Nov 18 Asian Marco Initial Thoughts, Weakness as inflation concerns rise along with covid cases.

18 Nov

This and previous notes can be found at Substack ( Asian Market Sense )
Check out for  interesting research and trading analysis

Asia General weakness as inflation concerns rise and covid cases surge in many countries.

Market opened lower with weakness in Energy and rising inflation concerns. Evolution +VE announced acquiring Ernest Henry gold mine from Glencore.
Nikkei Chicago futures -270pts following US weakness.  Credit Suisse upgrades its view on Japan.  
S Korea 
Markets to open 1 hour later than normal. Expect market to open lower as inflation and covid concerns continue to worry investors.
Expect market to open lower following the weak US markets overnight.
Expect market to open lower with continued concerns over covid outbreaks and Developers debts.
ADR’s -200pts at 25,450 broad weakness Alibaba reports today.
US Futures 
Opened -20pts S&P +0.05% and NDX +0.14%

DOW -0.58%, NDX -0.33%, S&P -0.26%, Russel 2K -1.16%
Markets opened flat but dipped slightly deaspite strong retail earnings as inflation worries investors.  Target -4.7% beat but CEO warned rising costs may have an impact on the company going forward as it plans to absorb those costs rather than pass them onto the customer.  Lowe’s +0.4% beat and rasied f/casts.  TJX +5.8% beat too.  Visa slid after Amazon said it will stop accepting payments made with Visa credit cards issued in the U.K. starting next year. That change came shortly after Visa raised its interchange fees for transactions between the U.K. and European Union. Mastercard, which has also increased its U.K.-EU interchange fees, fell 2.8%.
Banks JPMorgan Chase -0.5%, Citigroup -2.8%, Wells Fargo -1.1%, Amex -0.7%
Work from home names: Facebook -0.6%, Apple +1.7%, Amazon +0.2%, Netflix +0.6%,  Disney -0.9%, Zoom Video -0.3%, Alphabet +0.12% and Microsoft +0.1%,
Tech NXP Semi -0.7%, Nvidia -3.1% ahead of earnings, Micron -1.8%, AMD -0.7%, Skyworks -0.5%
Re-opening stocks  Boeing +0.4%, Caterpillar -1.2%, Simon Property +1.6%, Kohl’s -3.1%, Nordstrom -0.9%, Gap -5.2%, United Airlines -0.9%, Carnival %, Wynn Resorts -2.7%, Chevron -0.5%, Exxon Mobil -1.1%,  
Lock down names Campbell Soup +0.5% General Mills -0.2%, JM Smucker +0.2%
After Market
Nvida +3% strong Q4 guidence and top and bottom line beat
Sonos +4% strong FY guidence despite revenue miss
Cisco -6% guidence was at the low end of estimates
Victoria Secret +14% after reporting quarterly earnings of 81 cents per share. Revenue came in at $1.44 billion, missing estimates of $1.46 billion, according to Refinitiv.
MBA Mortgage Applications -2.8% vs 5.5% prior
MBA30 yr Mortgage Rate 3.2% vs 3.16% prior
MBA Purchase Index 282.5 vs 278.4 prior
MBA Mortgage Refinance Index 2695 vs 2841 prior
Housing Starts Oct -0.7% MoM vs -2.7% Sept (F/cast was 2.3%)
Building Permits Oct 4% MoM vs 7.8% Sept (F/cast was 4.5%)
EIA Crude Oil Change -2.101m vs -1.001m prior (Concensus was 1.398m)
EIA Gasoline Change -0.708m vs -1.555m prior (Concensus was -0.575m)
USD firm near 16 mth high. Bitcoin +0.7% @ 60,077.66, VIX +4.5% @ 17.11, US T10 @ 1.592% as housing starts slip.
OIL Brent -2.79%, WTI -3.19% on oversupply warnings
Gold +0.83%, Silver +0.77%, Copper -3.6% Platinum -1%, Palladium +1%.
AHEAD Philly Fed Data, CB Leading Index, Kansas Fed Composite & Manufacturing Indexes.

