compression, weighed on the bank stocks. American Intl. Group (AIG 40.19, -3.99, -9.0%), which fell well short of consensus earnings estimates for the December quarter, was a notable drag on the sector as well. Dow component Cisco Systems (CSCO 48.40, +0.90, +1.9%) provided the information technology sector with added support as it gained ground after beating earnings estimates, guiding Q3 revenue above consensus, raising its quarterly dividend by 6.0%, and approving a $15 billion increase to its stock repurchase program.
BLOCKCHAIN & CRYPTOCURRENCY NEWS
Santander Enters $700 Million Deal to Use IBM’s Tech, Including Blockchain
One of Europe’s largest banks, Banco Santander, and tech giant IBM have announced an agreement to accelerate the bank’s development of technologies such as blockchain. The five-year global technology agreement is aimed at enhancing the financial institution’s services using emerging technologies — such as blockchain, artificial intelligence and big data — provided by IBM. The deal between IBM and Banco Santander is reportedly valued at approximately $700 million. The move aims to reduce the bank’s annual costs on IT spending and significantly enable Santander Group to evolve towards the open, flexible and modern IT environment it requires. According to David Soto, IBM General Manager for Santander Group, Santander Group is leveraging IBM technologies to support their security and regulatory work, and to rapidly develop new services that meet emerging customer demand by tapping into IBM’s unique technology and industry expertise.
South Korea’s Largest Telecom Company to Develop Local Crypto: Report
South Korea’s leading telecommunications company, KT Corporation, has been selected to develop a local cryptocurrency in the South Korean city of Gimpo. The crypto called “K token” will reportedly be introduced in April, after a pilot project is carried out next month. The city plans to issue 11 billion won (over $9.7 million) worth of the currency per year, which includes budgets for various social services and development projects. The blockchain-based currency will reportedly only be available for use at merchants in the Gimpo area. The system will permit payments by scanning QR codes, and merchants can request funds to be converted into fiat and transferred to their bank accounts without incurring fees. KT plans to expand the cryptocurrency to local governments that have agreed to try the scheme, based on the coin’s performance in Gimpo according to ZDNet.
JPMorgan Chase to Launch ‘JPM Coin,’ Using Crypto to Speed Settlements
United States banking giant JPMorgan Chase (JPM) is launching its own cryptocurrency in a U.S. banking first, CNBC reported on Feb. 14. In a move commentators may see as unlikely, the multinational lender will use its newly developed asset, dubbed “JPM Coin,” to increase settlement efficiency, initially within three of its operations. JPM Coin will initially focus on international settlements by major corporations, helping speed up transactions that currently take a day or longer using extant options such as SWIFT. Elsewhere, treasury services and securities transactions are also in line to benefit, Farooq saying the cryptocurrency could expand further if it proves successful. Only a small amount of the total funds involved in the three areas would involve JPM Coin at first. The banking giant became notorious among cryptocurrency participants in mid-2017, when its CEO Jamie Dimon openly called Bitcoin a “fraud,” comments he later personally refuted to Cointelegraph at the World Economic Forum last year.