“The European Central Bank is going to have to keep raising rates, because otherwise people will begin to question their credibility even further… We’re likely going to see a hike of the same size as they have already done, but whether there would be a more aggressive move is anyone’s guess, since they are walking such a tightrope,” Hewson added.

Money markets are raising their bets on ECB hikes, moving to fully price in a 50 basis point (bps) hike in September, compared to the 50% chance of such a move priced in early August. They are also pricing in a small probability of a 75 bps move at the meeting. 

Crude is trading lower after two days of gains and are heading for weekly losses as a strong dollar and worries about a global economic slowdown weigh. The strong dollar has made oil more expensive for holders of other currencies. OPEC is keen to ensure Russia remains part of the OPEC+ group, Al Ghais said ahead of a Sept. 5 meeting. Supplies could tighten again when European buyers start seeking alternative supplies to replace Russian oil ahead of European Union sanctions which take effect from Dec. 5. “We calculate the EU will need to replace 1.2 million barrels per day of seaborne Russian crude imports with crude from other regions,” consultancy FGE said in a note.

COMPANIES & NEWS

Canada’s transport minister is expected to defend the government’s response to recent travel chaos at a Friday parliamentary hearing, as aviation wrestles with surging passenger demand after a pandemic-induced slump.

Canada’s oil sands mining industry on Thursday outlined proposals to release treated water from tailings ponds into northern Alberta’s Athabasca River, a move environmental groups say risks damaging one of the world’s largest freshwater deltas. 

ECONOMIC EVENTS (EST)
0830 Retail sales mm for June: Expected 0.3%; Prior 2.2%
0830 Retail sales ex-autos mm for June: Expected 0.9%; Prior 1.9%

COMPANIES REPORTING
August 19 
None

CORPORATE EVENTS
None

EX-DIVIDENDS
Keyera Corp: Amount C$0.16
Pan American Silver Corp: Amount $0.10

Applied Materials Inc: The semiconductor equipment maker on Thursday eased fears of a slowdown with a strong revenue forecast for the fourth quarter, though sticky supply chain snarls pinched its margins. Revenue is expected to be $6.65 billion, plus or minus $400 million, in the current quarter, compared with the $6.57 billion estimated by analysts. Applied Materials also beat third-quarter expectations with a record revenue of $6.52 billion, thanks to a flurry of orders from chipmakers building capacity in a bid to ease a widespread supply crunch. Investors are relieved to see the outlook, said Summit Insights Group analyst Kinngai Chan, but warned of risks from the weakness in end markets such as electronics. 

Deere & Co: The company reported a rise in quarterly profit as higher equipment demand coupled with a robust pricing environment helped the world’s largest farm equipment maker to offset inflationary cost pressures. Deere sees full-year earnings to be in the range of $7.0 billion to $7.2 billion compared with previous outlook of $7.0 billion to $7.4 billion. The firm’s net income was $1.88 billion, or $6.16 per share, for the quarter ended July 31, compared with $1.67 billion, or $5.32 per share, a year earlier. Total net sales and revenue rose about 22% to $14.10 billion.

Bed Bath & Beyond Inc: Investors flooded social media platforms such as Reddit with criticism of Ryan Cohen’s sale of his stake in the company, blaming him for helping fuel a meme stock rally only to then walk away with a $60 million profit. The billionaire investor disclosed on Thursday he had sold his 9.8% stake in the struggling home goods retailer, almost five months after amassing it and pushing for changes. In response, the company ousted its chief executive, changed some board directors and agreed to explore shedding its baby products unit. Cohen stands to earn a profit before taxes of between $55 million and $60 million on the stock sale, according to a Reuters review of regulatory filings and a person familiar with the matter. 

Citigroup Inc: Britain’s Financial Conduct Authority said it had fined Citigroup Global Markets $15 million for past failures to properly apply rules aimed at spotting suspicious trading in shares and commodities. Banks are required to implement rules introduced in 2016 and known as the market abuse regulation (MAR) to monitor for potential insider trading and market manipulation. But until January 2018, the London-based international broker dealer arm of U.S. bank Citigroup failed to identify significant gaps in its arrangements, systems, and procedures for trade surveillance, the FCA said in a statement. Citigroup Global Markets had agreed to resolve the case and qualified for a 30% discount, otherwise it would have been fined 18 million pounds, the FCA said.  

General Motors Co: The automaker and LG Energy Solution are considering a site in Indiana for a fourth U.S. battery cell manufacturing plant, a spokeswoman for the companies’ joint venture said on Thursday. Ultium Cells LLC “is developing a competitive business case for a potential large investment that could be located in New Carlisle, Indiana,” she said, adding that Ultium had submitted a tax abatement application that it hopes will be approved later this month. Production at Ultium’s first U.S battery cell plant in Warren, Ohio is set to begin later this month. The fourth plant is expected to be similar to the three others and have an investment of more than $2 billion, a source briefed on the matter told Reuters, but it is not clear when it might open. 