DAX +0.02%, CAC +0.06%, FTSE -0.49%
Markets open flat DAX andCAC traded sideways as investors react to increase inflation pressure, with the UK CPI at its highest for about a decade with Energy and Autos costs surging, which saw the FTSE drift lower. BoE now expected to raise rates in December. ECB warned of stretched valuations in property and financial market
Miners +VE but Travel & Leisure weak as covid surges.
Good earnings from Sage +9.9% good earnings.
Siemens Healthineers +5.6% after raising total synergy targets for its recent acquisition of U.S. rival Varian.
InPost -13.1% after cutting its full-year guidance amid slower-than-expected growth in the e-commerce market.
Evolution -5% after Bloomberg reported the online gambling firm had been accused by a U.S. competitor of operating illegally in some markets. Evolution has said the allegations are inaccurate.
Construction Output Sept 1.5% YoY vs -2.6% Aug (revised) (F/cast was 0.5%)
Core Inflation Rate Oct 2% YoY vs 1.9% Sept (F/cast was 2.1%)
Inflation Rate Oct 4.1% YoY vs 3.4% Sept (F/cast was 4.1%)
Inflation Rate Oct 0.8% MoM vs +0.5% Sept (F/cast was +0.8%)
Inflation Rate Oct 4.2% YoY vs 3.1% Sept (F/cast was 3.7%)
Inflation Rate Oct 1.1% MoM vs 0.3% Sept (F/cast was 0.7%)
Core Inflation Rate Oct 3.4% YoY vs 2.9% Sept (F/cast was 3%)
Core Inflation Rate Oct 0.7% MoM vs 0.4% Sept (F/cast was 0.3%)
Retail Price Index Oct 6% YoY vs 4.9% Sept (F/cast was 5.4%)
Retail Price Index Oct 1.1% MoM vs 0.4% Sept (F/cast was 0.5%)
PPI Core Output Oct 6.5% YoY vs 6% Sept revised (F/cast was 6%)
PPI Core Output Oct 0.7% MoM vs 0.6% Sept revised (F/cast was 0.4% )
PPI Output Oct 8% YoY vs 7% Sept revised (F/cast was 7%)
PPI Output Oct 1.1% MoM vs 0.7% Sept revised (F/cast was 0.4%)
PPI Input Oct 13% YoY vs 11.9% Sept revised (F/cast was 11.7%)
PPI Input Oct 1.4% MoM vs 0.8% Sept revised (F/cast was 0.7%)
Eurozone New Car Registrations
Germany No data due
France No data due  
UK  No data due

Nikkei Chicago futures -270pts following US weakness.  Credit Suisse upgrades its view on Japan.  
Yen currently 114.11
Data due Foreign Stock and Bond buying data.
The U.S. and Japan announced the formation of a new trade partnership to strengthen their alliance and coordinate on “third-country concerns,” an apparent reference to China.
Government considering increasing immigration amid labor crunch;  by letting foreign nationals working in farming, food service and other sectors remain in the country indefinitely as soon as next fiscal year, a significant turning point for a country that has long kept its borders mostly closed to immigrants. +VE
Japan intends to ease quarantine rules by the end of November for people inoculated with Johnson & Johnson's COVID-19 vaccine, the Nikkei daily reported on Tuesday.
A financial income tax review will be noted as an important item for consideration in Japan’s fiscal 2022 tax reform outline to be approved at year-end.  The government and the ruling parties are considering launching full-scale talks on a possible hike in financial income taxes next year or later, in order to achieve Prime Minister Kishida’s wealth redistribution policy. Slight -VE for sentiment
East Japan Railway Co on Wednesday invited the media to observe a test run of an autonomously operated bullet train in Niigata Prefecture as it eyes introducing trains without drivers in the future amid a labor shortage. +VE
Nissan Motor is redesigning its cars to use more generic chips, a move that companies in other industries are also making, potentially heralding a major shift in Japan's manufacturing sector. Auto and appliance makers have so far dealt with a prolonged global semiconductor shortage by building up inventories.  Slight +VE for the company, slight -VE chip designers.
Softbank -VE as Nvidia said the US FTC has expressed concerns regarding the proposed acquisition of Arm Ltd.“Although regulators and some Arm licensees have expressed concerns or objected to the transaction, we continue to believe in the merits and benefits of the acquisition to Arm, its licensees, and the industry”

Markets to open 1 hour later than normal.  Expect market to open lower as inflation and covid concerns continue to worry investors.
No data due
Korea’s daily Covid cases expected to hit record high of 3,300 today (vs. nearly 3,200 prior);  first time at 3,000 levels for two consecutive days. Govt is speeding up intervals between regular vaccinations and shortening the boost shot timeframe to four months from six. PM to hold emergency meeting with hospital heads to discuss.
Nvida’s 3Q earnings beat street estimates and also providing solid revenue guidance of $7.4bn (consensus $6.86bn) for the 4Q, driven by its expansion into data-center semiconductors and other markets.  +VE for Memory and Metaverse plays.
NAVER (035420) Appointed  a new CEO; 40 year old SY Lee a woman in response to the recent employee bullying scandals. 
She is expected  to seek global market expansion.  Also announced it will cancel 214,310 treasury shrs by end of 2021 (0.1% of outstanding) +VE

Expect market to open lower following the weak US markets overnight.
No data due
The influential U.S.-China Economic and Security Review Commission (USCC) included a range of recommendations about Taiwan in its annual report to Congress, amid heightened tensions between the democratically ruled island and China.
The report said Congress should authorize and appropriate funds for Taiwan to purchase defense articles from the United States and finance the deployment of cruise and ballistic missiles and other munitions in the Indo-Pacific while increasing funding for surveillance.
The government would maintain a freeze on prices for liquefied petroleum gas (LPG) and liquefied natural gas (LNG) amid rising costs for many items, Minister of Economic Affairs Wang Mei-hua told a meeting of the legislature’s Economics Committee yesterday.
Rising inflation combined with high inventory could create a painful trap for Taiwanese manufacturers, Qisda Corp chairman Peter Chen said yesterday as the electronics manufacturer reported that consumer demand had begun to flag by the third quarter.  Consumer demand would soften in the fourth quarter, Chen said, giving a cautious outlook for Qisda, whose products include LCD monitors, projectors, networking devices, medical equipment and smart business solutions. -VE

Expect market to open lower with continued concerns over covid outbreaks and Developers debts.
No data due
Responding to previous reports that the U.S. asked China to release oil reserves to aid stabilizing the soaring global oil prices, China's Ministry of Foreign Affairs (MoFA) said that President Xi and the U.S. President Biden did in fact touch upon the issue of energy security during the virtual summit meeting held yesterday (16th). In particular, Xi stated that China and the U.S. should join forces to guide the international community to safeguard the global energy security and strengthen the cooperation in the fields of natural gas and new energies.
Regarding China's request to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Australian Trade Minister Dan Tehan said Australia and China shall sit down and work through market access problems, Bloomberg reported. Both sides will need some sort of ministerial conversation as part of a process for China to join a regional trade deal.
China will let developers issue asset-backed securities while the China Banking and Insurance Regulatory Commission has urged trust firms to pay attention to the real estate market and ensure that no risks will arise when they dispose their assets.   The move to let property companies resume issuance of asset-backed securities ends a three-month market freeze, as authorities act to insulate higher-rated developers from an industry-wide funding crunch.

ADR’s -200pts at 25,450 broad weakness Alibaba reports today.
No data due

Short Selling HSI Wednesday 21.3% vs 16% Tuesday
Top shorts 
Bud APAC (1876) 53%, HSBC (5) 51%, Country Garden (2007) 44%, Sunny Optical (2382) 41%, ICBC (1398) 41%, Henderson Land (12) 41%, Sands China (1928) 39%, Baba-SW (9988) 39%, Bank of China (3988) 36%, China Res Land (1109) 34%, BoC Hong Kong (2388) 34%, Citic (267) 33%, Haidilao (6862) 33%, CM Bank (3968) 32%, Longfor (960) 32%, Hengan (1044) 32%, CG Services (6098) 32%, Petrochina (857) 31%, Power Assets (6) 31%, Shenzhou (2313) 30%, Wuxi Bio (2269) 28%, Galaxy Ent (27) 27%, ACC Tech (2018) 26%, Techtronics (669) 26%, China Overseas (688) 25%.

BIDU-SW (09888.HK) announced the result for 3Q ended 30 September 2021.
The company recorded a net loss of approximately RMB16.559 billion, compared to a net income of about RMB13.678 billion in 3Q20. The loss per ADS was RMB48.18. The non-GAAP net income amounted to RMB5.09 billion, down 27% YoY. Non-GAAP earnings per ADS was RMB14.66.  Slightly better than F/casts.
Chairman cum CEO Robin Li, in his letter to employees today, wrote that the company has become the largest self-driving travel service provider in the world, harnessing its long-term, steadfast and strong investment in R&D. By 2025, Li said, the self-driving business of the company will extend presence in 65 China's cities, and reach 100 cities by 2030.

BILIBILI-SW (09626.HK) announced the third quarter results. The average monthly paying users (MPUs) reached 23.9 million, a 59% increase from the same period in 2020. Average daily active users (DAUs) reached 72.1 million, a 35% increase from the same period in 2020. Average monthly active users (MAUs) reached 267 million, and mobile MAUs reached almost 250 million, representing increases of 35% and 36%, respectively, from the same period in 2020. +VE

CATHAY PAC AIR (00293.HK) announced that it has carried a total of approximately 76,000 passengers in October 2021, an increase of 98.3% compared to October 2020, but a 97.2% decrease compared to the pre-pandemic level in October 2019. The airline carried about 137,000 tonnes of cargo last month, an increase of 19.8% compared to October 2020, but a 25.2% decrease compared with the same period in 2019.  Chief Customer and Commercial Officer of the airline, Ronald Lam, expressed that the company has been able to achieve close to operating cash breakeven for the four-month period from July to October 2021. Slight +VE

* The email will not be published on the website.