Starbucks Corp: A U.S. judge ordered the company to reinstate seven employees at a Memphis, Tennessee, cafe on Thursday who were allegedly fired for supporting a union organizing campaign, as the company seeks to halt pending nationwide union elections. U.S. District Judge Sheryl Lipman in Memphis said the U.S. National Labor Relations Board had provided enough evidence that the firings earlier this year were motivated by anti-union animus. Lipman granted the order pending the outcome of an administrative case before the board. Starbucks said in a statement on Thursday it disagreed with the ruling and planned to appeal. The company said the workers were fired for violating company safety policies and that it respected the unionization process. 

ECONOMIC EVENTS

None

COMPANIES REPORTING RESULTS
None

CORPORATE EVENTS (EST)
1000 Deere & Co: Q3 earnings conference call

EX-DIVIDENDS
3M Co: Amount $1.49
Atmos Energy Corp: Amount $0.68
Blue Owl Capital Inc: Amount $0.11
NortonLifeLock Inc: Amount $0.12
Primerica Inc: Amount $0.55
Switch Inc: Amount $0.05
Tractor Supply Co: Amount $0.92
Westlake Corp: Amount $0.35

European shares are lower as the highest-ever jump in German producer prices in July wieghed over the economic outlook for the region’s biggest economy and rekindled fears of a recession. Energy stocks were among the few out-performers on the day and week. “Energy costs are only expected to go up as winter in the Northern Hemisphere kicks in… European energy is the sector that’s going to be able to ride through the current environment,” said Danni Hewson, financial analyst at AJ Bell.

“The European Central Bank is going to have to keep raising rates, because otherwise people will begin to question their credibility even further… We’re likely going to see a hike of the same size as they have already done, but whether there would be a more aggressive move is anyone’s guess, since they are walking such a tightrope,” Hewson added.

Money markets are raising their bets on ECB hikes, moving to fully price in a 50 basis point (bps) hike in September, compared to the 50% chance of such a move priced in early August. They are also pricing in a small probability of a 75 bps move at the meeting. 

Crude is trading lower after two days of gains and are heading for weekly losses as a strong dollar and worries about a global economic slowdown weigh. The strong dollar has made oil more expensive for holders of other currencies. OPEC is keen to ensure Russia remains part of the OPEC+ group, Al Ghais said ahead of a Sept. 5 meeting. Supplies could tighten again when European buyers start seeking alternative supplies to replace Russian oil ahead of European Union sanctions which take effect from Dec. 5. “We calculate the EU will need to replace 1.2 million barrels per day of seaborne Russian crude imports with crude from other regions,” consultancy FGE said in a note.

Asian shares were left in limbo while the U.S. dollar made all the running as recession clouds gathered over Europe and highlighted the relative outperformance of the U.S. economy.

COMPANIES & NEWS
Britain’s Financial Conduct Authority said it had fined Citigroup $15 million for past failures to properly apply rules aimed at spotting suspicious trading in shares and commodities. 

The Federal Reserve needs to keep raising borrowing costs to bring high inflation under control, a string of U.S. central bank officials said on Thursday, even as they debated how fast and how high to lift them.

Japan’s core consumer inflation accelerated in July to its fastest in seven-and-a-half years, driven by fuel and raw material prices and adding to the costs of living for households yet to see significant wage gains.

China’s cyberspace watchdog wants to build an “affectionate” relationship between internet enterprises and the government, a senior official said, the latest verbal assurance to an industry still on edge after a long and bruising regulatory crackdown. 

The frontrunner to be Britain‘s next prime minister Liz Truss said her government’s defining mission would be to revive the economy as she set out a series of measures to help parts of northern England.

Spain’s Aena on Thursday won the rights to operate the largest block of airports auctioned by Brazil’s government for 2.45 billion reais, adding to its portfolio in Latin America’s largest economy.

A restaurateur and rapper duo unveiled Stars Coffee on Thursday, reopening the chain of coffee shops in Russia formerly owned by Starbucks, the latest major company rebranding after a months-long Western corporate exodus from the country.

Wheaton Precious Metals agreed to end its so-called silver “streaming” deal with Glencore on Peru’s Yauliyacu mine for $150 million, the Canadian company said on Thursday, so that Glencore could divest the mine.

COMPANY ANNOUNCEMENTS
Kingspan Group PLC HY 2022 Earnings Release
PSP Swiss Property AG HY 2022 Earnings Release

ECONOMIC EVENTS (GMT)
0600 Germany Producer Prices mm for July: Expected 0.6%; Prior 0.6%
0600 Germany Producer Prices yy for July: Expected 32.0%; Prior 32.7%
0600 United Kingdom PSNB Ex-Banks for July: Expected 2.800 bln GBP; Prior 22.879 bln GBP
0600 United Kingdom PSNB for July: Prior 22.115 bln GBP
0600 United Kingdom PSNCR for July: Prior 12.610 bln GBP
0600 United Kingdom Retail Sales mm for July: Expected -0.2%; Prior -0.1%
0600 United Kingdom Retail Sales Ex-Fuel mm for July: Expected -0.2%; Prior 0.4%
0600 United Kingdom Retail Sales yy for July: Expected -3.3%; Prior -5.8%
0600 United Kingdom Retail Sales Ex-Fuel yy for July: Expected -3.1%; Prior -5.9%
0630 Switzerland Industrial Production yy for Q2: Prior 7.9%
0900 Euro Zone Current Account NSA for June: Prior -15.40 bln EUR
0900 Euro Zone Current Account SA for June: Prior -4.490 bln EUR